Prop. 73 Puts Politicians in a Financial Bind

State Atty. Gen. John K. Van de Kamp has a problem. He has $1.5 million in the bank set aside for a possible campaign for governor in 1990. But under a new law, he will be prohibited after Jan. 1 from spending it on that campaign or any other political race.

The Democratic attorney general is not alone. Politicians around the state have squirreled away millions of dollars to finance elections that are still years off. Because of Proposition 73, which was approved by the voters on Tuesday, they will have to start their fund raising all over again in January--this time governed by limits on the amount of money they can accept.

The restriction on money already collected is just one of many changes wrought by Proposition 73, a sweeping campaign-finance measure adopted by voters who were ready to overhaul a system of campaign contributions that has often favored wealthy special-interest groups.

Changing the Rules

Whether Proposition 73 actually reduces special-interest influence remains to be seen.

In the immediate future, the initiative could alter the dynamics of the Los Angeles mayoral race set for next April by changing the rules for fund raising in midstream. It also could produce expensive legislative races this fall as politicians rush to spend the money they have collected before it is too late.

In the long run, Proposition 73 has the potential of shifting the balance of power in state politics, weakening the influence of political parties and undermining the authority of the Assembly Speaker and other legislative leaders. It also could end the careers of politicians--from City Council candidates to gubernatorial hopefuls--who have depended on a handful of large political donors, and who are unable to broaden their fund-raising base.

The initiative won 58% of the vote in Tuesday’s election despite the fact that its supporters mounted virtually no campaign. Many of its facets were never fully debated before the election and its passage caught many politicians by surprise--including its principal author, Assemblyman Ross Johnson (R-La Habra).

A variety of legal issues remain to be resolved before it will be clear just how the initiative will work, according to the Fair Political Practices Commission, which is charged with implementing the measure.

Inadvertent Result

For example, Proposition 73 prohibits elected officials from sending out newsletters and mass mailings at the taxpayers’ expense. But the law is written in such a way that it may also inadvertently ban any mass mailing by state and local agencies--such as voter pamphlets, community college course schedules or even the paychecks of state workers.

Adding to the confusion, while the rest of the initiative takes effect on Jan. 1, the ban on mass mailings took effect the moment the initiative passed.

“There are many things that remain unclear and the commission is attempting to sort them out,” said Sandra Michioku, a spokeswoman for the political watchdog agency.

The measure also is receiving close scrutiny from the attorney general’s office and political consultants throughout California.

“You can bet the most politically creative minds in the state are giving this a lot of thought right now,” said Duane Peterson, an aide to Van de Kamp.

Looking for Loopholes

Already, campaign strategists are looking for ways to circumvent certain provisions of the measure, including its limits on campaign contributions, a ban on the transfer of campaign money from one candidate to another and restrictions on the size of speaking fees elected officials can receive.

One of the immediate effects of Proposition 73 is that it preempts Proposition 68, a rival campaign-finance measure. Although both initiatives were approved in Tuesday’s balloting, Proposition 73 received more votes and therefore takes precedence wherever the two measures conflict.

As a result, Proposition 68’s most important element--a provision giving tax dollars to legislative candidates who agreed to abide by campaign spending limits--was wiped out by Proposition 73, which bans public financing in state, local and legislative campaigns.

Backers of Proposition 68, who counted Van de Kamp, Common Cause and the League of Women Voters among their number, contend that some sections of their initiative are compatible with Proposition 73 and should take effect. The most significant such provision is a ban on fund raising in non-election years.

But Johnson argues that even though Proposition 68 received 52.8% of the vote, not a single provision of the initiative should become law because the measure is in complete conflict with Proposition 73.

Courts Probably Involved

“My impression is that there will be literally nothing from (Proposition) 68 that will be able to take effect,” Johnson said.

Eventually, it is likely that the courts will be called on to resolve the question.

Among its provisions, Proposition 73 will limit the size of campaign contributions to $1,000 from individuals and businesses each fiscal year; $2,500 from small political action committees made up of two or more members, and $5,000 from broad-based political committees, in existence for six months or more, that have at least 100 members. Lower limits enacted by local governments for races in their jurisdictions will take precedence over Proposition 73.

The transfer of campaign money from one candidate to another--long a device used by legislative leaders to aid their allies and remain in power--will be prohibited by the initiative.

“I think it will weaken the leadership of both political parties,” Johnson said. “You’re going to see a dramatic de-escalation in the amount of money candidates typically raise.”

Critics of Proposition 73, however, contend that the ban on transfers of money among candidates and the contribution limits will actually require candidates to spend more time raising money since they will be forced to raise it in smaller amounts.

Much Less Flexibility

Under the initiative, politicians will have much less flexibility in deciding which offices they will run for. Under Proposition 73, all candidates must declare which post they will seek before raising any money. Funds they collect cannot be spent on campaigns for any other office, making it difficult to switch later to another race.

And Proposition 73 guarantees that no limits can be placed on campaign spending. Such restrictions, the U.S. Supreme Court has ruled, must be accompanied by public financing, which is banned by the initiative.

Johnson said the measure will eliminate, for all practical purposes, the use of large loans to finance campaigns. Campaign loans would be limited to the same $1,000-to-$5,000 range that governs contributions. Candidates could take out personal loans and spend the money for their election, but they will be prohibited from using subsequent campaign contributions to pay off the debt.

The initiative, which was co-sponsored by Sen. Joseph B. Montoya (D-Whittier) and Sen. Quentin I. Kopp (I-San Francisco), also contains ambiguous restrictions on the amount of gifts and speaking fees elected officials can receive. The measure limits to $1,000 the fee an elected official can accept from a single source in payment for a speech, article or published work on a subject relating to “the governmental process.”

However, it leaves open the possibility that an elected official could collect multiple payments of up to $1,000 each from different sources for the same speech or article. And it also is unclear whether the initiative places any restriction on the size of gifts or honorariums elected officials can receive if they do nothing at all.

Commission to Interpret

The Fair Political Practices Commission will have to resolve the question of how broad the ban on mass mailings will be. But Johnson expressed confidence that the commission will conclude that it does only what he intended: prohibit elected officials from sending out self-aggrandizing mail at the taxpayers’ expense.

The restrictions on spending money already collected may present the most immediate source of political anxiety.

In addition to Van de Kamp’s $1.5 million, Gov. George Deukmejian has $1.3 million in the bank and Controller Gray Davis has $1.2 million. All three are potential contenders for the governorship in 1990.

But under the initiative, they will be unable to spend that money after Jan. 1 on any campaign for elective office. Under laws that are already in effect they will have few choices of what to do with the money: they can give a rebate to their contributors, donate the money to charity or spend it on campaign ballot measures. They cannot convert the money to their personal use.

The watchdog commission is looking into the question of whether politicians can spend money in 1988 for elections that will take place after the initiative takes effect.

Advance Purchasing

For example, candidates might be able to buy computer equipment for use in a later campaign, pay their political consultants in advance or even buy television advertising time long before any commercials would go on the air.

Such spending might be most important in races that take place soon after Jan. 1, such as the mayoral and City Council races in Los Angeles where the primary is scheduled for April and the general election is set for May.

Proposition 73’s limit on contributions from individuals and businesses during the fiscal year could also make fund raising more difficult in the contest for mayor. The city’s campaign laws limit contributions to mayoral candidates to $1,000 for the primary and $1,000 for the general election. Under Proposition 73, contributions from individuals and businesses would be limited to $1,000 for the entire period from Jan. 1 to June 30.

An overwhelming majority of the people who voted for the ballot measure--86%--agreed with the sentiment that “campaign contributions from special-interest groups are corrupting the state Legislature,” according to the Los Angeles Times Poll.

But now that the ballots have been counted, supporters and opponents continue to debate whether Proposition 73 is indeed going to curtail the power of special-interest groups.

‘A Level Playing Field’

“I believe Proposition 73 was designed to create a level playing field,” said Johnson, who is usually considered a highly partisan Republican. “It’s not pro-incumbent. It’s not pro-challenger. It’s not pro-contributor. It’s simply creating a system that is fair and reduces this insane fund-raising arms race.”

Critics of the measure, however, contend that it will lead to constant, year-round fund raising and to the proliferation of political action committees. It will protect incumbent legislators and give Republicans an edge in winning election, they say.

Assembly Speaker Willie Brown (D-San Francisco), whose grip on power could slip with passage of the measure, said it will be harder for Democrats to raise money because they have fewer contributors able to donate $1,000 each.

“For the Republicans, they can just call up 30 people and get $30,000, and so there will be a disadvantage (for Democrats). But it simply means we have to work harder,” the Speaker said.

Political consultants have suggested a variety of possible ways to circumvent the initiative’s contribution limits, including forming different political committees with overlapping memberships to increase the amount of money each donor could give to a candidate.

Might Be Illegal

But Johnson contended that it would be illegal under the initiative to form a variety of committees with slightly different memberships if the intent is to get around the limits.

One way to bypass the ban on transferring money among candidates, Brown suggested, would be to use the power of the Speakership to raise money directly for his allies. In the past, Brown has used the ability to dole out campaign money more effectively than any of his rivals. “Instead of Willie Brown holding a dinner for Willie Brown, Willie Brown will hold a dinner for 44 Democrats,” he said.

The victory of Proposition 73 over Proposition 68 suggests that the strategic decision of Proposition 68’s supporters to ignore the rival measure backfired.

While the supporters of Proposition 73 spent only $30,000 to promote their measure, the campaign led by Common Cause and the League of Women Voters spent more than $800,000 to push Proposition 68.

Although advocates of Proposition 68 used campaign commercials featuring Van de Kamp to push their initiative, they never attempted to warn voters that if Proposition 73 passed with more votes it would gut Proposition 68.

Meanwhile, the opponents of both propositions focused most heavily in their ads on Proposition 68 and its public-financing provision, which polls showed was the most objectionable portion of the measure.

In Los Angeles and Alameda counties, where the $1-million campaign of the opponents was most heavily focused, both measures were defeated. But where opponents were unable to mount a campaign, both initiatives passed.

HOW PROPOSITION 73 WILL AFFECT CALIFORNIA CAMPAIGN FINANCING

Voters approved two campaign financing initiatives Tuesday--Propositions 68 and 73. But Proposition 73 received more votes and, therefore, will preempt most--and maybe all--provisions of Proposition 68.

Many legal questions remain over exactly how Proposition 73 will work. Most of its provisions are scheduled to take effect Jan. 1.

ISSUE: PRESENT LAW: HOW IT WILL CHANGE: ISSUE: CAMPAIGN CONTRIBUTIONS PRESENT LAW: No restrictions in state and legislative races. Many local jurisdictions have enacted limits on contributions. HOW IT WILL CHANGE: Limits contributions and loans to candidates from individuals and businesses to $1,000 each fiscal year. Limits contributions from small “political committees” (two members or more) to $2,500. Limits contributions from “broad-based political committees” (100 members or more) to $5,000. Limits contributions to political committees from individuals and businesses to $2,500. Lower contribution limits adopted by local governments will take precedence. ISSUE: TRANSFERS AMONG CANDIDATES PRESENT LAW: No restrictions. HOW IT WILL CHANGE: Bans the transfer of campaign money from one candidate to another. Campaign money cannot be spent on any race than the one for which it was raised. ISSUE: CAMPAIGN FUNDS COLLECTED THROUGH 1988 PRESENT LAW: Can be spent on any campaign and on campaign-related expenses, including clothes and travel. HOW IT WILL CHANGE: May not be spent on any campaign after Jan. 1, 1989. May be returned to contributors, given to charity or spent on propositions. May not be converted to personal use. Only money collected after Jan. 1 may be spent on campaigns after that date. ISSUE: PUBLIC FINANCING PRESENT LAW: Sacramento County only jurisdiction in California to provide public financing in races. HOW IT WILL CHANGE: Use of tax dollars to subsidize candidates prohibited. ISSUE: LIMITS ON CAMPAIGN SPENDING PRESENT LAW: No restrictions. HOW IT WILL CHANGE: No restrictions on money raised after Jan. 1, 1989. ISSUE: GIFTS AND HONORARIUMS PRESENT LAW: No restrictions on amount that could be received. HOW IT WILL CHANGE: Limits to $1,000 a year any gift or honorariums from a single source in exchange for a speech relating to the governmental process--but appears to permit multiple payments from different sources for the same speech. Permits payment for travel and expenses in connection with a speech. ISSUE: DECLARATION OF CANDIDACY PRESENT LAW: Could raise funds without declaring candidacy for specific office. HOW IT WILL CHANGE: Must declare candidacy for one, and only one, specific office before raising money. Cannot spend money raised for one race on a campaign for a different office. ISSUE: NEWSLETTERS PRESENT LAW: Elected officials prohibited from sending newsletter at taxpayers’ expense after filing for candidacy. HOW IT WILL CHANGE: Bans newsletters or mailings of more than 200 pieces mailed at taxpayers’ expense. May inadvertently ban any mailing by state and local government agencies. Took effect immediately. POLITICAL FALLOUT FROM PROP. 73 John K. Van de Kamp, State attorney general Says one aide: ‘You can bet the most politically creative minds in the state are giving this a lot of thought right now.’ Ross Johnson, GOP assemblyman ‘You’re going to see a dramatic de-escalation in the amount of money candidates typically raise.’ Willie Brown, Assembly Speaker ‘For the Republicans, they can just call up 30 people and get $30,000, and so there will be a disadvantage (for Democrats).’