The hardball tactics that got Prop. 39 tax hike passed

Dec. 20, 2012

By Chris Reed

In June, California voters rejected a hike on cigarette taxes to fund cancer research. The defeat of Proposition 29 strongly suggested that the general anti-tax beliefs of most of the Golden State electorate remained intact, no matter the lunatics they elected to the Legislature and statewide office.

But in November, voters backed Proposition 30, increasing the sales tax on everyone and income taxes on the wealthy, to the surprise of many pundits. And they also approved Proposition 39, which wiped out a corporate tax loophole in favor of a bizarre and dubious scheme to subsidize green energy projects, which have gone haywire over and over in similar federal subsidy schemes.

We know why Prop. 30 passed: Gov. Jerry Brown and a well-funded TV ad campaign framed it as a referendum on public education by linking its rejection directly to massive school budget cuts. But how did Prop. 39 succeed?  By threats to personally demonize the CEOs of the companies most likely to fund opposition. Timm Herdt of the Ventura County Star has the back story:

 “It was a story jointly written by a brassy political consultant whose style was forged while fighting off scandals in the Clinton White House, a billionaire Silicon Valley investor with a passion for public policy, and a dogged state senator who waged a three-year crusade to change a tax policy he believed was shortchanging California businesses and taxpayers. …

“The solution, [Democratic consultant Chris] Lehane believed, was ‘to change the value proposition’ for companies considering whether to finance a campaign to defeat Proposition 39.

“Because Sen. Kevin De León, D-Los Angeles, had fought for three years in the Legislature to change the tax formula, he knew what to expect.

“‘The multistate corporations were so effective in their lobbying. They killed every effort,’ De León told me. ‘I knew who the players were.’

“He knew that the most likely opposition to Proposition 39 would come from the out-of-state companies that had most aggressively lobbied against the idea in the Legislature: Chrysler, General Motors, International Paper and Kimberly-Clark.

“Full-page newspaper ads, featuring photographs of the companies’ CEOs, were purchased, asking them not to oppose the measure. De León sent a letter to the CEOs challenging them to a public debate ‘so voters can plainly see how devastating your efforts are to our state.’

“By Sept. 26, only GM and Kimberly-Clark were still holding out. The Proposition 39 campaign threatened to start running TV ads and to ‘unleash a relentless barrage’ of commercials calling out those two companies.

“Because venture capitalist Tom Steyer had deposited $21 million into the Yes on Proposition 39 campaign, potential opponents knew this was not an empty threat. And they knew it would be impossible to wage an opposition campaign on the cheap.

“‘Tom was not going away,’ De León says.

“By Sept. 28, all four companies had promised not to oppose the initiative. And in the end, the opposition campaign was almost nonexistent.”

Politics is not for the weak of heart. These tactics aren’t illegal. But the cause they helped is such a disaster that stories like this are disheartening. If only defenders of taxpayers could figure out ways to play such effective hardball.

5 comments

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  1. StevefromSacto
    StevefromSacto 20 December, 2012, 10:34

    Want some cheese with that whine, Chris.

    Your claim that “the general anti-tax beliefs of most of the Golden State electorate remain intact” is pure balderdash.

    The majority of California voters saw the need for a balanced approach–both revenue increases and budget cuts–to help solve our state budget problems. All across the state, they not only supported Prop. 30 by a wide margin, but they also voted down candidates who ran on ideologically rigid anti-tax platforms. That is why the Democrats now have super majorities in the State Senate and Assembly.

    But by all means, Chris, I hope your candidates keep on pledging allegiance to Grover Norquist and Jon Coupal instead of to the people of California. I hope the Republicans continue to oppose any cooperation with the other side. That way, you’ll continue your slide into irrelevance.

    Reply this comment
  2. CalWatchdog
    CalWatchdog Author 20 December, 2012, 10:43

    StevefromSacto: Actually, Chris’ blog mainly was about Prop. 39, not Prop. 30.

    But to your general point: Californians may have second thoughts next year when the tax increases crash the economy.

    — John Seiler

    Reply this comment
  3. double l
    double l 20 December, 2012, 11:16

    It is too bad that politicians, opponents and proponents of propositions, and political pundits resort to slander and libel to further their causes during elections. It may not be illegal, but the electorate deserves facts not hyperbole.

    Reply this comment
  4. Rex the Wonder Dog!
    Rex the Wonder Dog! 20 December, 2012, 18:43

    StevefromSacto says:
    Your claim that “the general anti-tax beliefs of most of the Golden State electorate remain intact” is pure balderdash.
    The majority of California voters saw the need for a balanced approach–both revenue increases and budget cuts–to help solve our state budget problems.
    ==
    Hard to argue that Pop 30 sent a message, but was the message based on fraud and Prop 30 out spending the opposition by 5-1 the reason that it passed?? I say yes.

    Reply this comment
  5. SeeSaw
    SeeSaw 23 December, 2012, 21:28

    Want to document that, Rex? You better or your nose will continue to grow.

    Reply this comment

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