SACRAMENTO—The state’s political watchdog agency incorrectly limited donations to funds controlled by elected officials and candidates, a Sacramento County Superior Court judge ruled in a decision that could blow wide open the amount of money spent in an upcoming special election.

Judge Shelleyanne Chang’s preliminary ruling Wednesday said a committee raising money for Gov. Arnold Schwarzenegger’s proposed initiatives for an expected special election this fall may raise unlimited amounts of money from individual donors.

If Chang, who was set to hear oral arguments in the case Thursday, maintains her ruling, political committees controlled by the governor and other elected officials could widen their reach and accept donations that sometimes go beyond $1 million. Already, Schwarzenegger said he needs to raise $50 million to push his issues, while his opponents are rapidly increasing their fund-raising.

Treasurer Phil Angelides, a Democrat and declared candidate for governor, has a similar committee. Without limits, his Standing Up for California raised nearly $1.6 million in 2004. That includes contributions between $100,000 and $250,000. After Jan. 1 and the new limits, it has raised $5,000, state campaign finance records show.

Some of the money from his longtime supporters bought television time to attack the governor’s budget priorities.

Chang said the regulation adopted last summer by the state’s Fair Political Practices Commission to limit contributions to such committees to $22,300 infringed on the groups’ First Amendment rights to free speech. The FPPC based its regulation on the limit set by voter-approved Proposition 34 in 2000 for donations to candidates’ personal campaign funds.

The FPPC regulation “chills” a committee’s ability to raise resources “that are admittedly essential to the modern political initiative process,” Chang said in her ruling.

It also unfairly restricts who can associated with a committee, she wrote, because “such associations are chilled by the justifiable and reasonable apprehension that their mere association for the exchange of political ideas will result in a considerable curtailment, or even termination, of the committee’s ability to amass resources.”

Earlier this year, Assemblyman Keith Richman, R-Chatsworth, withdrew from a committee pushing his plan to privatize much of the state’s public pension system because of the regulation.

Opponents of Schwarzenegger and his allied group, Citizens to Save California, backed the FPPC regulation and argued that Citizens to Save California was actually controlled by the governor and should be held to the donation limits. Chang’s ruling Wednesday rejected both arguments.

Schwarzenegger and Citizens to Save California are pushing for measure to change teacher tenure, privatize much of the state’s public pension system and change the way congressional and legislative districts are drawn.

FPPC Chairwoman Liane Randolph disagreed with Chang’s decision.

“We have requested oral arguments tomorrow and are hopeful we can convince the judge of the validity of our regulation,” Randolph said in a prepared statement.

Randolph said the FPPC believes “strongly that the regulation is the correct interpretation of the campaign finance laws adopted by the voters of California.”

Assembly Speaker Fabian Nunez, D-Los Angeles, promised the Assembly will move at “lightning speed” to pass a bill tightening the campaign finance law.

“For someone who promised voters he didn’t need to raise money, the governor, in lockstep with the corporate backers of his initiatives, has gone to incredible lengths to eliminate the will of the people to limit campaign spending,” Nunez said.

The governor’s office referred calls to Sacramento attorney Chuck Bell, who could not be immediately reached for comment.

Derek Cressman, director of the TheRestofUs.org, a nonprofit political watchdog that has also challenged the committee’s fund-raising as illegal, said in a statement that the ruling was out of step with reality and the will of the people.

“Thanks to the court and the governor’s committees, the rest of us can shout ourselves hoarse and still not be heard above the roar of the millionaires’ cash,” Cressman said.