Initiative spending booms past $1 billion as corporations sponsor their own proposals

November 8, 2013

Tim Eyman, the Initiative King of Washington state (Elaine Thompson/AP)

Corporations and some of the wealthiest Americans have spent more than $1 billion in the past 18 months on ballot initiatives in just 11 states, an unprecedented explosion of money used to pass new laws and influence the public debate.

According to campaign finance reports in 11 states with long histories of initiatives and referendums, the billion dollars spent since the beginning of 2012 is more than has been spent in any two-year period. Supporters and opponents of ballot measures spent nearly as much, $965 million, in 2005 and 2006.

The initiative process, originally aimed at giving citizens the chance to break industry’s hold on state legislatures, is increasingly becoming the domain of corporations and wealthy individuals who advance new laws for their own advantage, bypassing reluctant legislatures and spending millions of dollars along the way.

On Tuesday, voters in Washington state rejected Initiative 522, which would have required labels on food that included genetically modified ingredients. Agriculture groups such as Monsanto and Dupont and food manufacturers such as PepsiCo and Nestle contributed a total of $20 million to oppose the initiative. Just $600 of the $20 million spent against I-522 came from inside Washington state. On the other side of the debate, Dr. Bronner’s Magic Soaps, an organic producer, contributed $2.2 million to help pass the initiative.

Voters also rejected a Colorado ballot measure, Amendment 66, that would have increased personal income taxes to provide almost $1 billion for schools. Supporters of the amendment, which about two-thirds of Coloradans voted against, raised and spent $10 million to make their case.

In 2012, supporters and opponents in California spent $477 million for and against proposed ballot measures. Business groups and unions spent a combined $149 million on Proposition 32, which would have restricted political fundraising by labor unions; that measure failed. And wealthy Californians such as investor Charles Schwab and philanthropist Eli Broad helped spend $76 million opposing a tax increase backed by Gov. Jerry Brown (D). Supporters of that measure, Proposition 30, spent another $72 million.

Also last year, Costco Wholesale spent more than $22 million on an initiative to end Washington state’s monopoly on liquor sales; the initiative restricted liquor sales to stores of more than 10,000 square feet, giving Costco the chance to sell booze in their massive warehouses.

MGM Resorts International contributed nearly $41 million to Question 7 in Maryland, which will allow the company to build a casino just outside the Washington Beltway; Penn National Gaming, which owns a nearby casino in West Virginia and wanted to avoid the competition, spent $44.1 million to oppose the measure. The two sides spent a combined total of more than $90 million in just two months.

“In many states, the cost of ballot-measure fights is staggering, in part because corporations are willing to spend crazy money to enact policies that favor their interests,” said Justine Sarver, executive director of the Ballot Initiative Strategy Center, a left-leaning think tank in Washington.

States like California, Washington and Colorado have strict disclosure laws. But because money spent on ballot measures isn’t subject to federal campaign finance disclosure rules, it’s not as clear in other states who is supplying the cash, or how much is being spent, said Daniel Smith, a University of Florida political scientist who studies the initiative process.

“It’s one of the most difficult things to track in campaign finance, because states do not do a terrific job” of making campaign finance disclosures available, Smith said.

It’s not just corporations spending money to influence elections. Because states don’t limit contributions to initiative campaigns, wealthy donors can use them as a way to influence public policy. Since 1997, Bill and Melinda Gates have spent more than $6.8 million on initiatives in Washington state alone, according to public records.

The amount of cash spent rewriting state law through the initiative process has exploded in recent years, spawning a cottage industry of campaign consultants who make their living helping ideological groups and corporations alike qualify measures for the ballot. The cost of advertising on television has gone up, even as the effectiveness of a TV ad has gone down. Initiative campaigns must gather hundreds of thousands of signatures to qualify for the ballot, and paid signature-gatherers can charge $5 or more per valid autograph.

Since passing his first ballot measure in Washington state in 1997, conservative activist Tim Eyman has succeeded in getting 13 initiatives and referendums on Washington’s ballot, from measures that allowed the state auditor to conduct performance audits to cuts in the motor vehicle excise tax. In Oregon, conservative activist Bill Sizemore pushed several tax cut measures in the 1990s.

Eyman raised just $75,000 to get Initiative 695, a measure limiting the amount of money Washington could charge for car tabs, on the ballot in 1999. Today, the average initiative campaign has had to spend nearly 20 times as much — $1.4 million — just to qualify for Washington’s ballot.

The number of signatures required to qualify an initiative for the ballot varies by state, and is usually a fraction of the votes cast in the previous gubernatorial election. As the number of voters, and therefore the number of signatures required, grows, costs go up.

“The cost to qualify over the last 13 years has quadrupled,” Eyman said, citing signature requirements as a growing barrier to entry. “How would you expect a regular person to [collect the necessary signatures] from a standing start without a ton of money?”

A handful of California firms make their livings by getting measures onto the ballot. Winner & Mandabach, a Santa Monica-based firm, and Arno Political Consultants, based in Carlsbad, Calif., are names frequently found in disclosure reports.

Initiatives and referendums became a part of American politics in the Progressive Era, when activists in Midwestern and Western states pushed to include citizen-driven ballot measures in state constitutions. South Dakota began allowing the referendum in 1898, in an effort to break the stranglehold that railroad tycoons enjoyed over the legislature. Oregon voters were the first to use their initiative process, in 1904. By 1918, Massachusetts had become the 20th state to allow direct democracy.

Today, 24 states allow some form of direct democracy. In the past several decades, liberal and conservative activists have used the initiative process to amend state law on issues as diverse as the death penalty, same-sex marriage, abortion rights and taxes. Where legislatures have been reluctant to take on hot-button issues, citizen-driven initiatives have been tools of social change.

As West Coast states, in particular, have solidified under Democratic control, business interests have used the initiative process to advance goals that won’t get a hearing in liberal legislatures. In red states such as Missouri or Florida, progressives have used the ballot initiative to push their agenda.

“Business interests are no longer able to kill off legislation coming through Sacramento or Salem or Olympia, so they’re turning to the initiative process to overturn legislation that’s passed or trying to put forward legislation that may be more hospitable to their business interests,” Smith said.

“There’s lots of money and lots of wealthy people with lots of causes that are willing to step up and put money behind initiatives,” said Ron Dotzauer, a Seattle political consultant who worked against Initiative 522. “You can write the checks to influence the outcome in Washington state.”

Corporate spending on initiatives isn’t entirely a new thing. The gaming industry spent tens of millions during the 1980s pushing measures that established or expanded state lotteries and casinos.

In 1908, two wings of the salmon-fishing industry in Oregon got dueling measures on the ballot: One, advanced by upstream companies, banned net fishing, the technique used by downstream companies. The other, pushed by downstream companies, banned the water wheels the upstream companies depended upon for their harvest. After both initiatives passed, threatening the entire industry, the legislature had to step in.

“The irony is, even though a lot of industry opposed direct democracy in the 1900s and 1910s, you had also the takeover of state legislatures by more progressive forces,” Smith said. “So those special interests that opposed direct democracy realized, ‘Oh, we can go to the ballot and reverse what’s going on in those legislatures.’ “

Reid Wilson covers state politics and policy for the Washington Post's GovBeat blog. He's a former editor in chief of The Hotline, the premier tip sheet on campaigns and elections, and he's a complete political junkie.
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