Report Finds City Campaign Laws Lacking

Los Angeles campaign finance rules have increased competition among local candidates and expanded the influence of small donors. But the city’s system is threatened by unregulated independent expenditures and by wealthy, self-financed candidates, according to a report released Wednesday by the Center for Governmental Studies.

The yearlong study by the Los Angeles-based nonpartisan research center recommends increasing public funding for candidates going up against opponents who spend heavily from their personal fortunes or who benefit from the spending of others on their behalf.

Under the city’s campaign rules, candidates who agree to limit their spending may receive public matching funds. Those who break the spending caps are forbidden from accepting public money and their decision to exceed the limits can free others to do so without penalty. Nevertheless, those restrictions have not been enough incentive for some to hold down their spending.

In the recently concluded mayoral campaign, for instance, James K. Hahn and Antonio Villaraigosa both benefited from extensive special interest campaigns on their behalf, while wealthy businessman Steve Soboroff spent heavily on his own race.

“It sort of upsets the balance of law,” said center President Bob Stern, who helped draft the city’s election laws 11 years ago.

Despite those problems, Stern said, the city’s campaign finance rules have created a healthy atmosphere in which candidates with few resources can go up against well-funded opponents. The center’s report lists a handful of recommendations to strengthen the current system.

“The law has worked pretty well,” Stern said. “Other cities would do well to copy this.”

One sign of the local ordinance’s success is demonstrated by politicians’ willingness to participate in public financing. Nearly every city candidate participated in L.A.’s matching fund program in the last two elections, Stern said. That contrasts with places such as Wisconsin, where only 10% limit their spending and fund-raising to get public financing.

A package of campaign finance rules passed by voters in 1990 limited the size of contributions and created a partial public matching fund program for those seeking local office. The rules also restricted the amount of time during which candidates can raise money for their campaigns.

According to the report, those laws have helped candidates without big donors compete through matching funds, and have shifted the emphasis of fund-raising to getting small donations. The time constraints have also given elected officials more time to concentrate on passing legislation rather than raising money.

But several loopholes in the law have allowed unchecked spending, particularly in the mayor’s race. Independent expenditures--those made by individuals on behalf of a candidate but without coordination with the person’s campaign--have channeled massive amounts of money into local elections, Stern said.

In the 2001 elections, political parties, unions and businesses spent $3.9 million in independent expenditures, up from a previous high of $323,000 in 1993.

More than $900,000 was spent on behalf of now-Mayor Hahn or against Villaraigosa. Those expenditures, especially a set of billboard ads on Hahn’s behalf, caused the city’s spending limit to be lifted for the final phase of the mayoral campaign.

Though only $156,000 in independent expenditures was spent on behalf of Villaraigosa, he benefited from $740,000 in “member communications”--paid mailers from the Democratic Party and labor unions sent to their members advocating his election. That, too, became a hot topic in the mayoral campaign.

Because member communications are not considered independent expenditures under state law, those expenses do not have to be reported and do not affect the spending cap.

But even without including that spending, the large sums spent by outside parties on behalf of the mayoral candidates make spending limits “hypothetical at best,” the report states. As a result, the restrictions encourage fund-raising beyond the limit.

The study recommends doubling the amount of matching funds for candidates who go up against opponents benefiting from independent expenditures or personal wealth, and maintaining the spending cap for those benefiting from the expenditure.

LeeAnn Pelham, executive director of the city’s Ethics Commission, agreed that independent expenditures pose one of the biggest threats to the current campaign finance system.

“That’s one of the most challenging areas for us,” she said. “Our commission is interested in seeing what kind of additional regulation might be possible.”

The report by the center also recommended lowering the spending limits in City Council races, noting that the candidates for those seats rarely spend up to the existing limits.

Hahn, who protested the expenditures on Villaraigosa’s behalf, has since urged passage of new rules to regulate city races.

“Independent expenditures are a problem that should be addressed,” Deputy Mayor Matt Middlebrook said Wednesday. “It would be positive to come up with measures to help level the playing field for all candidates, whether it’s because they receive independent expenditures or because wealthy candidates dump large amount of money in.”