Court Orders Trial to Settle Campaign Fund-Raising Caps

A federal appellate court Tuesday sidestepped a decision on a voter-approved ballot initiative restricting campaign fund-raising by state politicians, and instead ordered a full-blown trial on Proposition 208.

The decision by the U.S. 9th Circuit Court of Appeals allows politicians--at least for now--to continue raising money under the current system, without caps on the size of the contributions they accept.

Voters approved the initiative in 1996. But last January, U.S. District Judge Lawrence Karlton of Sacramento blocked it, concluding that Proposition 208 would have violated free speech protections. The contribution limits it imposed were too low and would have prevented candidates from communicating with the electorate, Karlton said.

Although the appellate court Tuesday upheld Karlton’s injunction, the three-judge panel did not say whether it agreed with his reasoning. The court directed that Karlton hold a trial on the initiative and rule on all its aspects.

The court also told Karlton to expedite the trial to ensure that the issue is resolved before the election in 2000.

“We’re extremely pleased,” said attorney Joseph Remcho, who represented opponents of the initiative, including organized labor. “We’ll be delighted to participate in a further trial.”

The ruling is a blow to backers of Proposition 208, who believed that at least two of the three appellate judges who heard oral arguments in the case last month were inclined to reinstate the initiative.

When one of the judges suggested the middle ground of sending the case back to Karlton for a trial, lawyers defending the initiative objected, saying Karlton already held a lengthy hearing on it.

“For the near term, the injunction is in effect, and that’s bad,” said attorney Bradley S. Phillips, who represents backers of the initiative. But he also said he is confident that the initiative ultimately will be affirmed.

With the injunction intact, incumbents in state office can hold fund-raisers and build their campaign coffers in preparation for the next election, giving them an advantage over any would-be challengers, backers of the initiative note.

The initiative limited donations to $250 for legislative races and $500 for statewide races such as governor. The amounts could double if candidates agreed to campaign spending caps.

Under Proposition 208, a state Senate candidate could raise no more than $700,000, and an Assembly candidate could raise no more than $350,000. Several legislative races cost more than $1 million. Candidates in at least one state Senate race together spent more than $5 million.

“This unfortunately adds an additional period of uncertainty, which is disappointing,” said Tony Miller, one of the initiative’s co-authors. “But I’m pleased that the court has another chance to take a look at it.”