Annual reports reveal that thousands of special-interest groups spent $177 million last year on lobbying the Legislature and other branches of state government.
That’s a lot of money, but it doesn’t tell the whole story of spending to influence political decisions – spending that is, in reality, a relative drop in the bucket.
One should add money for direct campaign contributions to candidates and ballot measure campaigns, “independent expenditures” on campaigns and other ancillary political action activities. The National Institute on Money in State Politics says more than $650 million was spent on campaigns in California in 2012, three-fourths of it on ballot measures.
It’s a drop in the bucket because the stakes are much, much higher, given that the governor, legislators, other elected officials and their appointees to myriad boards and commissions directly affect at least a half-trillion dollars each year.
For starters, the state budget, including special, bond and federal funds, is more than $200 billion a year. Kick in, roughly, at least $100 billion in insurance premiums regulated by the Department of Insurance and another $100 billion in utility rates at the Public Utilities Commission.
Then factor in about $50 billion in local property taxes and $20 billion in local sales taxes, all collected under rules set by an elected Board of Equalization, and the $500 billion mark is clearly visible. That’s about a quarter of the state’s entire economy, incidentally.
But that doesn’t count countless billions more in less tangible impacts – particularly on the many professions and businesses regulated by the state. Just one example: Health care is California’s largest single economic activity, more than $200 billion a year, and every aspect is regulated by the state, including the Legislature’s minute control over which medical practitioner can perform which procedure on which part of the human body.
The largest lobbyist employer last year, the Western States Petroleum Association, illustrates that aspect. It spent $4.7 million, principally to affect regulation of hydraulic fracturing to exploit California’s shale oil, the nation’s largest deposits.
The outcome was more oversight than the industry wanted but not enough to stop drilling that’s potentially worth hundreds of billions of dollars. And if the oil industry is a big winner after spending just $4.7 million, it’s an investment that will pay off very handsomely.
It’s the unspoken cost-benefit equation in every decision to hire a lobbyist, make a campaign contribution or launch a public-relations campaign, whether by the oil industry, a public-employee union, an insurance company or a public-works contractor.
The cost is simply a tiny fraction of the potential gain or loss.