Paul Tullis's Grim Tidings

Bitter musings on politics and policy

Propositions 16 and 17: Welcome to the corpocracy

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On June 8, Californians will vote on a couple of exceptional propositions that are the first attempts in decades by corporations to use the ballot initiative process to change the law in their favor.

California’s ballot initiative system was implemented during the Progressive era to enable citizens to amend the state constitution without going through the legislature (though the legislature can also put initiatives on the ballot). The idea was to provide citizens with a method of protecting themselves from well-funded special interests lobbying the legislature by giving them their own direct avenue to lawmaking.

It’s ironic, therefore, that the system should become a means by which well-funded special interests circumvent the legislature—because they know that a well-informed professional lawmaker would never buy what’s now being propagated in an ad campaign paid for by the state’s largest private utility, PG&E.

Prop 16, the “Taxpayers’ Right to Vote Act,” would require a 2/3 majority in a voter referendum to create or expand any municipally-owned utility, which in most of the state would mean competing with Pacific Gas & Electric or shutting it out of a potential market. PG&E is the measure’s sole sponsor, and has spent $44 million pressing for passage. (The company told shareholders to expect a short-term decline in share price as a result of the expenditure, originally budgeted at $35 million.)

Nearly every city, town, county, consumer group, environmental group, and newspaper in the state opposes the measure, along with AARP, the League of Women Voters and even another large private utility, San Diego’s Metropolitan Water District.

“This is a for-profit corporation trying to kill off its not-for-profit rivals,” said San Francisco Supervisor Ross Mirkarimi told the SF Chronicle. “Prop. 16 is a colossal fraud perpetrated on the people of California.”

PG&E wants to hike rates because it spent a lot of money on dirty-energy infrastructure just before California passed its Renewable Portfolio Standard, requiring the state to get 20% of its energy from fossil-fuel-free sources by the end of this year. Success of Prop 17 would put the kibbosh on efforts to quash the rate hike.

The company’s ad dollars have shouted down proposals to create public utilities in the past—and those only needed a bare majority to pass. Experts say the 2/3 requirement, which is a major factor in the annual disaster in California known as the state budget, would effectively doom any future proposal—and with it efforts to accelerate the transition to green energy.

Prop. 17 got on the June 8 ballot through a $3.5 million signature-gathering campaign by Mercury Insurance Co. The company has been accused of illegally discriminating against some applicants, but Prop. 17 would make such behavior OK, and roll back other consumer protections. California’s Insurance Commissioner (yes, since 1991 California has had a statewide elected official with this title), a Republican, has written of Mercury’s “lengthy history of serious misconduct [and] contempt toward and/or abuse of its customers.”

Nothing like these initiatives has been tried since 1988, when the law which Prop 17 is attempting to overturn was enacted. That November, there were four competing insurance-related initiatives on the ballot, one of which was backed by an insurance company that spent over 90% of the money in support of it. Until then, insurers could deny coverage on the basis of race, religion, sexual preference, choice of boxers over briefs—literally anything. Because there were competing initiatives, and it was a November Congressional election with relatively high turnout, the propositions got a ton of press coverage and a consumer-friendly one that Ralph Nader supported won the day. It limits the factors that an insurer can take into account when deciding whether to offer coverage, and at what price, to factors that actually have a statistical bearing on one’s likelihood of getting into an accident.

Ever since ’88, I was told by Eric McGhee, an expert on voter initiatives at the Public Policy Institute of California, companies have been discouraged by the experience from pursuing their agendas through the ballot-intitiative process and have instead mainly spent their political-influence money on lobbying. McGhee says they largely prefer lobbying to campaign contributions because it’s more likely to get them the specific break in the law that they’re seeking.

This isn’t to say corporations have stayed out of initiative campaigns, but it’s usually been on the No side, to stop a proposition placed on the ballot by citizens or the legislature that goes against their interests. With 16 and 17, the companies are pro-actively seeking to change the law in their favor in a way that’s exceptional.

One longtime academic observer of California politics told me the measures will fail if voters pay close enough attention and the “No”‘s can raise enough money.

But that’s a big if. PG&E is outspending the No’s by more than 1000:1 (yes, one thousand to one.) As for the former question, we’ll just have to wait and see on June 8. The companies have been hitting the airwaves to pump the notion that they’re looking out for Californians’ best interest, but if that were so it could put PG&E afoul of the law: SEC regulations require the publicly-traded company to place shareholder value above other concerns, so either its $44 million investment is in its own best interest, not Californians’, or it risks legal action. PG&E’s lawyers and executives may be greedy, craven and cynical, but I doubt they’re stupid.

The failure in ’88 discouraged companies from using ballot initiatives to push their agendas for a generation. But someone at one of the groups opposing the measures told me that the PG&E attempt is “the most brazen attempt” he’s ever seen.

If PG&E &/or Mercury are successful, it could have as strong an influence as ’88 did, but in the opposite direction, unleashing corporate money into the initiative arena like never before—and showing the rest of the country what life post-Citizens United might look like.

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2 Responses

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  1. Can’t say that I’m all that sympathetic. Kalifornia did it to itself.


    June 1, 2010 at 12:29 pm

  2. […] Tullis at True/Slant has a comprehensive explanation of the campaign, if you’re looking for […]

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