Millionaire Tom Knox could lose his lopsided spending edge in the mayor's race if City Council adopts a proposal by Councilman Jim Kenney to suspend newly enacted campaign contribution limits.

Kenney will introduce a bill today permitting unlimited contributions to mayoral candidates in a race where a candidate spends at least $2 million of his own cash.

Kenney, who was among the first Council members to propose campaign finance reform, said Knox's spending in the first election with contribution limits has perverted the election process.

"Every five minutes on television I see a Tom Knox ad," Kenney said yesterday. "Unfortunately the campaign finance restrictions have left one candidate with the ability to get his message out on the one really effective medium."

The U.S. Supreme Court has ruled that candidates cannot be restricted from spending their own money on their campaigns.

Kenney said he believes he has the support of most of Council's 14 Democrats, and Mayor Street seems to like the idea.

Spokesman Joe Grace said Street is "inclined to support this exception" to contribution limits, saying heavy spending by a millionaire creates "a question of fairness."

Even if Kenney's bill becomes law, the city won't return to a world of unlimited contributions. In addition to passing the city's campaign finance law, City Council imposed contribution limits on companies seeking city contracts or financial assistance, and those limits would remain in effect.

The combined effect would be to limit contributions by big law firms, insurance companies and developers, but permit them by unions, and companies or individuals who have no interest in city business.

U.S. Rep. Bob Brady, whom Kenney supports for mayor, got three contributions from building trades unions last month of $20,000 each - the maximum permitted under the existing campaign limits. Kenney said the bill isn't about helping Brady, but about fairness.

"Today's Daily News pushed me over the top on this," Kenney said, referring to Knox's showing the Keystone poll. "Tom Knox bought 22 points worth of name recognition. If he weren't in the race, we wouldn't even be talking about this change."

Kenney's bill would also require that contributions in excess of the suspended limits be reported to election officials and the board of ethics within 24 hours.

Zack Stalberg of the reform group Committee of Seventy said his organization will look at the proposal, but "we have fought for campaign finance limits and my expectation is that we will probably oppose the Kenney bill."

Former City Councilman Michael Nutter, the first candidate to abide by the contribution limits, has called a news conference today to condemn Kenney's proposal.

"To think we have to blow up campaign finance reform just because one guy showed up with a lot of money to buy television ads is complete insanity," Nutter said. "This is not reform. This is retreat."

Kenney's bill will have to be assigned to a committee and debated at a public hearing. If it were fast-tracked, it could be approved by Council as soon as Feb. 15, three months before the Democratic primary. *

Staff writer Catherine Lucey contributed to this report.