Examiner Editorial: Shut The City’s stealth campaign-finance loophole

SAN FRANCISCO — As this newspaper has consistently observed, setting fair election-fundraising limits seems a virtuous safeguard against undue influence. But it is extremely difficult to work out without running afoul of constitutional free speech protections. Our latest local example of this standoff is an “independent expenditure” campaign-contribution loophole that has more than quintupled its money flow during the past six years.

San Francisco voters approved a public-financing program in 2000 that included a $500 annual contribution cap to “third party” committees — defined as organizations spending money to directly advocate election or defeat of a municipal candidate or measure, but operating independently of the affected candidate or official measure sponsors.

Board of Supervisors candidates received just $262,000 from third party expenditures in 2002. But by 2008 this “independent support” had exploded to more than $1.3 million, according to the San Francisco Ethics Commission. Whatever might be your feeling about campaign financing caps, The City’s third party loophole has obviously become big enough for any special interest to pass through it at will.

Two factors clearly triggered last year’s spike of independent expenditures. The November 2008 election had the potential to dramatically shift the tone and actions of city government. Seven of the 11 Board of Supervisors seats were up for grabs, with three powerful incumbents termed out. Big-money independent-expenditure contributions shaped up as a tug of war between moderate downtown groups and liberal labor unions.

The most impressive example of third party money pouring into a supervisor race last year was in District 1, which covers the Richmond district. Winner Eric Mar, the progressive-bloc choice, drew $195,000 in independent-expenditure support. That was nearly equaled by $178,000 in independent-opposition money. Sue Lee, his main moderate opponent, gained $116,000 in third party committee backing while having only $41,000 independently spent against her. Independent expenditures in races in districts 3 and 11 were nearly as generous.

One might wonder how so much money could be funneled into these third party committees despite a $500 annual contribution cap from any single donor. The catch — at least for now — is that in 2007, opponents of election-spending caps won a preliminary injunction against enforcing The City’s independent-expenditure limits.

That case is currently on hold in the 9th U.S. Circuit Court of Appeals, where its fate will be decided on the basis of a ruling yet to be made on similar lawsuits filed from San Jose and Long Beach. But at this point, San Francisco is being denied any meaningful oversight of third party committee spending.

We want this limbo state ended without additional arbitrary delays. Some constitutionally acceptable ground rules for independent expenditures need to be established, because the current free-for-all leaves a door wide open for abuses.