A pilot project to experiment with public financing of Big Island County Council campaigns is moving toward final approval after state House and Senate lawmakers agreed in principle yesterday on a draft.

Lawmakers in conference committee chose to drop from the bill a controversial proposal to clarify a limit on corporate campaign contributions that activists feared would poison the proposal.

The pilot project, if approved by the full House and Senate, would start in 2010 and run through three Big Island County Council election cycles.

Candidates would have to get $5 contributions from 200 registered voters to qualify for public financing which, in theory, would help them become more competitive against candidates who accept private campaign donations from individuals, labor unions and corporations.

The Big Island County Council volunteered for the pilot in January, and activists hope the concept will be successful enough to spread to other counties and to state campaigns.

"The County Council thinks it's a great idea, and they're willing to do it," said Ralph Boyea, the council's legislative advocate. "I think it's a perfect time to give it a shot."

Kory Payne, a community organizer with Voter Owned Hawai'i, said activists were pleased lawmakers left the clarification on corporate contributions out of the draft.

House and Senate leaders had agreed earlier this session to clarify an apparently inadvertent change to state campaign-finance law in 2005 that limited corporate contributions to corporate political action committees to $1,000 per election.

Activists had urged lawmakers not to lift the limit but instead ban all corporate donations to political candidates.

Payne said public financing would lessen the fundraising pressure on candidates and may reduce the influence of private donations.

"It fundamentally changes the style of campaigning for County Council," Payne said. "It will be a lot less dialing for dollars from donors and a lot more talking to constituents and networking with constituents within the district that you live in."

Barbara Wong, the executive director of the state Campaign Spending Commission, said the commission is neutral on public financing but warned of the potential cost to the state if the idea expands to other election campaigns. She also said the state constitution only authorizes partial public financing.

"I don't see the public being asked whether they want to fund this program," said Wong, who prefers gradual increases to the state's existing partial public financing program. "We would rather have incremental change."

House and Senate conferees, meeting before the deadline last night to move bills that do not have a financial impact, agreed to limit the size of political campaign signs on residential property.

Political signs — if the bill passes — would have to be no larger than 2 by 4 feet, and the total area of all signs could not exceed 16 square feet.

The Outdoor Circle has wanted the restriction to prevent some oversized campaign signs and the practice of overloading signs in front of homes near heavily traveled intersections or street corners.

"It's a big victory for the beauty of Hawai'i," said Bob Loy, the director of environmental programs at Outdoor Circle.

Lawmakers chose not to move a last-minute proposal by state Rep. Tommy Waters, D-51st (Lanikai, Waimanalo), to prohibit nepotism by lawmakers and state employees.

The House had passed a nepotism bill and named conferees, but the Senate did not follow after the bill was criticized for a provision barring lawmakers from getting state contracts worth more than $10,000.

State Rep. Josh Green, D-6th (N. Kona, Keauhou, Kailua, Kona), a doctor with a contract with the Hawai'i Health Systems Corp., claimed the provision was punitive because of a previous dispute with Waters over medical malpractice liability reform.

Waters, the chairman of the House Judiciary Committee, added the nepotism language yesterday to a separate bill carried over from last session and dropped the provision on state contracts.

But state Sen. Brian Taniguchi, D-10th (Manoa, McCully), the chairman of the Senate Judiciary and Labor Committee, said he was uncomfortable moving the bill and encouraged more discussion on nepotism during the interim before next session.

Dan Mollway, the executive director of the state Ethics Commission, had wanted the nepotism bill to discourage lawmakers or state employees from showing favoritism to relatives.

"I'm really disappointed, because I think the bill they came up with was a really good bill," he said.