Campaign Financing Law Upheld : Politics: The state Supreme Court rules that an L.A. ballot initiative allowing candidates to receive taxpayer matching funds is legal.

SAN FRANCISCO —  Affirming the right of California cities to regulate local campaign finances, the state Supreme Court on Thursday upheld a Los Angeles ballot initiative that allows candidates to receive taxpayer matching funds for their campaigns.

City officials said the ruling would help prevent an all-out spending war in next April’s mayoral election by preserving the matching-fund program and related spending limits in the city’s campaign law.

“This went to the heart of the whole ethics law,” said Robert M. Stern, a consultant to the city’s Ethics Commission. “If this had been struck down it would have assured a much greater level of spending--a fund-raising frenzy.”

The court’s decision also clears the way for California cities to adopt programs to provide public funds to political candidates. And it further eviscerates Proposition 73, a statewide 1988 campaign finance initiative that promised to curb political contributions and ban the use of tax money to finance campaigns.

The proposition is essentially “a dead horse,” Justice Stanley Mosk wrote in a concurring opinion, noting that much of the law already has been thrown out by the federal courts.

Chief Justice Malcolm M. Lucas, writing for the majority of five justices, upheld the city law on different grounds--saying that the state Constitution grants municipalities the power to regulate elections. The state’s charter cities are entitled to “home rule” and are not preempted by state law in certain functions, such as the supervision of elections, the court concluded.

The ruling resulted from a challenge by Proposition 73’s sponsors--state Sen. Quentin L. Kopp (I-San Francisco) and Assemblyman Ross Johnson (R-La Habra)--and by City Councilman Ernani Bernardi. They argued that the state proposition’s ban on public campaign financing should apply to city and county elections as well as to state races.

The most immediate effect of the ruling will be to keep in place the matching-funds program and spending limits approved by Los Angeles voters in 1990 that, for the first time this April, will govern elections in Los Angeles.

Mayoral candidates must agree to spend $2 million or less in the primary campaign to receive up to $667,000 in matching funds. If they qualify for a June runoff, they will be permitted to spend another $1.6 million, receiving as much as half of that in public funds.

The law limits candidates in eight City Council races to $300,000 in expenditures in the primary and another $250,000 in the runoff to qualify for matching funds totaling $225,000.

The city’s Ethics Commission will distribute the first money from an $8-million public financing fund in February, said Ben Bycel, the commission’s executive director.

Harvey A. Englander, a veteran campaign consultant, said the court’s decision will help “maintain a level playing field” in the upcoming mayoral race.

“Instead of $2 million, you would have seen $4 million or $5 million spent by a lot of the candidates,” said Englander, a consultant to City Councilman Joel Wachs, a mayoral contender.

Most of the prominent mayoral candidates have pledged to abide by the spending limits and apply for matching funds. But civic activist and multimillionaire Richard Riordan has said he will not apply for matching funds.

That decision would free Riordan from the related spending limitations and therefore lift the caps for all other candidates.

Riordan argued Thursday that the city’s fund for campaign finance could be better spent on other programs. “We don’t have enough money to pay for police or to clean up the city,” he said.

But Riordan’s opponents have argued that he should voluntarily abide by the spending limits, even if he does not accept matching funds.

“I hope all the candidates for public office will adhere to the (ballot) proposition,” said Councilman Nate Holden, a mayoral candidate. “Anybody who does not, the people will know that they are for the special interests. . . .”

Stern, the city Ethics Commission consultant, said the court ruling opens the door for other local jurisdictions to enact public financing measures in the hopes of reducing special-interest influence on campaigns.

“It now permits other cities to adopt comprehensive campaign financing,” he said. “I know many cities were awaiting this decision.”

One jurisdiction watching the Los Angeles suit was Sacramento County, which had adopted its own public financing plan before Proposition 73 was approved.

While saying they were heartened by the court’s ruling, officials in the Sacramento County counsel’s office said they might still have to petition the high court to reinstate their ordinance, which was struck down by an appellate court.

The high court’s ruling left only shreds of Proposition 73 intact. As approved by the voters in 1988, the measure limited campaign contributions, prohibited the transfer of campaign funds among candidates, restricted political mailings at taxpayer expense and banned public financing.

Since then, federal courts have thrown out all of the provisions on contribution limits. With Thursday’s action, all that remains of the law are restrictions on taxpayer-subsidized legislative mailings and a ban on public financing of candidates in state campaigns.

The law has been rendered all but meaningless “after the federal courts finished dining on it,” Mosk wrote. He concluded that the entire initiative should be laid to rest.

“As I have said before in a different context, ‘a dead horse cannot win a race,’ ” Mosk wrote.