High Court Turns Down Funds Limit : Prop. 73: Justices’ ruling upholds lower court’s decision and sets off a scramble for political donations in the final days before the Nov. 6 election.

Sparking a renewed scramble for huge political donations, the U.S. Supreme Court refused Friday to reinstate California’s campaign contribution limits for the remainder of the 1990 campaign.

The Supreme Court, in a major victory for Democrats, issued a one-sentence order declining to stay the lower court decision that overturned the voter-approved contribution limits of Proposition 73 as unconstitutional.

The high court’s ruling, ending nearly three weeks of uncertainty and legal wrangling, determines once and for all that candidates for statewide and local office are not restricted in the amount of money they can raise in the final days before the Nov. 6 election.

“I’m extraordinarily pleased,” said Joseph Remcho, an attorney for Democratic legislative leaders and labor unions who brought the initial lawsuit. “The consequence of the (court action) is lots more free speech. This is an election that now should be won or lost on the merits, not because some candidates have had one hand tied behind their backs.”

In particular, the court action was a blow to the campaign of Republican gubernatorial nominee Pete Wilson, who had hoped to prevent Democratic rival Dianne Feinstein from raising millions of dollars in unrestricted donations.

But with the court ruling, the Wilson campaign announced he will abandon any hope of voluntary compliance with the limits and immediately begin cashing checks for as much as $25,000 that his campaign has already received.

“We’re going to redouble our fund-raising efforts, there’s no question about that,” said George Gorton, Wilson’s campaign manager. “We held off as long as we could and we appealed it as high as we could.”

Proposition 73, approved by the voters in 1988, prohibited candidates from receiving more than $1,000 from individuals and more than $5,000 from political committees in any fiscal year. The initiative also banned the transfer of campaign funds among candidates.

But U.S. District Judge Lawrence K. Karlton in Sacramento struck down both provisions, ruling that restrictions based on a fiscal year time period--rather than election cycles--were unconstitutional because they were unfair to challengers. He later narrowed his decision to apply to candidates for statewide and local offices, but not state legislators.

Two legislators who helped draft Proposition 73--joined by the California Republican Party--appealed the judge’s ruling to the U.S. 9th Circuit Court of Appeals, to U.S. Supreme Court Justice Sandra Day O’Connor and ultimately to the full Supreme Court. But their bid to overturn Karlton’s decision was rebuffed each step of the way.

“The United States Supreme Court’s ruling represents a victory for powerful special interests,” charged Assembly Republican Leader Ross Johnson of La Habra, the principal author of Proposition 73. “It guarantees a continuation of the fund-raising binge and the specter of undue influence unleashed by Judge Karlton.”

Nearly all of the candidates for statewide office--Republicans and Democrats alike--had already begun raising donations in excess of the limits. But Karlton’s ruling clearly gave the biggest boost to Feinstein in her bid to defeat Wilson, who is far ahead of Feinstein in fund raising.

The Feinstein campaign expects to raise well over $2 million in unrestricted donations, and has already accepted at least four contributions of $100,000 or more. Until Friday, some of the Democrat’s advisers had privately worried that the Supreme Court might impose a retroactive stay requiring her to return money raised in excess of the Proposition 73 limits.

“It’s terrific news for us,” Feinstein press secretary Dee Dee Meyers said after the ruling was announced. “It gives us an opportunity to at least be competitive. We can’t spend as much money as Pete Wilson, but the court decision at least gives us an opportunity to run a strong campaign against him.”

Wilson, who had repeatedly challenged Feinstein to voluntarily limit her fund raising, began soliciting unrestricted donations last week. He pledged to return any money above the limits if the Supreme Court granted a stay.

Campaign manager Gorton said the Wilson campaign already has received at least $300,000 in checks or promises of contributions in excess of the Proposition 73 limits.

To avoid any taint of corruption, Wilson has insisted that he will not accept any large donations from groups that have an interest in his official actions, but has not said how much money would be too much.

“We don’t know what it (the improper amount) is, but we’ll know it when we see it,” Gorton said. “We’re essentially asking people to contribute up to $10,000. I can tell you there are no checks I’m aware of that are more than $25,000.”

Democratic Party Chairman Edmund G. Brown Jr., who helped bring the challenge against Proposition 73, joined Feinstein in welcoming the Supreme Court action.

“It is profoundly reassuring that the nation’s highest court has refused to go along with the pathetic attempt of Pete Wilson and his Republican allies to censor and stifle Dianne Feinstein’s campaign,” the former governor said. “Today’s decision makes clear that the Democratic Party and our candidate for governor will be able to counteract the Republican barrage of . . . T.V. commercials that have pounded Californians for months.”

Secretary of State March Fong Eu, whose Republican opponent has already raised thousands of dollars beyond the Proposition 73 limits, pledged Friday to honor the court-overturned restrictions.

“It is a mandate from the voters and somebody ought to honor that,” said Leo McElroy, Eu’s campaign consultant. “If it costs us, it will cost us, but we will have been right.”