Alarcon-Katz Senate Race a Test for Prop. 208

Next year’s hottest political race in the San Fernando Valley pits a savvy veteran with strong Sacramento connections against an ambitious local lawmaker to represent the heart of the Valley in the state Senate.

Traditional wisdom would favor former Assembly minority leader Richard Katz over Los Angeles City Councilman Richard Alarcon because of Katz’s proven ability to raise money through his connections to labor unions and lobbyists.

After all, Katz raised nearly $1.3 million in his last election, with 40% of his donations coming in amounts of more than $500.

But voter-passed reforms designed to reduce the impact of big money went into effect last week and are rearranging the political landscape.

Now it’s anyone’s guess who has the advantage in the race to replace state Sen. Herschel Rosenthal (D-Los Angeles), according to political observers. Rosenthal is being forced out by term limits.

The campaign will give Valley residents the first glimpse of the effects of Proposition 208, the campaign-finance reform measure adopted last year that imposes new limits on fund-raising.

“The intent was to level the playing field so that money wouldn’t be a big factor,” said former Deputy Secretary of State Tony Miller, coauthor of the legislation.

But Miller’s law includes a few loopholes that could play a significant role in the race. For example, special-interest groups are allowed to form independent committees to spend unlimited amounts on behalf of the candidates.

The predictions are that the campaign will be unpredictable because of other variables as well. Limits on the terms in office of elected officials and the newly adopted open primaries are both being challenged in court.

If term limits are thrown out, Rosenthal--a 15-year veteran of the state Senate--promises to enter the fray, making for a wild three-way race with Katz and Alarcon.

Rosenthal has yet to begin fund-raising, opting to wait for a ruling on the constitutionality of term limits. A special 11-judge panel could rule on the limits by the end of the year.

Both Alarcon and Katz have agreed to the spending limits created by Proposition 208, approved by 61% of California voters last year.

Candidates for the Legislature who agree to a voluntary spending limit of $300,000 for the primary and $400,000 for the general election can accept contributions of up to $500. Otherwise, the contributions are limited to $250 each.

The law also limits how much donors can give to political parties and independent committees. It sets up a system of voluntary spending limits and bans contributions from lobbyists and transfers of campaign funds among candidates, among other provisions.

Proposition 208 has already changed the tactics of fund-raising. Instead of holding elaborate dinners and expensive fund-raisers at swank clubs and restaurants, the candidates are turning to more frugal methods in order to make each dollar stretch further.

“You almost have to be nuts to have dinners at this point,” said Katz. “If you spend $10,000 for a dinner, that is $10,000 you don’t have for mailers and phone calls and letters.”

Katz held his first fund-raiser last week at a supporter’s West Los Angeles home.

In the next few weeks, Katz and Alarcon say they will spend much of their time soliciting donations from past contributors through letters and phone calls. They also plan to attend more small gatherings at private homes and businesses.

Some observers said the new limits will force candidates to spend more time raising money and less time talking to voters about the issues of the race.

“They will have less time to campaign and formulate the message,” said Rick Taylor, a veteran political consultant.

Alarcon will have less of a problem because he has had to abide by similar restrictions imposed on candidates for the Los Angeles City Council. The limits for city candidates are roughly the same as those imposed by Proposition 208.

“I’m very comfortable with the fund-raising rules,” he said.

But Katz has other advantages, such as the $120,000 balance in his campaign war chest--the result of a one-time transfer allowed by Proposition 208 from his last campaign in 1994. Alarcon has no surplus because he closed out his last campaign account before he launched his latest campaign bid.

The reforms put a new emphasis on the role of the so-called independent expenditure committees, which may spend unlimited amounts as long as incoming contributions do not exceed $250.

In the past, independent expenditure committees were used by unions and special interests to spend unlimited amounts to influence a race. The 1st Amendment preserves the right of independent committees to spend as much as they like in support of or opposition to an initiative or candidate. Proposition 208 simply adds a restriction on the contributions to the committees.

“What Prop. 208 will do is increase the importance of independent expenditure committees,” said Katz.

Both Alarcon and Katz stand to benefit. Before he was forced out of office due to term limits, Katz was instrumental in helping Democrats take control of the Assembly last year. Political consultants say Democratic leaders in the Assembly may want Katz back in Sacramento and may be willing to form an independent expenditure committee to help his cause.

“It’s not clear who the organizations are at this point, but there is a likely cast of characters,” said political consultant Parke Skelton.

Other special-interest groups, such as labor organizations, may also be willing to help.

So far this year, 23 independent expenditure committees have registered with the secretary of state’s office.

The list of independent expenditure committees includes several groups that have contributed to Katz in the past, including the California State Employees Assn., the California Union of Safety Employees and the California Building Industry Assn.

Alarcon may also benefit from an independent expenditure committee.

In recent years, Sacramento has seen a surge in the size and influence of the Latino delegation. Its members may be willing to form an independent expenditure committee to increase their ranks by helping Alarcon get elected.

The drawback for candidates is that they have no control over the message the independent expenditure committees send on their behalf. By law, the candidates cannot have any communication with the organizers of such a committee.

The most vivid example of how such committees can backfire occurred in Northern California last year, when an independent expenditure committee sent out a “hit piece” on behalf of Republican Patrick Shannon, a candidate for the state Senate.

The widely circulated mailer alleged that Shannon’s opponent, Democrat Byron Sher, had been “cited for deadly toxic law violations” on his El Dorado County pear farm, and featured a picture of a waste pit.

But the photo was taken elsewhere, and the allegations were false. The piece was disavowed by Shannon.

Sher won handily.

“It’s an extraordinary pitfall,” Skelton said. “You just have to hope for the best.”