Campaign Spending Changes Urged : Panel Favors Lifting Donation Limits in City Elections

A series of sweeping changes in local campaign laws, highlighted by plans to double the current contribution limit to $500 and allow now-banned corporate and political action committee donations, were proposed Friday by a special task force set up to review city election laws.

Other possible revisions of the city’s 12-year-old election ordinance, detailed at a City Hall meeting, include mandatory audits of major campaigns’ financial reports, shifting enforcement of the laws from the city attorney to the San Diego County district attorney’s office, and possibly allowing candidates to solicit contributions exceeding the $500 limit in an attempt to neutralize wealthy candidates’ infusion of large sums of their own money in their races.

The chairman of the 18-member task force, Mark Nelson, emphasized that the proposals discussed during Friday’s two-hour meeting may be revised or eliminated from the recommendations that the panel is expected to forward to the San Diego City Council for action later this year. A public hearing on the proposed election-law changes is scheduled to be held Nov. 8 at City Hall.

“We want public input, and this gives the public an idea of where the task force is heading,” said Nelson, executive director of the San Diego Taxpayers Assn.

Initially proposed by Councilman William Jones, the task force was set up last year in the wake of Mayor Roger Hedgecock’s indictment on charges that he conspired to circumvent the city’s current $250-per-person contribution limit by funneling tens of thousands of dollars in allegedly illegal donations through a political consulting firm. The mayor was found guilty of those charges by a Superior Court jury earlier this month, but jury-tampering allegations could reverse his 13-count felony conviction.

Another major motivation behind establishing the task force, however, was a widespread perception among political observers that the $250 limit needed to be increased to reflect inflation, and that current disclosure and enforcement procedures should be reviewed in light of the changing nature of campaigns--notably, the larger amounts spent in local races and the increasing use of professional consultants.

The proposed increase in individual donations to $500 does not totally compensate for the effects of inflation over the last 12 years, “but we believe it’s an acceptable figure,” said James Leahy, a professor at California Western University School of Law who chaired the task force’s contributions subcommittee.

Local politicians have complained for years that, at a time of million-dollar mayoral campaigns and six-figure council races, the $250 limit is a severe burden, particularly for challengers running against better-known incumbents, and may, in fact, prompt some candidates to search for loopholes. Moreover, critics argue that the current limit is an unrealistically low one that favors rich candidates--who can spend unlimited amounts of their own money--over opponents of more modest means, and forces candidates to spend much of their time raising money instead of discussing issues.

“I think raising the limit to $500 would be a move in the right direction, but I’d like to see it go even higher, maybe up to $1,000,” said political consultant David Lewis. “As long as you have very strict reporting requirements, I see no major problem in allowing bigger contributions.”

In testimony delivered to the task force last summer, consultant Ken Rietz emphasized that campaign costs have risen dramatically since the $250 limit was established in 1973. Since then, direct mail and radio ad costs have risen 200% (to about 11 cents per piece and $65 per minute, respectively), while prime television time slots have increased by as much as 500%, Rietz said.

At Jones’ suggestion, the task force plans to reevaluate the proposed $500 limit on the basis of what Nelson termed “a campaign-sensitive index”--one based on campaign-related expenses, rather than general cost-of-living increases--to determine whether a higher contribution figure perhaps is justifiable.

Another major complaint about the existing law is that it gives a significant edge to wealthy candidates who, courts have ruled, may spend unlimited amounts of their personal money in their own campaigns. Therefore, a candidate forced to raise funds within the confines of the $250 limit--or even the proposed $500 restriction--is at a severe disadvantage when running against a rich opponent who can pump hundreds of thousands of dollars of his own money into his campaign.

That was precisely the problem that Hedgecock confronted in his two successful mayoral campaigns. In the special May, 1983, race to elect a successor to Pete Wilson after his election to the U.S. Senate, Hedgecock’s opponent, former Councilwoman Maureen F. O’Connor, then the wife of Jack in The Box founder Robert O. Peterson, spent $780,749, including more than $560,000 of her own money. Hedgecock, meanwhile, raised $571,672 in contributions within the $250 limit.

In Hedgecock’s 1984 reelection campaign, the mayor received donations totaling $447,760, while the $784,572 raised by his opponent, La Jolla millionaire Dick Carlson, included $498,000 of Carlson’s own money.

Saying that “we need to balance the equation” between wealthy and average-income candidates, Jones suggested that one possible way to accomplish that goal would be to waive or raise the $500 limit for candidates facing wealthy opponents in order to allow the candidate of lesser financial means to try to neutralize his opponent’s personal resources.

In other words, if one candidate spent $100,000 of his own money in his campaign, his opponent could try to raise all or at least part of that amount without having to abide by the $500 restriction. The waiver of the limit, Jones explained, conceivably would allow the other candidate to turn to “his rich uncle” or donors willing to contribute in excess of $500 to try to keep pace with his rich opponent.

“It doesn’t have to be a one-for-one thing to make up every single dollar of the difference,” Jones said. “I don’t think we should totally abandon the limits . . . to allow the other candidate to come up with the exact same amount” that a wealthy opponent contributes to his own race.

As a possible model, Jones cited an election law in Los Angeles that allows candidates to raise up to $30,000, without dollar-amount restrictions, once his opponent spends that much of his own money in the campaign. However, even if a wealthy candidate spends $500,000 of his own money, $30,000 is the maximum that his opponent can raise outside the normal restrictions under the Los Angeles law, according to Jones.

“If you eliminate all the restrictions, you might just get into a bidding war,” Jones said.

While the current law bans donations from businesses and political action committees (PACs), the task force members have suggested allowing such donations in future elections. At the time that the existing laws were passed, contributions from corporations and PACs--the political arms of business, labor and other groups--were viewed as a possible “corrupting” influence that could outweigh personal donations.

“Now, the argument has come full circle, and there’s some thought that by excluding PACs and businesses, you’re narrowing the base . . . and perhaps creating problems that way,” Nelson said. For example, some argue that the current laws give greater impact to wealthy contributors easily able to donate the maximum $250; the impact of smaller donations from modest-income individuals may be enhanced, they contend, if individuals can band together in PACs.

Under the proposals before the task force, businesses could contribute $500 per election to candidates, while PACs’ limit would be $1,000.

Mark Zerbe, the San Diego coordinator of Common Cause and a member of the task force, expressed concern at Friday’s meeting that the proposed campaign-law amendments could allow persons to circumvent the spirit, if not the letter, of the law by donating money to candidates in several ways--as an individual, through their business and through PACs.

Nelson conceded that such occurrences would be “theoretically possible” under the proposed changes, adding that “refined legal language” is needed to clarify that and other provisions.

In addition, Jones expressed skepticism about the proposals to “open the door” to donations from businesses and PACs.

“I’m not convinced that we necessarily need more money or more sources of money,” the councilman said. “I’m not saying I’m against it. I’m saying I need to be convinced.”

To better monitor the sources and candidates’ use of the increased donations that would be allowed under the proposed changes, the task force also has suggested various steps designed to strengthen public disclosure and enforcement features of local campaign laws.

Those proposals include recommendations calling for mandatory audits of campaigns that raise in excess of $50,000, increasing the fines for failure to file campaign financial disclosure reports on time, and a requirement that contributions received in the waning days of a campaign, which now typically are not publicly reported until after the election, be disclosed the Friday before Election Day.

Bob Miller Sr., head of a local accounting firm, complained that the proposal calling for an additional pre-election financial report could be cumbersome and an undue burden on accountants who handle multiple campaigns. Leahy sympathized with Miller, but added, “The reason is to allow the press . . . and anyone else to get as much information as possible before the election.”

Another proposal would shift enforcement powers from the city attorney to the district attorney’s office, based on the theory that the district attorney has less potential for conflicts of interest in determining whether and how to prosecute city officials accused of violating the law.

However, finances pose a formidable obstacle to some of the proposals, such as those dealing with campaign audits and additional duties for the district attorney’s office. Some task force members have suggested that the city’s general budget funds be allocated to fund those expenses--a prospect that Jones warned the panel is a slim one in light of the city’s tight budget constraints.