Elections Panel Closes Loophole on Fund-Raising Limits

Eager to plug a troubling loophole in California’s new election finance law, the Fair Political Practices Commission on Thursday rejected a staff legal opinion that would have let political groups skirt fund-raising limits until they began spending money for independent campaigns.

The commission voted 4 to 1, with Chairman Ravi Mehta the lone dissenter, to rescind a controversial advice letter that had come under sharp attack from political reformers since it was issued in late May.

As the commission’s legal staff saw it, a section of Proposition 208--the campaign reform measure approved by state voters last November--clearly says that a political group is not subject to the new law’s $250 contribution limit until it spends $1,000 on a so-called independent expenditure campaign. Until then, a committee would be free to raise unlimited funds, the staff determined.

The authors of Proposition 208 argued that the commission’s legal staff misread that section of the law. They contend that the initiative was clearly intended to ensure that any groups that end up spending $1,000 or more on independent expenditures may not have collected donations in excess of $250.

Reformers have feared that the letter would allow an independent committee to raise a huge war chest from large donors then spend all the money in the last few weeks of a campaign, which is often the point at which an independent expenditure effort would have the greatest impact.

Many political groups already have embraced the FPPC legal opinion on independent expenditure campaigns as a way to circumvent the limits on contributions directly to campaigns. Several of the Capitol’s biggest campaign contributors have already formed independent expenditure committees for 1998 races.

Although he did not testify Thursday, the state’s top election official, Secretary of State Bill Jones, recently urged the commission to overrule the opinion.

“Essentially, the FPPC has said that it is OK for several individuals to contribute $100,000 each to an independent expenditure committee, as long as they do so before the committee spends the first $1,000 of its war chest,” he said. “I strongly encourage the commission to rescind this interpretation.”

After a 90-minute debate that was as much a tug of war over grammar and syntax as legal principle, the commission majority decided that the true meaning of the section seemed ambiguous at best and ordered the staff to wrestle anew with how best to interpret it.

The decision left the agency’s legal counsel, Steve Churchwell, befuddled. He said the interpretation his staff had drawn was the only possible one, and that they now would have to essentially produce new law to fashion an alternative.

“If we had this question 100 times, we’d have come back with the [same advice] 100 times,” Churchwell said.

Meanwhile, the agency’s enforcement chief, Darryl East, said any change could cause problems because some political groups have been collecting contributions based on the advice the agency had been giving.

But commissioners said the section’s true meaning seems to be in the eye of the beholder. Faced with conflicting interpretations, they stepped in and pushed for a legal opinion more in line with the spirit of Proposition 208, which was approved by more than 60% of the voters.

“I think we’re pushing the constitutional envelope,” said Commissioner Jim Porter, a Republican. But he said the staff interpretation “bothered me because it created a gaping hole in 208.”

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The section of the law reads: “Any committee that makes independent expenditures of $1,000 or more supporting or opposing a candidate shall not accept any contribution in excess of $250 per election.”

As the name implies, an independent expenditure campaign must be run independently of a candidate’s efforts to get elected to office. There can be no consultation or planning with a candidate to decide how money is spent.

Under the rules of Proposition 208, contributions made directly to a candidate’s campaign remain capped at $500 for legislative races and $1,000 for statewide contests.

In a separate action, the commission sought to defuse controversy over advice it gave to lobbyist Kevin Sloat, a former top assistant to Gov. Pete Wilson, who has been accused by Consumers Union of violating the state’s “revolving door” law.

The revolving door law prohibits for one year former executive branch officials from lobbying agencies for which they once worked. The ban applies to lobbyists who receive compensation for seeking to influence decisions.

Consumers Union, which is locked in a battle with Sloat over deregulation of private trade schools, had complained to the commission that Sloat had violated the revolving door prohibition by lobbying the governor’s office.

The commission refused to take up the issue of whether Sloat had violated the law.

It did, however, reaffirm its attorney’s opinion that Sloat could draft letters seeking to influence the governor as long as they are signed by associates in his lobbying firm and not by Sloat himself. The commission also sought to narrow the advice somewhat.

For example, the advice letter had said Sloat could introduce his clients to members of Wilson’s “‘immediate staff” so long as he did not ask their views on issues. The commission removed that section from the advice letter.

Later, Harry Snyder of Consumers Union and Ben Davidian, a former commission chairman and Sloat’s attorney, disagreed on whether the controversy had been closed.

Times staff writer Carl Ingram contributed to this story.