Consultants Strike a Rich Vein

In this year of stratospheric campaign spending, everybody who’s anybody in politics is seeing green.

The gambling industry, electric utilities and big tobacco have spent a combined $155 million so far on three ballot initiatives: Proposition 5, which would permit expanded gambling on Indian reservations; Proposition 9, aimed at electric utilities; and Proposition 10, which would raise cigarette taxes 50 cents a pack.

Add the $50 million being spent on the race for governor between Lt. Gov. Gray Davis and Atty. Gen. Dan Lungren, plus what’s being shelled out for other statewide posts and legislative races, and the California general election tab will reach a record-setting $300 million.

Though the money is being spent to win voters, some of the biggest winners are the consultants who come up with the campaign strategies, produce the television commercials and buy the air time, campaign finance reports filed last week show.

Four campaign firms involved in the year’s highest-priced initiative battles have pulled in a combined $82 million since July 1. After taking cuts for fees and commissions, the main campaign consulting firms pay subcontractors and purchase time on TV.

“It’s a good year for consultants, if you can live through it,” said Donna Lucas of Nelson Communications, a public relations and political organizing firm that is opposing Proposition 5 and Proposition 9.

For the Los Angeles firm of Winner/Wagner & Mandelbach, the year stands to be not merely good but golden. Winner/Wagner is managing the campaign for Proposition 5, on behalf of Indian gambling interests, and is helping run the campaign against Proposition 9, on behalf of electric utilities.

Winner/Wagner has received $27.8 million since July 1 for its Proposition 5 work and $16.3 million for its anti-Proposition 9 efforts. Its net from the campaign will be significantly less, though still in the millions.

“It costs a lot of money to contact . . . 12 million voters,” said David Townsend of Townsend, Raimundo, Winner/Wagner’s partner in the No on Proposition 9 campaign. “If we don’t tell people what it’s about, they might be misled by false promises.”

Much of the money going to such firms ends up with television stations. In one 17-day period earlier this month, KNBC-TV Channel 4 in Los Angeles received $2.6 million and KABC-TV Channel 7 got $2.1 million for ads from the campaigns for and against Proposition 5, and against Propositions 9 and 10. Several other broadcast outlets in Los Angeles and the Bay Area received upward of $1 million during that period.

“We’ve never seen a TV blitz like this. Ever,” said Bob Stern of the nonprofit Center for Governmental Studies in Los Angeles.

Proponents of Proposition 9 have raised $1.3 million, not enough to buy television air time. Broadcasters no longer have to provide equal time in political contests, though backers of the utility measure have pleaded with stations to air their ads free.

“I have never seen anything like this before,” consumer activist Ralph Nader, a proponent of Proposition 9, said Tuesday, referring to the spending imbalance and calling the expenditures “a corruption of the democratic process.”

Among those who have profited by the spending to defeat Proposition 9 is state Sen. Steve Peace (D-El Cajon). He is a partner in a San Diego movie and television production firm, Four Square Productions, that so far has received $80,000 from the No on 9 campaign for its role in producing an extended commercial starring consumer advocate David Horowitz.

The producer of that “infomercial” is Bernie Rhinerson, director of marketing for Peace’s firm. Rhinerson produced the ad through his company, Rhinerson Communications, and said the fees to be paid to Peace’s company were for renting a sound stage and equipment.

What rankled sponsors of Proposition 9 was the fact that Peace was chairing a joint state Senate-Assembly committee looking into Proposition 9 at the same time his company was working with the No on 9 campaign. Peace also helped write the 1996 energy deregulation law that Proposition 9 is challenging.

Mailers and TV Blitzes

“The whole process stinks,” said Harry Snyder of Consumers Union, one of the backers of Proposition 9. “Peace passes legislation that gives utility companies money. The utilities give him money. Then he holds a hearing to look at Proposition 9. That is absolutely wrong.”

Peace said the money from the infomercial represented a relatively small part of Four Square’s annual $5 million to $6 million in billings.

He said that although Snyder and others “are entitled to their opinion,” Four Square has done work for numerous political campaigns in the past and will continue to do so. “We’re not going to sit here and not do business,” he said.

All the high-priced initiative campaigns have paid for endorsements on literature mailed to registered voters.

The Yes on Proposition 5 campaign spent more than $700,000 earlier this month to get on eight such “slate cards” sent by groups and entrepreneurs with mailing lists aimed at such divergent voters as mobile home owners, senior citizens, Latinos, people who support abortion rights, firefighters and gays--not to mention registered Republicans and Democrats.

“It’s a cynical examination,” Yes on 5 campaign spokesman Steve Glazer said of this peek into how the campaign money is spent. “It’s a lot easier to do when the results are in, and you can see if it was worth it. If Proposition 5 wins, I suspect the Indians will feel their investment was well spent.”

The No on 10 campaign, meanwhile, is blitzing the opposition in a late television ad campaign. The effort features a spot that harks back to the lottery initiative of 1986, which promised to earmark much of the proceeds for public schools.

The ad suggests that the voter-approved lottery did not fulfill its promise of helping schools and says the proposed cigarette tax increase to help pay for early childhood education and health programs won’t help youngsters either.

The law firm for the tobacco industry-funded campaign against the tobacco tax is Bagatellos & Fadem of San Francisco, which collected $21,000 earlier this month. Barry Fadem, who could not be reached, was one of the authors of the lottery initiative.

“We have compared Proposition 10 to the lottery because the public perception is that the lottery was an empty promise,” said Matt Taggart of the public relations firm representing the tobacco companies’ campaign as well as one of the firms working on the Yes on 5 campaign.

Morain reported from Sacramento and Shuit from Long Beach.

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Where the Money Goes

In this year of record-breaking campaign spending, consulting firms are collecting hefty fees. After taking their commissions and fees, the firms use most of the money to buy television air time and pay subcontractors.

Tens of millions of dollars have gone to these consulting companies since July 1:

Winner / Wagner & Mandebach Campaigns, Yes on Proposition 5: $27.8 million.

Goddard*Claussen / First Tuesday, No on Proposition 5: $18 million.

Winner / Wagner & Mandebach Campaigns, No on Proposition 9: $16.3 million

Strategic Solutions, No on Proposition 10: $12.8 million*

Townsend, Raimundo, Besler & Usher, No on Proposition 9: $7.4 million

* Covers the period Oct. 1-17.