State’s Campaign Funds Law Voided by Federal Judge

SACRAMENTO —  A federal judge struck down the core of California’s voter-approved limits on campaign contributions Tuesday, a decision likely to reignite the feeding frenzy for political cash among politicians.

The ruling was praised by Republican and Democratic leaders alike as a boost for candidates who face millionaire opponents, whose self-financed campaigns were exempt from the limitations. But supporters of the restrictions vowed to appeal.

In a 43-page opinion, U.S. District Chief Judge Lawrence K. Karlton ruled that the limits in Proposition 208 were set so low that they unconstitutionally infringed on a candidate’s ability to get his or her message to voters.

Karlton said the effect of Proposition 208 “is not only to significantly reduce a California candidate’s ability to deliver his or her message, but in fact to make it impossible for the ordinary candidate to mount an effective campaign for office.”

But in an unusual twist, the judge gave the state, which defended the law, and the proposition’s sponsors a chance to try to salvage at least parts of the initiative by directing the state Fair Political Practices Commission to take the case the state Supreme Court.

He said the state’s high court might be able to “sever” such sections from the clearly unconstitutional features and rewrite them to make them legal. These include issues such as prohibiting use of campaign funds for officeholder expenditures.

Karlton said federal courts have no such reformulation authority over disputed state laws, but noted that the California Supreme Court has claimed such powers in certain limited cases.

The judge’s order stops the FPPC from enforcing the law, a move that appeared to assure that the rush for campaign contributions in this election year will return to pre-Proposition 208 levels.

Proposition 208 was approved in November 1996 and was in place for only a year.

“This is back to business as usual,” said Tony Miller, a Proposition 208 co-sponsor along with California Common Cause and the League of Women Voters. “We will see a horrendous pouring of cash into these campaigns, unless we can stop it. The political action committees, parties and politicians won at least this round.”

Miller, a Democratic candidate who has said he will run for either lieutenant governor or secretary of state, and Jim Knox, executive director of California Common Cause, said they intend to pursue an appeal.

Miller noted that last month the federal 9th Circuit Court of Appeals handed lawmakers a major defeat by overturning a lower court ruling and upholding term limits for lawmakers.

In November, another federal judge in Sacramento ruled against the Democratic and Republican parties and upheld voter enactment of the open primary.

Gov. Pete Wilson, a champion fund-raiser who described himself as a supporter of reasonable contribution ceilings, agreed that Proposition 208’s limits were too low.

“As a practical matter, these limits inhibited the ability of all but the wealthiest to participate in our system of democracy,” Wilson said in a statement.

Enacted by 61% of the voters, the California Political Reform Act of 1996 was promoted by its sponsors as an emergency brake on what they described as the corruptive influence of big money on state and local elected officials.

The initiative, which took effect Jan. 1, 1997, generally limited donations to $250 per election for legislative candidates and to $500 per election for statewide candidates such as governor. Political parties and so-called small contributor committees could give more.

If a candidate voluntarily agreed to limit campaign spending, the limits would double. The initiative also prohibited fund-raising during nonelection years, banned candidates from transferring funds to each other and outlawed contributions by lobbyists.

But opponents, including the Democratic and Republican parties, labor unions and other interests, argued in Karlton’s court that the spending limits in the era of high campaign costs infringed on their 1st Amendment rights to free speech.

Among other issues, they argued that under Proposition 208, wealthy candidates would face no restrictions in spending their own money, but that candidates of modest means would be unfairly handcuffed by contribution limits--giving them virtually no chance of winning.

Opponents also complained that so-called independent political committees could mount campaigns for or against candidates and yet be excluded from the limitations of Proposition 208.

Karlton, who in 1990 struck down another campaign contributions limitation initiative because it favored incumbents, said Proposition 208’s limits were unreasonable “because they are set at a level precluding an opportunity to conduct a meaningful campaign.”

During the trial last year, Karlton conceded that a long court fight would occur, regardless of how he ruled. He viewed himself as a way station on the way to the U.S. Supreme Court.

State Democratic Party Chairman Art Torres welcomed Karlton’s ruling, but said the Legislature must use it to move “quickly on true political reform.” Such attempts have failed for decades.

Torres said any substantial reform must include expenditure limits, full disclosure of finances and public financing to “even the playing field between rich and poor candidates.” Public financing traditionally is opposed by Republicans.

California Republican Party Chairman Mike Schroeder also praised the ruling. “If Proposition 208 had stayed on the books, it would have had a very unhealthy effect on the political process and made it impossible for the little guy to win a contested election against a millionaire,” he said.

The court’s decision also appeared to benefit candidates with long-standing fund-raising operations and modest personal means, chiefly Atty. Gen. Dan Lungren and Lt. Gov. Gray Davis, both gubernatorial candidates.

Davis faces millionaire Democrat Al Checchi, a self-financed contender, who already has spent more than $6 million. Darry Sragow, a strategist for Checchi, said the ruling made no immediate impact on the campaign and even under the loosened restrictions, “No one can match Al Checchi’s wallet.”

Garry South, campaign manager for Davis, said he believed it was Checchi’s free-spending ways that convinced Karlton to strike down the limits.

Bill Carrick, a Democratic campaign consultant, agreed that Checchi’s campaign expenditures will be vast, but said the court ruling “will close the gap somewhat between Checchi, who is willing to spend $30 million to $50 million, and people who can’t do that.”

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Times staff writer Cathleen Decker contributed to this story.