Candidates may have to return loans

Alicia Robinson

Two candidates for the 70th District Assembly seat may give back

money that they borrowed for their campaigns after a preliminary

court ruling Monday that Gov. Arnold Schwarzenegger violated campaign

finance law by using $4 million from a bank loan for his campaign.

State law bars candidates from loaning their campaigns more than

$100,000. In the 70th District Republican primary race, Cristi

Cristich borrowed $250,000, and Chuck DeVore took out a loan for

$115,000, and each put the money into their campaign coffers.

Sacramento Superior Court Judge Loren E. McMaster issued a

preliminary ruling on Monday that said the Fair Political Practices

Commission incorrectly interpreted state law when it set guidelines

that allowed bank loans beyond the $100,000 limit.

The commission made the guidelines to implement Proposition 34, a

campaign finance reform ballot initiative that voters approved in

November 2000. Candidates have relied on the commission’s regulations

to determine what they are allowed to borrow.

“Any decent candidate, in view of this decision, should return the

loan,” said Shirley Grindle, an independent campaign finance watchdog

who wrote Orange County’s campaign reform ordinance.

DeVore took out loans totaling $115,000 this month to bring his

cash total closer to that of Cristich, who has said she’ll spend $1

million on this campaign. He plans to repay the loans immediately and

donate his own money as needed to cover campaign expenses, he said.

Devore said he was following the court case with interest and had

hoped to see a ruling before campaigning began for the March 2

primary.

“We were hopeful that the judge would restore the letter and the

spirit of Prop. 34 and would restore as a consequence the $100,000

cap that a candidate can loan their campaign,” he said. “We’re

delighted with the ruling.”

Cristich said she’ll leave the loan in her campaign fund until she

sees how the final court ruling comes out, and she will follow the

law as the court decides it.

“I suspect that it’s not going to have any big impact in her case

because she’s quite capable of turning that loan into a donation if

she needs to,” said Dave Gilliard, a campaign advisor to Cristich.

On this issue, the commission made a mistake in interpreting what

voters wanted when they voted for campaign finance reform, Grindle

said.

If bank loans are allowed, candidates can raise money to repay

them after the election, so voters won’t know when they go to the

polls who is funding candidates, Grindle said. The loans also make

for an uneven playing field because not everyone can get them, she

added.

“The only candidates who are going to get huge bank loans from a

bank for running a campaign are ones who are good for [the money],”

she said.

Using a bank loan for a campaign is basically the same thing as a

candidate lending his or her own personal money, and the law sets a

$100,000 limit on that, she said.

Don Wagner, another 70th District Republican candidate, said he

hadn’t read the judge’s ruling but expects it to benefit his

campaign. Wagner did not take out campaign loans exceeding the

$100,000 limit and has been the third-place fundraiser after Cristich

and DeVore.

“Does it help me? Yes, if they can’t spend it,” he said. “I think

that’s the only way they beat me, is by spending enormous amounts of

money and swamping my message.”

A statement on Tuesday from the Fair Political Practices

Commission said the commission will review regulations related to

Proposition 34 in August.