Governor's Race Renews Finance Debate

*Legal loopholes probably will let record spending continue

By Sandy Kleffman and Andrew LaMar

SACRAMENTO - Now that it's over, the 2002 California governor's race is the latest poster child for campaign finance reform, advocates say.

The close to $100 million spent by Gov. Gray Davis and his main challenger, GOP businessman Bill Simon Jr., set a state record and, after all the expenditures are tallied, could end up being a national record, too.

The pair spent roughly $77 million on the general election and $23 million on the primary.

The escalating price tag for the office creates more potential for mischief, said Ed Davis, the vice president for field and state operations for Common Cause, a national nonprofit group that lobbies for campaign finance reform.

"What we really see as a problem is where that money comes from and what influence it buys after the election," Davis said.

California voters passed a measure two years ago, Proposition 34, that limits individual contributions in all state races. The measure didn't kick in for gubernatorial candidates until after the Nov. 5 election.

But the new rules are likely to redirect the flow of money rather than stem the tide, experts said.

Prop. 34 bans individuals and businesses from donating more than $20,000 to gubernatorial candidates in future elections. That will mark a change from the 2002 race, when Davis and Simon frequently collected checks of $50,000, $100,000 and even more.

"It will make a difference, but not a huge difference," said Bob Stern, president of the Center for Governmental Studies in Los Angeles.

Stern predicted the limit would encourage bundling. Donors will naturally find ways to boost their contributions by finding relatives, friends and business associates to join them in making the maximum donation.

Under the measure, there are no limits on contributions from political parties or on independent expenditures; that is, money spent for or against a candidate that is not coordinated with the candidates in the race.

The impact of that loophole became clear in this year's legislative races. Because Prop. 34 restricts donations to no more than $3,000 from most sources for legislative candidates, the unlimited spending allowed by outside interests and parties became crucial.

In the hard-fought battle for an East Bay Assembly seat, for instance, the California Dental Association spent more than $150,000 on ads promoting Republican Guy Houston, while a professional engineers union spent more than $55,000 on behalf of Democrat Donna Gerber. Houston won.

The high cap on contributions to governor's candidates coupled with the unrestricted flow of spending by parties and outside interests makes Prop. 34 mostly impotent, experts said.

"We don't see it as true campaign finance reform," said Jim Clarke, executive director of the California Clean Money Campaign, a nonpartisan group pushing for additional reforms.

Campaign buck-raking turns voters off, Clarke said. He cited the large amount of campaign spending in the governor's race as one cause of the record low voter turnout. The more money that poured into the gubernatorial campaigns from special interests, he said, the more voters felt disconnected from the candidates.

"The average person sees all this money and feels my vote doesn't count because they're getting all this money from other people, not me," Clarke said.

Despite disgust with the governor's race and Prop. 34's flaws, campaign finance reform advocates say there is no clear solution. The subject is a tricky one because of concerns that restricting how much candidates can spend could violate their First Amendment free-speech rights.

As a result, many of the reforms are voluntary. Common Cause favors using tax dollars to fund campaigns.

The California Clean Money Campaign proposes a voluntary system of publicly financed campaigns similar to programs in Arizona, Maine, Massachusetts and Vermont. The group argues that this would free up candidates to meet with voters and talk about issues, rather than rushing from one fund-raiser to another.

Candidates who participate would agree to limit their spending and reject contributions from private sources. Those who don't participate could continue to raise money on their own.

To qualify for public funding, candidates would need to get a required number of $5 contributions and signatures from residents. They would then receive the average amount spent by candidates for that office in recent elections.

Such candidates, though, could still be outgunned by wealthy opponents. To avoid that scenario, they could receive a dollar-for-dollar match-up to a set limit if their opponents spent more than the public financing grant.

Clarke estimated the cost would be $500 million for all statewide, senate and Assembly races. That would come to roughly 2 cents per day per eligible voter, Clarke said.

Other states have funded such programs through a checkoff on state income tax forms or a surcharge on civil and criminal penalties. The group's proposal includes shortening the election cycle to remove the pressure for candidates to raise money around-the-clock.

Many reform advocates believe the cost of running an effective campaign in California must be reduced. One problem is that TV stations have cut back on news, thereby forcing candidates to buy more ads to get their message out. One alternative, advocates say, is for the federal government to order stations to provide candidates with free air time.

For now, people such as Ed Davis intend to follow the money trail closely.

"I think it's a fairly common thing, if you're giving large amounts of money, you're expecting something in return," Davis said. "That's where we see a real problem in California."


Andrew LaMar covers state government. Reach him at 916-441-2101 or alamar@cctimes.com


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