By Olin Ericksen
Staff Writer

November 30 -- With the dust still settling after one of the hardest-hitting and expensive elections in Santa Monica history, a new dust-up began Tuesday when the City Council returned to the highly divisive issue of how campaign money is raised, spent and accounted for.

Keeping an election night promise, Council member Kevin McKeown -- the target of a $100,000 campaign by local hotels -- sponsored an item instructing staff to research and return with options by early February 2007.

From fronting public dollars for campaigns and boosting community outreach, to cleaning up a controversial anti-corruption law and tackling the legally dicey issue of capping big money spent on negative campaigns, council members began staking out their positions early in a fight that could draw in every political force in Santa Monica.

"I'm not tonight proposing a plan, I'm proposing a process," said McKeown, a member of Santa Monicans for Renters' Rights (SMRR), a big winner November 7, sweeping eight seats on the College and School boards and hanging on to a one-seat council majority.

"I think there has been some concern raised on the part of the community on how elections are conducted," said McKeown, who was opposed in an unprecedented campaign on Cable TV. (see story)

Perhaps the most controversial proposal includes possibly reining in groups that are not tied to candidates, including independent expenditures and Political Action Committees (PAC). Such committees spent more than $500,000 in the recent council race, thanks to donations from the Edward Thomas Management Company, which owns two beachfront hotels. (see story)

SMRR Council member Ken Genser -- who has been on the council for 18 years -- supported exploring how such spending can be legally tracked and finding ways to stop such groups from skirting Santa Monica's stringent $250 campaign contribution limits in place since the early 1990s.

"A new phenomenon is happening when an individual or individuals form a PAC," Genser said. "I don't know what we can do constitutionally, but we should look at that."

But Council member Bobby Shriver, among others, opposed restraining PACs and independent expenditures.

"I can't support all” of the proposals, said Shriver "I think the law is pretty settled in this area."

Shriver cited Buckley vs. Vellajo, a 1976 landmark Federal case on campaign finance that found it is unconstitutional to limit some forms of speech by individuals in elections, including the use of expenditures that are paid for on a candidate's behalf .

It would be a waste of time and money, Shriver said, to try and scale back such spending.

"I'd rather have a citizen panel getting behind homelessness," said Shriver, who has been a leading force on the council when it comes to homeless issues.

Shriver -- who raised some $260,000 in contributions under the current $250 cap -- said the current limits are working.

"I have to say, when people come in and say they want to reduce the influence of special interests, I have to say, 'I don't know what you're talking about,'" Shriver said.

The expensive campaign attacking McKeown may have, in fact, backfired, Shriver argued.

"To the extent that it's going on in Santa Monica, it isn't working," he said.

Foreshadowing a future showdown on the issue, Genser said the matter may not be as clear cut as many think.

"There's this area in between," said Genser. "What about when a number of individuals form a PAC, can their contributions be limited."

Bob Stern, an expert on campaign finance law who heads the Center for Governmental Studies, agreed that Genser may have a point.

"Genser's right, it is a gray area," Stern told The Lookout after the meeting, adding that the issue has not been fully settled in the courts.

While much of the discussion focused on limiting the influence of PACs and independent expenditures, the council also prepared to tackle an anti-corruption initiative passed in 2000 by local voters known as the Oaks Initiative.

The law – implemented for the first time in 2006 after the City battled the measure in court for six years – prohibits incumbents from accepting gifts, jobs or cash, including contributions, from members who may have benefited from a council member’s vote.

However -- as a Lookout News investigation revealed -- the law also prohibits contributions from non-profit board members and volunteers who serve on City boards and commissions that receive municipal funds. (see story)

Jean Ann Holbrook has threatened to test the law in court, after being barred from contributing to the reelection campaign of her husband, Mayor Bob Holbrook, because she serves on a board of the Historical Society, which receives money from the City. (see story)

In an attempt to de-claw the measure, the council sponsored a measure, Prop W, that failed at the polls.

"This month SM voter rejected prop W," said Carmen Balber, an advocate at the Foundation for Consumers and Taxpayers Rights. "You now have the chance to embrace the will of the voters."

Instead of starting from scratch, Santa Monica should copy Pasadena, which created a task force to implement an identical measure passed by voters in 2000, said Balber, who worked on the campaign to oppose Prop W.

"They did a lot of work on it and it is a very good starting block," Balber said, noting that the council had the opportunity last summer, before placing Prop W on the ballot, to make such changes.

In addition to revamping Oaks, the council will also look at the possibility of public financing for campaigns, though council members said they would have the weigh the costs and benefits.

Forming a task force, or including members of the community will be another option brought back to the council early next year.

While council members butted-heads on what reforms should be included, they agreed hat comprehensive finance reform – if it is truly going to be accomplished – must happen soon.

"This is the time to do it, as far away from a council election as we can," said Genser.