Rival Measures Seek to Limit Political Funds

Times Staff Writer

Legislators, lobbyists and consumer activists alike have long complained about the high cost of campaigns and the huge amounts of money contributed to lawmakers by wealthy interest groups.

Now, California voters have a chance to rewrite the rules for campaign fund raising--and much of the state's political establishment is not too happy about it.

Two rival initiatives on the June 7 ballot, Proposition 68 and Proposition 73, are aimed at limiting the amount of money that candidates can raise and spend in campaigns.

Voters will decide whether tax dollars should be used to subsidize the campaigns of politicians who are seeking election to the Legislature. And they will vote on new campaign financing restrictions that could alter the balance of power in Sacramento and undermine the current legislative leadership.

'Money . . . Is Contaminating'

"The money in legislative races today is contaminating, if not corrupting," said Assemblyman John Vasconcellos (D-Santa Clara), one of the few legislators backing Proposition 68. "This is the public's chance to say, 'We want our Legislature and we're willing to pay for it.' I think it's the most important issue facing the voters this year."

Not since the voters passed the landmark Political Reform Act in 1974 has there been as sweeping a ballot measure as Proposition 68 to overhaul the state political system and change the way campaigns are financed.

Strongly opposing Proposition 68 are Republican Gov. George Deukmejian, Democratic Assembly Speaker Willie Brown, Democratic Senate President David A. Roberti, Senate GOP Leader Ken Maddy and Assembly GOP Leader Pat Nolan--a group of powerful politicians who rarely find agreement on any major state issue. They contend that the initiative is "fundamentally flawed" and unconstitutional.

Proposition 68 would restrict the size of campaign contributions, place limits on campaign spending and provide public financing for candidates. Sponsored by former Pacific Mutual Life Insurance Co. Chairman Walter Gerken of Newport Beach, it is backed by Common Cause, the League of Women Voters, Consumers Union, corporate leaders and a host of other groups.

Proposition 73 also would place limits on campaign contributions. But it contains no restrictions on spending and would prohibit the use of tax dollars to fund campaigns. It is sponsored by an unlikely trio of state legislators: Assemblyman Ross Johnson of La Habra, who is a highly partisan Republican; Democratic Sen. Joseph Montoya of Whittier, a prominent campaign fund-raiser, and Independent Sen. Quentin Kopp of San Francisco.

Complex Legal Tangle

Passage of both propositions could result in a complex legal tangle that the courts would ultimately have to unravel. The initiative that receives the most votes would take effect, while any sections of the second-place measure that do not conflict with the winning initiative also would become law.

In fact, supporters of Proposition 68 contend that Proposition 73 was placed on the ballot in an attempt to confuse the voters and nullify their initiative.

The backers of Proposition 73, however, insist that their measure is a sincere attempt to reduce the amount of money raised and spent in campaigns.

"This is a serious and I think well-crafted effort," Johnson said. "I think it is clearly constitutional and I think it will work."

Democratic legislative leaders, and some Republicans, including Gov. Deukmejian, oppose Proposition 73.

Although both Proposition 68 and Proposition 73 address the problem of runaway campaign spending, they offer quite different solutions.

Proposition 68 would provide matching tax dollars to legislative candidates who agree to abide by voluntary limits on the amount of money they spend in their campaigns. Without such public financing, the U.S. Supreme Court ruled in 1976, it is unconstitutional to restrict campaign spending.

Proposition 73, on the other hand, would set no spending limits. Instead, it would ban public financing in any local, legislative or statewide race.

Both Propositions 68 and 73 would limit campaign contributions from individuals, businesses and political action committees to amounts ranging from $1,000 to $5,000.

Contribution Limits

For example, under Proposition 68, individuals could give $1,000 to a candidate in a primary election and an additional $1,000 to the same candidate in the general election. Under Proposition 73, an individual could give $1,000 during each 12-month period between July 1 and June 30--in other words, $2,000 for a combined primary-general campaign.

Proposition 68 also would ban contributions during non-election years.

Both initiatives would prohibit the transfer of contributions from one candidate to another--a technique that legislative leaders have used effectively to retain power among their colleagues and help their supporters win election.

And both initiatives would restrict the size of gifts and speaking fees legislators can accept, although the restrictions in Proposition 68 are tougher, both would curtail what has become a lucrative source of outside income from groups that have an interest in bills before the Legislature.

Proposition 73 also would prohibit incumbents from sending newsletters or mass mailings to voters at the taxpayers' expense.

Non-partisan Legislative Analyst Elizabeth G. Hill estimates that Proposition 68 would cost the taxpayers about $11 million a year, primarily because of the public financing provision, while Proposition 73 would save about $700,000 a year because of its ban on newsletters.

Either ballot measure is likely to weaken the power of legislative leaders like Speaker Brown, who control huge campaign funds and dole out money to their legislative allies.

But who would gain under the two initiatives--Republicans or Democrats, incumbents or challengers--is less clear and is the subject of considerable disagreement among supporters and opponents of the measures.

In any case, voters can expect a campaign of confusing, contradictory charges as the various sides debate whether the propositions would open up the electoral process to newcomers or make it even more difficult to dislodge members of the Legislature.

Naturally, supporters and opponents of the initiatives are both raising money for their campaigns from the very people and interest groups who would be affected by the proposed contribution limits.

Slow Start

But whether any of the campaigns are able to raise more than $1 million to wage a substantial statewide campaign on television or through the mail in the final weeks before the election remains to be seen. All three of the major campaign committees appear to be off to a slow start raising money and getting their messages out to the voters.

Calling themselves the Taxpayers to Limit Campaign Spending, the backers of Proposition 68 are appealing to corporate leaders, Hollywood stars and concerned citizens in the hope of raising sufficient funds to buy television advertising time, particularly in Southern California.

The supporters of Proposition 73, who go by the name of Campaign Reform Without Taxpayer Financing, have yet to attract a broad base of financial support and expect to have little money to wage a campaign.

Brown, Roberti and some Republican legislators are throwing their efforts into a committee that is attempting to defeat both measures. Calling itself No on Propositions 68 and 73, the committee will rely on an assortment of Democratic and Republican campaign consultants and public relations specialists to run a television and direct-mail campaign.

The legislative leaders have begun an aggressive effort to raise funds from Sacramento lobbyists and special-interest groups to finance their effort. They are also receiving help from the California Medical Assn., which has long been one of the largest campaign contributors in state politics.

"The money's not in the bank, but I have every reason to believe we will be able to put on that kind of campaign," said CMA political action committee Finance Director Al Pross, who is working on the campaign to defeat both measures.

Changed Mind

The medical association's stance against both measures is somewhat surprising since it paid more than $23,000 to help qualify Proposition 73 for the ballot. But Pross denies that it was part of any attempt to confuse the voters and said the organization changed its mind after reviewing both initiatives.

"Money is a basic ingredient in politics and individuals and organizations should always have the right to contribute to the candidate of their choice," Pross said.

Those who are backing either Proposition 68 or Proposition 73 agree on one thing: The system of financing campaigns is out of control.

Last year, state legislators collected $27 million in campaign contributions--and it was not even an election year. Speaker Brown collected more than $1.7 million. Senate Leader Roberti raised $1.8 million. And Republicans Nolan and Maddy together raised more than $1.1 million. All four leaders will spend much of that money this year to help their allies win reelection.

Special-Interest Groups

Most of the donations lawmakers collect each year come from special-interest groups that have an interest in bills before the Legislature. The California Medical Assn., for example, with a stake in dozens of bills, contributed $275,000 last year and more than $1 million during the 1985-86 session.

With the cash collected from these special interests, legislators are very hard to beat at election time. In 1986, not a single incumbent was defeated in a bid for reelection.

In some cases, candidates have spent more than $2 million to win a legislative seat that pays $37,105 a year.

A share of the political money also ends up helping some lawmakers live in a life style they might not otherwise be able to afford: paying for trips abroad, clothes, meals, tickets to sporting events and a variety of other expenses that, at best, are marginally related to their reelection campaigns.

Hint at Influence

While supporters of both initiatives are careful not to accuse any individual legislators of selling their votes, they hint that special-interest contributions are having an influence on the Legislature's decisions.

"Money talks and money persuades," Assemblyman Vasconcellos said. "The loss of integrity, I think, is increasingly evident. There's not a buy-and-sell operation going on by and large, but I've heard enough shakedown stories to be alarmed."

Over the last several years, a number of controversial bills have won passage in the Legislature after the affected interest groups contributed huge amounts of money.

One notable case was a 1987 bill that would have reduced competition among beer wholesalers by granting them exclusive sales rights in their own territories. The Legislature passed the bill after beer wholesalers contributed about $500,000 to lawmakers over a three-year period. Deukmejian subsequently vetoed the measure.

Complaints, Protests

In recent years, legislators often have complained about the constant need to raise money and that soliciting contributions from business groups is demeaning. Lobbyists and business leaders, in turn, protest that legislators' demands for money have become too great. And consumer lobbyists and other public interests groups contend that the wealthy interest groups have far too much influence with lawmakers.

However, proposals to curb campaign contributions have been rejected year after year, frequently stymied by disagreement over whether proposed changes in the law would favor one party over the other.

In 1984, the Legislature passed a Democratic-sponsored measure that would have limited campaign contributions and spending and also would have created a system of public financing. But Deukmejian vetoed the measure because of his longstanding opposition to using tax dollars to finance campaigns.

Years of Effort

The same year, the voters rejected Proposition 40, an initiative also sponsored by Assemblyman Johnson that would have imposed even stricter limits on campaign contributions than his current ballot measure.

Proposition 68 represents the culmination of years of effort by citizen activists and critics of campaign fund raising to reduce the influence of wealthy special-interest groups. It is based on the findings of the California Commission on Campaign Financing, a group of business leaders, former politicians, legal scholars and educators.

Last year, Speaker Brown introduced a bill virtually identical to the initiative but abandoned the measure after the Assembly balked at passing it. The Speaker now says he is opposed to Proposition 68 because it does not provide 100% public financing for campaigns.

The most controversial element of Proposition 68 is the provision under which the state could provide up to half the amount candidates would be allowed to spend if they agree to abide by the voluntary expenditure limits.

Limits Struck Down

California voters adopted spending limits once before when they approved the Political Reform Act in 1974. However, the limits were struck down by the state Supreme Court in keeping with the U.S. Supreme Court ruling.

"The action that California takes on Proposition 68 will have extraordinary national significance," said former Watergate Prosecutor Archibald Cox, who as national chairman of Common Cause was recently in Los Angeles and Sacramento to promote the proposition. "California can and will set the example for the country."

Under Proposition 68, candidates would qualify for public financing by raising $20,000 in amounts of $1,000 or less. They would receive tax dollars only after an opponent also had qualified for public financing or had raised $35,000 in campaign funds.

Financial Incentives

Those who accept public money would be subject to spending limits ranging from $150,000 to $350,000, depending on whether they were running for an Assembly or Senate seat in a primary or general election.

Although the spending limits would be voluntary, sponsors of Proposition 68 say there are enough financial incentives in the complex measure that it is unlikely any candidate would turn down tax dollars and refuse to adhere to the limits.

In an attempt to encourage local participation in campaigns, contributions would be matched at a ratio of 5 to 1 if they come from within a legislator's district and 3 to 1 if they were from outside the district. Only the first $250 of any contribution would be matched by the state.

The money available for public financing would come from taxpayers who check a box on their state income tax returns indicating that they want $3 of their tax payment to go into a state elections fund. If this system does not raise enough money to pay all candidates the share they are entitled to, available sums would be parceled out on a pro rata basis.

Least Support

Among the public, polls indicate that public financing is the element of Proposition 68 that has the least support.

Opponents argue that Proposition 68 would provide tax dollars to extremist politicians such as Lyndon LaRouche, who has already qualified this year for $100,000 in federal matching funds as a Democratic presidential candidate.

"Proposition 68 means that extremist candidates and non-serious candidates will have access to tax money to mount their soapbox," Johnson said.

Opponents also contend that the initiative would cost far more than the $11 million estimated by the legislative analyst. The amount of matching tax dollars available, they say, would be woefully inadequate, leaving candidates who agreed to abide by the spending limits without sufficient funds to run their campaigns.

Supporters of Proposition 68 counter that no extremist candidates would qualify because the $20,000 threshold for qualifying is too high. And they say there would be enough tax money to pay for campaigns, if not in 1990, then certainly by 1992.

So far, Proposition 73 appears to have found little major support beyond its three sponsors.

"I'm afraid we're going to get lost in the shuffle," Johnson said.

HOW PROPOSITIONS 68 AND 73 COMPARE

PROP. 68 ELECTIONS Legislative COVERED SPENDING LIMITS Spending limits would be imposed on candidates who accept public financing: Assembly primary election: $150,000 Assembly general election: $225,000 Senate primary election: $250,000 Senate general election: $350,000limit PUBLIC Gives tax dollars, ranging from $75,000 to FINANCING $175,000 per election, to candidates who agree to adhere to spending limits. Candidates must qualify by raising more than $20,000 in amounts of $1,000 or less. Only contributions of $250 or less will qualify for matching funds. No public financing will be available until opponent also qualifies or raises $35,000. CONTRIBUTIONS Limit contributions from individuals and and small businesses to $1,000 per candidate for each election. Limit contributions from big businesses and most political action committees to $2,500. Limit contributions from political action committees representing small contributors to $5,000. Limit total contributions from any group to all candidates to $200,000. TRANSFERS Prohibited AMONG CANDIDATES NON-ELECTION Prohibited YEAR CONTRIBUTIONS HONORARIA AND Limit of $2,000 from a single source in a GIFTS two-year period NEWSLETTERS No new restrictions COST OF The legislative analyst estimates the cost of IMPLEMENTING public financing at $9 million a year and the cost of administration at $1.9 million. SPONSORS Walter Gerken, former chairman of Pacific Mutual Life Insurance Co. Also backed by Common Cause, League of Women Voters and many other organizations.

PROP. 73 ELECTIONS Statewide, legislative, local COVERED SPENDING LIMITS PUBLIC Bans public financing in all local, FINANCING legislative and statewide elections CONTRIBUTIONS Limit contributions from individuals and businesses to $1,000 per fiscal year. Limit contributions from small organizations to $2,500; from political action committees to $5,000. TRANSFERS Prohibited AMONG CANDIDATES NON-ELECTION Permitted YEAR CONTRIBUTIONS HONORARIA AND Limit of $1,000 a year, not GIFTS including reimbursement for travel expenses. NEWSLETTERS Bans newsletters mailed by incumbents at taxpayers' expense. COST OF The legislative analyst estimates net IMPLEMENTING savings of $700,000 a year, primarily because of savings from ban on newsletters. SPONSORS Assembly Ross Johnson (R-LaHabra), Sen. Joseph Montoya (D-Whittier) and Sen. Quentin Kopp (I-San Francisco).

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