Campbell, Influential State Senator, to Resign : Politics: Republican leaves post to become president of a major trade group with lobbying operations in Sacramento, and a special election is expected.

State Sen. William Campbell (R-Hacienda Heights), an influential legislator for two decades, abruptly announced Thursday that he would resign his seat in January to become president of the California Manufacturers Assn., a major trade group with extensive lobbying operations in Sacramento.

Campbell, 54, who won the Republican nomination for state controller in 1986 but then lost to Democrat Gray Davis, acknowledged that part of the reason he is leaving the Legislature after more than 20 years is that his immediate prospects for moving up in office are dim.

“Things started getting farther and farther into the future and thus more unattainable,” said Campbell. “And so . . . when I met with the California Manufacturers Assn. and they made this offer and they worked out the details of it, it was an offer I couldn’t refuse and probably the best thing for me.”

Campbell’s district straddles Los Angeles and Orange counties. His decision immediately set up the possibility of a cross-county showdown for a successor between two Republican assemblymen.

Assemblymen Frank Hill, (R-Whittier), and Gil Ferguson, (R-Newport Beach), both said within hours of Campbell’s announcement that they are preparing for possible campaigns. Since the district is overwhelmingly Republican, experts figure the race will probably be determined by their primary.

But Janice Graham, the Democrat who lost to Campbell in 1988 by 69% to 31%, said Thursday she was considering another run at the seat.

Gov. George Deukmejian is expected to call a special election for the seat within two weeks of Campbell’s resignation becoming official in January. The special election is expected to be held next June with a general election in November if none of the candidates gains more than 51% of the vote.

Ferguson said he has already researched the election laws and found that he will be able to retain his Assembly seat while he is running for the Senate. If he runs for the Senate, Ferguson said, his name will appear twice on the ballot--once for the Assembly and once for the Senate.

In a morning press conference, Campbell, a jocular public speaker who is in high demand on the toastmaster circuit, said he will abide by the spirit of proposed ethics reforms that would ban former lawmakers from lobbying the Legislature a year after they leave office.

Campbell also said he intends to vote during the upcoming special session called in response to last week’s Northern California earthquake, but vowed to steer clear of any votes that may even have “the perception of a conflict of interest” with his new job.

California Common Cause blasted Campbell on Thursday for having “serious ethical problems” by accepting a full-time job without immediately relinquishing his office.

“If nothing else, the senator’s acceptance of a position with an association that he has been lobbied by, and perhaps even sponsored bills for, creates the appearance of a serious conflict of interest,” said Mark Haarer, acting director of the public interest group.

Campbell and association officials declined to say how much the senator would make in his new position. But a source told The Times that other candidates for the job were quoted an annual salary of $150,000. Campbell makes $40,816 a year as a senator.

Campbell said his decision to leave the Legislature is not related to proposed ethics rules to ban the acceptance of speaking fees--which last year netted him $46,900--or a number of recent news stories about how his wife and two top aides made thousands of dollars from a series of women’s conferences sponsored by Campbell’s office.

Records show that Margene Campbell and aides Jerome M. Haleva and Karen L. Smith were paid $452,500 in salaries and consulting fees from the nonprofit events since they were organized seven years ago. The state attorney general’s office is investigating fees paid to Campbell’s wife in 1987, and the federal Small Business Administration is demanding repayment of $43,000 in public funds used for the conference.

In addition, the state’s Fair Political Practices Commission has recently opened investigations into why Campbell and Haleva failed to disclose the gift of free limousine service during the 1988 Republican National Convention, as well as Haleva’s intervention on a state contract for a Campbell campaign contributor who earlier had given the aide a $20,000 personal loan.

Rick Melendez, an ARCO executive who headed the search for a new association president, said Thursday that the trade group asked Campbell about the negative stories during an association executive committee meeting on Wednesday. “We were completely satisfied that there were no issues that we had to be concerned with,” said Melendez.

Campbell obliquely referred to the newspaper stories during his upbeat press conference, remarking that media coverage of him and other legislators had become “a lot more intense” during his tenure.

He also said that stories such as how his aide Haleva intervened on the part of two large campaign contributors last year would have a “chilling effect” on the political process.

“When attacks come in that particular regard, we chase people away in the political arena, we drive them out. . .,” he said.

Campbell added that although he will not lobby his former colleagues on manufacturing association issues, he still intends to keep in touch and will invoke his privilege as a former legislator to go onto the Senate floor during session.

“As a former member, I do have access. But I would certainly not go on the floor and lobby,” Campbell said.

Ferguson said Thursday he hopes to decide by “the holidays” whether he will run for Campbell’s seat. If he does, he said, the political profile of the district looks favorable for an Orange County candidate.

TIMES--The energetic senator’s reputation has been hurt by allegations of improprieties. A22