Cash Pouring in on Initiatives

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BY JON MILTIMORE — Cash is flowing into campaigns on ballot initiatives, some of which will determine how billions of taxpayer dollars are taken and spent. For details on ballot issues in all 50 states, check ballotpedia.com

Interest groups are spending lavishly on ballot initiatives this election season.   Campaign contributions to ballot proposals eclipsed the $50 million mark in several states this election season, including California and Washington, where combined contributions currently total nearly $200 million.   While more than 20 states have tax issues of some kind on the ballot, some of the proposals drawing the most donations are not directly tax related.

Education initiatives in Oklahoma and Florida, for example, have prompted multi-million dollar ad campaigns, while in California a pair of ballot proposals that will determine who will draw district lines in 2011 has generated $30 million in ad spending.

Eric McGhee, research fellow at the California Public Policy Institute, said the prerogative had belonged to the state legislature until 2008, when a successful initiative narrowly passed and created a citizen commission to oversee drawing of state district lines.   Proposition 20 would extend the law to apply to congressional districts as well as state districts, a move that incited an interparty conflict.

“The California Democratic Party probably has the most to lose by this,” McGhee said, noting Democrats hold hefty majorities in the legislature and are pegged as a favorite to seize the governor’s mansion.

McGhee said the Democratic operatives responded by launching their own ballot initiative, Proposition 27, which would dissolve the commission, and the result has been a $30 million ad war.

Should both measures pass, the proposal with the higher majority vote would become law, but no public polling on the initiatives is currently available.   “I guess we’ll have at least one Election Day surprise on Tuesday,” he said.

The California episode lends itself to detractors of the initiative process who say it empowers well-funded special interests and sacrifices the public interest to the will of a fickle electorate.

“Elected officials right, left and center know that the best course isn’t always the most popular,” said Jon Shure, Deputy Director of the State Fiscal Project at the Center on Budget and Policy Priorities.   Shure said replacing democratic decision-making with constitutional formulas can inhibit a state’s ability to direct resources efficiently. He cited Colorado’s 1992 Tax Payers Bill of Rights initiative as an example.

“Voters often support such initiatives, feeling they will be gaining control over spending when in fact they are giving it up,” Shure said. “Conveying that to voters in states where policy decisions can bypass legislatures can be difficult.”

Taxpayer advocacy groups often defend the initiative process, arguing it gives voters a direct method to check lawmakers.

Jonathan Williams, director of the Tax and Fiscal Policy Task Force for the American Legislative Exchange Council, said legislators often have difficulty voting against their own interests, including issues such as term limits.   “It’s awfully hard for legislators to vote to limit their own power,” Williams said.“The downside is a case like California where they have so many issues … it can lead to complications.”

The Golden State has nine initiatives on the ballot, second only to Oklahoma.   With billions of state dollars at stake, it’s not surprising campaigns have raised $130 million, policy analysts say, especially when powerful interest groups are competing for the same prize.

This is in California’s Proposition 24, which pits members of the Silicon Valley Leadership Group against public sector unions. The  initiative will determine if corporations receive a series of tax breaks expected to cost the state about $4 billion over the next four years.

The California Teachers Association and the National Education Association have already contributed more than $10.5 million to the Yes on 24 campaign, which had spent more than $10 million on ads as of October 15.   On the opposing side, heavyweights such as Viacom, Walt Disney Co., General Electric, Fox and CBS have all made contributions of $1 million or more to defeat the proposal. As of mid-October the No on 24 campaign had spent about $8 million on media ads.   McGhee said such initiatives often leave lawmakers handcuffed when coming up with budgetary solutions.

“Take Prop 13… It completely scrambled the entire fiscal structure of the state,” McGhee said of the 1978 initiative that rolled back property taxes.   Williams conceded that many tax cut proposals don’t target spending reductions, but pointed out public employee unions often employ similar “back door strategies” to fund services and programs.   “The left has been fairly effective at using the ballot to advance what they call pro-education initiatives,” Williams said. “The education lobby often times is the most powerful lobby group in state capitols.”

While public employee unions have been the largest contributor in several initiatives, the biggest spender on a single proposal this election season has been the American Beverage Association.   The organization, made up of soda companies such as Pepsi, Coca Cola and Dr. Pepper, dumped $16.5 million into a campaign initiative to repeal a two percent excise tax on soda and bottled water that went into effect in July. The tax is expected to raise about $90 million.

Opponents of the initiative have raised less than $400,000, mostly from contributions from health organizations and local unions, and as a result are being outspent by about a 40-1 margin.   Williams said the beverage industry could be sending a message to lawmakers who’d lump sugary drinks in with alcohol and tobacco as a “sin tax.”

“I think the ABA drew a line in the sand and said this is not responsible policy,” Williams said. “Certainly an industry targeted (for taxation) is going to protect their interest.”   In the ABA’s case, the ad campaign appears to have paid dividends. A recent SurveyUSA poll showed the public in favor of the measure by a nearly 2-1 margin.  

This is the second story in a series on ballot initiatives. Click here to see the first.

Jonathan Miltimore is a national reporter for The Franklin Center for Government and Public Integrity. jonathan.miltimore@franklincenterhq.org

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