Court Gives Campaign Finance Laws a Green Light

Ruling means strict limits on donations in three cities may finally take effect.

By Jia-Rui Chong, Times Staff Writer

More than three years ago, voters in Pasadena, Claremont and Santa Monica approved some of the nation's strictest campaign finance laws.

But the rules, which strictly limit the ability of individuals who have business dealings with the city to make contributions to local officials, have yet to be enforced. In fact, Pasadena and Santa Monica have fought to kill the laws, arguing that they violate free-speech rights.

The last of the cities' legal battles appeared to end earlier this month, when the California Supreme Court refused to hear the challenges to the laws. Backers now hope the cities will finally begin enforcing them.

"This is a court saying that when the voters speak at the ballot, they must be heard," said Carmen Balber, with the Foundation for Taxpayer and Consumer Rights in Santa Monica, which sponsored the ballot initiatives.

The court, Balber said, is "telling each of these cities: Simply because politicians dislike a law, that does not mean they can spend public money to fight it, particularly when those measures were put on the ballot by the public and voted by the public."

Balber said the rules were intended to "go after what frequently happens in small cities: A small cadre of contractors end up working with a city and it becomes something of an old boys' club. It certainly will rein in 'You scratch my back, I'll scratch yours.' "

The regulations:

• Prohibit individuals or businesses that have done more than $25,000 worth of business with the city to make campaign contributions to local officials, including city council and commission members. The rules apply to public officials for a year after they leave office and for five years after they approve a contract.

• Prohibit these individuals or businesses from giving gifts exceeding $50 in value to the officials.

• Prohibit these individuals or businesses from hiring or contracting with public officials.

Volunteers in five California cities collected signatures and got the proposal on their respective ballots between 2000 and 2001. It won majority support in the three cities, as well as in San Francisco and Vista, a suburb in northern San Diego County. San Francisco implemented the rules, but Vista didn't because a competing campaign finance measure got more votes during the election.

City attorneys in Santa Monica and Pasadena advised the city councils that the law could infringe on constitutional free-speech rights, since other courts have established campaign contributions as a form of free speech. Officials in Claremont put the rules on their books but didn't enforce them pending the results of the litigation.

Santa Monica tried to get a court to judge the measure's validity by suing its own city clerk for not enforcing it. In Pasadena, City Atty. Michele Beal Bagneris directed the city clerk in June 2001 not to file the amendment to the city's charter with the secretary of state to make its measure law. A resident sued Pasadena over this inaction in 2002.

The Oaks Project, a group within the foundation that helped write the rules, got involved in both of these cases and argued against the cities when their cases merged in 2004 at the state appeals court.

That court ruled in favor of the Oaks Project on procedural grounds in January, in effect telling the cities to stop fighting the ballot measures. The cities appealed to the California Supreme Court, but it declined to hear the case, and the appeals court finalized its ruling on May 12.

Santa Monica Mayor Pam O'Connor said she was disappointed with the outcome. "This will have the chilling effect of discouraging regular people from running for office," she said. "It will limit the pool to people who are independently wealthy."

O'Connor also believes the measure itself is flawed. For example, she said, "it still allows [a planning commissioner] to get influenced on a land-use decision, because they can still get contributions ahead of time. You can pile up before it's voted on…. How is that campaign finance reform?"

O'Connor said she believes Santa Monica has enough limits on campaign finance. She said city council members regularly disclose their contributions, decline to vote on something in which they have a financial interest and do not receive contributions above $250 per individual.

"There has been no meaningful suggestion of impropriety of matters of this kind in recent memory," said Pasadena Mayor Bill Bogaard. "The flavor of this ordinance and the way in which it was advocated during the campaign clearly implied a conviction on the part of supporters that corruption was rampant in cities where it was promoted."

Bogaard said this was the first time the City Council had ever fought a voter-approved ballot initiative. Bagneris, the city attorney, calculated that the city spent $162,000 in legal and research fees.

Both Santa Monica and Pasadena now plan to begin implementing the ordinance.

Campaign finance expert Bob Stern said the initiative was "a step forward" in reform and "certainly unique." Stern, who helped write the 1974 state campaign finance law that requires regular disclosures of contributions, said he encouraged local cities to go beyond the state minimum.

Campaign finances were a dominating issue in the Los Angeles mayor's race, with victor Antonio Villaraigosa hammering Mayor James K. Hahn over allegations that city contractors made contributions to election campaigns in exchange for business.

But Stern said he saw some flaws in this initiative.

For instance, it does not seem to apply to employee contracts, so unions could continue to donate freely. "They could get contributions from unions after they negotiated a salary increase for the union. That seems a little one-sided."

The initiative also requires public officials to decline funds or jobs for five years after approving the contract. Stern says it is difficult to keep track of conflicts of interest for so long.

"You'll probably see mistakes made," he said. "People will forget after a few years and there will be some inadvertent violations."

He also said that incumbents would face a new disadvantage in reelection races. "Maybe we'll see more challenges to incumbents, because [the new rules] will hurt their fundraising."

Claremont officials have been waiting for a ruling on the ballot initiative. The City Council wrote it into the municipal code, but a notice distributed to all candidates informs them that the city has not yet acted on the law.

City Atty. Sonia Carvalho said it has not received any complaints about the law in the last four years, so officials have not had to actively enforce it. Since the state appeals court dismissed the Pasadena and Santa Monica case on procedural grounds, Carvalho said she does not believe the city has to do anything different.

Because no definitive ruling on the constitutional question has been made, the initiative could still face legal challenges, she said. "Say a contractor got an award and he feels you can't restrict his rights to donate to somebody. He could sue the city," Carvalho said.

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