Court Won’t Restore Limits on Fund Raising

SACRAMENTO —  The U.S. 9th Circuit Court of Appeals on Wednesday refused to reinstate California’s campaign fund-raising limits, a decision that left an increasingly eager pack of candidates for statewide office free to raise as much money as they can.

The court’s decision touched off a headlong rush by candidates of both parties for millions of dollars in large contributions. A variety of candidates who had challenged opponents to abide by the spirit of Proposition 73 after a lower court last week ruled it unconstitutional abandoned any effort to stick to the voter-approved limits.

“These are the new ground rules,” said Dan Lungren, the Republican nominee for attorney general. “The appellate court said the limits were off, so I’m going to abide by the law.”

In addition to those running for attorney general, nearly all of the candidates for treasurer, lieutenant governor, secretary of state and controller said they would solicit donations above the $1,000 individual limit imposed by Proposition 73.

Democratic gubernatorial nominee Dianne Feinstein, the first to break with the pack last week and begin accepting large contributions, pocketed a $50,000 donation Tuesday from comedian Chevy Chase. An aide to Feinstein said the court decision lifting the limits will be worth at least $2 million to her campaign. (Story, A3).

After the appeals court ruling, supporters of Proposition 73 immediately filed a last-ditch motion with the U.S. Supreme Court in a bid to restore the campaign restrictions.

“If Proposition 73’s contribution limits are not fully reinstated, representative government could be swept away in a flood of special-interest money,” charged Assembly Republican Leader Ross Johnson of La Habra, the principal author of the measure. “We will continue the battle to restore the reforms enacted by the voters.”

Proposition 73, approved by voters two years ago, prohibited candidates from receiving contributions of more than $1,000 from individuals and $5,000 from political committees.

U.S. District Judge Lawrence K. Karlton, siding last week with Democrats and labor unions, ruled that the contribution limits were unconstitutional because they discriminated against challengers and violated their First Amendment right to free expression. The judge also overturned Proposition 73’s ban on the transfer of campaign money between candidates.

Later in the week, however, Karlton acceded to a second request from Democrats that he reinstate the Proposition 73 limits for legislative races. The judge agreed that the law was less restrictive than the requirements of Proposition 68, which would have taken effect for legislative contests in the absence of Proposition 73.

Supporters of Proposition 73 argued that Karlton’s ruling, coming just six weeks before the Nov. 6 election, created chaos for candidates up and down the state.

But the court of appeals, acting less than 24 hours after hearing arguments on the issue, rejected their reasoning and refused to reinstate the limits.

Without elaborating on the decision, the divided three-judge panel issued a brief order declining to overrule Karlton. Judge Cecil Poole, a former aide to Gov. Edmund G. (Pat) Brown, and Judge William A. Norris, the Democratic nominee for California attorney general in 1974, concurred in the ruling. Judge Charles Wiggins, a former Republican congressman from Fullerton, dissented.

On Saturday, U.S. Supreme Court Justice Sandra Day O’Connor declined a request from supporters of Proposition 73 that she intervene in the case and grant a stay before the appeals court heard the case. Court officials said they now expect the justices to act quickly on the renewed request for a stay.

Attorney Joseph Remcho, who argued the case on behalf of Assembly Speaker Willie Brown (D-San Francisco), Senate President Pro Tem David A. Roberti (D-Los Angeles) and labor unions, said the appeals court action validates Karlton’s judgment that the contribution limits were unconstitutional.

“The rule now is that, in California, contributors who want to give and candidates who want to spend are going to be able to get their message out through the election,” Remcho said.

The removal of the contribution limits so soon before the election works primarily to the advantage of underdogs. Candidates with little money in the bank now have the chance to close the gap with their rivals and buy valuable advertising on television, radio or slate mailers.

In each race, it was the candidates who trailed in fund raising who were the first to say they would take advantage of the current ruling.

U.S. Sen. Pete Wilson, the GOP nominee for governor who enjoys a clear fund-raising advantage, said he would abide by the limit at least until the Supreme Court decides the issue.

But the other Republican candidates for statewide office, who all lag behind their rivals in raising money, have broken ranks with Wilson.

Attorney general candidate Lungren; Treasurer Thomas W. Hayes; state Sen. Marian Bergeson, the Republican nominee for lieutenant governor; Los Angeles City Councilwoman Joan Milke Flores, the GOP candidate for secretary of state, and Matt Fong, the Republican candidate for controller, all said they will seek donations above the Proposition 73 limits.

On the Democratic side, Secretary of State March Fong Eu said she will abide by the limits for the time being but could alter her strategy depending on Flores’ fund-raising success.

In the race for attorney general, Lungren and his Democratic opponent, Arlo Smith, had challenged each other to follow the requirements of Proposition 73.

But during the Los Angeles taping of a joint television appearance to be broadcast Sunday, Lungren said the appeals court decision had prompted him to begin soliciting donations of any size.

Following Lungren’s lead, Smith said he also would begin seeking unlimited amounts of money. “If he doesn’t (abide by the limits), I have no choice,” Smith said. “That’s where we are.”

In the treasurer’s contest, Hayes and Democratic nominee Kathleen Brown had challenged the other to follow the Proposition 73 limits. But after Hayes said Wednesday that he would begin unlimited fund raising, Brown said she would do the same.

Democratic Controller Gray Davis also changed his stance after rival Matt Fong decided to seek donations of any size, a spokesman said. Davis will solicit unrestricted donations even though his campaign report shows he has $2 million more than Fong.

Contributing to this story were Times staff writers Paul Feldman, Carl Ingram, Dave Lesher, Dean Murphy, Douglas P. Shuit, George Skelton and Bill Stall.