Loophole in Law Allows Concealing of Ads’ Backers, Commission Rules

The Fair Political Practices Commission has ruled that legislative leaders Willie Brown and David A. Roberti and the alcohol industry can air political ads that conceal financial backing.

Acting on a complaint from political watchdog groups, the commission on Friday said it will not stop opponents of Propositions 131 and 140, the term-limit initiatives on the Nov. 6 ballot, from running a controversial ad featuring actress Angela Lansbury even though it fails to identify its financial backers--political committees organized by Assembly Speaker Brown (D-San Francisco) and Senate President Pro tem Roberti (D-Los Angeles).

Gregory Baugher, the commission’s executive director, said that although state laws were intended to require the disclosure of major funding sources behind political ads, they contain an “unintended loophole” that exempts commercials whose content deals equally with two initiatives.

“The words in the (Angela Lansbury) ad appear to have been carefully chosen so as to create the impression that the ad refers equally to both initiatives,” Baugher said. “The producers of this ad have obviously tried to take advantage of this loophole.” He conceded that the decision had been a close call and others “may reasonably disagree.”

Likewise, the commission staff said a radio advertisement produced by anti-tax groups that fails to disclose alcoholic beverage interests as their prime financial backers seems to be in compliance with state law.

The staff said the commercial’s content appears to be “evenly divided” between Propositions 136 and 137. Proposition 136 rewrites tax law to mandate a two-thirds vote by the people to raise special or single-purpose taxes and would make it extremely difficult to hike alcohol taxes. Proposition 137 requires a public vote on any changes in laws governing initiatives.

The latest decision does not affect an earlier commission ruling regarding political ads aired by alcohol interests that promote Proposition 126, a proposal for a small increase in beer, wine and liquor taxes, and oppose Proposition 134, an initiative providing for substantial increases in those taxes. In that case, the commission said the industry would have to make full disclosure because the exemption applies only to initiatives. Proposition 126 was put on the ballot by the Legislature.

Chairman John Larson said the commission would begin examining ways to close the loophole at its next meeting Nov. 7.

The ruling coincided with the filing of financial reports that showed the alcoholic beverage industry and tobacco interests have funneled nearly $3 million in the last month into the campaign to pass 136.

Lenny Goldberg, campaign director for Californians Against Initiative Fraud, a coalition opposing the initiative, said the commission’s ruling will make it harder now for his organization to defeat the ballot measure.

“Disclosure that the alcohol industry is behind this would blow Proposition 136 completely out of the water,” he said.