By Paul Tullis, TRUE/SLANT BLOG

On June 8, Californians will vote on a couple of exceptional propositions that are the first attempts in decades by corporations to use the ballot initiative process to change the law in their favor.

California’s ballot initiative system was implemented during the Progressive era to enable citizens to amend the state constitution without going through the legislature (though the legislature can also put initiatives on the ballot). The idea was to provide the citizens with a method of protecting themselves from well-funded special interests lobbying the legislature by providing them with their own direct avenue to lawmaking.

Its ironic, therefore, that the system should become a means by which well-funded special interests circumvent the legislature because they know that a well-informed professional lawmaker would never buy the line of bullshit now being propagated by an ad campaign paid for by the states largest private utility, PG&E.

Prop 16, the Taxpayers Right to Vote Act, would require a 2/3 majority in a voter referendum to create or expand any municipally-owned utility, which in most of the state would mean competing with Pacific Gas & Electric or shutting it out of a potential market. PG&E is the measure’s sole sponsor, and has spent $35 million pressing for passage. (The company told shareholders to expect a short-term decline in share price as a result of the expenditure.)

Nearly every city, town, county, consumer group, environmental group, and newspaper in the state opposes the measure, along with AARP, the League of Women Voters and even another large private utility, San Diego’s Metropolitan Water District.

“This is a for-profit corporation trying to kill off its not-for-profit rivals,” said San Francisco Supervisor Ross Mirkarimi told the SF Chronicle. Prop. 16 is a colossal fraud perpetrated on the people of California.

PG&E wants to hike rates because it spent a lot of money on dirty-energy infrastructure just before California passed its Renewable Portfolio Standard, requiring the state to get 20% of its energy from fossil-fuel-free sources by the end of this year. Its ad dollars have shouted down proposals to create public utilities in the past”and those only needed a bare majority to pass. Experts say the 2/3 requirement, which is a major factor in the annual disaster in California known as the state budget, would effectively doom any future proposal”and with it efforts to accelerate the transition to green energy.

Prop. 17 got on the June 8 ballot through a $3.5 million signature-gathering campaign by Mercury Insurance Co. The company has been accused of illegally discriminating against some applicants, but Prop. 17 would make such behavior OK, and roll back many other consumer protections. California’s Insurance Commissioner (yes, since 1991 California has had a statewide elected official with this title), a Republican, has written of Mercury’s lengthy history of serious misconduct [and] contempt toward and/or abuse of its customers.

Nothing like these initiatives has been tried since 1988, when the law which Prop 17 is attempting to overturn was enacted. That November, there were 4 competing insurance-related initiatives on the ballot, one of which was backed by an insurance company that spent over 90% of the money in support of it. Because there were 4 competing initiatives, and it was a November Congressional election with high turnout, the initiatives got a ton of press coverage and a consumer-friendly one that Ralph Nader supported won the day.

Ever since, I was told by Eric McGhee, an expert on voter initiatives at the Public Policy Institute of California, companies have been discouraged by the experience from using the ballot-initiative process and have instead mainly spent their political-influence money on lobbying and campaign contributions. McGhee says they largely prefer lobbying because its more likely to get them the specific break in the law that they’re seeking. (Of course, Props 16 & 17 will get them a specific break in the law, too.)

This isn’t to say corporations have stayed out of initiative campaigns, but its usually been on the No side, to stop a proposition that goes against their interests. With 16 & 17, the companies are pro-actively seeking to change the law in their favor in a way that’s exceptional.

Bruce Cain, a poly-sci prof at Berkeley who’s on the California Fair Practices Commission, which interprets federal law as it applies to elections in California, told me the measures will fail only if voters are paying attention [and] there is enough money on the no side.

So far the latter question is a definite no: PG&E is outspending the No’s by more than 1000:1 (yes, one thousand to one.) As for the former, well just have to wait and see on June 8; the fact that a proposal to write an article similar to the one you are now reading was turned down by The New Republic, The Nation, Mother Jones and The Nation may not bode well for a well-informed electorate.

The failure in ‘88 discouraged companies from using ballot initiatives to push their agendas for a generation. But someone at one of the groups opposing the measures told me that the PG&E attempt is the most brazen attempt he’s ever seen.

If PG&E &/or Mercury are successful, it could have as strong an influence as ‘88 did, but in the opposite direction, unleashing corporate money into the initiative arena like never before.

By Scott Martelle, Protect Consumer Justice -
CALIFORNIA PROGRESS REPORT

One of the oddities of California politics is the way different factions use the initiative process to try to sneak into law programs and policies that, given full attention and airing, would die an inglorious death. Add Proposition 17, the bizarrely named “Allows Auto Insurance Companies to Base Their Prices in Part on a Driver’s History of Insurance Coverage,” to the list of propositions-as-shell games.

Prop. 17 has, in effect, one serious backer: Mercury Insurance, which has kicked in $10 million to get it on the ballot and finance the campaign to get it passed. No surprise why: The measure would let Mercury and other insurance companies charge customers a premium if there’s a lapse in coverage. While sounding stultifyingly boring, that means consumers who go uninsured for any amount of time will get whalloped.

In essence, Mercury is trying to buy a law that would let it do an end run around Proposition 103, passed in 1988 to try to corral excessive insurance rates.

Incidentally, Mercury isn’t exactly a poster child for Good Corporate Citizenship. The San Francisco Chronicle has been reporting on some of its shenanigans, citing a state report that indicated Mercury may have violated Prop. 103 (if you can’t beat it, change it?):

A high-profile California insurance company that is backing a controversial insurance measure on the June ballot has engaged in practices that may be illegal, including deceptive pricing and discrimination against consumers such as active members of the military and drivers of emergency vehicles, according to a state report obtained by The Chronicle.

The report, obtained through the state Public Records Act, alleges that Mercury Insurance Group may have violated Proposition 103, the landmark consumer protection law approved by voters in 1988.

So far, the only significant newspaper editorial board to think Prop. 17 is a good idea is the Orange County Register, which also thinks government should be limited to a Hobbesian minimum. So we’ll discount that voice. The rest are unanimous. As the San Jose Mercury News put it:

“It’s a smoke screen for allowing insurance companies to substantially increase rates for drivers who, for whatever reason, allowed their insurance to lapse for more than 90 days. That could include a wide range of people, such as drivers hospitalized for a long period of time, military personnel or unemployed Californians who couldn’t keep up their premium payments.”

Incidentally, the $10.6 million raised from all sources for the measure dwarfs the $535,000 opponents have been able to muster. So if the measure passes, it will stand as sterling proof that the initiative process is a mechanism for corporations to buy the laws they want.

And it’s not the only corporate-serving initiative in the June ballot. Pacific Gas&Electric is pushing Proposition 16 — fittingly enough right next to Prop. 17 on the ballot — to require a two-thirds vote before a municipality can create a local utility. PG&E has spent $35 million to try to preserve its monopoly.

And people wonder why voters are so cynical.
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Scott Martelle is a veteran journalist, including 12 years at the Los Angeles Times. He currently writes for Protect Consumer Justice, a project of Civil Justice Research&Education Project. The site’s goal is to honestly report on consumer, legal and political issues important to the American civil justice system.