Battle of the white hats: two campaign finance reform groups fight the good fight - with each other.

ON A SACRAMENTO STREET DOTTED with pawn shops and storefront eateries a vintage 14-story office building stands out amidst the flat, faceless, structures around it. The building's inexpensive rents and proximity to the state capitol have made it a haven for the clatch of public interest and grassroots organizations that lobby the California Legislature. The noisy elevators, funky climate control, and badly outdated lobby directory give a sense of community to this collection of underdogs.

If there's one truth about which most occupants of these musty suites would agree, it is that money is power in Sacramento--nearly all have a story to tell about cooling their heels in a legislator's office while the door swings open for the high rollers. Yet in 1996, it is the very issue of money in politics that has rattled this community and its larger constituent organizations. For the third time in less than a decade, California was fighting an initiative war over campaign finance reform, but this time, the reformers' main foes were not the intractible, well-heeled architects of the status quo. This time, the reformers faced opponents as energetic, committed, and creative as themselves.

This time, they faced each other.

In a spectacle that angered some voters and confused others, two different campaign reform initiatives were placed on this November's statewide ballot. The two initiatives--Propositions 208 and 212--were similar in basic form but distinct in their particulars, representing markedly different philosophies about the concept of reform. The measures were drafted, circulated, and promoted in direct competition with each other by two institutions that have, in other states, worked in concert on the issue--Common Cause and the U.S. Public Interest Research Groups (PIRG). In the end, only one--the Common Cause-backed Prop. 208--survived. But the price of that success was a costly and divisive civil war in which erstwhile allies suddenly found themselves going for each other's throats with the gusto of practiced partisans. "The competition and anger that came out of this will have a detrimental effect on the public interest community in Sacramento for a long time to come," says Kim Alexander, director of the nonpartisan California Voter Foundation.

The long strange trip began in the summer of 1994, when PIRG's California branch, CalPIRG, convened a meeting of campaign reform's usual suspects--the League of Women Voters, the American Association of Retired Persons, United We Stand, and, of course, California Common Cause. Many of these groups had worked together in other, smaller states to enact strict $100 campaign contribution limits, as well as a variety of disclosure, gift, and PAC regulations. Though many of these proposals were still being vetted in the courts, CalPIRG was hot to try out PIRG's national template in its own state. California seemed the perfect place to pursue the Holy Grail of campaign reform--a direct challenge to the U.S. Supreme Court's Buckley v. Valeo decision, which effectively banned any form of mandatory limits on campaign spending. "We made it clear we were willing to put resources behind an initiative," says Doug Phelps, director of PIRG and a prime mover in PIRG's previous sojourns into campaign reform. "We had our preferred content, but we figured we'd all have to go to the lowest common denominator"

California's campaign reform veterans--Common Cause and the League of Women Voters--saw CalPIRG as an attractive coalition partner but saw its model as not well-suited to a state California's size. Any direct challenge to Buckley, they felt, threatened the constitutionality of the entire initiative. They also were not convinced that CalPIRG's proposed $100 donation limit for legislative elections would withstand constitutional muster, especially considering how much more populous California's legislative districts were than those of other states that had enacted $100 limits. "Being the policy wonks we are, we didn't want to write our initiative based on what is sexy," says Ruth Holton, director of California Common Cause. "We want to write it on the basis of what will pass and what will hold up in court"

Discussions among the various groups proceeded through the fall of 1994 and into the winter of 1995. Early on, the prospective partners agreed that public financing, though attractive in principle, was a political non-starter in California. According to Phelps, CalPIRG was also willing to defer its challenge to Buckley. All agreed on the importance of uniting behind a single initiative, remembering the bitter experience of 1988. That year, a comprehensive package of spending and contribution limits with public financing was approved by voters, but wound up a dead letter when a competing initiative--bankrolled by legislators--got more votes.

As the months passed in 1995, however, some significant sticking points remained. The League of Women Voters, whose prestige was considered a key selling point for any measure, was adamant about including some kind of voluntary spending limit. To accomplish this without public financing, they and Common Cause proposed a system of variable contribution limits. Candidates who kept their spending below a certain level could receive contributions twice as large as candidates who did not adhere to the spending cap. Phelps was particularly opposed to this concept. "Who does that help? The people with the money to double their contributions," says Phelps.

With spring in bloom and prime signature-gathering season on the way, the League, Common Cause, and United We Stand were anxious to get busy mobilizing their volunteers. The draft was complete, including the variable contribution limit provision and base contribution limits of $250 for legislative races and $500 for statewide campaigns. Most of the organizations involved with the negotiations were prepared to go along with the draft. CalPIRG was not.

Just who walked away from whom is a matter of interpretation; more was at work than mere policy disagreement. Organizational turf-guarding and personal ego were much in evidence during the negotiating process. "Clearly, they [CalPIRG] were very jealous of Common Cause, and didn't want them to get credit," says one source with ties to the Prop. 208 coalition. If CalPIRG was jealous of Common Cause's cachet in finance reform, Common Cause and the League appeared to resent the way the upstart CalPIRG threw its weight around. "Campaign reform is an issue that Common Cause and the League see themselves as owning," says another insider. "PIRG was the new kid on the block. It was divisive chemistry."

Beyond the personality questions, however, lay a deeper and more fundamental rift. The "Old Guard," represented by Common Cause et al., sees campaign reform as a means of equalizing all players so no one side enjoys any particular advantage. On the other hand, CalPIRG is populated with youthfull idealists whose goal is not mere equalization of the playing field, hut gaining a competitive advantage for their side. "CalPIRG has a clear agenda," says campaign reform guru Robert Stern, who helped draft the Common Cause measure. "Their agenda is to help progressives" That agenda became abundantly clear when CalPIRG began redrafting its initiative. In addition to putting back everything they had bargained away, they drew up some new provisions at the behest of organized labor. Most controversial was a section that allowed "citizen contribution committees"--PACs built with contributions of $25 each--to donate up to $10,000 per campaign--100 times the base contribution limit. About the time the contribution committees were being discussed, the California Teachers Association began hinting they'd support the measure. CTA is routinely among the top five organizations in the state in lobbying and campaign expenditures, and has vigorously opposed campaign finance reform.

As it became clear the Common Cause measure would make the ballot, one last-ditch effort was made to keep CalPIRG's measure off. Common Cause and several other intermediaries tried to talk Phelps and his group into holding off until 1998. By then, however, CalPIRG had juiced up its grassroots organization and had a document it thought was ready to go. On the day the Common Cause coalition submitted its signatures, CalPIRG began circulating its measure. "I think there's a culture in the initiative process that says, We want to do it our way,"' says Jim Schultz, director of the San Francisco-based Democracy Center. "That's not a culture of compromise"

Common Cause and its allies immediately began working the media with tales of the cozy connection between CalPIRG and CTA. They denounced CalPIRG's proposal as a "Trojan horse" and made hay out of the citizen contribution committee as a potential loophole through which single-issue groups like the National Rifle Association and the Christian Coalition could walk. Then the state's Fair Political Practices Commission analyzed what had now become Proposition 212 and discovered the initiative would repeal a 1991 statute that placed specific dollar limits on gifts to legislators. The repeal of the gift limits would by most independent accounts, open the prospect of large indirect cash contributions to legislators, none of which would, fall under state campaign reporting guidelines. Phelps and his group insisted the provision had been included as a means of forcing the legislature to impose stricter limits, but to most ears, the explanation had a "the dog ate my homework" ring to it. "It was either a drafting error or one of the stupidest things a campaign has ever done," says Schultz.

The discovery of the loophole was a godsend to the Prop. 208 coalition. Most members of the group conceded privately that the CalPIRG measure seemed far more appealing on paper than their more measured approach. By pointing out the gift-limit repeal, Prop. 208's campaign could present voters with a reason to vote no on the rival measure. It proved a powerful argument, and nearly every newspaper editorial board in the state eventually recommended a "yes" vote on Prop. 208 and a "no" on 212, including the San Francisco alternative weekly Bay Guardian. Another blow to 212 was the conspicuous silence of PIRG's most notable founding father, Ralph Nader. Nader, who was running for president, weighed in on several California ballot measures, but he never endorsed either 208 or 212, even though his campaign centered around the corrupting influence of political money.

Stunned by the attacks, CalPIRG spent much of the summer playing defense. In September, however, Phelps and his group decided to directly engage Prop. 208 in battle. A blizzard of faxes, news conferences, and ginned-up reports called attention to the provisions 208 lacked. They paid particular attention to 208's lack of any kind of ban on corporate contributions. With the gloves off on both sides, the final month of the campaign was a good old-fashioned political mudbath. Each camp made sure it had a representative at the other camp's news conferences, and these conferences often ended up with the advocates engaged in sharptongued colloquy.

Although it continued to boast of comfortable support, CalPIRG felt compelled to play its financial hole card. A few weeks before the election, they launched a TV ad campaign that eventually approached $3 million, aided by $600,000 from the CTA. The tortured illogic of campaigning for reform with special-interest money was quickly seized upon by 208's spinmasters, but their glee was short-lived. Not a week after the CTA contribution was revealed, Prop. 208's forces disclosed they'd gotten $100,000 from a pro-school voucher PAC headed by John Walton, the conservative heir to the Wal-Mart fortune. That contribution was used to help 208 proponents buy a smattering of television time around the state, though they ultimately spent only about a tenth of what was spent on 212. The commercials these donations bought were right out of the attack-ad manual. CalPIRG's ad showed a lobbyist celebrating 208's provisions and panicking at 212's. Common Cause's spot showed two shady characters with stacks of cash, the supposed effect of 212's repeal of the gift restrictions. For organizations that view themselves as occupying the moral high ground, both made ads that were decidedly unseemly.

The capping irony to this internecine squabbling came in the campaign's final week. A business-oriented PAC led by the California Chamber of Commerce began funneling money into a group called Citizens Against Flawed Reform. This new group's objective was to defeat both initiatives, and by election day it spent some $500,000 attacking them. In radio and TV commercials, the opponents used the criticisms of each group to batter the other's initiative. Common Cause and the League were cited as reasons to vote "no" on 212. CalPIRG was cited as a reason to reject 208.

This late blitz prompted one last bid to salvage a shred of unity as CalPIRG approached Common Cause about a joint response ad. It also offered to withdraw an ad attacking 208 if the 208 forces would withdraw a "no on 212" spot. The approach was perhaps the clearest sign that things were not going well for 212. "Why were they doing this?" wondered Holton. "They were outspending us 10-to-1. We should have been nothing but flies around their ankles" Common Cause rejected the overture.

Just about everyone expected both measures to receive more than 50 percent of the vote. The battle seemed to be over which would get the most votes, since the measure that did better would automatically take effect. But when the votes were tallied, only Prop. 208 emerged with a majority, and a sizeable one at that. CalPIRG had not only lost the race; it hadn't even made it to the finish line.

What Now?

With the wounds still fresh, it is difficult to predict how deep and long-lasting the rift will be. The combatants themselves insist the long-term impact will be minimal. "I'm a member of Common Cause, and there are two PIRG directors on the national board of Common Cause," says Phelps. "[Working together] won't be more difficult from our point of view" Holton also softpedals any permanent rift, but she worries about how both groups will be perceived by others with less at stake in the battle . "It's been truly unfortunate," says Holton. "It has divided resources and forced a lot of groups to take sides. But the differences are not irreconcilable"

Others, however, are not as optimistic, particularly in light of the outright defeat of Prop. 212. The Democracy Center's Jim Schultz frets that the youthful energy of CalPIRG's grassroots army was mispent on a fool's errand. "I have nothing but respect for all those young PIRG people who worked their tails off trying to clean up government," says Schultz. "They're terrific people who were trapped in a bad strategy."

The architects of that strategy appear to hold the key to the future, and much will depend on how they respond to the inevitable legal fight over Prop. 208. The successful initiative has more than enough in it to draw a legal challenge from the politicians it targets. The initiative not only limits individual contributions to candidates, but also puts some restrictions on party fund-raising and the time frame in which candidates can raise money. There are even new reporting requirements for ballot initiative campaigns.

The history of campaign reform in California suggests that either the parties, the legislature, or both will challenge Prop. 208, hoping to stay some or all of its restrictions. If Phelps and the PIRGs try to "give peace a chance" by letting Prop. 208 work for awhile, and joining Common Cause, et al. in fighting the lawsuit, the optimists may prevail. If, however, the PIRGs respond by expanding a promised 1998 initiative, then the mood in that ramshackle Sacramento office building will be unsettled for years to come.

STEVE SCOTT is managing editor of the California Journal. He has been covering California politics and the initiative process since 1986.