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California ballot package caters to special interests

Published: Sunday, May. 3, 2009 - 12:00 am | Page 1A

As California's legislative leaders and Gov. Arnold Schwarzenegger rushed to craft a budget compromise in February, there were two key political goals.

The first: Obtain enough votes to get it through the Legislature.

The second: Keep the state's richest interest groups happy with the result.

The latter goal was critical. Six elements of the final budget deal, Propositions 1A through 1F, will face the voters in a May 19 special election.

Legislative leaders knew that any well-financed campaign against the delicate package could sink the whole thing.

"Any time you do a ballot measure – any ballot measure – you always sit around and say, 'Who could be the potential opposition?' " said Assembly Speaker Karen Bass, a Los Angeles Democrat and one of four lawmakers at the negotiating table. "You also always sit around and say, 'How do I get that opposition on board or neutral at best?' "

The entire architecture of the ballot pact that emerged was heavily shaped by leaders' desire to please – or at least neutralize – the state's most powerful political players.

Now, some of those very interest groups protected in the budget deal are bankrolling the campaign to ratify it.

For the oil industry, the package omits a once-proposed 9.9 percent oil severance tax. Energy companies have given more than a million dollars to pass the plan, led by a $500,000 donation from Chevron.

For the liquor, beer and wine industry, increased alcohol taxes were shelved. Alcohol industry heavyweights, such as E. & J. Gallo Winery ($100,000) and California's Beer and Beverage Distributors ($50,000), have all opened their checkbooks.

For the teachers union, the list of ballot measures includes a separate measure to ensure repayment of deep cuts to schools and protections for top-priority programs. The California Teachers Association has contributed $7 million to the passage of Propositions 1A and 1B.

For casino-operating Indian tribes, the state lottery measure avoids any new games that could threaten their gambling operations. Tribes, who could have been major contributors against the lottery proposition, have kept their checkbooks closed.

The influence of such groups is, more often than not, simply unspoken.

"If somebody has a history of putting tens of millions of dollars into lobbying and ballot measures, they don't have to say anything," said former Assemblyman John Laird, who was the Democrats' chief budget negotiator for several years.

In 2006, for instance, the oil industry spent $100 million to defeat an oil severance tax on the ballot.

Negotiators know that an industry with that track record "would quite probably be willing to do it again," Laird said.

At the start of 2009, lawmakers and the governor faced a daunting $40 billion budget hole made worse by a cash shortage so severe the state would soon no longer be able to pay all its bills.

Democrats, who control a strong majority in both houses of the Legislature, were stymied by Republicans and California's constitutional requirement that two-thirds of lawmakers approve tax hikes.

Lawmakers of both parties and Schwarzenegger squabbled for months before settling on a complex plan that raises broad taxes (the sales tax, personal income tax and vehicle fees) on most Californians, borrows heavily and slices deeply into state services.

Bass said Democrats also fought hard to protect programs for the poor, aged, blind and disabled.

"If it was just as black and white as who yelled the loudest and who had the most money, we would have wiped out (in-home supportive services) and we would have wiped out (welfare programs)," she said. "They would have been gone."

The linchpin of the ballot deal was Proposition 1A.

If passed, the measure would allow $16 billion in continued tax hikes and create a stronger rainy-day fund to constrain future state spending.

Large special interests played a key part in determining which taxes were raised.

Democrats had wanted to tax the rich, but GOP lawmakers nixed that idea. Then, on New Year's Eve, the Schwarzenegger administration proposed taxing oil, alcohol and extending the sales tax to certain services, such as sporting events.


Call Shane Goldmacher, Bee Capitol Bureau, (916) 326-5544.


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