Posts Tagged ‘NewsStory’

Business-Backed Measures Fail On California Ballot

June 9th, 2010

The Associated Press State & Local Wire

LOS ANGELES, CA — Two initiatives put on the California ballot by businesses were defeated despite the large amount of money poured into them.

Voters on Tuesday defeated Propositions 16 and 17, a blow to Pacific Gas & Electric and Mercury Insurance.

Proposition 16 would have required local governments to get two-thirds voter approval before they could spend tax dollars to start a power agency. PG&E spent $46 million in its bid to curb the expansion of public power.

Proposition 17 would have overturned a state law that bans auto insurance companies from considering a driver’s insurance history to set rates.

Mercury Insurance spent more than $15 million in an effort to persuade voters that most Californians would save money under the proposal.

Prop. 17: Auto Insurance Measure Appears To Fail

June 9th, 2010

By Justin Berton, THE SAN FRANCISCO CHRONICLE

UPDATE 6:54 a.m. Proposition 17, auto insurance measure, appeared to be headed for defeat. With 99. 1 percent of the precincts reporting, it was losing by 158,000 votes, or 52-48 percent.

***

California voters were divided closely on a measure Tuesday that would change state law to allow insurance companies to raise rates on drivers who let their coverage lapse while allowing insurers to award discounts to those who maintain continuous coverage.

Supporters of Proposition 17 said the ballot initiative, sponsored mainly by Mercury Insurance, would lead to more competition and better rates for consumers who take advantage of “continuous coverage” discounts by sticking with insurers.

But opponents said the proposition would unfairly raise fees for drivers who drop their coverage and would erode consumer rights guaranteed under Prop. 103, the landmark insurance reform measure that voters approved in 1988.

Tuesday’s low voter turnout could help the measure pass, opponents said. Early returns showed the measure gaining support in Southern California counties, while Bay Area counties showed opposition.

“We’re still hoping the votes will come in,” said Doug Heller, a spokesman for Stop Prop. 17. “We were outspent $16 million to $1 million, so we moved away from expectations, and just hoped voters received our message.”

The change in the law would allow insurers to penalize drivers who let their insurance lapse, according to opponents. Under Prop. 103, insurance companies are barred from considering motorists’ coverage history when they apply for insurance.

“It’s a positive sign tonight that voters took a careful look at Prop. 17,” said Kathy Fairbanks, a spokeswoman for the Yes on Prop. 17 campaign. “Voters recognized it fixed a flaw in the system and improved the insurance market.”

The controversial proposition was heavily financed by the Mercury Insurance Group, the state’s third-largest insurer, which contributed more than $16 million to the campaign for the measure.

For months, Prop. 17 has been the target of complaints by Consumer Watchdog, the Santa Monica advocacy group that was founded by Harvey Rosenfield, the author of Prop. 103.

Rosenfield has argued that the measure would allow Mercury and other companies to impose surcharges as high as $1,000 on drivers who have not had continuous coverage.

Drivers who are students, low-income and members of the military on duty in other states would be unfairly punished by the new measure, Rosenfield said.

In February, a state report obtained by The Chronicle through California’s Public Records Act, alleged that Mercury may have engaged for years in illegal practices, including deceptive pricing and discrimination against consumers.

In April, The Chronicle reported that Mercury faced hefty fines after another state report alleged it violated state laws “despite agreements with the state to terminate illegal behavior.”

Last month, Consumer Watchdog filed a complaint with the federal Securities and Exchange Commission, charging that Mercury founder and Chairman George Joseph hired his nephew as an actuary for the firm without disclosing the family relationship to investors.

The company has denied any wrongdoing.

E-mail Justin Berton at jberton@sfchronicle.com.

Voters Approve California Open Primary

June 9th, 2010

By Patrick McGreevy, THE LOS ANGELES TIMES

Proposition 14 victory changes future elections for congressional, legislative and statewide offices. An experiment in state-financed political campaigns and two propositions put on the ballot by major corporations are all rejected.

Reporting from Sacramento — California voters went to the polls Tuesday and recast future elections in the state by passing a ballot measure that creates open primaries, one of five propositions on the ballot.

Gov. Arnold Schwarzenegger, who championed the open-primary measure called its passage a “historic change” that “sends a clear message that Californians are tired of partisan gridlock and dysfunction.”

At the same time, voters rejected an experiment in state-financed political campaigns, while tax breaks for buildings retrofitted for earthquake safety passed by a wide margin.

Two other initiatives put on the ballot by major corporations — Proposition 16 requiring voter approval before cities can get into the electricity business, and Proposition 17 giving auto insurance companies more leeway in setting rates — were rejected by voters.

Jamie Court, president of Consumer Watchdog, said he was heartened that those propositions were so close despite tens of millions spent by companies that would benefit.

“I think it says the electorate isn’t as stupid as the corporations think it is,” Court said.

Under an open primary system, voters will no longer be limited to choosing among candidates from their own parties. Proposition 14 puts the top two vote-getters in primary races for congressional, state legislative and statewide offices, regardless of political party, in a face-off in the general election.

Backers of the measure said the shift would produce more moderate candidates because they would have to appeal to a wider group of voters.

The state Democratic and Republican parties opposed the change, as did minor parties.

“It will lead to a spike in backroom deal making [and] fewer candidates to choose from,” said Ron Nehring, state GOP chairman.

Voters were also asked to decide on another proposed change in elections: Proposition 15 would have established an experiment to test public funding for campaigns. The measure, pushed by Common Cause, would have allowed candidates for secretary of state in the next two elections to receive government funding for their campaigns if they agreed to spending limits.

Secretary of state candidates in the 2014 and 2018 elections who demonstrated viability by receiving $5 donations from 7,500 registered voters would have received at least $1 million in state funds for the primary election.

The proposition also would have barred special interests from writing big campaign checks to participating politicians, in an effort to reduce the influence of those contributors.

The measure would have repealed a ban on the use of public funds for state political campaigns, raising most of the money by increasing a state fee charged to lobbyists and their clients.

The California Chamber of Commerce and the Howard Jarvis Taxpayers Assn. opposed Proposition 15, arguing that it would open the door to tapping other public funding, beyond lobbyist fees, for political campaigns.

“With a $20-billion [state] budget shortfall, it’s a horrible idea,” said Richard Wiebe, a spokesman for the opposition campaign.

Pacific Gas and Electric Co. spent $46 million on its campaign for Proposition 16, which would have required local government agencies to obtain approval of two-thirds of voters before providing electricity service to new customers. The measure also would have called for a two-thirds vote before the expansion of service beyond current coverage areas if public funds or bonds were used.

“We think people should have a right to vote when local governments spend their money to go into the electric utility business,” said Robin Swanson, a spokeswoman for the campaign.

The measure was opposed by groups including Consumer Watchdog, which said that PG&E was just protecting its turf and that electricity customers would suffer.

Proposition 17 would have allowed automobile insurance companies to base their prices in part on a driver’s history of insurance coverage, authorizing discounts for those who have kept their coverage even if they changed insurance companies.

The measure, on which Mercury Insurance spent $16 million, would have allowed insurance companies to increase the cost of insurance for drivers who have not maintained continuous insurance coverage.

The least controversial measure on Tuesday’s ballot was Proposition 13 which provides that certain construction projects to make buildings safer during earthquakes will not trigger reassessments that could increase property taxes on the structures.

patrick.mcgreevy@latimes.com

California Voters Reject Mercury General-Funded Ballot Question

June 9th, 2010

By Sean P. Carr, BESTWIRE

SACRAMENTO, CA — California voters rejected a Mercury General-sponsored proposition to allow insurers to extend automobile insurance discounts to more drivers despite the company having 15-to-one spending advantage.

Proposition 17 lost by a 52.1% to 47.9% margin, 2,004,410 to 1,848,768, according to unofficial results from the California Secretary of State’s office.

The outcome was a victory for consumer groups that argued the referendum would effectively legalize surcharges outlawed since the passage of Proposition 103 in 1988. Because those with lapses in coverage or payments would be disqualified from discounts, the initiative would allow insurers to charge those customers more, they argued.

While the Yes on 17 – Californians for Fair Auto Insurance Rates campaign touted the support of 100 organizations, Mercury General Corp. funded virtually the entire operation. The insurer gave approximately $16 million toward the effort.

The proposition’s failure to win despite the financing disparity shows that voters don’t trust the insurance industry, said Jamie Court, president and chairman of Consumer Watchdog. Court is also a board member of the Campaign for Consumer Rights, which ran the Stop Prop 17 campaign.

“It tells the insurance industry it shouldn’t be messing with the voters, because the voters can see through their tricks,” Court said.

Mike D’Arelli, executive director of the Alliance of Insurance Agents and Brokers, said voters missed an opportunity to save themselves money. “There is no doubt that extending the continuous coverage discount would have improved current auto law,” he said in a statement from the Yes on 17 campaign.

Mercury Insurance Co. (NYSE: MCY), a member of Mercury General Group, currently has a Best’s Financial Strength Rating of A+ (Superior).

The top five writers of private passenger automobile insurance in California in 2009 were Farmers Insurance Group, with a 15.1% market share; State Farm Group, 13.1%; Allstate Insurance Group, 8.8%; Auto Club Enterprises Insurance Group, 8.8%; and Mercury General Group, 8.7%; according to BestLink, which provides online access to A.M. Best’s Global Insurance & Banking Database.

Contact the author at: sean.carr@ambest.com

Decision Time for State’s Voters

June 8th, 2010

By Carla Marinucci, THE SAN FRANCISCO CHRONICLE

Primary to pick nominees, decide crucial local issues

After enduring months of expensive campaigning by corporations and candidates, California voters go to the polls today to decide primaries for governor and U.S. Senate and races for a number of statewide and local offices – as well as ballot measures to allow the San Francisco 49ers to build a new stadium in Santa Clara and to change primary elections in the state.

Just one-third of California’s almost 17 million registered voters – a record-low turnout – are expected to weigh in, according to an analysis by the Field Poll.

The lack of voter interest reflects the lack of drama in two high-profile Democratic races, where Attorney General Jerry Brown, a candidate for governor, and incumbent Sen. Barbara Boxer face no strong competition from their party.

By contrast, GOP voters will decide two of the most-watched political contests in the nation – and whether to nominate women for the first time as Republican candidates for governor and U.S. Senate.

In California’s gold-plated GOP governor’s race, first-time candidate Meg Whitman – the former eBay CEO who has put $71 million of her own money into the race – leads state Insurance Commissioner Steve Poizner, who has dropped $24 million of his money.

Democrat Brown, the former two-term governor and Oakland mayor, cleared the field of any serious contenders months ago.

Seeking challenger to Boxer

In the GOP U.S. Senate race, former Hewlett-Packard CEO Carly Fiorina – who has invested more than $5 million of her own funds in her campaign – is leading in the polls against moderate former South Bay Rep. Tom Campbell and Assemblyman Chuck DeVore of Irvine, a Tea Party favorite.

The winner will challenge Boxer, who has faced a feisty but longshot challenge from former Slate.com blogger Mickey Kaus as she seeks a fourth term.

California voters also will decide who will square off in November for the lieutenant governor’s post. On the Democratic side, San Francisco Mayor Gavin Newsom, with the edge in fundraising, polling and endorsements, is the favorite over Los Angeles City Councilwoman Janice Hahn, who has attacked him for not knowing what the position entailed several months before announcing he was running.

In the GOP primary, recently seated Lt. Gov. Abel Maldonado, a moderate from Santa Barbara County, is facing a challenge on the right from Sen. Sam Aanestad of Grass Valley Nevada County.

Two district attorneys from opposite ends of the state appear to be the favorites to win their party’s nominations for attorney general in crowded fields. San Francisco District Attorney Kamala Harris, a Democrat, has polled well against six challengers but has been hit hard over the city’s drug-lab scandal by her most well-funded opponent, former Facebook privacy officer Chris Kelly, who has put $12 million of his own money into the race.

GOP attorney general’s race

At the same time, Republican Los Angeles District Attorney Steve Cooley has been attacked by his right-of-center opponents, state Sen. Tom Harman and former Chapman Law School Dean John Eastman, for his criticism of the state’s “three strikes” sentencing law.

California voters also will decide two measures that would affect elections and campaigns.

Proposition 14 would place all candidates from all parties in the same primary, with the two candidates with the most votes advancing to the general election even if they’re both from the same party. Proposition 15 would create a pilot program to publicly fund the campaigns for secretary of state.

Two ballot measures with major financial backing from corporations also will be decided.

The campaign for Proposition 16, supported by $46 million in funding from PG&E, would bar communities, including San Francisco and Marin County, from forming public power agencies without the approval or two-thirds of local voters.

At the same time, the campaign for Proposition 17- which would offer discounts to drivers who have maintained continuous coverage while allowing insurers to raise rates for drivers whose coverage has lapsed, has received $17 million from its chief backer, Mercury Insurance.

Santa Clara votes on 49ers

Perhaps the highest-profile measure in the Bay Area is Santa Clara’s Measure J, which would clear the way for the San Francisco 49ers to build a new $937 million stadium next to the Great America amusement park.

The team, which has spent more than $4 million on the campaign, promises that no money from the city’s general fund would be spent on the stadium. Opponents, who have raised about $20,000, argue that the stadium deal is too big a risk for Santa Clara.

Bay Area voters also will decide a dozen tax measures to benefit local school districts.

Chronicle staff writers John Wildermuth, John Coté, Nanette Asimov, Marisa Lagos and Carolyn Jones contributed to this report.

‘Democracy Hijacked’ as California Goes to Polls

June 6th, 2010

By Staff Writers, AGENCE FRANCE PRESSE

LOS ANGELES, CA — The free-spending role of corporations in California’s electoral system has come under fire as the state prepares to vote on two referenda which opponents have condemned as a “hijacking” of democracy.

Whether its a bid to legalize marijuana or ban same-sex marriage, single-issue referenda, known in California as ballot initiatives, are part of the fabric of the state’s political scene.

But two ballot measures being presented to voters at Tuesday’s June 8 primaries have raised questions about an electoral system which allows corporations to bankroll campaigns with millions of dollars.

The highest profile initiative — Proposition 16 — is backed and financed by Pacific Gas and Electric, the private, for-profit electric company which supplies energy to nearly two thirds of northern California.

Proposition 16 would require any city or county in the state seeking to start its own municipal utility to get approval from two thirds of its voters.

Opponents of the initiative say that if approved it will give PG&E and other existing companies a virtual monopoly, locking out potential public sector rivals in perpetuity.

“I think it’s outrageous that a regulated company could decide to write its own business advantage into the state Constitution,” John Geesman, a former member of the California Energy Commission, told the Los Angeles Times.

So far PG&E has spent an estimated 46 million dollars on its campaign, blitzing local television, radio and newspapers with hard-hitting ads touting the measure as the “Taxpayers Right to Vote.”

Opponents however are hamstrung because the law forbids municipal power providers from spending any money on electioneering. The “No on 16″ campaign is staffed exclusively by volunteers and has so far raised only 80,000 dollars.

“The initiative process originated with the idea that ordinary voters could bring forth issues of importance to them and it’s pretty much been hijacked by wealthy corporations,” said “No on 16″ spokeswoman Mindy Spratt.

“We have far more public support, far more endorsements, far more volunteers. But the challenge is getting our message out against a 46 million dollar ad campaign that has blanketed the entire state.

“PG&E has obviously calculated ‘If you can buy a Governor’s Mansion, you might as well try and buy a part of the constitution.’”

The other ballot measure being decided Tuesday, Proposition 17, is being funded by Mercury Insurance, which has spent more than 15 million dollars on the campaign. Supporters say the measure is designed to allow drivers to keep loyalty discounts even if if they switch insurance companies.

Opponents say Proposition 17 will allow insurance companies to raise rates by imposing premium surcharges that are currently illegal.

“When was the last time an insurance company spent millions to save you money?,” the “Stop Prop 17″ campaign asks on its website.

Experts say that while corporations attempting to influence politics is nothing new, the sums of money being spent by backers of the two California measures in Tuesday’s election are unprecedented.

John Matsusaka, a leading authority on ballot initiatives who heads the Initiative And Referendum Institute at the University of Southern California, described the PG&E-financed campaign as “staggering.”

“Corporations have been involved in initiatives since the very beginning. It’s not new. But the amount of money being spent is,” Matsusaka told AFP.

“PG&E has spent something like 45 million dollars now. That’s staggering. Huge. That is a completely new thing.”

Matsusaka noted however that corporations were not alone in trying to buy influence at the ballot box, where public sector unions and wealthy individuals have often mounted similar campaigns in the past.

“What I do think is of concern though is the imbalance between the two sides,” Matsusaka said. “The direct democracy process was set up in the belief that the voters are competent to make choices.

“But in order for them to make choices they need to hear both sides of the argument. What’s troubling about this campaign is that only one side of the argument is being heard.”

ELECTION: Corporations Back Propositions 16, 17

June 6th, 2010

Both have sought to be portrayed as “grassroots” efforts

By Eilene Zimmerman, SAN DIEGO BUSINESS.COM

The phrase “more power to the people” has a lot of resonance here in California, where so many of our laws are decided by ballot initiative. This year voters would be justified in feeing a bit manipulated by special interests, as some of the most significant propositions on the ballot are being bankrolled by corporations advancing their own agendas.

No on Prop 17.

Courtesy photo

Proposition 16, for example, called the “Taxpayer’s Right to Vote Act” isn’t actually about voting rights. And although it sounds very grass roots, it’s not. If Prop 16 passes, it will mean that for a local government to get into the energy business—by forming a municipal utility, for example, or a community-wide clean electricity district—they first have to schedule an election and win approval of two-thirds of voters in the area of the proposed utility. The proposition’s main financial sponsor is—surprise, surprise—Pacific Gas & Electric.

The utility company has spent more than $46 million to make this proposition law. Opponents of Prop 16 have raised a paltry $50,000. If the proposition doesn’t pass, it means local governments can continue to startup up or expand electricity service either by approval of a majority of voters or through the action of governing boards. If it does pass, PG&E could give itself a perpetual monopoly in the state.

The energy company is presenting its support of Prop 16 in a very Tea Party light—voters taking control of the public funds their governments spends too easily. Robin Swanson, a spokeswoman for the “Yes On 16” campaign told National Public Radio this month the proposition puts “the power back in the hands of the people.”

She also said PG&E isn’t afraid of competition from publicly owned power providers. “If our opponents can provide cheaper, greener, better electric service, then they shouldn’t b e afraid to go to the people and sell it to them,” she says.

Another corporate entity financing a proposition on Tuesday’s ballot? Mercury Insurance. The company put Prop 17 on the ballot in order to repeal a provision of a voter-approved insurance rate regulation that saved California motorists over $60 billion in excessive insurance rate hikes, according to the Consumer Federation of California. Prop 17 allows auto insurers to raise your premium if you have a break in insurance coverage for three months for any reason, even if you have a great driving record.

Mercury is portraying Prop 17 as “correcting a flaw in the law” that prohibits drivers from taking continuous coverage discounts with them when they switch insurers. The insurance company spent more than $3 million to get the proposition onto the state’s ballot.

Mercury’s CEO George Joseph told Steve Lopez of the L.A. Times that Prop 17 was an effort to offer low car insurance rates for Californians, but a few sentences later admitted he wants more customers, and if discounts become portable, drivers will drop other companies and switch to Mercury because of the company’s cheap rates.

So voters beware. Certain companies (and individuals) stand to benefit mightily if Props 16 and 17 pass. You ought to know that before casting your vote.


Eilene Zimmerman

About the author: Eilene Zimmerman is a journalist based in San Diego who writes about a variety of topics, including business, social and political issues and family life. Her work has been published in national magazines and newspapers including The New York Times, The San Francisco Chronicle, The Christian Science Monitor, FORTUNE Small Business, CNNMoney.com, CBS MoneyWatch.com, Wired, Harper’s, Salon.com, Slate.com, Psychology Today and others. She blogs at www.trueslant.com.

Democratic Interest Wanes in Quiet Primary

June 6th, 2010

By Steven Harmon, CONTRA COSTA TIMES

SACRAMENTO — When he first began to ramp up the No on Proposition 16 campaign in the fall, Mark Toney was given helpful advice by Democratic political consultant Gale Kaufman.

Don’t expect Democrats to carry the day in the battle to defeat the ballot measure, backed by Pacific Gas & Electric, which would require a two-thirds vote before local governments could provide alternative energy sources.

‘She said this will be a highly Republican electorate,” said Toney, the executive director of San Francisco-based The Utility Reform Network.

So, Toney has put “extra time and energy” into reaching out to Republicans to support his cause in Tuesday’s primary election — something unthinkable in a typical year. In most years, Democrats could have been counted as a reliable bloc to help vote down corporate-backed ballot measures, another of which is Proposition 17, financed almost wholly by Mercury Insurance Corp. and opposed by consumer groups.

This year, however, Democrats will have a tough time motivating their voters to the polls, thanks to a quiet race at the top of the ticket.

State Attorney General Jerry Brown, running for governor, scared away a handful of potential Democratic opponents in the fall with his near-universal name recognition and superior fundraising network. Elsewhere, no one seriously entertained challenging U.S. Sen. Barbara Boxer, the three-term incumbent. That meant neither had to fret over what could have been divisive and costly primaries, and both could hoard resources for the general election against wealthier GOP opponents.

“Low turnout will definitely have an impact — it won’t help us beat those (corporate-backed measures) back,” said Roger Salazar, a Democratic political consultant. “But, frankly, our focus is more on November than the primary.”

One question is whether a relatively low-profile primary will make it difficult for Democrats to rally support in the fall, particularly at a time when Republicans are fully motivated by competitive primaries at the top of the ticket.

Meg Whitman, the billionaire ex-CEO of eBay, and state Insurance Commissioner Steve Poizner are tied up in the gubernatorial primary. Carly Fiorina, the former CEO of Hewlett-Packard, former U.S. Rep. Tom Campbell, and Assemblyman Chuck DeVore are in a three-way battle in the GOP primary for U.S. Senate.

“I can tell you, the enthusiasm for Republicans couldn’t be higher,” said Jon Fleischman, a Republican Party officer and editor of the conservative blog FlashReport. “They can’t wait for the first opportunity to vote. They’re trying to sort out who to support for governor and senator, but Republicans are unified behind the idea that Jerry Brown and Barbara Boxer make them nauseous. There’s a lot of excitement to get rid of them.”

The more volatile action on the Republican side could result in many decline-to-state voters — who represent a record 20.1 percent of registered voters — participating in the GOP primary, said Democratic pollster Ben Tulchin. But they will likely return to the Democratic fold in the general election, he said, given their history of being more philosophically aligned with Democrats — and the nasty and expensive on-air Republican campaigns.

“I’d rather take a lower turnout and no hostilities in a primary than a higher turnout and divided electorate,” Tulchin said.

In many parts of the East Bay, the competitive primaries among Democrats are few and far between. In contrast, the four-way race in the GOP primary in the 11th Congressional District has built considerable interest among Republicans in the district covering parts of Contra Costa, Alameda, San Joaquin and Santa Clara counties.

“I do see a fair amount of apathy among Democrats,” said Ray Link, a past San Ramon Valley Democratic Party president. “I certainly don’t see the kind of energy that the Republicans have put together this year.”

But Alameda County Democratic Central Committee Chairwoman Robin Torello said it may depend on the area.

“Lucky for Democrats in Alameda County, we have great pockets of places where people are going to go out and vote no matter what, even if it’s just dogcatcher on the ballot,” Torello said. “We do have some contested races — the 20th Assembly District, two supervisorial districts — that cover maybe a little less than half the county, so that will help get people to the polls.”

Overall, a low turnout — possibly one of the lowest in California history — is expected, said Mark Baldassare, president and CEO of the Public Policy Institute of California.

“No contested primary for governor and Senate on the Democratic side, all the money with mostly negative ads on the Republican side — there’s lots of reasons for people to not vote,” Baldassare said. “The stars are aligning for a low turnout.”

Until recently, Democrats around the country warily eyed an enthusiasm gap with Republicans. Tea party enthusiasts held the promise of a passionate conservative movement — aimed at dealing a blow to President Barack Obama — heading into this fall’s midterm elections.

But Obama took some air out of the tea party movement’s sails when he signed the historic health insurance reform bill into law, and a recent spate of primaries in several states brought mixed results that scrambled what had been a tidy narrative that held that Republicans were ascendant.

Tea party activists trumpeted the victory of one of their own in Kentucky — Rand Paul defeated an establishment-backed Republican candidate in a GOP primary for a U.S. Senate seat. But Democrats were equally bolstered by a win in a special election in a conservative Pennsylvania district to replace late U.S. Rep. John Murtha. And U.S. Rep. Joe Sestak, challenging from the Democrats’ left wing, captured the Democrats’ nomination over U.S. Sen. Arlen Specter, a former Republican who only last year changed parties to avoid a primary challenge from the GOP’s right wing.

“Passing health care galvanized Democrats, and Wall Street reform handed Republicans a defeat,” said Democratic pollster Tulchin. “We were on the right side of a populist issue. I mean, you’ve got Rand Paul defending BP (the oil company responsible for the massive oil spill in the Gulf of Mexico). There’s been a big shift in the landscape that has helped the Democratic base.”

Meanwhile, as many California Democrats are cooling their heels for the fall, opponents to another ballot initiative, Prop. 17, are searching for voters interested in a populist issue in their own backyards.

The measure would allow drivers to switch insurers while retaining their continuous coverage discount but would also mean surcharges for drivers who haven’t been able to make continuous payments.

“If Democrats are not coming out because they’re not as interested in the election, that’s a concern,” said Doug Heller, executive director for Consumer Watchdog, the group opposing Prop. 17. “I think more Democrats would add to our campaign, and the natural inclinations are there to vote against big industry. Republicans are more amenable to a corporate message. But being ripped off by an insurance company makes people angry on a bipartisan basis, so I feel pretty confident.”

Staff writers Josh Richman and Lisa Vorderbrueggen contributed to this story. Contact Steven Harmon at  916-441-2101.

Propositions 16 and 17 Could Pave the Way for More Company-Backed Initiatives

June 5th, 2010

If the proposals pushed by utility PG&E and insurer Mercury succeed, individual corporations could turn to the ballot box as an easier way to change laws.

By Marc Lifsher, THE LOS ANGELES TIMES

Reporting from Sacramento — Tuesday’s California primary election represents a first — two initiative measures that were conceived and financed by individual companies. The fate of these propositions, analysts say, could determine whether other companies follow suit.

Proposition 16 is being pushed by Pacific Gas & Electric Co., which has provided 98% of the $46 million in campaign financing for the measure, according to the secretary of state’s office. The measure would make it harder for municipalities to launch utilities to compete with corporate providers such as PG&E.

Likewise, Proposition 17 was the brainchild of insurance company Mercury General Corp., which has raised 99% of its $16 million in campaign funding. Approval of the measure would make it easier for auto insurance companies to win customers from competitors by allowing them to carry over their loyalty discounts.

Both companies have spent far more than opponents, who raised just $50,000 against Proposition 16 and $1.3 million against Proposition 17.

A victory for either measure could mark a troubling development in the century-long evolution of direct democracy in initiative-happy California, some veteran political observers say.

“You could very well see the floodgates open,” said Dan Schnur, the newly named chairman of the Fair Political Practices Commission, the state’s political ethics watchdog. “Any number of corporations and union interests could decide that a ballot initiative is a much easier” way to change the law.

Gov. Hiram Johnson championed the ballot initiative in 1911 as a populist tool to counter Southern Pacific Railroad’s influence on the Legislature, noted Jessica Levinson, political reform director at the Center for Governmental Studies, a nonpartisan Los Angeles think tank.

“Now, we’re seeing special interests using the initiative process to simply bypass the Legislature completely by proposing laws that would overwhelmingly benefit the proponents of the initiative,” Levinson said.

PG&E and Mercury both insist the propositions they are backing would benefit millions of Californians.

PG&E contends that it and its allies — many of them nonprofit groups that have received contributions from the utility — are pursuing a good-government goal of giving citizens the right to vote on public power projects. Proposition 16 would require municipal power advocates to get approval from two-thirds of the voters in an affected area for any plan to create or expand a nonprofit alternative to a for-profit utility.

Voters rarely back any proposal by such a super-majority, so Proposition 16’s passage would essentially eliminate future public power efforts, opponents say.

For its part, Mercury claims that Proposition 17 could foster competition and lower insurance bills for most car owners by allowing them to keep a current discount for being loyal to their insurance company, even if they switch insurers.

“A more competitive market always makes people better off,” said Proposition 17 spokesman Mike D’Arelli.

Courts have ruled that such “portable” discounts violate Proposition 103, an initiative passed in 1988 that regulates property insurance rates. Consumer advocates in the past have contended that providing new discounts would raise premiums for motorists buying first-time coverage or who let policies lapse because they didn’t own cars or lived out of state.

The fact that both PG&E and Mercury are pushing pet initiatives doesn’t necessarily signify a trend toward a corporate takeover of the process, said Allan Zaremberg, president of the California Chamber of Commerce, which backs both propositions 16 and 17. “There are two unique circumstances here that happen to be on the same ballot,” he said.

Until this election cycle, initiatives that primarily benefited a single corporation have been rare. In 1984, a drive to give California a state lottery passed with support from Scientific Games Corp., a Georgia company that still sells instant-winner, scratch-off tickets to the agency.

Another company-specific effort, Proposition 10 in November 2008, failed spectacularly. The initiative, backed by Texas oil and gas developer T. Boone Pickens Jr., asked voters to approve $5 billion in bonds to finance investments in natural gas and alternative energy projects.

There have been no publicly available polls on either of next week’s business-backed propositions. But people who have seen private daily tracking polls say that the PG&E initiative has been stuck in the mid-40% approval zone while Mercury’s effort is running somewhere around 50%.

Often with initiatives, voters have an ability to see through the propaganda, said John G. Matsusaka, president of the Initiative and Referendum Institute at USC.

“If voters favor corporations, that’s their choice,” he said. “But the thing that concerns me is when the spending is so one-sided. You wonder, did the other side get to make its arguments?”

marc.lifsher@latimes.com

Insurers Weigh in on Democratic Races

June 4th, 2010

By Steven Harmon, CONTRA COSTA TIMES

SACRAMENTO — Big insurers are targeting a handful of Assembly races in an effort to send business-friendly Democrats to Sacramento as they gird for a renewed push for regulations and consumer protections that might come if Jerry Brown is elected governor.

The insurance industry has poured millions of dollars into four Democratic primary races, including $367,000 into the Bay Area’s 20th Assembly district to support Garrett Yee, an insurance industry professional who is challenging the state Democratic Party’s favorite, Bob Wieckowski.

“It’s pretty obvious the industry is trying to elect one of its own,” said term-limited Alberto Torrico, D-Fremont, who has endorsed Wieckowski to succeed him. The district includes Fremont and surrounding cities in Alameda and Santa Clara counties.

Three insurance political action committees have combined to spend $329,000 in independent expenditures on behalf of Yee.

Yee, a 44-year-old Republican before he switched his registration in 2002 to “Decline to State” and then to Democrat in 2008, has also received $37,800 in direct contributions from insurance PACs.

Yee said he has the backing of the insurance industry because “I understand the principles of insurance. It’s a very complex subject. If elected, I would be understanding of the ramifications or complexities of insurance issues.”

Wieckowski, an attorney who has received $331,000 from labor groups and trial attorneys, more traditional allies of Democrats, said Yee was “speaking industry code for ‘don’t touch us, don’t regulate us.’ ”

Yee downplayed his ties to the insurance industry, saying his role as manager of the quasi-state Workers’ Compensation Insurance Rating Bureau has been as a data collector and watchdog over information he gathers from insurance corporations.

But on his campaign website, Yee boasts that he worked “directly with employers and insurers,” and as policyholder ombudsman, he “assisted hundreds of employers with problems and disputes involving their workers’ compensation insurance.”

Just as important to his insurance backers, he is on their side on one of the most high-profile issues that is vigilantly guarded by the industry: the $250,000 cap on pain and suffering jury awards, a controversial portion of the Medical Injury Compensation Reform Act (MICRA) of 1975, which could be a central battleground issue in the next legislative session.

Under MICRA, patients can collect unlimited economic damages, unlimited loss of income, unlimited medical expenses and unlimited punitive damages. Pain and suffering is the only area of medical malpractice that is capped in California, which attorneys say hurts many women, the poor and elderly, who end up with the lowest recovery totals because of their limited earning power.

But Yee said the limits on pain and suffering damages have “kept the cost of health insurance under control, to the extent that medical malpractice costs are passed onto patients.”

Lisa Maas, executive director of the Californians Allied for Patient Protection, which has made $184,000 in independent expenditures in support of Yee, said her PAC wanted a candidate “who would be a problem solver when it comes to meeting health care challenges.

“We think it’s very important to make sure we have legislators who are going to be strong on health care, who understand health care issues, who understand the importance of protecting access to health care,” Maas added.

The Californians Allied for Patient Protection’s executive board consists of medical malpractice insurers, the California Hospital Assocation, California Medical Association, California Dental Association and others.

Critics say insurers and large businesses are trying to maintain the anti-regulatory mood that’s thrived under Gov. Arnold Schwarzenegger and, until 2009, ex-President George Bush.

“I do think the insurers and others in the corporate community have had somewhat of a free ride under Schwarzenegger and Bush and, certainly, they’re afraid of change,” said Lea-Ann Tratten, the political director for Consumer Attorneys of California. “They don’t like regulation and don’t like to be accountable when they hurt people.”

Wieckowski, Yee’s opponent, accused insurance industry PACs of not clearly disclosing to voters their motive behind backing pro-industry candidates in the Democratic races. Campaign fliers sent to thousands of homes by the industry PACs steer clear of the issue of medical malpractice insurance and other regulatory issues which are driving the big push for pro-industry candidates.

“He’s a Boy Scout, he’s close to the Chinese American community here, he’s on the Ohlone Community College board, he’s a colonel in the Army Reserve, he’s apolitical, everything but what he does for a living,” Wieckowski said. “They’re OK with being silent on insurance issues, with having it a nonissue. They know that when I get to the Assembly, I’ll be interested in insurance reform. I believe in consumer protections.”

In addition to the effort by Californians Allied for Patient Protection in the 20th District, another $125,000 in independent expenditures on behalf of Yee came from the Cooperative Of American Physicians, the PAC of the medical malpractice insurer known as Mutual Protection Trust.

The Civil Justice Association of California, whose board of directors is dominated by insurers, has weighed in with $1.75 million in three races, including one in which a former Democratic lawmaker-turned insurance company executive, Juan Vargas, is challenging Assemblywoman Mary Salas, D-San Diego.

In one “hit piece” against Salas, she is accused of taking contributions from health insurers — an attack made all the more rich by the fact that it was funded by the insurer-backed Civil Justice Association of California, said Tratten.

“Insurers are spending millions of dollars to influence the outcome of Tuesday’s election, but most voters don’t know insurance companies are out there propping up initiatives and attacking candidates,” said Doug Heller, executive director of Consumer Watchdog, which is virtually single-handedly taking on Mercury Insurance Corp.’s Proposition 17. Mercury has outraised Consumer Watchdog’s PAC $15.9 million to $1 million.

Contact Steven Harmon at 916-441-2101.