Campaign Reflects New Influence of Local Panels

When California voters passed a ballot measure four years ago to restrict political donations, critics warned that it contained loopholes that would eventually make the limits meaningless.

Now, critics say, the fall election campaign has confirmed just how easy it has become to skirt some of the law’s intent.

Under the campaign finance reform measure that voters passed in 2000, donors can give no more than $3,200 to an individual candidate. But they can give up to $26,600 to a county committee. And the committee can in turn give unlimited amounts to candidates as party leaders see fit.

So this year, Democratic and Republican committees that in the past rarely received large donations collected nearly $10 million, according to filings with the secretary of state. And at least $2.5 million of that was directed to some of the most hotly contested legislative races.

“I don’t know if we would have been able to fund the campaigns as well as we did if we didn’t have the county committees,” said Assembly Speaker Fabian Nunez (D-Los Angeles).

Government watchdogs call the practice a legal subversion of what voters intended when they passed the campaign finance law, Proposition 34.

“Proposition 34 was fake reform,” said Robert M. Stern, president of the nonprofit, nonpartisan Center for Governmental Studies in Los Angeles. “This is one instance where voters were fooled.”

Written by legislators, Proposition 34 blocked the implementation of an even more restrictive cap on donations. It repealed Proposition 208, a 1996 measure that would have capped donations to legislative candidates at $250 and gifts to political parties at $5,000. That measure was blocked by courts before the Legislature and voters replaced it with Proposition 34.

Some say the expanding use of county committees -- once political backwaters that controlled no more than a few hundred or thousands of dollars -- shows the futility of trying to block the flow of money to politicians.

Scott Baugh voted against putting Proposition 34 on the ballot when he served as Assembly Republican leader in 2000. But this year, as head of the Orange County Republican Party, he helped raise $1.3 million for the county committee between January and election day, then directed $380,000 to four legislative candidates facing particularly tough fights.

“Those are the rules of the game now and we’ll play by the rules of the game, but I don’t think that Proposition 34 should have ever passed,” Baugh said. “The purpose was to limit campaign contributions and to know the source of who’s funding particular candidates.... Now it’s more difficult to follow the money trail.”

“Donors always adjust to the rules of the game,” Baugh said, “and the money will continue to flow. That’s why the best result is to have instant disclosure and electronic reporting of all contributions over a certain threshold.”

Before Proposition 34, people, groups and businesses could give unlimited donations to politicians and $100,000 checks were not uncommon. But with the $3,200 individual cap under Proposition 34, some special interests have redirected money to county parties and to independent expenditure committees, which buy advertising themselves on behalf of -- or in opposition to -- various candidates.

As more money flows to the county committees, their leaders have a new ability to reach sometimes hundreds of miles outside their borders to help party candidates. Donors to county committees cannot earmark their money for a particular candidate. It’s up to each county committee to choose which candidates to help. The entire committee may vote on whom to support or the chairman or treasurer may decide.

At the Sacramento County Democratic Central Committee, Treasurer Virginia Moose said Nunez’s staff told her to whom she should write checks.

That Democratic committee raised nearly $1 million and distributed $20,000 each to Pedro I. Nava and Juan Arambula, successful Assembly candidates in Santa Barbara and Fresno, and $25,000 to Assemblywoman Nicole Parra (D-Hanford), who won reelection.

“It’s the way the proposition was written,” Moose said. “They can always change that, but at the moment this is perfectly legal.”

Donations aren’t flowing to political parties in every county. On the Democratic side, $4.1 million was raised by committees in Sacramento, San Diego, Santa Clara, Riverside and Merced counties. Republican committees in San Diego, San Bernardino, Stanislaus, Sacramento, Riverside, Merced, Placer, Los Angeles, Orange and San Joaquin counties raised $5.4 million.

“Many county committees don’t have the ability to manage Proposition 34 funds,” said Jonathan Buettner, chief operating officer of the Republican Party of San Diego. “It’s a new trend and it’s primarily based on new leadership. The [local] party [committee] has come across as credible to the donor community.”

The use of party committees has been controversial. Shortly before the November 2002 election, the state Republican Party and 15 Republican county committees received nearly $1 million from 21st Century Insurance Group. The money was donated to candidates in some of the tightest legislative races around the state. The source of the money was not revealed until January 2003, because 21st Century made the donations one day after the law’s deadline for more immediate public disclosure.

In June, three committees involved -- in Butte, Kern and San Joaquin counties -- each paid $10,000 fines to the Fair Political Practices Commission. They each stipulated that they had exceeded state campaign finance limits that at the time capped contributions to political parties at $25,000 for the purpose of supporting or defeating candidates. The cap has since been raised to $26,600.

Under a bill signed into law last month by Gov. Arnold Schwarzenegger, county committees must swiftly disclose who gives them the money. The new law requires county committees to report to the secretary of state within 24 hours of giving or receiving donations of $1,000 or more in the last few weeks before an election.

Bill author Assemblyman Lloyd Levine (D-Van Nuys) defended the relatively new practice of using county committees to boost donations to candidates.

“The idea behind [Proposition 34] was to limit special interest influence,” he said. “I would argue that a party ... giving to their own candidate is not a special interest exerting influence.”

“The money in politics,” he said, “is simply to try to elect people who represent your views.”