Corporations, Wealthy Dominate Initiative Process

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SACRAMENTO, CA — California's initiative process was intended to give people a way to arm themselves against corruption, whether it was from lawmakers in the Capitol or the special interests that controlled them.

But in the 100 years since former Gov. Hiram Johnson rallied against the corrupt politics that permeated state government, corporations and wealthy individuals have adapted to California's initiative process and in some years dominate it by qualifying ballot measures that benefit them.

Insurance, oil, pharmaceutical and utility companies are among the well-funded interests that have spent tens of millions of dollars in recent years to promote their causes through California initiatives. In 2008, for example, Texas oilman T. Boone Pickens' company contributed 98 percent of the $22.8 million spent to promote an initiative regarding the use of natural gas in vehicles, a move that would have benefited the billionaire's business interests. Voters rejected it.

In the June 2010 primary, the only two initiatives not placed on the ballot by the Legislature were funded primarily by two corporations Pacific Gas & Electric Co. and Mercury Insurance. The largest donation given to any one initiative campaign came from Hollywood producer Steven Bing, who gave $48 million in support of Proposition 87, an unsuccessful alternative energy initiative on the November 2006 ballot.

The money flowing in from corporations, deep-pocketed individuals and labor unions has overwhelmed the initial intent of the initiative process and undermined the notion of direct citizen democracy.

According to "Democracy by Initiative," a report by the Center for Governmental Studies, two-thirds of all ballot initiative contributions came in amounts of $100,000 or more in 1990. By 2006, two-thirds of all contributions came in amounts of $1 million or more.

"Ironically, we're sort of back where we started when Hiram Johnson started the initiative process," said Kim Alexander, president of the California Voter Foundation. "It's dominated by the very special interests he sought to overcome through the initiative process."

Mercury Insurance illustrates how narrow interests have laid claim to the process.

In 2010, the company sunk $15 million into Proposition 17, an attempt to overturn state law banning auto insurance companies from considering a driver's insurance history in setting rates.

While that measure failed, Mercury Insurance Chairman George Joseph has donated nearly $8.1 million to a political action aiming to place a similar initiative on the ballot next June. American Agents Alliance, which runs the PAC, says the proposal will allow customers to receive a discount for having consistent coverage in the past and is allowed in almost every other state.

Opponents said the previous version would have punished people who had to drop auto insurance for any reason, including those deployed abroad for military service.

"The initiative is written to benefit consumers and is much more inclusive than Proposition 17," Mike D'Arelli, executive director of the insurance alliance, said in a statement.

Consumer Watchdog, a Santa Monica-based nonprofit, said the proposal will allow insurance companies to boost rates for customers who had not purchased insurance at some point in the last five years, increasing premiums by as much 40 percent.

"That's about as far a cry from what Hiram Johnson and the progressives contemplated as you can get," said Doug Heller, the nonprofit's executive director.

The initiative process also has led to deceptive campaigning, making it difficult for voters to determine the accuracy of claims.

In 2005, a slate mailer funded by pharmaceutical companies featured photographs of prominent black lawmakers next to an endorsement of a prescription drug initiative even though many of them were opposed.

"This is dirty politics at its worst," Rep. Barbara Lee, D-Oakland, one of four Democratic House members from California shown on the flier, said at the time.

Several of the lawmakers denounced the Proposition 78 flier, which was distributed by a group funded by the Pharmaceutical Research and Manufacturers of America, or PhRMA, the powerful lobbying organization for the nation's drug companies.

The industry-sponsored initiative was placed on the ballot to compete with one sponsored by consumer groups that would have penalized drug companies unless they provided low-cost prescriptions to uninsured Californians. The resulting confusion led to the defeat of both on the 2005 special election ballot.

California voters often find themselves voting repeatedly on the same issue because there is no limit to how often a topic can be placed on the ballot.

For example, they have rejected initiatives three times that sought to require parental notification when minors seek an abortion, yet the initiative's supporters plan to come back for a fourth time next year because of polling they say shows increased support for their viewpoint. The movement is funded by a wealthy conservative donor in San Diego.

"If you don't like this issue, then you will say, `You are abusing the system.' If you like it, then you will say, `We are persevering,'" said, Albin Rhomberg, an organizer for the parental notification initiatives.

Even with the influence of big money, voters approve only about one-third of all initiatives that make the ballot. They have considered a total of 348 initiatives in the past century but approved just 116.

"During the last 100 years, the voters have shown a keen ability to recognize important and legitimate reforms over the desires of special interests who may have used the initiative for their own purposes," said Thomas Hiltachk, a prominent lawyer in a firm that represents the California Republican Party and has worked with former Gov. Arnold Schwarzenegger. "In fact, the voters do a far better job at that than the Legislature ever has."

Still, many agree the system is far from perfect and could use some adjustments.

According to a survey by the Public Policy Institute of California, nearly 90 percent of Californians think the initiative process is controlled a lot or some by special interest. Most Californians favor establishing a time period for the initiative sponsor and the Legislature to meet to discuss a compromise solution before the initiative is placed on the ballot and support more donor transparency.

Good government advocates say it's important to list sponsors, not just online but also on ballot pamphlets. Just as a bill analysis will list sponsors, a ballot question should disclose donations.

Groups seeking political reforms in California also advocate a formal legal review of ballot initiatives to address drafting mistakes, legal conflicts or unintended consequences. In some states, the Legislature is allowed to make changes to initiatives after they pass.

Another reform proposal would extend the time for campaigns to gather signatures, theoretically allowing more grass-roots efforts to get on the ballot. The 130-day window from the time the attorney general approves the ballot language makes it difficult for volunteers to collect the hundreds of thousands of names they need for ballot qualification.

A relatively short timeframe to gather signatures means initiative proponents have to rely on paid signature gatherers, a process that costs millions of dollars.

"The initiative process is a little bit like democracy, messy and filled with problems," said Heller, of Consumer Watchdog. "But there's no better way."

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