PUBLIC CAMPAIGN FUNDING URGED L.A. ETHICS PRESIDENT SAYS IT'S TIME TO MOVE FORWARD.

Byline: Lisa Mascaro and Harrison Sheppard Staff Writers

The city Ethics Commission set the stage Tuesday for a massive overhaul of the way candidates raise money for elected office, as it handed down $250,000 in penalties in two high-profile corruption cases.

Los Angeles is considering full public financing of elections, part of a growing civic trend to stem the influence political donors have on City Hall.

Commission President Gil Garcetti said he's never seen such an outpouring of public support for an issue since he took the helm of the commission three years ago.

``It's time, and we have to move forward,'' Garcetti said. ``The only problem ... is both the will and finding the money.''

Officials estimate it could cost at least $9 million annually to fund all city elections, including those for mayor and City Council.

But clean-money supporters welcomed the city's pursuit of publicly financed elections, saying Los Angeles could take the lead in the growing national trend.

``It would make a big difference - for us, a big city, to do this would send a real signal,'' said Julia Maher, a neighborhood activist from West Los Angeles.

``It needs to be simple. We are the people. We elect our representatives.''

The commission - which has no authority to change laws or put the issue on the ballot, as would be required - directed its staff to report next month with a public-funding proposal to take to the City Council. Council President Eric Garcetti hopes to put a proposal before voters by November or spring 2007.

``This isn't a decision for the City Council to make. It's a decision for the people of Los Angeles to make,'' said Garcetti, whose father, former district attorney Gil Garcetti, presides over the Ethics Commission. ``Democracy comes at a price, but it's a cheap price to pay for giving our government back to the people.''

Council members Garcetti, Wendy Greuel and Bill Rosendahl first proposed public campaign financing in July.

The commission's action came as it approved penalties in two corruption cases involving prominent officials and supporters.

The commission approved a $105,271 fine against former Councilman Martin Ludlow to settle violations stemming from his 2003 council campaign. It was the maximum penalty the city could impose for Ludlow's offense.

Ludlow admits he accepted contributions above the $500 limit by coordinating the use of $32,490 in staff time and equipment from Service Employees International Union Local 99 to his campaign. He then concealed the illegal activity.

Ludlow has pleaded guilty to state charges and has agreed to plead guilty to federal charges in the case, and is banned from holding public office for four years and from working for a union for 13 years.

The councilman left office last year to head the Los Angeles County Federation of Labor, AFL-CIO, but stepped down from that post last month in agreeing to cooperate with authorities.

``Mr. Ludlow has acknowledged that mistakes were made, but he's taken full responsibility for his actions,'' said Ludlow's attorney. Stephen J. Kaufman, adding that penalties will be paid in part through Ludlow's defense fund.

Separately, the commission voted 3-0 to approve a $147,000 penalty against attorney Pierce O'Donnell, who admitted to using $25,500 of his own money to reimburse friends, relatives and employees for contributions to the campaign of former Mayor James Hahn. He also failed to disclose a $25,000 independent expenditure in a timely matter, as required.

O'Donnell had previously reached an agreement with the District Attorney's Office to pay a $155,280 fine in the criminal case. He also agreed Tuesday to pay an additional $72,000 fine levied by the state Fair Political Practices Commission in Sacramento.

``We consider laundering of campaign contributions to be one of the most serious violations of the Political Reform Act,'' John Appelbaum, chief of the FPPC's enforcement division, said in a written statement.

``This case involved 26 separate counts of laundering. Laundering conceals the identity of the actual donor and thwarts campaign contribution limits.''

O'Donnell's attorneys declined to comment.

Last summer, some of L.A.'s City Council members asked for a study of public financing of elections.

Just prior to that, Hahn's administration had been under criminal investigation into allegations that companies were compelled to make campaign contributions to get city business.

Clean-money campaigns have gained state and national attention with scandals involving lobbyist Jack Abramoff, former House Majority Leader Tom DeLay and others in Congress.

State legislation is making its way through Sacramento while the California Nurses Association is trying to get a campaign reform initiative on the November ballot.

Supporters say public financing of campaigns lessens the influence of donors and encourages more candidates, while detractors say it's a waste of taxpayer funds.

Gil Garcetti said he remembers the ``tremendous burden'' of having to raise campaign cash for his run for district attorney - while also trying to do his job.

Already, the city budget provides $2.6 million annually to provide public matching funds. Nearly $5 million to $7 million more would be needed to fully fund the campaigns.

Bob Stern of the Center for Governmental Studies was optimistic about the city's effort to look at reform.

``It's better than I thought it would be,'' he said. ``But it has a long ways to go.''

Lisa Mascaro, [phone]

lisa.mascaro(at)dailynews.com