WASHINGTON -- The Supreme Court, long opposed to mandatory campaign spending caps, cleared the way yesterday for states to use generous public subsidies to entice candidates to accept voluntary limits and to pressure candidates who refuse to agree to limits.

A Kentucky public financing scheme that goes further than most states have gone withstood a constitutional challenge when the court, without comment, turned down two appeals on the issue.

The Supreme Court ruled 23 years ago that it is unconstitutional to impose a direct spending limit on political candidates, prompting states to look for indirect means to curb campaign outlays.

The Kentucky approach "has some of the most aggressive provisions" on spending caps, according to Brenda Wright, managing attorney of the National Voting Rights Institute. "This was a case people were watching pretty closely as a test of the constitutionality of public financing systems."

The Kentucky plan gives candidates the option of accepting subsidies, but requires those who take public funds to agree, too, to spending limits. It also includes an unusual feature designed to dissuade those who reject the subsidies from exceeding the spending limits.

If a nonsubsidized candidate spends more, the ceiling for all candidates in that race is eliminated, and additional public funds are poured into the coffers of the candidates already receiving subsidies.

Another facet of the plan is that all candidates, subsidized or not, are barred from raising money in the final 28 days before the election.

Both of those parts of the plan were challenged by Robert E. Gable, a former state Republican chairman who in 1995 unsuccessfully sought the GOP nomination for governor as an unsubsidized candidate.

Under the Kentucky law, adopted in 1992 and used for the first time in 1995 elections, candidates for governor who accept subsidies may spend up to $1.8 million on the primary election and another $1.8 million on the general election.

Those candidates receive $2 in public funds for each dollar they raise. Thus, they reach the $1.8 million spending ceiling by raising $600,000 privately and getting $1.2 million from the state.

If candidates who reject subsidies go beyond the $1.8 million in spending in either election, then their subsidized rivals are allowed to spend more, with every added $1 they raise matched with another $2 in public subsidy.

Gable contended that this system interfered with his First Amendment free speech rights because it amounts to coercion to accept subsidies and to abide by spending limits.

He also argued that the ban on raising money in the final 28 days threatens to cut down political speech at the most critical point in the campaign.

A federal appeals court upheld the financing scheme and upheld the 28-day ban on raising money, although it ruled that a candidate could spend his or her own money -- rather than funds from outsiders -- during that 28-day span.

In the second case, Gov. Paul E. Patton argued that, if the court agreed to hear Gable's appeal, it also should consider restoring the 28-day ban on all contributions, including a candidate's use of his or her own money.

The justices simply refused to hear either appeal.

The court also held a one-hour hearing yesterday on the right of victims of sexual harassment to get heavy "punitive" damages tacked on to their jury verdicts against their employers.

At issue in a test case -- involving a woman who failed to get a promotion on the staff of the American Dental Association -- is the legal standard the courts are to use in deciding whether a harassment victim deserves an extra damage award.

A final ruling on the issue is expected by summer.

Pub Date: 3/02/99