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— After the Republican Party of San Diego County endorsed Steve Francis for mayor on June 13, it wasted little time in turning its endorsement into campaign action.

As of election eve, public election filings showed that the local GOP had collected $158,000 from a small group of donors and spent it quickly. Expenditures for Francis were reported at $86,342, including $76,059 for mailers, $8595 for door hangers, and $1688 for precinct maps.

Relying on a legal loophole that allows donors to ignore San Diego's campaign restrictions, local business leaders who had a major stake in the election's outcome made big contributions. Donations to the party from June 21 through July 21 included $50,000 from Manchester Resorts, owned by hotel magnate Doug Manchester, an early supporter of the Francis candidacy; $40,000 from real estate developer Macey McMillin, Jr.; $10,000 from McMillin Management Services; $25,000 from the EastLake Company, which develops in south San Diego; $10,000 from Reno Contracting, Inc., of San Diego; $7000 from Atlas Hotels, which owns the Town and Country in Mission Valley; $5000 from developer Barrett-American; $5000 from Ace Parking; $5000 from San Diego GOP chair Ron Nehring; and $1000 from Collins Development Company.

San Diego's Election Campaign Control Ordinance limits individual contributions to $300 per candidate, but Proposition 34, passed by California voters in 2000, created a new category called "member communications," a category the city's ordinance does not address. Under state law, individuals and businesses can make unlimited contributions to political parties, and under Prop 34, political parties, in turn, can make unlimited expenditures on member communications. The one restriction is that the party must direct its efforts only to the party's members, in this case, registered Republicans.

According to April Boling, San Diego's ubiquitous campaign treasurer, whose clients include the San Diego Republican Party, the San Diego Police Officers Association, recently resigned Mayor Dick Murphy, and Councilman Brian Maienschein, the "type of communication cannot be bumper stickers, yard signs, TV, and radio. This is because the message [in those instances] is being communicated beyond the [party] membership."

Public disclosure records show that in the 2004 election cycle, the San Diego Republican Party spent hundreds of thousands of dollars on behalf of GOP candidates, mostly for state legislative seats, but it also targeted Republican voters in nonpartisan races. For example, the party spent $61,096 in mailers for city attorney candidate Leslie Devaney, $127,786 in mailers for Mayor Dick Murphy, $16,625 in phone banks for businessman Phil Thalheimer in his unsuccessful attempt to defeat Councilman Scott Peters, and $57,537 in a mailer attacking Democratic mayoral candidate Donna Frye.

Nothing in Prop 34, says Boling, precludes coordination between candidates and party officials.

One GOP consultant concurred. "My [Republican] clients and I work directly with the party. We decide what we want the party to do, such as a direct mail piece. We line up the funds, design it, print it, mail it, and the party essentially rubber stamps it and gets a commission for being a political laundromat."

But candidates aren't the only ones to profit from the loophole. The local GOP and its chosen consultants also make big money. Ronald Nehring, an East County resident, chairs the San Diego County Republican Party. Nehring requires that Republican candidates benefiting from member communications sign a memorandum that allows the party to keep 18.5 percent off the top for administration and overhead.

"I do not know what they do with the 18.5 percent," said one political consultant who has worked closely with the Republican Party's member communication efforts.

Nehring would not disclose the percentage charged the Francis campaign. "How funds are allocated is an internal decision made by the party," said Nehring.

However, public records dated July 22 show that of the $158,000 collected, $86,342 was spent on behalf of Francis and $9403 to support Prop A, the Mt. Soledad cross ballot measure. The remaining $62,255, or 39 percent of the funds collected, was spent on GOP consultants and Republican Party overhead costs.

Will Hutson, political director of the Orange County Republican Party, said his organization does not have a similar procedure or charge candidates overhead fees. "I do not know if we have done it in the past. We do not [currently] have a built-in procedure on that."

And last year in San Bernardino County, Republican Party chairman Bill Postmus raised and spent over $200,000 for member communication without requiring a memorandum with GOP candidates or including any "overhead" provisions.

Boling, who did not know how much the party was charging Francis, said the San Diego GOP held back 18.5 percent of the funds because "there are overhead costs related to these projects...related to maintaining the party apparatus."

Local GOP sources indicate that the party spends about $15,000 a month on staff and overhead costs.

Several Republican Party activists claim Nehring pushed to get the party to endorse Steve Francis in the mayoral primary.

"You know why Ron pushed this through?" said a senior GOP leader who agreed to comment on the condition of anonymity. "The party had $40,000 in the bank, and overhead is $15,000 a month. They are moving office locations, and that will cost them. So if they did not endorse Steve Francis, they would shut down. This election is essentially saving Ron's ass."

Was money the motive? Nehring denied it. "The financial health of the party is unaffected whether a candidate is endorsed or not. It does mean significant party resources are committed for the candidates."

Besides Francis, San Diego's Republican mayoral hopefuls included former police chief Jerry Sanders, Mt. Soledad cross activist "New York" Myke Shelby, and attorney Pat Shea.

One mailer sent out by the San Diego GOP not only endorsed Steve Francis but attacked Republican Jerry Sanders for supporting tax increases. (The same mailer also attacked Democrat Donna Frye.) This may have been the first ever "attack" mailer by a local Republican central committee on a fellow Republican candidate.

Traditionally, the local GOP has stayed out of most contested Republican contests, including nonpartisan races, according to public records. Races with incumbent Republicans running, such as Mayor Murphy's reelection campaign, are the most notable exception.

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