Dan Walters

Dan Walters: Activist government spawns corruption opportunities

Dan Walters
Dan Walters

Environmental groups claimed a major victory for the public interest four decades ago when voters, and then the Legislature, imposed tight regulation on the development of land along California’s 1,000-mile-long coastline.

Projects within the “coastal zone” would be subject to oversight by a new state commission appointed by the governor and the Legislature.

However, as with all major political policies, the coastal-protection law had unintended consequences.

By restricting the supply of coastal land that could be developed, it raised the economic value of that land, and therefore created an incentive for landowners and developers to influence the regulatory mechanism.

A corps of lobbyists, many with connections to Sacramento politicians who appointed commission members, quickly offered services to developers. Meanwhile, there was a flurry of bills to redraw the coastal zone’s boundaries to exclude certain lands from the commission’s purview.

With stakes in the hundreds of millions, if not billions, of dollars, it’s not surprising that scandals ensued. One coastal commissioner was nailed for taking bribes, a legislator was revealed to be seeking a coastal zone exemption for his own holdings, and several other lawmakers were found to be carrying exemption bills for others.

The situation was encapsulated in a memo that a coastal land lobbyist wrote to a group of Southern California landowners, describing the increase in value that their holdings would enjoy from a coastal zone exemption and itemizing how much money it would take in lobbying fees and campaign checks to get such a bill through the Legislature.

What happened on coastal land regulation was a perfect illustration of what one might call the dark side of governmental activism. A new regulatory mechanism, a new tax break, or a new subsidy – all with supposedly benign motives – also create new incentives for those affected to employ lobbyists, campaign contributions and other forms of political persuasion.

We have seen it not only with coastal regulation, but with “enterprise zones,” with “redevelopment,” and with countless tax breaks of various kinds.

A quarter-century ago, when the FBI conducted a sting investigation of Capitol influence peddling, agents posed as businessmen seeking special treatment of a shrimp processing plant, and the ruse worked because it sounded like business as usual to legislators caught soliciting bribes.

It apparently sounded legitimately illegitimate to Sen. Ron Calderon who, an FBI affidavit says, sought bribes from an agent posing as a movie producer and pleading for an expansion of the state’s subsidy program for film projects.

When a new regulatory or subsidy scheme is proposed to supposedly benefit the larger public, we should always keep in mind that it may have a darker side.