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Cruz Bustamante

A legal loophole allows him to exceed the limits on campaign contributions. The conduit is his 2002 reelection committee.

August 27, 2003|Matea Gold | Times Staff Writer

Lt. Gov. Cruz Bustamante is avoiding state restrictions on recall campaign contributions by asking donors to give money to his 2002 reelection campaign committee, which is not subject to the same cap on donations that new campaigns must observe.

Bustamante has raised nearly $400,000 in the last month in unlimited contributions to his old campaign committee -- money that he can roll over into his recall campaign. The move circumvents a new law that restricts donations to candidates to $21,200.

The lieutenant governor's campaign estimates that it can transfer as much as $4 million this way because of an accounting loophole created by the state Fair Political Practices Commission.

Meanwhile, Bustamante is raising money under the current contribution limits for his "Yes on Bustamante" campaign and a separate committee advocating defeat of the recall.

Critics call his tactic an end-run around campaign finance rules established by Proposition 34, the ballot initiative voters approved in 2000.

"I think it's further proof that California's system of campaign financing is a joke," said Jim Knox, executive director of California Common Cause. "It renders contribution limits meaningless."

Bustamante campaign strategist Richie Ross said Tuesday that the lieutenant governor is merely following the law.

"We didn't write Prop. 34; we're obeying it," said Ross, noting that the current system also allows wealthy candidates like Arnold Schwarzenegger to spend unlimited amounts of money on their campaigns.

Proposition 34 does not allow candidates to collect campaign money after an election unless they have outstanding debt. However, because Bustamante's 2002 reelection committee was established before the measure took effect, it is not subject to that rule. Bustamante can keep raising money for his old campaign committee until nine months after he leaves office, the date by which he is required to close the committee.

Proposition 34 also states that "when a candidate has money, you have to let them use it," said Mark Krausse, executive director of the Fair Political Practices Commission, which interprets and enforces the state's campaign laws.

In June 2001, the commission ruled that candidates can transfer money from their old committees to new ones through a process called attribution. Under that system, money can be rolled over in increments of up to $21,200 by considering it a donation in that amount from a previous contributor to the old committee.

Krausse explained the maneuver as "an accounting procedure."

But Robert Stern, president of the Center for Governmental Studies, called the commission's ruling "a nutty interpretation."

"The FPPC is supposed to be there to interpret the law liberally, to ensure the law is carried out," Stern said. "Now limits don't mean anything."

The contribution exception also applies to Gov. Gray Davis and state Sen. Tom McClintock (R-Thousand Oaks), who both have campaign committees from the 2002 election. However, the governor, as the target of the recall, is not subject to any contribution limits. McClintock has not been raising money for his old committee, and deputy campaign director John Stoos said McClintock does not plan to take advantage of the maneuver.

Bustamante is exploiting the exception to the new contribution limits. Campaign finance filings show that he is steering smaller donations to his recall campaign committee, which has so far raised $473,400, while large contributions are going to his 2002 reelection committee. On Aug. 12, he transferred $100,000 from the old committee to the new one.

Bustamante has been raising money for his 2002 campaign committee all year, collecting $402,275 from March through July from unions, Indian tribes and corporations.

But the pace quickened after the recall qualified for the ballot on July 24. The next day, Gambro Healthcare, a medical technology company based in Aliso Viejo, gave Bustamante $10,000. In just a month, he raised $390,250 for his old committee.

The largest sums have come from tribes with casino interests, which have been frequent contributors to Bustamante's campaigns. On July 28, the Viejas tribe in Alpine gave $35,000 to his 2002 committee. Last Friday, the Sycuan Band of the Kumeyaay Nation, based in El Cajon, contributed $300,000. A spokesman for the tribe told The Times that Bustamante's campaign instructed them to place the money in the old account.

Other large contributors to Bustamante's 2002 reelection committee include the Southwest Regional Council of Carpenters, which donated $15,000 on July 28, and the California Teachers Assn., which gave $10,000 on July 30.

The Sycuan Band and the carpenters union also donated the $21,200 maximum to Bustamante's recall campaign committee.

A third committee controlled by Bustamante called "Californians for Stability -- No on the Recall" is considered a ballot measure committee and is not subject to limits on donations. So far, that campaign has only raised $31,800.

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