PACs Let Officials Exceed City Law’s Donation Ceilings

Two years ago, Los Angeles voters overwhelmingly approved a sweeping city Charter amendment placing a lid on city campaign contributions, hoping to lessen the fund-raising advantage that incumbents have over their challengers and at the same time temper the influence of major political donors.

But as the April 14 election nears in seven City Council districts, a review of campaign records shows that since the campaign law went into effect, city politicians have continued to collect hundreds of thousands of dollars above the campaign ceiling. And many of them are planning to raise still more large amounts in the future.

The excess bank balances are not a violation of the city’s campaign financing law, even though its main purpose when passed in April, 1985, was to cut down on large contributions. Major donors have continued their flow of dollars to city politicians, in amounts of their choice, as they pursue efforts to win influence at City Hall.

They do so by routing their checks through political action committees or PACs--to the chagrin and frustration of the officials who favor limits.

“I think that these committees represent a potential undermining of (the law), and the city’s attempt to regulate campaign spending,” said Assistant City Atty. Shelley Rosenfield, who is the city’s leading legal authority on the campaign law.

“The voters voted for a (contribution) limit. The council members voted for a limit. And they’re not getting a limit,” said Robert Stern, a former general counsel with the state Fair Political Practices Commission who is now with the bipartisan California Commission on Campaign Financing.

The alleged loophole through which the four- and five-figure contributions pass is that PAC funds, while controlled by city officeholders, are nevertheless not restricted by the city’s campaign law.

The committees are usually established by candidates for county or state offices having no legal limits on contributions. They are also used by candidates to raise funds to support other candidates or issues. In Los Angeles, the city attorney has advised city politicians that they may raise and spend unlimited PAC money as long as they do not spend it on financing campaigns to run for city offices.

However, some council members, even though they have expressed interest in holding nothing but a city office, have amassed PAC funds and used them to support activities previously financed out of their city campaign budgets.

Councilman Ernani Bernardi, who authored the campaign contributions law after a decade-long battle, said that city officials are “blatantly violating the spirit of the law” if they accept contributions in excess of the limits without declaring their candidacies for non-city offices.

Others at City Hall share the concern over the possible loophole.

In a letter to Council President Pat Russell, Mayor Tom Bradley last month warned against “the potential uses and abuses” of campaign funds raised by political action committees and officeholders who spend that money on “community mailers, phone banks, and other clearly political outreach endeavors.”

Deputy Mayor Tom Houston, a former FPPC chairman, told The Times that incumbents could take unfair advantage of their PAC dollars unless such committees are regulated by the city.

“I guess it was a mistake to let these (committees) proliferate rather than put on the brakes from the beginning,” he said.

City officials who have raised funds in excess of the limits insist they they have done nothing legally or morally wrong.

“It’s supposed to be a free America,” said Councilman Gilbert Lindsay, whose political action committee LIN PAC has raised $330,220 since the campaign law took effect. “People should be able to give you anything they want to give you. And you should be able to accept anything, as long as you accept it on top of the table.”

When it was adopted with 77% of the vote in 1985, the campaign contributions law was ballyhooed as a far-reaching attempt to grapple with the mushrooming costs of city elections and the pervasive influence of money on campaigns.

Patterned after similar efforts in San Diego, San Francisco and other cities, the Los Angeles law limits City Council candidates from accepting more than $500 from a single donor during a campaign. Candidates for city attorney, city controller and mayor are limited to $1,000 per source for a single election.

As outlined in the city Charter, the purpose of the law is “to encourage a broader participation in the political process.” The law affects all contributions received on or after July 1, 1985.

Among the exemptions to the contribution ceiling are donations used to pay off campaign deficits incurred before the law took effect--a provision that has allowed Councilman Michael Woo, City Atty. James K. Hahn and City Controller Rick Tuttle to raise money in excess of the contribution limit to pay off their 1985 campaign debts.

Like other city officeholders, the three men are relying on their political action committees to collect the money. In addition to Tuttle and Hahn, Mayor Bradley also has a PAC and used that committee to raise money for his unsuccessful gubernatorial campaign.

In all, six City Council members have formed political action committees that are not regulated by the city and have raised nearly $1.5 million through those PACs since the campaign law went into effect. The council members are Richard Alatorre, Hal Bernson, Robert Farrell, Joan Milke Flores, Lindsay and Woo.

Councilmen John Ferraro and Joel Wachs also have formed political action committees but have not reported raising any money since the restrictions on campaign contributions began.

The very existence of these PACs, however, not only has troubled proponents of the campaign law but has led to some deft juggling between city officeholders and their contributors.

Last December, guests at a Woo fund-raising dinner were asked to contribute to two separate political committees. Los Angeles City Employees Union Local 347, for example, gave the maximum $500 to the Citizens for Woo committee because it is city-controlled. At the same time, the union gave $3,000 to the Friends of Michael Woo, a committee whose stated purpose is not to raise money for Woo’s reelection campaign and is therefore not governed by city campaign restrictions.

Similarly, last September, attorney Neil Papiano gave $1,000--the most he could contribute--to the reelection committee for City Atty. Hahn. He then donated $2,000 to another Hahn committee that is considered exempt from the campaign law because, like Woo’s, it is being used to pay off his old campaign debt.

Wachs, who has yet to begin his PAC fund raising, has invited contributors to a $5,000-per-table dinner March 25 at the Beverly Hills Hotel. The invitation asks contributors to make checks of $500 or less payable to the Committee to Reelect Joel Wachs and make checks over $500 payable to “Friends of Joel Wachs.” The latter--a political action committee--”will be used for Joel’s future political efforts other than those related to an elective city office,” the invitation said.

Since the law was enacted, council members have scrambled to form such political action committees and have continued to raise large sums of money outside the new restriction, claiming that the funds had nothing to do with their city careers.

However, some of the major donors to these committees are individuals or organizations such as city employee groups, developers and lobbyists with special projects or interests at City Hall.

Virtually all of the $330,220 raised by LIN PAC--Councilman Lindsay’s political action committee--was raised during the first six months after the city law went into effect. And since the committee was not bound by the $500 limit, Lindsay received individual $3,000 contributions from various investment banking firms hoping to land city business and a $9,000 donation from a firm that is building a trash-burning facility in Lindsay’s South-Central Los Angeles district.

Lindsay said he established LIN PAC “so I would have money to play with.” But he scoffed at the notion that he is somehow skirting the campaign law.

Councilman Farrell told The Times that he has formed a committee, which operates under the contribution limit, in order to raise money for his April reelection bid. But he also has raised nearly $182,000 through his political action committee which Farrell said is used to pursue broader goals including fighting apartheid, aiding black candidates in other cities and enlisting more money for charities in Los Angeles and across the country.

“You got to use something to prime the pump,” he said, “I use my PAC.”

Councilman Bernson, a leading opponent of the campaign law, called the measure “a farce” when the measure was before the council in 1985 and warned that it would only make people “more devious.” Less than six months after the law took effect, he set up a political action committee of his own to accept contributions of up to $2,500 per donor.

Bernson raised $151,255 for his new committee in 1986--even though he had $197,830 in his campaign treasury when the new law took effect.

Bernson said he organized his PAC so he could continue many of the activities that he funded out of his city campaign fund before the law went into effect, such as contributing to community groups in his San Fernando Valley district.

“I don’t think I’m circumventing the law,” Bernson said. “I’m just using the legal means available to carry on some of the things that I think are worthwhile.”

Bernson said he has been cautious about spending some of his committee money because of the uncertainty over interpreting the campaign law.

That reticence to spend PAC money is shared by Flores, who has raised $225,487 and plans to hold another $3,500-a-table fund-raiser later this month.

Flores said much of her PAC money probably will go for campaigning if she decides to run for a non-city office. But she insisted that the use of political action committees is not sidestepping the campaign law.

Alatorre also has raised funds in excess of the $500-per-donor limit through the committee that he established as a state assemblyman. Last year, he ran afoul of the campaign law for using funds from this state committee to help finance his 1985 council election. He paid fines and restitutions of about $220,000--and drew on his PAC funds to pay $10,000 of the fine.

While some of the money raised through PACs has indeed gone to help community organizations or to promote political causes and candidates, some also has been used for more personal political benefit.

City officeholders have used their PAC money to pay for newspaper ads, marathon races, foreign trips, restaurant meals, lawyer fees, symphony concerts, baseball and football tickets and Broadway shows.

In Lindsay’s case, he also spent nearly $35,000 from his LIN PAC funds for “supplemental staff.” That money went to pay the salaries of non-city staff to “go about the community,” said Lindsay in an interview, although he declined to be more specific.

The city attorney’s office is reviewing those expenditures as part of an investigation into the Lindsay committee amid complaints that political action committees are being used to bypass the campaign law.

Critics including officials from the Center for Law in the Public Interest and Common Cause contend that officeholders are using their PAC money to enhance their image in their own council districts by donating sizable sums to area charities, mailing holiday cards, taking out newspaper ads and engaging in other self-promotional activities.

If they are doing that, then those committees should be regulated by the city and a contributions limit imposed, said Walter Zelman, executive director of California Common Cause.

“They are raising amounts over the contribution limit and spending it in ways that would appear to have value to them as an officeholder and future candidate in a city election,” Zelman said. “That would be a violation of the law, which says they cannot spend money in connection with a city election except from a fund of dollars raised within those limits.”

Zelman singled out not only City Council members but the city attorney, Hahn, himself, for allegedly violating the law and guidelines that the city attorney’s office had issued for complying with the campaign law.

“(Hahn) is raising money in excess of $1,000 to pay off his debt,” which is permitted, Zelman said. “Out of that same account, he is spending money in ways that would appear to have nothing to do with repayment of his debt but have to do with his status as an officeholder and his status as potential city candidate.

“He’s given money to certain charities, to certain political organizations. He’s mailed Christmas cards. Those are the kinds of things that within his own guidelines are expenditures (and) are not supposed to be made out of a fund that took contributions in excess (of the limit),” Zelman said.

Hahn denied that activities such as mailing Christmas Cards are connected with his 1989 reelection.

“Clearly, the advice I’m giving to other people I’m following myself. I want to make sure none of these expenditures are in connection with a city election,” he said.

Through these political action committees, city officials have accepted contributions in excess of the $500 limit from many of the same special interests whose influence was to be reduced by passage of the campaign law.

Some of these major donors said they are still donating as much money as they had in the past--only to different committees and for different reasons in order to comply with the law.

One contributor, who has given large sums of money to council candidates and asked not to be identified, said that while he is strictly observing the $500 limitation to city-controlled committees, he is also donating to the PACs of council members.

“Look, when someone asks me for more than $500, you can’t turn them down,” he told The Times, “else how are you going to do business with the city?”

George Aliano, president of the Police Protective League, said his organization has been careful to give only the legal limit to city-controlled committees and larger amounts to the PACs of city officeholders. But he said that despite the intentions of the campaign law, it clearly favors incumbents who still can tap a broader base of contributors and receive sizable donations.

Aliano said he can see why city politicians have turned to the political action committees. “Money is so important in these campaigns,” he said, “and for those guys (candidates), it’s a matter of survival.”

Woo, who was elected before the campaign limitations took effect, questioned whether incumbents are becoming more--not less--entrenched under the new law.

“I was the last challenger elected prior to this law taking effect,” he said. “I don’t know if I could have done it if I had to struggle under these new laws.”

In an effort to tighten the campaign law, the City Council Rules Committee is considering proposals to amend the city law and somehow limit fund raising and spending by political action committees, including a suggestion to declare that all incumbents are running for city office--a stance that would make it more difficult for city officeholders to use PAC money.

One who is closely watching the committee’s action is Councilman Zev Yaroslavsky. Although he has scrupulously obeyed the $500-per-donor limit since the law took effect, Yaroslavsky had amassed $912,503 in his city campaign fund before the measure was approved.

The city attorney has said that Yaroslavsky’s fund and the large campaign treasuries left over by other council members reelected in 1985 are PACs, and that Yaroslavsky, who hopes to run for mayor someday, and the other council members are severely restricted in how they can spend the money.

Yaroslavsky, who has used campaign funds to pay his expenses for running in the New York Marathon, has strongly resisted efforts to greatly limit his use of PAC funds.

“It is absolutely incomprehensible to me as to why I can pay for a trip to Seattle to attend the National League of Cities convention out of my city budget, (but) why I should not be permitted to do so out of my campaign budget,” Yaroslavsky said.

A major concern, said the city attorney’s Rosenfield, is that the public may become skeptical of the city’s campaign law if incumbents take advantage of the unlimited contributions from PACs to help their political fortunes.

If contributors continue to give large donations that somehow aid city officeholders in their city campaigns, “the public may be left with the perception that influence and access is still being bought,” she said.

“If they can take advantage of unlimited contributions and derive local political benefit,” Rosenfield added, “then there is indeed a loophole not contemplated by the original voters.”

FUND-RAISING OVER THE CITY CEILING A Los Angeles city law approved overwhelmingly by voters in 1985 limited contributions to candidates for City Council to $500 per source and to candidates for city attorney, controller and mayor to $1,000 per source during an election. Yet, a number of committees controlled by city officials have raised funds in excess of the limits since the law took effect on July 1, 1985. Here’s a look at some who are over the limit: CITY OFFICIAL: Councilman Richard Alatorre COMMITTEE: Citizens for Alatorre RAISED: $73,610 LEADING CONTRIBUTORS/DONATION: Willie Brown Campgn. Comm./$15,000 Civic Betterment Assn./$3,500 L.A. Police Protective League/$1,500 Joseph E. Seagram and Sons/$1,500 Scientific Games/$1,500 Winston Network, Inc./$1,000 CITY OFFICIAL: Councilman Hal Bernson COMMITTEE: Bernson Political Action Committee RAISED: $151,225 LEADING CONTRIBUTORS/DONATION: Taxpayers for Responsible Govt./$2,500 Cranston Securities/$2,500 Bench Ad Co./$2,500 Galpin Ford/$2,500 Occidental Petroleum Corp./$2,500 Valley Cable TV/$2,500 Apartment Assn. PAC/$2,500 CITY OFFICIAL: Councilman Robert C. Farrell COMMITTEE: Robert C. Farrell Political Action Committee RAISED: $181,796 LEADING CONTRIBUTORS/DONATION: Smith Barney $5,000 Travers J. Bell Jr. $5,000 Occidental Petroleum Corp. $3,000 Taxpayers for Responsible Govt. $3,000 L.A. City Employees Union $3,000 The Casden Co. $3,000 Attorney Neil Papiano $3,000 CITY OFFICIAL: Councilwoman Joan Milke Flores COMMITTEE: Friends of Joan Milke Flores RAISED: $225,487 LEADING CONTRIBUTORS/DONATION: Apartment Assn. PAC $2,500 Taxpayers for Responsible Govt. $2,500 Int’l Bro. of Elec. Workers, Local 18 $2,500 Galpin Ford $2,500 Ogden Martin Systems, Inc. $2,500 Occidental Petroleum Corp. $2,500 L.A. City Employees Union $2,500 CITY OFFICIAL: Councilman Gilbert W. Lindsay COMMITTEE: LIN PAC RAISED: $330,220 LEADING CONTRIBUTORS/DONATION: Ogden Martin Systems, Inc. $9,000 McGuire Thomas Partners $6,000 Jack Needleman $5,000 Ayala Hotel Corp. $3,500 L.A. Police Protective League $3,000 Occidental Petroleum Corp. $3,000 Union Oil $3,000 Taxpayers for Responsible Govt. $3,000 CITY OFFICIAL: Councilman Michael Woo COMMITTEE: Friends of Michael Woo RAISED: $515,822 LEADING CONTRIBUTORS/DONATION: Alex. Haagen Develop. Co. $10,000 Taxpayers for Responsible Govt. $8,100 L.A. City Employees Union $7,600 Watt PAC $6,500 L.A. Police Protective League $6,500 Pacific Drive In Theatres Agency $6,100 CITY OFFICIAL: City Atty. James K. Hahn COMMITTEE: Friends of James Kenneth Hahn RAISED: $337,814 LEADING CONTRIBUTORS/DONATION: Supervisor Kenneth Hahn $10,000 Anjac Fashion Building $5,000 The Casden Co. $8,000 Madison, Inc. $5,000 Ira Distenfield $4,000 Manatt, Phelps $3,000 O’Melveny and Myers $3,000 CITY OFFICIAL: City Controller Rick Tuttle COMMITTEE: Rick Tuttle Campaign Committee RAISED: $72,408 LEADING CONTRIBUTORS/DONATION: Berman for Congress $5,500 Leisure + Technology, Inc. $3,000 Frederick Field $3,000 Long Beach Savings & Loan $2,500 Premier Cleaning Contractors $2,000 Priority One Electronics $2,000