U.S. Rep. Neil Abercrombie's race for the governor's office suffered a setback yesterday when a state commission ruled the veteran congressman cannot transfer more than $900,000 from his federal campaign fund to his gubernatorial campaign.

Abercrombie's campaign staff called the decision unfair because it benefits politicians in state and city government who are allowed to use funds left over from their previous races.

Honolulu Mayor Mufi Hannemann and Lt. Gov. James "Duke" Aiona, both of whom are also expected to run for governor next year, have transferred funds from their previous campaigns, they noted.

"Why would a federal candidate be prohibited (from transferring excess funds) where state candidates are not prohibited?" asked Abercrombie attorney Karl Sandstrom. The campaign has not decided if it will appeal.

The state Campaign Spending Commission, in a 4-0 vote, said state law does not permit a candidate for state office to accept funds transferred from his or her federal campaign except for $6,000 from the federal committee itself.

The decision is not devastating for Abercrombie's gubernatorial bid but puts pressure on him to raise money quickly to show he can compete with Hannemann and Aiona, said Neal Milner, a political science professor at the University of Hawai'i-Manoa.

"It puts pressure on (Abercrombie) to show that he can raise more money pretty quickly ... to demonstrate his strength as well as to put more cash in the coffers," Milner said. "He has to show that he can do it pretty quickly so that people don't say, 'Ah, Mufi's got the money, he's going to be the serious candidate.' "

Under the opinion, Abercrombie's federal campaign committee can refund contributions to those making them and contributions may be solicited from those persons for his gubernatorial bid.

Abercrombie's latest gubernatorial campaign spending report through June 30 shows he had about $390,000 cash on hand.

Hannemann reported $1.17 million in cash on hand, including about $660,000 transferred from his mayoral campaign last year.

Aiona reported $880,000 cash on hand, including $767,000 transferred from his lieutenant governor campaign.

"It's clear that Hawai'i law does not expressly prohibit the transfer of (federal surplus) funds," Sandstrom said.

He said the appointed commission overstepped its role as an administrative agency by creating a law that did not previously exist. The decision will inhibit Abercrombie's ability to reach out to more voters, Sandstrom said.

"This decision makes it more difficult," he said. "You have to spend less time with voters and more time with the donors."

Hannemann attorney Lex Smith acknowledged that there is not a specific prohibition against transferring excess federal campaign funds to a state campaign account in the state law, and that the federal law allows for states to decide whether such transfers can be made.

"But that doesn't mean that the state law allows it," Smith said. He added that the state law does prohibit any federal committee such as Abercrombie's congressional committee from contributing more than $6,000 to a gubernatorial account.

GOP attorney Cal Chipchase applauded the commission's decision.

"I think that for the Hawai'i governor's race, the politics are local and the money should be too," Chipchase said.