New L.A. ordinance goal is closing campaign finance loophole

The Associated Press
Tuesday May 08, 2001

LOS ANGELES — A city ordinance taking effect Tuesday closes a loophole in a state campaign finance law that allowed political parties, unions and other groups to spend unlimited amounts in the April mayoral primary without immediate disclosure. 

The state law, Proposition 34 passed in November, helped turn the primary into a big-money contest as the state Democratic Party and the Los Angeles County Federation of Labor spent large sums on behalf of former Assembly Speaker Antonio Villaraigosa. 

His opponent in the June 5 mayoral runoff, City Attorney James Hahn, accused Villaraigosa of benefitting from “secret contributions.” The emergency ordinance was spawned by controversy over Proposition 34’s effect on the race.  

A companion ordinance retroactively applies to spending for the primary. 

Consultants to Hahn and Villaraigosa said Monday they welcome the changes, which require parties and other groups to promptly report how much they are spending. But the chairman of the state Democratic Party, the president of United Teachers Los Angeles and the head of the Los Angeles County Federation of Labor – all groups that spent large sums to support Villaraigosa – said they objected to it. 

In a letter to the president pro tem of the City Council, the state party’s general counsel called the ordinance  

legally flawed. “Attempted enforcement by the city will almost certainly prompt protracted litigation,” wrote the attorney, Lance H. Olson. 

Proposition 34 exempted any organization’s “communications to members” from guidelines that apply to contributions and independent expenditures. 

That allowed the state Democratic and Republican parties to send mailers about candidates to registered Democrats and Republicans without disclosing contributions or expenditures except at unrelated reporting periods, typically quarterly or semiannually.  

Other membership organizations like unions could raise and spend money communicating with members without ever having to report it. 

Under the new law, whenever a group spends $1,000 or more on a member communication, it must disclose the expenditure within 24 hours. If a group spends $10,000 or more, it must disclose by May 29 all the contributions it received starting from when the ordinance took effect. 

The ordinance also requires that recorded phone calls and other electronic communications disclose who is paying for them and are put on file with the city Ethics Commission. Anonymous attack calls were a problem during the primary. 

“Our concern is making sure the public has the information they need,” said LeeAnn Pelham, executive director of the Ethics Commission, which proposed the emergency ordinances the City Council adopted Friday. “We don’t want Prop. 34 to gut our effective reforms in L.A. It’s as simple as that.” 

Olson said the ordinance conflicts with state law, unfairly changes rules in the middle of the election, and violates free speech and association rights. 

Pelham declined Monday to respond to those issues except to say, “Our city attorney’s office has advised us that we have the authority to do this.” 

Party officials have estimated that the Democratic Party spent $500,000 during the primary on behalf of Villaraigosa and the Republican Party spent about the same on behalf of businessman Steve Soboroff. Both parties received large donations during the weeks leading up to the primary from donors who thus skirted the city’s strict donation limits and reporting guidelines. 

Soboroff did not make it into the runoff. Hahn and Villaraigosa are both Democrats, but Villaraigosa has the state party’s endorsement.