Ballot initiatives divide a usually united business front
California business usually shows singular unanimity on election day.
This year is a bit different.
With voting Tuesday, the business community has coalesced, as usual, behind Republican candidates, including gubernatorial hopeful Meg Whitman, who is promising tax cuts and reduced regulation.
But business is divided over several controversial ballot measures. The initiatives pit the conventional corporate culture against many high-tech and green-tech companies in Silicon Valley and other entrepreneurial hubs.
The biggest split is over Proposition 23, an attempt to suspend California’s 3-year-old law aimed at limiting emissions of greenhouse gases that cause global warming.
The emissions law, AB 32, was the first of its kind and a signature achievement of outgoing Gov. Arnold Schwarzenegger. But the initiative would put that law on hold unless the state unemployment rate stays under 5.5% for 12 straight months — something that has happened only three times in 40 years.
“Some companies are playing offense and some are playing defense on Proposition 23,” said Mark Baldasarre, president of the Public Policy Institute of California. “What you have is a more complex situation” than in most elections.
A similar split in business has developed over Proposition 26. The ballot measure would make it more difficult for lawmakers to raise fees paid by companies to fund a variety of government services, including environmental protection and pollution prevention.
Most trade groups support Proposition 26, but a key high-tech organization, the Silicon Valley Leadership Group, hasn’t taken a position.
“We’ve never been the strangle-the-government-and-drown-it-in-the-bathtub type of organization,” said the group’s president, Carl Guardino.
Business leaders generally oppose Proposition 19, which would legalize and tax marijuana, but some back it. Financier George Soros donated $1 million last week to fund last-minute TV ads supporting the proposition, far more than the $42,000 that major businesses gave to the other side.
Tracing the money has always been a good barometer of where business stands — and how strong its stance is — on ballot measures.
Proposition 23 is being pushed primarily by two Texas oil companies that operate in California — Valero Energy Corp. and Tesoro Corp.
Manufacturers and other conventional business groups worry that the emissions law would drive up already high electricity rates in a weak economy and lock them in permanently.
“Energy costs would go up 30% to 60%,” said Jack Stewart, president of the California Manufacturers & Technology Assn. “It’s going to price many manufacturers out of the California market.”
They and their allies, including Occidental Petroleum Corp. in Los Angeles, have pumped about $9 million into the Yes on 23 campaign.
But they have been outspent 3-to-1 by their green-tech opponents, backed by Schwarzenegger, environmentalists and Democrats.
Last week’s Los Angeles Times/USC poll indicated that 48% of likely voters oppose Proposition 23 and 32% favor it.
The emissions law currently in place has solid support from venture capitalists, who want to invest in cutting-edge, clean-energy technology. Green-energy development — and the jobs that would come with it — would be fostered by a requirement that California reduce its greenhouse gas emissions to 1990 levels over the next decade.
Silicon Valley high-tech companies and entrepreneurs also embrace the law as an incentive to make California a world leader in renewable resources, including solar and wind power.
The Silicon Valley Leadership Group, whose members generate more than
$2 trillion in annual revenues worldwide, always has been enthusiastic about California’s landmark law.
“Our members believe that reducing greenhouse gas emissions and our dependence on imported fossil fuels presents an opportunity to transform the economy from one based on coal, oil and gas to one that runs
on clean renewable energy,” the group said in its opposition statement to Proposition 23.
Also opposing the measure are the state’s three biggest power utilities: the corporate parents of Pacific Gas & Electric Co., Southern California Edison Co. and San Diego Gas & Electric Co. They favor development of more renewable energy to help them meet a state mandate to generate one-third of their electric power from nonpetroleum sources by 2020.
Though Occidental supports the initiative and has contributed $300,000 to the cause, Chevron Corp. in San Ramon, California’s biggest corporation, is noncommittal.
On the sidelines are the powerful California Chamber of Commerce — mainly because its members are split — and its Los Angeles-area affiliate, which said it “appreciates arguments on both sides.”
Business also is divided over Proposition 26, which would require a two-thirds vote to approve state and local fees on businesses that aren’t linked to a specific service.
A majority vote, for instance, would still be required to raise fees for specific services such as issuing licenses for doctors, lawyers, accountants and motorists. But the super-majority vote would be needed to approve fees on, say, wine sales to cover the cost of alcoholism treatment programs.
Linking fees to general programs has become more common in the last decade because lawmakers have found it nearly impossible to come up with enough bipartisan votes to reach the two-thirds majority needed.
In one such case, a majority of the San Francisco Board of Supervisors passed a so-called nickel-a-drink fee on alcoholic beverages to raise $15 million a year for alcohol abuse and treatment programs. Mayor Gavin Newsom vetoed the measure, calling it detrimental to the city’s tourism industry.
Mike Falasco, a spokesman for the Wine Institute, an industry lobbying group, backs Proposition 26 as a way to make sure similar efforts don’t succeed in the future. “This makes taxes masquerading as fees subject to a two-thirds vote,” he said.
But raising the bar on fees so high could make it almost impossible for local governments to perform some basic public safety functions, countered Lenny Goldberg, executive director of the California Tax Reform Assn.
“You couldn’t pay overtime to cops at a rock festival without a two-thirds vote,” he said.
Business, so far, has contributed more than $13 million to the Yes on Proposition 26 campaign. Of that,
oil companies have donated $4 million, alcoholic beverage companies more than $2.5 million and the tobacco industry at least $1.3 million.
Opponents, mainly public employee unions, raised about $3 million.
But many high-tech executives haven’t taken a position on Proposition 26.
“You have to invest in the future,” said Guardino of the Silicon Valley Leadership Group. “It’s hard to complain about poor roads and water systems and dilapidated schools if you’re not going to invest in them.”
Guardino and his members also haven’t taken a position on Proposition 19, the initiative that would legalize the cultivation and possession of marijuana by people over the age of 21 and allow local governments to tax and regulate sales.
That non-stance differs from most major business organizations, which are concerned about how marijuana use could affect the work environment.
“How do you address an employee who has been using marijuana and comes to work in that state?” said Gary Toebbin, president of the Los Angeles Area Chamber of Commerce.
The Los Angeles chamber concedes that current drug laws must be reformed, but it contends that Proposition 19 is “poorly written and cannot be improved without a subsequent initiative.”
Billionaire investor Soros, though, likes the initiative enough to pay for a week’s worth of pre-election television advertisements.
“I’d much rather invest in effective education than ineffective arrest and incarceration,” Soros said in an opinion piece in the Wall Street Journal.
Though business remains surprisingly discordant on some hot button issues, it has closed ranks to oppose Proposition 24, a measure to permanently repeal a $1.3-billion corporate tax cut, and Proposition 25, which would allow state budgets to be approved by a majority vote of the Legislature instead of by a two-thirds super-majority.
Business also is backing Proposition 20, which would extend the authority of a bipartisan state citizen’s commission to draw legislative districts for Congress. On the flip side, it’s fighting a counter-measure, Proposition 27, that would eliminate the commission and return redistricting authority to the state Legislature.
Even though business supports changing some recently enacted laws, particularly the emissions law, most trade groups don’t want to see a constant shift in the rules under which they operate, said Darry Sragow, a Democratic political strategist and business lawyer.
“If California wants to be a tough regulator because we’re very strict about clean air and water and labor standards, that’s a political choice we can make, and the business community may not like it,” he said.
“But the business community is certainly entitled to know the rules it’s going to be held to for more than a month at a time.”