California's initiative process adds up to a huge waste of money

A look at initiative campaign funding shows that corporate interests and wealthy individuals have co-opted the process.

No one today can overlook that it's California's self-indulgent initiative process that's attracting the big political bucks into the state, the way a magnet attracts scrap iron. Year in, year out, the torrent of spending on initiative campaigns swamps the money spent on traditional candidates.

Tuesday's ballot, with 11 propositions attracting $350 million in campaign spending, is another data point. Not even Meg Whitman's gubernatorial campaign in 2010, in which the candidate spent $144 million of her own money on her way to a $160-million bottom line, comes close — and that exercise in futility set a spending record.

You'll hear people arguing that this is a virtue, or at least that it should be accepted as the new normal in California politics.

Times voter guide: Propositions

"We are moving toward direct democracy," says Thomas F. Steyer, a San Francisco hedge fund manager whose $28.6-million contribution accounts (as of Oct. 25) for 95% of the war chest for Proposition 39, which closes a costly state corporate tax loophole. Steyer was also a major donor to the 2010 effort to defeat Proposition 23, which would have overturned the state's pollution control laws.

Steyer argues that measures like Proposition 39 are necessary because the Legislature can't act. "The Legislature tried three times since 2009 to close the loophole but it couldn't, because of concerted action by the moneyed interests." He ticks off the raft of political issues that have been getting addressed not by the Legislature but at the ballot box: "Gay marriage, three-strikes, GMOs, environmental law, taxes," he says. "That's a pretty big legislative agenda."

But is the initiative process up to the task of taking over? Almost certainly not, because it's already been co-opted by the same moneyed interests.

The typical initiative campaign today consists of flagrantly misleading TV commercials produced by companies or wealthy individuals intent on concealing how the passage or defeat of a given measure will line their pockets with gold. With the exception of Steyer's Proposition 39, Gov. Jerry Brown's Proposition 30 tax initiative and a handful of non-economic measures, Tuesday's lineup mostly involves narrow corporate goals on one side or another.

One can learn a lot by examining where the initiative campaign money comes from.

Looking at contributions of more than $1-million among the top contributors on each initiative (thanks to for crunching the data from the California secretary of state's office), we find that about $80.5 million came directly from corporations. Most of that was spent by Monsanto, DuPont, PepsiCo and other food mega-marketers to defeat Proposition 37, which mandates the labeling of foods prepared with genetically modified ingredients (some foods, not all, which is a major problem with the measure).

An additional $128.3 million came from wealthy individuals whose money generally can be traced to corporate or investment sources. The big spenders here are Charles Munger Jr., who contributed $35 million to enact Proposition 32 and defeat Brown's Proposition 30, which raises income taxes on the wealthy and sales taxes on everyone. Munger is the son of Warren Buffett's investment partner. His half-sister, Molly Munger, has spent $44 million to enact Proposition 38, an alternative tax increase competing with Brown's plan.

There's the mysterious $11 million dropped on the No on 30/Yes on 32 campaign by an outfit called Americans for Responsible Leadership, which is claiming in court that as a nonprofit devoted to "social welfare" it shouldn't have to tell California voters who its donors are. The state's Fair Political Practices Commission disputes that, and a state judge agreed. But late Friday the state Supreme Court signaled that it will accept briefs in the case over the weekend, so it's remotely possible that we'll get some names before election day.

Then there's organized labor, which accounts for about $80 million of these major contributions. The vast bulk of that money — $53.6 million — has gone to defeat Proposition 32, an unbelievably dishonest attempt to drive working men and women out of the political process by eliminating their unions' ability to spend money in politics, while leaving the political influence of corporations and their wealthy beneficiaries intact.

That points us to the principle that initiative spending often begets more initiative spending: None of that money would have to be donated if not for the $60 million in influence on the other side devoted to stripping unions of their political voice.

An additional $16 million has gone to promotional ads for Mercury Insurance — sorry, did I say Mercury Insurance? Of course I meant Proposition 33, which is touted as a rate-cutting measure for car owners, but is really just a device cooked up by Mercury to enable it to poach customers from other insurers. The money comes from Mercury Chairman George Joseph, the creator of this measure.

All this adds up to a stupendous waste of money that could do wonders elsewhere.

What would $350 million buy out in the cruel, cold world? It would cover 10%, maybe even 15%, of the cost of American Red Cross relief for East Coast residents battered by Hurricane Sandy. It would cover four years' tuition and fees (at current rates) for 2,760 students at the University of California, or 14,657 students at Cal State.

Or it could reverse almost all of Gov. Brown's budget cuts for CalWORKS, the relief program for families with dependent children, including restoration of the exemption from work requirements for parents with a child at home under the age of 2. It could lessen by two-thirds the impact of budget cuts on the state's community colleges if Brown's Proposition 30 tax increases don't pass. If your social empathy lies elsewhere, it could make the investment bankers at Swiss-based UBS entirely whole on their losses from the botched initial public stock offering of Facebook.

It's tempting to see the corporate takeover of the initiative process as an offspring of the Supreme Court's 2010 Citizens United decision. But the truth is that California was a bellwether of this trend, as it is in so many others. Big business had set its cap at the ballot box long before Citizens United, and it's only going to get better at it as time goes on.

Don't be fooled by the occasional public-interest victory, such as the Steyer-funded defeat of Proposition 23 in 2010. While Californians kid themselves into thinking the initiative process protects "people power," the moneyed interests will smile and keep their shears at the ready, hidden behind their backs.

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Michael Hiltzik's column appears Sundays and Wednesdays. Reach him at, read past columns at, check out and follow @latimeshiltzik on Twitter.