Feinstein Raps Shift of Funds by Own Party

Leveling criticism rare for a party loyalist, California Sen. Dianne Feinstein has disclosed that she told the Senate Democrats’ fund-raising organization she wants no part of a new role it took on this year--helping to finance the election campaigns of state lawmakers.

Feinstein said the Washington-based Democratic Senatorial Campaign Committee has no business “diverting” a portion of its contributor funds to state legislative candidates.

Other critics charge that the committee’s money was also used indirectly--and improperly--to help congressional candidates.

In California, fund transfers from the committee totaling more than $1.5 million proved to be a boon to legislative candidates in the Nov. 5 elections, including Assembly Democrats who ousted Republicans as the majority party controlling the lower house.

It was the first time the Senate campaign committee shipped funds to Democrats running in state legislative races.

Nationally, the committee distributed $11 million to state legislative candidates, according to Paul Johnson, the committee’s executive director and former chief of staff to the Senate Democrats’ campaign committee chairman, Sen. Bob Kerrey (D-Neb.).

Feinstein, in a statement to The Times, called the transfers a misuse of the committee’s contributions, saying the funds it raises should be confined to what its name implies--electing Democrats to the U.S. Senate.

Public interest groups such as Common Cause go further, condemning the entire process of campaign financing, and charging that federal election laws are too easily circumvented.

The Democrats’ Senate campaign committee is one of at least seven in Washington controlled by Democrats and Republicans that transfer contributions to partisan allies at the state level, mostly for “party building.”

In all, the national campaign committees dispatched more than $100 million to state affiliates this election year, $15 million of it for Republican and Democratic election operations in California, records show.

In essence, the committees send surplus money--the extra contributions that accumulate after the committees have reached their legal spending limit on congressional and presidential campaigns.

There is a label for this kind of campaign cash: “soft money.”

Controversy over this form of financing was highlighted during this year’s presidential election by the more than $1 million from foreign donors that critics charge was illegally or improperly obtained, and later returned, by the Democratic National Committee.

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The trafficking of contributions from Washington to state campaigns, Feinstein said, “is a huge mistake.” She said that this year, she refused to help the committee with any such fund-raising efforts, declining, for example, to make phone calls soliciting contributions of that kind from her supporters.

She remains willing to help the committee raise funds that are within federal limits for U.S. Senate campaigns, and has herself benefited from committee contributions totaling more than $3.8 million since 1992, according to Federal Election Commission records.

Overall, Feinstein has spent more than $40 million campaigning for public office, said her press secretary, Susan Kennedy. She is a strong supporter of proposals to put limits on campaign financing at both state and federal levels, Kennedy said.

Most funds transferred to states from national fund-raising operations go to the state parties, such as the California Democratic and Republican state parties.

Federal guidelines require the state parties to keep separate accounts of contributions that can and cannot be used to help congressional and presidential candidates.

Bob Mulholland, campaign advisor to the California Democratic Party, said books are kept and regularly audited to make sure the party is allocating its funds according to federal election laws.

The major exception this year, however, was the transfer of funds that arrived in California from the committee that Feinstein criticized.

Rather than sending funds to the state party, the Democratic Senatorial Campaign Committee sent its $1,593,000 to individual Democrats in state races who were not bound by the federal rules.

The practice was not generally known. For example, California’s other U.S. senator, Democrat Barbara Boxer, was unaware that the Senate group had begun accepting contributions that were going out to legislative candidates, said her communications director, David Sandretti.

Boxer, who favors campaign finance reform, was “looking into it,” Sandretti said.

One other Washington-based fund-raising arm, the Democratic Congressional Campaign Committee, has been sending funds directly to state candidates for years, but in smaller amounts. This year, for example, it sent $136,000 to California legislative candidates, a spokesman said.

Among those receiving checks from the Democrats’ Senate committee were 18 Democratic Assembly candidates, seven state Senate candidates and former Assemblyman Richard Katz (D-Sylmar), who orchestrated Assembly Democratic campaigns but was not himself a candidate. Term limits prevented Katz from running again.

The biggest checks went to Katz and to Assembly Democratic incumbents who were not in tough races, but who in turn passed on their Washington money to other candidates and for “party building” activities such as getting out the vote and voting by mail, which indirectly help federal candidates.

Party building is legal and widely practiced by both parties, but when contributions come from national pots of money supposedly off-limits to federal candidates, critics charge wrongdoing.

It’s a practice that “stays within but comes right up to crossing the legal lines,” said Ruth Holton, executive director of California Common Cause.

In reply to Feinstein’s criticism, Johnson, the Senate committee’s executive director, said that making transfers to state political operations “is not something we invented” and the committee only began building up the fund in mid-1995.

GOP spokesmen said Republicans do not engage in transferring campaign money from Washington directly to state candidates.

“We asked, and were turned down,” said Jeff Flint, who directed Republican Assembly campaigns this year. The California Republican Party did, however, receive large contributions from individuals, notably $1 million from media mogul Rupert Murdoch, reports showed.

Money for party building will be severely curtailed when Proposition 208 takes effect on Jan. 1, said Holton, whose group was the principal sponsor of the ballot measure approved by California voters on Nov. 5.

Contribution limits of $5,000 to political parties and $250 or $500 to state candidates “will stop the soft money cold,” said Proposition 208 strategist Tony Miller.

Mulholland described the criticism over party building as quibbling “by do-gooders who don’t like politics.”

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A party’s efforts to register voters, for example, helps everyone running, federal candidates included, he said.

“It’s in the American spirit to register voters and hope like hell they vote for all these people.”

Assemblywoman Sheila Kuehl (D-Santa Monica)--who received $172,000 from the Washington committee--acknowledged that the California Democrats’ “coordinated campaign” strategy helped congressional candidates, and also amounted to an investment in the future.

This year’s get-out-the-vote efforts, Kuehl said, could even help Feinstein if she runs for governor in 1998.

“If she decides to run,” Kuehl said, “she’ll be glad that work was done [this year] for the Democratic standard-bearers, because the notion of a Democratic governor becomes more popular as we build this goodwill around the state.”

Times researcher D’Jamila Salem-Fitzgerald in Washington contributed to this report.