Ex-Candidates Push Cap on Contributions

On March 7, California voters will decide if the fund-raising practices of the state’s highest elected officials should be illegal.

In the past year, Gov. Gray Davis raised an unprecedented $13.2 million in political money. Insurance Commissioner Chuck Quackenbush took a $93,350 contribution from a company he regulates. And Assembly Speaker Antonio Villaraigosa (D-Los Angeles) transferred $1 million from his campaign accounts to his successor, Bob Hertzberg (D-Sherman Oaks).

All of those actions would be outlawed by Proposition 25, an initiative placed on the ballot by two unsuccessful candidates for statewide office--Tony Miller, a political watchdog who ran an underfinanced campaign for secretary of state, and Ron Unz, a millionaire businessman who used his own funds to bankroll a losing run for governor in 1994.

The proposal is the latest attempt to use the initiative process to reform California’s campaign financing system and tap into voter discontent with the way donations are solicited from private interests to underwrite political ventures.

It would place severe restrictions on campaign financing in a state that historically has had few such constraints. California is one of only six states that has no limits on contributions; a wealthy donor in California can write a candidate a check for $1 million. And it is one of the few states that does not ban union and corporate contributions.

Proposition 25 is a sweeping proposal that would limit contributions, restrict time periods in which candidates can raise money, require overnight disclosure of donations exceeding $1,000, ban corporate money-giving, forbid the transfer of money from one campaign to another, establish voluntary spending limits and provide some free TV and radio air time for candidates who agree to abide by the voluntary limits.

“For the first time, California would actually have a contribution limit,” said Unz, who is best known for sponsoring an initiative designed to end bilingual education in public schools. “I’m not one who believes you can buy a politician for $1,000 or $5,000. But if you offer them a check for $500,000, I think you’re tempting them too much.”

For current officeholders such as Davis, blackouts on money-raising in nonelection years would have prevented him from collecting donations his first year in office. The contribution limits would have stopped Quackenbush from accepting big donations from insurance companies. And the ban on transfers would have kept Villaraigosa from giving money to his successor.

California has not significantly reformed its campaign financing system since 1974, when voters overwhelmingly approved Proposition 9, a measure that established disclosure requirements. Since then, many initiatives have been attempted but were either defeated at the polls or nullified by the courts.

The most recent was Proposition 208, a reform measure that set contribution limits and was approved by voters in 1996. It was struck down by a lower court, but a recent Supreme Court decision upholding contribution limits in a Missouri case has breathed new life into it. A federal appellate court has sent it back to the lower court for a full trial.

Different From Proposition 208

Proposition 208 differs markedly from the Unz-Miller initiative in that it provides much stricter limits. It sets a $500-per-election contribution limit on statewide campaigns, while Proposition 25 has a more liberal $5,000 limit.

One of the leading opponents of the Unz-Miller measure is Craig Holman, an author of Proposition 208 who fears that passage of Proposition 25 could entangle his measure in endless court battles. Unz argues that if Proposition 208 is upheld by the courts, his measure provides that the Proposition 208 contribution limits take precedence. But Holman worries that will not be enough to stop the courts from weighing in to resolve the conflicts between the two proposals.

Besides Holman, the Unz-Miller proposal has attracted opposition from a broad coalition of business, union, Republican and Democratic groups that have homed in on what they believe is its Achilles’ heel--a provision that sets up a limited form of public financing of elections. In the past, the concept has proved unpopular with California voters, who soundly defeated an earlier initiative that attempted to establish a more comprehensive public financing system.

The opposition camp, calling itself the No on Proposition 25 campaign, is expected to spend hundreds of thousands of dollars on television and radio advertising contending that the measure will engender $55 million in new costs to be shouldered by the taxpayers.

“The idea that you’re going to take my tax money and give it to politicians; that’s a very big weakness in this. People don’t like that idea,” said Scott Macdonald, communications director for the No on Proposition 25 campaign.

Unz calls the advertising misleading and argues that voters will find the provision palatable if it is presented in its full context. To qualify for public financing, a candidate would have to agree to voluntary spending limits--$6 million, for example, for a gubernatorial primary candidate and $10 million for the general election.

Once they agreed, they would be entitled to receive public financing in the form of credits for broadcast media advertising. A candidate for governor could get credits worth up to $1 million per election. To pay for the credits, $1 a year per taxpayer would be set aside in a special fund.

“I personally think it’s worth spending $1 a year per taxpayer to buy back our government from the special interests,” said Unz. “This provides no money to campaigns, only free air time.”

The other weakness the opponents see in the Unz-Miller proposal is what they like to call the “soft money loophole.” It has attracted support to their side from an unexpected source--the League of Women Voters, a civic organization that helped sponsor some of the previous reform initiatives.

Soft money is donations by corporations, unions and individuals to political parties to be used for “party building.” In reality, the money goes into projects that indirectly benefit candidates. It circumvents contribution limits as well as any ban on corporate donations.

The absence of contribution limits has prevented soft money from becoming an issue in California in the past. But if Proposition 25 is successful, opponents of the initiative insist it is likely to become as pressing here as it is in Washington.

Soft Money Scandals

Unz said his proposal immunizes the state against soft money scandals because it prevents those funds from being used for political advertising, their primary use at the federal level. In the last presidential election, soft money was credited with giving Clinton an early lead, because it paid for a nationwide television advertising blitz that featured him. The ads never asked anyone to vote for him, but they gave him immense exposure.

“The problem with Prop. 25 is that it still allows unlimited soft money into political parties,” Holman said. Although he acknowledges that the parties would be banned from using it for advertising, he says there are still many other ways it can be spent on behalf of candidates.

So far, the two sides in the battle over Proposition 25 have been evenly financed. The opposition campaign has raised $734,825, while the Unz-Miller coalition has collected $880,738, most of it in loans--$815,000--from Unz.

Even so, with such widespread opposition, the campaign to pass the measure was expected to have an uphill fight. But the sudden success of Republican presidential candidate John McCain, who has endorsed the proposal and made political reform a central theme of his campaign, is expected to give it a boost.

Meanwhile, Davis, who has joined the opposition to Proposition 25, filed disclosure forms showing that he had raised $13.2 million in a nonelection year.

“He’s an embarrassment,” Holman said. “Good grief! This guy is breaking every rule in the campaign financing ethics book, and then he comes out on our side. Thanks a lot. We’d be better off if he’d just be quiet.”