By the shady standards of politics these days, oil giant Phillips 66 made a shrewd investment by spending $81,000 to kill a ballot measure to raise oil taxes in the hard-luck Southern California town of Rialto in 2012.
Aided by practiced Sacramento consultants, Phillips 66 hid its involvement by slipping much of its money into an apple pie-sounding campaign committee, Californians for Good Schools and Good Jobs.
The “Californians” included casino tribes, plaintiffs attorneys, public employee unions, a health insurance company and the Houston-based Phillips 66. In 2012, they infused the shell with a combined $309,400 for lofty causes of good schools, good jobs, politicians willing to do their bidding and, in Phillips 66’s case, the defeat of the Rialto oil tax.
Using the cynically named cut-out, Phillips 66’s consultants delivered mailers urging voters to defeat Measure V, which would have imposed an annual $5 million tax on companies that own massive oil storage tanks in Rialto. Sure enough, voters rejected the tax by 6 percentage points, 1,154 votes out of 20,840 ballots cast.
The other day, the California Fair Political Practices Commission got around to fining Phillips 66 $16,000. By the FPPC’s standards, the fine was hefty. For Phillips 66, which reported earnings of $4.2 billion last year, $16,000 is chump change.
“If you spend $80,000 and you get fined $16,000 four years later to save $5 million, draw your own conclusions,” Rialto City Manager Mike Story said by phone.
A single transgression in one far-off city might seem trivial. Huge corporations and billionaires spend millions to buy initiatives, elect presidents and governors, and control Congress and legislatures. But it’s emblematic of the fast and loose manner in which campaigns are waged.
Consultants involved point fingers away from themselves, and Phillips 66 said it was an oversight. Mistakes, in other words, were made. As set forth by the FPPC and stipulated to by Phillips 66, however, the facts are worth noting as this year’s election nears.
In 2012, Sacramento consultant Josh Pulliam was running an independent campaign in the Rialto area against a Rialto Councilman Joe Baca Jr., a Democrat who was running for Assembly against Cheryl Brown, another Democrat who ultimately won.
Pulliam’s client was the California Tribal Business Alliance, which includes two tribes, but which raises money for its varied political adventures from casino owners, Realtors, prison guards, lawyers, doctors, chemical companies and others.
In late October 2012, Phillips 66 consultant Stephanie Williams hired Pulliam to defeat the Rialto oil tax, and they set about devising a budget of $81,000 for a poll, voter contact and mass mailings.
In their settlement, the FPPC and Phillips 66 said that at Pulliam’s request, Phillips 66 reported $30,000 earmarked for voter outreach as a donation to the California Tribal Business Alliance.
The stipulation also says Phillips 66 spent an $41,000 for two mass mailings printed by Pulliam’s print shop. Rather than report that the money went to the print shop, Phillips 66 claimed the $41,000 went to Californians for Good Schools and Good Jobs, another of Pulliam’s entities.
The mailers were typical fare: a sleazy-looking obese man, who happened to look a little like Baca; claims that Rialto officials wasted taxpayer money; and that the measure would cost jobs and raise prices. The mailers also said Californians for Good Schools and Good Jobs paid for them, a lie.
“This is not obscure,” said Galena West, the FPPC’s chief of enforcement at the FPPC. Disclosure of who’s behind campaign mailers “was one of the basic and fundamental purposes” of the California Political Reform Act.
And now for the finger pointing:
“The mailers were not produced or sent by Phillips 66, and we believed we were part of a larger committee,” a Phillips 66 spokeswoman said in an email.
“We got hung out to dry by Phillips,” Pulliam said. “Our committee is the scapegoat in a witch hunt by the FPPC, which, rather than regulate as it should, is making up the rules as it goes along and making up the facts to corroborate the rules.”
The FPPC has a case pending against Good Schools. Pulliam is resisting settling because he thinks the FPPC is overreaching.
Rialto’s hands aren’t clean, either. The FPPC fined the city $6,000 last year for misusing tax money in the campaign. City Manager Story said the city’s consultant, former Lt. Gov. Cruz Bustamante, paid the fine.
There are certain lessons in all this: A multibillion-dollar corporation spends tens of thousands of dollars to sway voters, and saves millions in taxes – a nice return on investment. A fine is a small cost of doing business, especially if the corporation wins.
It’s impossible to know whether the 2012 campaign would have turned out differently if voters had known that Phillips 66 was funding the “no” campaign.
But in 2014, Rialto voters considered another oil tax. This one sought to raise $10 million. Once again, Pulliam did the “no” campaign. In this instance, his mailers made clear that oil companies paid for the anti-tax effort. Voters approved it 238 votes. It’s not over. Oil companies are suing, another cost of doing business.