Race for Political Cash Is On Again, but Effect Is Unclear

At 9 o’clock Wednesday morning, state Senate candidate Richard Katz called a campaign donor, seeking money. “What took you so long?” deadpanned the donor.

Within minutes of Tuesday afternoon’s court decision outlawing voter-approved limits on campaign fund-raising, the phone calls started: candidates calling donors, trolling for money; donors calling candidates, offering it.

The chase for cash is now unfettered, courtesy of the federal court ruling, and at first blush many assumed that California would see a wholesale return to the unseemly, cash-laden days of the past. But the collision of term limits, initiatives and scandal may temper the rush for dollars.

Certainly, there are beneficiaries. Lt. Gov. Gray Davis and Atty. Gen. Dan Lungren, both running for governor, can now tap their extensive fund-raising bases for more than the $1,000 a pop allowed under the overturned Proposition 208. So could Dianne Feinstein, should she seek to exchange her seat in the U.S. Senate for the governor’s office. Legislative candidates, both incumbents and challengers, are free from the bondage of $250-per-person donation limits.

But dramatic change--of the type prevalent the last time a judge overturned funding limits, in 1990--may not necessarily be in the offing. First, California’s political system has to sort through the chaos of a roller-coaster year dominated by the impact of voter initiatives and court decisions that either supported or overturned those measures.

“Anybody who’s looking for certainty in this political cycle is unlikely to find it,” sighed Darry Sragow, the Democratic political consultant who this year has the luxury of strategizing for a candidate for whom donation restrictions meant nothing: mega-millionaire Al Checchi. The Beverly Hills businessman has already spent $6.2 million of his own money--a gesture not restricted by Proposition 208--and plans to spend a good bundle more.

Katz, a former Democratic Party leader who was forced by term limits to leave his Assembly post in 1996, is now vying for a state Senate seat in the same northeast San Fernando Valley region that he represented in Sacramento for 16 years. He faces a popular and aggressive opponent in City Councilman Richard Alarcon, the first Latino council member from the Valley.

Under the limits of Proposition 208, Katz said he expected to raise and spend the maximum $300,000 allowed under the law. But now that those limits have been struck down, he expects to raise much more, though he declined to estimate how much.

With the Proposition 208 limits out of the way, Katz said he has “upped the number of calls” he has made to contributors. He added that he doesn’t have to tell the contributors that the limits have been struck down--”people know,” he said.

Katz has proven his ability to raise funds in the past by putting together a campaign war chest of nearly $1.5 million in his unsuccessful bid for the Los Angeles mayor’s chair in 1993.

With the limits of Proposition 208 out of the picture, the race between Alarcon and Katz may hinge upon whether Alarcon can match Katz’s fund-raising prowess.

But in assessing the impact of the court decision, the uncertainties are rampant. First of all, political money-giving is in a slump, at least in part because of the chatter of scandal surrounding fund-raising for the 1996 presidential campaign. Interest groups that had planned to run independent, issue-oriented campaigns in lieu of giving to candidates may now opt for the latter--decisions that could take weeks or even months. Some are hamstrung by commitments to fight new ballot measures, and some are unsure to which candidates they should give.

And there is always the chance that another court decision prompted by an appeal could turn the fund-raising world topsy-turvy again.

The governor’s race shows clearly how turbulent political campaigns remain, even after the fund-raising decision.

Davis, running against fellow Democrat Checchi for the party nomination--and perhaps against Feinstein as well--can now expect an infusion of cash over and above what he would have raised. That led his campaign manager, Garry South, to declare that the decision opened “a new ball game” for his campaign.

But only some of Davis’ fund-raising problems stemmed from the Proposition 208 restrictions. He also has faced resistance from donors wishing to stay on the sidelines until Feinstein reaches a decision, and from those supporting Checchi because they feel Davis cannot beat Republican Lungren in the general election. Neither of those difficulties was erased by Tuesday’s decision.

Checchi, for example, planned to finance his campaign under Proposition 208 and still plans to. He had no plans to raise outside money under the limits and still does not; indeed, his campaign has yet to employ a fund-raiser.

“Nothing in this campaign is changing,” said Sragow.

So the question for Davis is whether the increased money he can now raise will be enough to overcome Checchi’s--and possibly Feinstein’s--greater personal resources. And for Lungren, the question is whether he can make enough hay to overcome a wealthy Democratic nominee.

In addition to the greater sums it can now receive from individuals, Davis’ campaign was also hoping for a return to pre-208 behavior by the state’s influential interest groups.

Under Proposition 208, outside organizations were barred from donating big sums to one candidate, and many instead had planned to run so-called independent expenditure campaigns. Those typically key on an issue and are used to bolster or tear down a particular candidate.

Now groups are once again free to give to the candidate. But not all are sure they will, at least at the levels they once did. Thomas E. Rankin, president of the California Labor Federation, AFL-CIO, said his organization is focusing this year on defeating a Republican-embraced ballot initiative that would cripple labor’s clout by restricting its use of member dues for political purposes.

“I’m sure that there will be more contributions directly to candidates than there would have been [under Proposition 208], but we plan to continue our emphasis on issue-based politics,” he said.

Most organizations, however, are expected to give to candidates. “They want the candidates to know that they are giving,” said Republican consultant Allan Hoffenblum.

Another element of the governor’s race that would seem to be affected by the court decision is Feinstein’s timetable for entering the race--if that is what she decides to do. In theory, an earlier-than-planned jump might be opportune now, giving Feinstein time to raise unlimited money from donors before any appeal knocks down Tuesday’s judgment.

But as her political associates are fond of saying, Feinstein does not always play by everyone else’s rules.

“I don’t think this is going to have a determining impact on her,” said Bill Carrick, her once-and-future campaign manager. But he acknowledged that the judge’s decision is “positive for her potential candidacy.”

Many political operatives view the court decision as more important for legislative races than for statewide campaigns. The decision not only lifted the donation cap for individual races but also restored the power of caucus leaders to dispense money and accrue power, much as they had in the days before fund-raising restrictions. Fund-raising prowess again becomes a key element in decisions over who will lead party caucuses in the Legislature, many believe.

“It certainly throws the whole question of who the next speaker and the next Senate [president] pro tem are into a whole new light,” said Katz, who was Assembly Democratic leader until forced out by term limits.

But it is unlikely that caucus leaders will return to their former baronial status. For one thing, term limits mean that the turnover in leadership will continue. Donors looking for long-term relationships might opt to give their money to political parties rather than individuals--although individuals will still cast the deciding votes in Sacramento.

Nonetheless, those running legislative campaigns were breathing easier Wednesday.

“It is a major relief for the people who are running legislative races,” said Sragow, who ran the Democratic Assembly campaigns in 1996. “It was going to be extremely difficult. . . . I was mystified as to how they would do it.”

San Francisco lawyer Joe Remcho, an advisor to Democrats, said Wednesday that he has a short message for anyone running: “You should raise the money you think you’re going to need, and you should start right away.”

Times staff writers Carl Ingram and Max Vanzi in Sacramento and Hugo Martin in Los Angeles contributed to this report.