SACRAMENTO / BRADLEY INMAN : Business Is Rethinking Political Contributions

Last week’s U.S. 9th Circuit Court decision to throw out provisions of the Proposition 73 campaign reform rules is not expected to open the flood gates for business contributions to the political process.

Last Tuesday’s court edict wipes out the $5,000 limit on contributions from political action committees to an individual candidate and permits PACS such as those operated by business firms to make unlimited donations.

But companies aren’t necessarily poised to expand their campaign contributions. Rethinking their role in state politics for the past couple of years, some industries are even cutting political donations to legislative candidates.

Last year, for example, United for California, a 20-year-old political action committee, folded its operation. Funded by some of the state’s largest corporations, the PAC gave generously to “pro-business” candidates that often challenged incumbents.

“Business is frustrated with the legislative gridlock that exists in the state capital,” said Cynthia Suzuki, political affairs director for the California Chamber of Commerce. Business leaders point to this summer’s budget impasse as an example of what they see as ineptitude in Sacramento. They also complain about the lack of action on big issues such as the state’s water problems, the deteriorating infrastructure and the growing strength of the no-growth movement.

But more than anything, “business is tired of being hit up for contributions,” said Kirk West, president of the California Chamber of Commerce. “They see all of this money going to pollsters, consultants, lawyers and political gurus, and they begin to wonder whether it’s worth it.”

The California Chamber of Commerce’s directors recently turned down a staff proposal for creating a new PAC that was to make contributions in legislative races. Although it has a PAC that funds ballot measures, the chamber has no program for making donations to state candidates.

“The standard misconception is that business is pushing money on the legislature but, in fact, businesses are being actively solicited for funds all of the time and the top executives don’t really enjoy it,” said Tracy Westen, executive director at the California Commission on Campaign Financing, a nonpartisan organization that studies state political issues. “Unlike other business decisions, they don’t know what they are getting for their money and they are afraid to ask.”

In August, during the last month of the legislative session, 90 fund-raising events were held in the state capital, according to an account in the California Journal, a Sacramento political magazine. Someone contributing to all of these functions would have dished out $44,000 to attend three fund-raisers a day.

The federal extortion and racketeering convictions of State Board of Equalization member Paul Carpenter and State Sen. Joseph Montoya (D-Whittier) have also made business executives wary. They fear that they might be dragged into a high-profile scandal that could bruise their credibility.

More often, uneasiness with the process has nothing to do with breaches of the law. For example, during the fund-raiser spree in August, nearly a 1,000 bills were pending before the Assembly and Senate.

“The (fund-raising) push comes when the stakes are the highest,” Westen said. Industry lobbyists “are put in an awkward position and feel queasy about it; business is tainted when it gives, but there’s still a feeling of being disadvantaged if they don’t.”

There’s no statistical evidence that the disillusionment has caused business contributions to dry up. From July 1, 1989, to June 30, 1990, the 25 largest business-related PACs donated more than $5 million to state campaigns and had another $3.7 million in their coffers to be doled out in the next six weeks.

“The political economy is still very strong in Sacramento,” said Ken Mandler, publisher of the Capitol Weekly, a publication about state government that analyzes political contributions.

Nevertheless, “many business leaders who have actively contributed in the past are saying that the system no longer works,” said Al Pross, executive director of the California Medical Assn. Political Action Committee, which is the state’s largest PAC. “Except for the companies that have front-burner issues, many large corporations really don’t like making contributions anymore.”

Campaign reform has forced some big companies to reshape their political strategy in Sacramento. Approved by the voters in 1988, Proposition 73’s $5,000 limitation on PACs has weakened the punch that a company has with a single candidate, but now large firms and trade associations spread money to more candidates.

“In some cases, it’s not that businesses are turned off by the process, they are simply limited by the law,” said Pross.

Some business executives argue that Proposition 73 muddied the waters by giving politicians other ways of soliciting funds through a myriad of election committees and campaign techniques.

“The reform effort has created a maze of regulations and hasn’t really reformed anything,” said Fred Martin, senior vice president at Bank of America. “It confuses the public and doesn’t force full disclosure of who is soliciting funds for what and for whom.”

It was easier to track special interests before Proposition 73, according to Sherry Bebitch Jeffe, a senior associate of the Center for Politics and Policy at the Claremont Graduate School.

Now, “we are seeing more individual gifts--individual lawyers, individual Realtors and individual high-level employees making contributions--but fewer conglomerate PAC contributions,” said Jeffe. “The money is still there, it’s just harder to figure out where it’s coming from.”

The proliferation of expensive local and state ballot measures that focus on particular issues has also changed how business spends its political resources.

The California Assn. of Realtors, for example, has been increasing the size of its political war chest that finances issue campaigns such as local and state ballot initiatives. This new emphasis is likely to reduce the size of the California Real Estate Political Action Committee, which contributes to candidates and has been one of the largest and most influential PACs in the state.

In the past six years, businesses have poured more than $150 million into fighting or sponsoring statewide ballot measures on everything from taxes on cigarettes to insurance reform. In the November election, the alcohol industry, chemical companies and timber interests are expected to raise an additional $100 million to fight propositions that would raise the alcohol tax, adopt strict rules on air and water pollution, and enact new regulations for timber harvesting.

“Partially to defend (itself), business has decided that the biggest bang for the buck is in the initiative process,” Jeffe said. “It’s a reluctant discovery that ballot issues are what’s making public policy in this state,” she said.