Politicians’ Version of Finance Reform

SACRAMENTO —  California’s top political leaders have tapped organized labor for money to pass their version of campaign finance reform--a measure that has a loophole allowing unions to avoid limitations on contributions.

The strategy so far has paid off, giving supporters of Proposition 34 nearly a 3-1 edge in money-raising over public interest groups who are fighting the proposal. By early October, the “no” side had collected only $111,567. Supporters of the measure had raised $307,722, more than half from labor unions.

“It’s not surprising,” said Craig Holman, a member of the opposition camp that includes Common Cause and the League of Women Voters. “Labor unions want to be able to pump as much as they possibly can into political campaigns, and this proposition lets them do it.”

The brainchild of two of the state’s leading Democrats--Senate President Pro Tem John Burton (D-San Francisco) and Assembly Speaker Bob Hertzberg (D-Sherman Oaks)--Proposition 34 would require more frequent disclosure of campaign contributions and would limit political contributions.

It gives labor, which traditionally supports Democrats, a way around such limits by allowing each union and its locals to be treated as separate entities. A corporation and its subsidiaries would be subject to a single limit.

Proposition 34 represents the latest attempt to control the financing of political campaigns in a state that for decades has had a laissez-faire attitude. California has no restrictions on campaign spending or on donations, and a $100,000 gift to a candidate is not unusual. The state also allows transfers of money from one campaign to another.

What is unusual about the new measure is the role reversals of the players. This time it is politicians, who have often resisted reforms, promoting Proposition 34. Groups that usually push these measures are bitterly opposed, and for the first time in years, Proposition 34 has galvanized them into a solid coalition: Californians Against Phony Reform.

They say its real purpose is to nullify an earlier, tougher reform measure, Proposition 208, that passed in 1996 and is tied up in the courts. To finance the campaign to pass the new measure, Burton and Hertzberg have appealed for contributions to labor unions and the lobbying groups that traditionally make donations to political races.

“Your financial support is needed to enable our campaign to carry the message of sensible campaign finance reform to California voters,” said a Sept. 22 fund-raising letter to lobbying groups co-signed by Burton and state Sen. Ross Johnson (R-Irvine).

Opponents have tried to use that fund-raising appeal to illustrate their theme--that Proposition 34 is just a clever trick, purporting to be reform when its true purpose is to kill reform.

“It’s perhaps the single most dishonest proposition that anyone has ever placed on the ballot, and that’s saying a lot,” said Ron Unz, a millionaire businessman who tried unsuccessfully to pass his own reforms last spring.

Holman said the lobbying groups to whom Burton’s letter appeals have the most to lose from real reforms, which would restrict their contributions and dilute their influence over the political process.

So why would they give to this campaign? Because the reform they fear most, he said, is Proposition 208. By supporting the new Burton-Hertzberg measure, he said, donors are buying insurance that Proposition 208 will never take effect.

A few months after its passage, Proposition 208 was struck down by the courts. But it got a new lease on life when the U.S. Supreme Court upheld contribution limits in a Missouri case and then a federal appellate court sent Proposition 208 back to a lower court.

If Proposition 34 is approved by voters Nov. 7, it will nullify any court decision to reinstate Proposition 208.

The differences between Proposition 34 and the earlier measure are stark. The earlier proposal sets a $250 limit on individual contributions to legislative races and a $500 limit on donations to other statewide races, including those for governor.

The new ballot measure establishes a $3,000 limit on legislative contributions and a $5,000 ceiling on donations to all statewide candidates except the governor, who is given a $20,000 limit.

Mike Roos, a former state Assemblyman who is spearheading the campaign to pass Proposition 34, bristles at the suggestion that it is not true reform. He insists its purpose was never to torpedo Proposition 208 but to offer a proposal that can survive a court challenge and provide “realistic” contribution limits.

“The $250 limitation [in Proposition 208] sounds good in terms of reducing special-interest influence, but it’s unrealistic in districts that have 400,000 or 800,000 people,” he said. “You just can’t communicate with limits that low.”

Severe restrictions on fund-raising, he argues, give a decided edge to incumbents and celebrities, who have less need for expensive advertising because they already have recognizable names.

He defends the labor loophole, saying Republicans would not have supported the proposal if it gave unions a lopsided advantage. Proposition 34 has been endorsed by both parties.

“As I read it, I see no special advantage to anyone,” Roos said.

Voters can judge for themselves if any group has an unfair advantage, he said, because Proposition 34 requires that the sources of campaign donations be reported more frequently. The measure would require that in the 90 days preceding an election, candidates post contributions of $1,000 or more on the secretary of state’s Web site within 24 hours.

Tony Miller, a former acting secretary of state who is opposing the ballot measure, acknowledges that improved disclosure is an important reform, but he says it does not offset other flaws.

Proposition 34 fails, he says, to rein in contributions to political parties, opening the door for large donors to give unlimited amounts to parties that can then spend the money to help candidates of the donor’s choice.

Roos says that is an unlikely scenario because candidates seldom know the source of the money spent by political parties. “It’s just a lot different when the medical association gives you $25,000 than when the party gives you $25,000,” he said.

Each side acknowledges they will have difficulty getting their arguments to the voters this year. Roos said he does not expect to be able to raise enough to money for television ads. Miller is hoping a wealthy contributor will drop $1 million into his effort in the final weeks before the election.

“If we can’t go on television, we’re in serious trouble,” he said, “because people will just see the words campaign reform and vote for it.”

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Proposition 34

Proposition 34, a campaign finance measure proposed by the Legislature, would change current law and repeal many provisions of Proposition 208, a reform measure approved by voters in 1996 that is tied up in the courts.

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Limits on individual contributions

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Current law Prop. 208 Prop. 34 Assembly, Senate none $250 $3,000 Statewide offices none $500 $5,000 Governor none $500 $20,000

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Voluntary campaign spending limits*

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Current law Prop. 208 Prop. 34 Assembly none $200,000 $700,000 Senate none $400,000 $900,000 Governor none $8 million $10 million

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Limits on candidate loans to themselves

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Current law Prop. 208 Prop. 34 none $20,000** $100,000

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Fund-raising in non-election years

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Current law Prop. 208 Prop. 34 unlimited prohibited unlimited

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Transfers from one campaign to another

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Current law Prop. 208 Prop. 34 unlimited prohibited allowed with limits

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* General election

** $50,000 limit for governor