Taking the Initiative on ’04 Ballots

Well-heeled interest groups are preparing to appeal directly to voters on such high-stakes issues as gambling, the right to sue and tax policy, making 2004 potentially one of the busiest initiative years in California history.

Outside supermarkets and malls, signature gatherers already are collecting names for initiatives to increase funding for children’s hospitals, hospital emergency rooms and mental health care. Soon they probably will be asking people to sign petitions for as many as a dozen others.

“I’ve been out to lunch -- do we have three or four more?” asked attorney Vigo “Chip” Nielsen, whose firm, Nielsen, Merksamer, has written three of this year’s initiatives and is representing opponents of several others.

Why the renewed interest in government by ballot after a lull of several years? Some initiative advocates blame legislative gridlock. California’s budget woes also are contributing; several measures focus on taxes and spending.

Gov. Arnold Schwarzenegger, who got his start in politics by promoting an initiative in 2002 to expand after-school care, is playing a big role too. The new governor persuaded legislators to place two propositions on the March ballot in hopes that they will help ease the state’s budget crisis.

Schwarzenegger is mulling whether to get involved in one or more measures for the November election. In his State of the State speech Tuesday, the governor vowed to push for an initiative overhauling the complex workers’ compensation insurance system unless legislators move quickly to approve changes he wants.

Interest groups often threaten to go to the ballot to gain negotiating advantage in the Legislature. But unless deals can be struck soon to avert the ballot fights, there could be half a dozen initiatives on the November ballot, maybe even twice that number.

“It will be a wild ballot year,” said California Business Roundtable President Bill Hauck.

The electorate will decide four statewide measures March 2, and perhaps a fifth: a business-backed referendum to repeal Senate Bill 2, a labor-backed bill signed last year by then-Gov. Gray Davis requiring that employers provide health care for their workers.

Organized labor sued to block the measure from the ballot. It’s on hold pending the outcome of the suit. If the referendum does not appear on the March ballot, it could be on the November list -- if the California Chamber of Commerce-led coalition behind it wins the suit.

California’s annual budget standoffs have led to one measure that will take on a high profile in March: Proposition 56. Backed by public employee unions, the initiative would allow the Legislature to approve the annual budget and tax increases with a 55% vote. Currently, budgets and tax hikes require a two-thirds majority.

Fearing that Proposition 56 could lead to higher taxes, oil, tobacco, insurance, alcohol and other businesses have contributed $2.6 million to defeat it. Public employee unions have raised at least $2.1 million in favor of it. Spending in campaigns for and against the initiative could top $20 million.

“Giving this Legislature an easier route to raise taxes is the wrong way to go,” California Chamber of Commerce spokeswoman Sara Lee said, denouncing Proposition 56 as a “blank-check initiative.”

Proponents downplay tax implications, calling it the “Budget Accountability Act.” They emphasize that under the measure, lawmakers would forfeit their pay for failing to approve budgets by the July 1 deadline, and would be barred from voting on other legislation until a budget is approved.

“Voters really believe that the time to hold the Legislature and governor accountable is now,” said Democratic consultant Gale Kaufman, who is managing the Proposition 56 campaign.

Lawmakers placed three measures on the March ballot, each with budget implications:

Proposition 55 is a $12.3-billion school construction bond issue. Voters approved a $13.5-billion school construction bond measure in November 2002.

Proposition 57 is a $15-billion bond issue to allow the state to refinance its debt. Schwarzenegger pushed legislators to place it on the ballot.

Proposition 58, also promoted by Schwarzenegger, would limit state spending by requiring that the emergency reserve be boosted to 3% of the state general fund.

In recent years, voters have approved school bonds. But this year’s could be complicated by its juxtaposition with the deficit bond. The combined $27-billion debt from the two measures would nearly double California’s current general obligation bond debt of $29 billion. Annual debt payments would rise by $2 billion a year if voters approved both measures.

“It does complicate things,” California Teachers Assn. President Barbara Kerr said. “But we have confidence in the voters.”

The teachers union, the main proponent of the school bond, is preparing for a major battle. The campaign could cost $10 million.

Schwarzenegger, meanwhile, is placing his prestige on the line, signing ballot arguments for the deficit bond issue and Proposition 58 to limit future spending. Without the bond money, Schwarzenegger warns in the voter pamphlet to be mailed to registered voters, California could run out of cash by June. If the bond fails, he writes, the only choices facing Sacramento would be to “drastically increase taxes.”

Some of Schwarzenegger’s critics come from within his own Republican Party. Along with Sen. Bill Morrow (R-Oceanside), Sen. Tom McClintock (R-Thousand Oaks), who ran against Schwarzenegger in the recall, wrote the ballot argument against the bond, saying it “simply papers over the gigantic deficit that Sacramento’s politicians created in the first place.”

In addition to the statewide measures, voters will face an array of local issues, many of which are related to taxes and spending. The Los Angeles Unified School District is pushing a $3.85-billion school construction bond measure.

Voters in 10 cities in Los Angeles County will be asked to approve taxes to help fund public libraries. The cities are Avalon, Bell, Bradbury, Carson, Gardena, Huntington Park, La Puente, Montebello, San Fernando and South Gate.

The sole measure on the November ballot so far is a $9-billion bond proposal to help pay for a high-speed rail system. But no fewer than 21 initiatives have been approved for signature gathering. That number is expected to grow in coming weeks.

Initiatives are easy to propose. All a promoter needs is a $200 check, payable to the state attorney general’s office. The attorney general gives the measure a title and summary, and sends it to the secretary of state, whose office releases it for circulation.

But few initiative proposals make it to the ballot and become law. Between 1912 and 2002, advocates sought to place 1,187 measures on state ballots, according to Secretary of State Kevin Shelley. In those 90 years, fewer than a fourth -- 290 -- made it onto the ballot. Voters approved 99 of them, or 8.3% of those originally proposed.

More often than not, money determines their fate. It generally costs $1 million, and often twice that, to hire the firms that obtain the petition signatures necessary to place initiatives on statewide ballots.

For 2004, promoters must submit to county elections officials 373,816 signatures of registered voters. For constitutional amendments, they must submit 598,105 signatures. Petition circulators generally gather twice the minimum number to ensure that enough of the signatures are deemed valid.

Serious statewide initiative campaigns routinely cost $10 million. Many exceed $20 million. Some proposed for the November ballot “will fail for lack of funding,” said Hauck of the California Business Roundtable. “People are going to have to prioritize what they will support financially.”

Among the major measures that could appear on the November ballot is one promoted by Hollywood producer Rob Reiner and the California Teachers Assn. It is an initiative to increase commercial property taxes by $4.5 billion a year. In what would be a major campaign, proponents could be expected to spend $20 million, to be matched by businesses opposing it.

Gambling interests have proposed a measure to end Indian tribes’ monopoly on Nevada-style casinos in California, and allow five race tracks and 11 card rooms to divide 30,000 slot machines.

Card rooms and tracks have placed $830,000 in a campaign fund. But that would hardly be a down payment on the campaign. Tribes already have pledged $9 million to fight the measure.

In another potentially high-priced campaign, the California Chamber of Commerce, car dealers and other businesses are pushing an initiative to roll back a broadly defined and widely used civil code section that allows for lawsuits alleging unfair business practices.

How much will they spend? “Whatever it takes to win,” said John Sullivan, head of the Civil Justice Foundation of California, a business group devoted to curbing litigation. So far, backers have raised $6.4 million for the measure.

Plaintiffs’ lawyers routinely invoke civil code section 17200 when they sue corporations in class action and environmental law cases. But businesses charge that lawyers operating lawsuit “mills” allege minor consumer law violations in an effort to obtain quick settlements.

“Every time we turn around, the process server is at the door,” said Peter Welch, president of the California Motorcar Dealers Assn., which has spent $500,000 to place the initiative on the November ballot. “We have been trying to get redress from the Legislature for four years, and they won’t touch it.”

Trial lawyers, among the biggest spenders in California politics, are sure to respond, as will others. One measure already filed would allow used-car buyers to change their minds and return cars after three days and impose added disclosure requirements on dealers. Another would expand the right to sue if businesses sell or in any way use people’s personal information without approval.

Backers of the initiative to limit the right to sue “don’t know what a Pandora’s box they’re opening,” said Jamie Court of the Foundation for Consumer and Taxpayer Rights in Santa Monica, an organization that writes initiatives and sometimes is allied with trial lawyers.

In some instances, political leaders and health care advocates who have been unable to persuade the Legislature to approve spending boosts are turning to voters in the hope that they will provide money:

* Emergency room physicians are advocating a $550-million tax hike on telephone use to reimburse physicians for the cost of providing emergency room care.

* Hospitals are proposing a $750-million bond to pay for construction at children’s hospitals.

* Various individuals are promoting $295 million in annual bonds over a 10-year period to finance stem cell research to cure an array of diseases.

* The League of California Cities and the California State Assn. of Counties have spent a combined $1 million to pay for signatures for an initiative to block the state from reducing tax revenue that goes to local governments. Former Assembly Speaker Bob Hertzberg also is contemplating an initiative aimed at stabilizing local finances.

* Assemblyman Darrell Steinberg (D-Sacramento) is pushing to raise taxes by 1% on those whose adjusted gross income is $1 million or more to pay for mental health care for the severely mentally ill. The tax would generate $700 million annually.

Other promoters hope to bring back issues that voters supported in the past but that were struck down by courts. One that has garnered significant support would give California an open primary, allowing voters to cast ballots for candidates of their choice regardless of party registration.

Another is aimed at curbing services to illegal immigrants, similar to Proposition 187 of 1994. It is unclear whether it has the financial or political support to qualify for the ballot.

Ted Costa, the chief proponent of Gov. Davis’ recall, is pushing an initiative to change how legislative districts are drawn.