Appeals Court Delays Ruling on Funding Limits : Politics: Judges say they’ll decide later whether to overturn a ruling blocking Proposition 73’s campaign restrictions.

Keeping the door open for statewide candidates to collect huge campaign donations, the U.S. 9th Circuit Court of Appeals balked Tuesday at immediately reinstating Proposition 73’s political contribution limits for the Nov. 6 election.

After hearing arguments on the issue for more than two hours, the three-judge panel said it would take the case under submission and announce later whether it will block a lower court decision overturning the contribution limits.

So for the moment, candidates for statewide and local elections can continue raising campaign funds without restriction.

The appellate court was asked by the state Fair Political Practices Commission, two authors of Proposition 73 and the California Republican Party to stay the lower court’s decision last week that overturned key provisions of the 1988 initiative. Democratic legislative leaders, labor unions and the Democratic Party, which won the initial ruling, argued against any move to reinstate the contribution limits.

In a decision that touched off a flurry of fund raising, U.S. District Judge Lawrence K. Karlton ruled that the contribution limits of Proposition 73 were unconstitutional because they hampered the ability of challengers to raise campaign funds. Siding with Democratic legislative leaders and labor unions, the judge also threw out Proposition 73’s ban on transferring money among candidates.

But a few days later, Karlton reinstated the campaign contribution limits of Proposition 73 for legislative races. Again agreeing with Democrats, Karlton concluded that the limits in the proposition would be less onerous than the restrictions of Proposition 68, a rival measure that would take effect in the absence of Proposition 73.

While the three appeals court judges did not disclose how they will rule, their questioning of the attorneys in the case indicated that two of the three have serious reservations about overruling Karlton in the complex matter.

James R. Parrinello, an attorney for the Republican Party, argued that the sudden change in the law six weeks before the election posed a hardship to many candidates who had planned their campaigns months in advance. “The rules were changed with two minutes left in the fourth quarter,” he said.

But Judge William A. Norris shot back, “Have you ever known of a candidate who wasn’t willing to adapt his campaign to take advantage of new money?”

Judge Cecil S. Poole also seemed unwilling to grant a stay, suggesting that the increase in campaign funds “is not going to subvert the election process.”

However, Judge Charles E. Wiggins, a former Republican congressman from Fullerton, questioned Democratic attorneys closely about whether Proposition 73 was in fact unfair to challengers, as Karlton ruled.

Still, Wiggins took issue with the legal theory that campaign contribution limits generally are constitutional because they counter corruption or the appearance of corruption among public officials. “Nobody is accusing anybody of being corrupt,” he said. “It is the ill-conceived perception of corruption (among public officials) that some people in our society harbor.”

Since Karlton’s decision, some candidates have taken advantage of the ruling to raise large donations, including Democratic gubernatorial nominee Dianne Feinstein, who has raised at least several hundred thousand dollars from labor unions and other groups.

Republican gubernatorial candidate Pete Wilson said that if the court fails to reinstate Proposition 73’s voter-approved restrictions, he would renew his challenge to Feinstein to abide by the $1,000 limit on individual contributions established by the measure.

“And if she can’t do that, I would invite her to at least abide by some limit,” Wilson told reporters after he addressed the convention of the California Assn. of Realtors.

Times political writers Cathleen Decker and Bill Stall contributed to this story.