California businesses got a pretty good return on their investment when it came to ballot measures in last week's primary election.
Of the seven statewide measures that business coalitions or individual industries supported with substantial contributions, six went in their favor. And the one that didn't missed by a mere 1 percent of the vote.
"Business knows how to play the ballot game in California and they did it quite well," said Dane Waters, president of the Initiative and Referendum Institute in Washington.
While final figures have yet to come in, business interests spent at least $70 million on campaigns for or against measures on the March 7 ballot.
The vast majority at least $60 million went to defeat three measures: $50 million spent by insurance companies to defeat the two insurance referenda, Propositions 30 and 31, and $10 million to defeat Proposition 25, the campaign finance reform initiative.
Business coalitions also backed three bond measures with substantial contributions, including a $2.1 billion parks bond, a $1.9 billion water bond, and a $350 million library bond. All three passed with overwhelming majorities.
"Business handpicked and chose their battles and did very well; it was almost a clean sweep," said Tony Quinn, a Sacramento-based political consultant with the firm of Goddard-Clauson, Porter-Novelli. "In the measures that received a lot of business contributions, the money proved critically important."
Nearly a sweep
The one sour note for business was Proposition 26, which would have reduced the necessary vote for local school bonds from two-thirds to a simple majority. Despite $2 million in financial backing from business, the measure was narrowly defeated, 51 percent to 49 percent.
Nonetheless, this was among the most successful elections for business interests in recent memory.
"In the last several elections, business has spent more money on ballot measures than on lobbying the entire state government," said Craig Holman, project director at the Center for Government Studies, a private, non-partisan think tank in West L.A. that wants to reduce the role of money in politics. "In the process, business has turned the initiative process into a high-finance political arena."
A California Chamber of Commerce official concurred, saying that business interests typically spend $30 million to $40 million on lobbying the various branches of state government in a given year.
"When you lobby in Sacramento, you pretty much only have to communicate with 121 voters: 40 state senators, 80 state Assembly members and the governor," said Fred Main, senior vice president of the California Chamber. "When it comes to ballot measures, you have to communicate effectively with 13 million voters. So it should come as no surprise that more money is spent on ballot measures."
The biggest spending in last week's primary surrounded the two insurance measures, Propositions 30 and 31. In an unusual twist, insurance companies placed the measures on the ballot in a bid to reverse two laws pushed through last year by trial lawyers that would have allowed third-party lawsuits against insurance companies.
In the process, they outspent supporters of the laws chiefly trial lawyers at least 10 to 1 in the fight over 30 and 31. And it worked. Both measures went down in defeat by at least 2-to-1 margins.
"It was quite probably the cleverest move I've ever seen in any ballot measure campaign," Holman said. "The insurance companies wanted to overturn legislation, but instead of putting measures (on the ballot) that negated the law, they decided to put the actual law on the ballot and run a campaign against it, on the theory that it's easier to defeat something than to pass it."
Until now, this tactic of putting a referendum on the ballot to overturn recently approved legislation has been used sparingly. But it may become more popular after last Tuesday's result.
"For the first time in California history, we successfully overturned legislation on a business-related issue that was harmful to business," said political consultant Quinn, whose firm was hired by the insurance industry to defeat the propositions.
As for the bond measures, business interests were aided in their cause by the robust economy, which made voters feel more comfortable about investing huge sums of money in infrastructure projects.
Lack of L.A. support
That momentum, though, was not enough to carry the day on Proposition 26, which would have changed the two-thirds vote necessary to approve local school bonds to a simple majority vote.
While some consultants privately said the campaign might not have been run as effectively as it could have been, a major reason for the narrow defeat appeared to be the Belmont Learning Complex scandal in Los Angeles.
With the greatest need for new schools, L.A. County had been counted on to provide a major base of support for the proposition to counter conservative voters in tax-averse regions of the state, like Orange County. But the proposition actually lost in L.A. by 2,000 votes.
Ironically, when the voter initiative process was first introduced in California by Progressive-era Gov. Hiram Johnson in 1911, its aim was to provide grassroots groups with a way to get around entrenched business interests in Sacramento, chiefly major national railroad companies. Now, according to Holman, business coalitions or specific industries typically outspend all other parties on ballot measures.
That spending exploded in the 1980s as business came under attack from environmentalists, trial lawyers and other groups. "Business felt under attack and tried to defend themselves," Holman said.
In recent years, the initiative process, which had typically been used for more grassroots or social issues like the Proposition 13 tax reform measure, has turned into a tool for special interests to craft highly technical legislation.
The most glaring example was the insurance initiative wars on the 1988 ballot, in which five competing auto insurance reforms pulled in a total of $70 million in spending. Proposition 103, put on by a grassroots consumer organization, won the day, despite being outspent at least 10 to 1.
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