Prop*50

Follow the money: California's Prop. 23

Proposition 23 would temporarily suspend AB 32, the California Global Warming Solutions Act of 2006, until the state's unemployment rate drops below 5.5 percent.  AB 32 requires the state's greenhouse gas emissions to be reduced to 1990 levels by the year 2020, with further reductions in later years.

Prop. 23 proponents claim that AB 32 will cost the state over 1,000,000 jobs and lead to energy tax increases.  Read more about their side here.

Opponents of Prop. 23 claim that the initiative was put on the ballot by Texas oil companies to kill clean energy and air pollution standards that would be expensive to their industry.  Read more about their side here.

Rather than listening to the two sides duke it out in 30-second ads, perhaps a more useful tool for discerning the goals of the measure can be found in analyzing who is spending money for and against it.  This is not a good exercise just for Proposition 23, by the way; campaign finance data is always a good gauge of the true motivations behind ballot measures.

Who is spending in favor of Proposition 23?

According to the California Secretary of State's web site, there is just one committee registered in favor of Prop. 23, the California Jobs Initiative Committee, a Coalition of Taxpayers, Employers, Food Producers, Energy, Transportation and Forestry Companies.  Most of the industries mentioned in the committee's name play a minor financial role in the campaign.  The heavy weight is carried by the energy industry.  Of the more than $8.2 million raised so far, $7.5 million, or 91 percent, comes from the energy industry.  Nearly 80 percent of the total raised comes from just three contributors:

• Valero, a Texas oil refiner, has contributed $4,059,678
• Tesoro, a California-based refiner, has contributed $1,525,000
• Flint Hills Resources, a Kansas refiner owned by Koch Industries, has contributed $1,000,000

Who is spending against Proposition 23?

A total of eight committees opposing Prop. 23 are registered with the Secretary of State.  The major player is No on 23, Californians to Stop the Dirty Energy Proposition. Sponsored by Environmental Organizations and Business for Clean Energy and Jobs.  This committee has raised just over $6.7 million.  (Of the remaining seven committees, two report no fundraising, four have raised $100,000 or less, and the fifth, sponsored by the National Resources Defense Council, has turned over most of its contributions to the No on 23 committee.)

Cleantech investment and venture capital firms are contributing heavily to the "no" side.  The single largest contribution so far has come from hedge fund manager Thomas Steyer, who gave $2.5 million.  Environmental and community foundations have given as well, and there are many more individual contributions to the "no" side than the "yes" side.  The construction, solar energy and real estate industries have contributed in smaller amounts.

Prop. 23 funding investigated

The Fresno Bee reports that legislative leaders in California have asked U.S. Attorney General Eric Holder to launch an investigation into a Missouri non-profit called the Adam Smith Foundation.  The Adam Smith Foundation gave $498,000 to the California Jobs Initiative committee, the sole committee spending in support of Proposition 23.  (See California campaign finance records filed by California Jobs Initiative here.) California Senate President Pro Tem Darrell Steinberg and Assembly Speaker John Perez allege that the Adam Smith Foundation is taking advantage of its tax status to hide who its contributors are.

The Adam Smith Foundation's filings with the Internal Revenue Service show that it raised just $5,200 in 2009 and ended the year with $109.  The California lawmakers question how the organization is capable of legally contributing nearly half a million dollars to the Prop. 23 campaign under such financial circumstances.  They allege that the foundation is merely acting as a pass-through agent for political contributions, which is illegal under federal tax laws.

Criticism of the "booming business" of initiatives

Kansas City Star editorial board member Barbara Shelly wrote an August 5 commentary on the "booming business" of petitions in Missouri.  Read it here.  Her criticism is directed not just at the large amounts spent in the attempt to qualify measures for the ballot, but also at initiative proponents who sue to ask the state to ignore its own laws when their petitions fail to qualify. 

Among the 70 or so groups that filed with the state to circulate petitions this year, she singles out one in particular for its big spending:  she says Rex Sinquefield, a wealthy St. Louis businessman, spent $6.8 million to qualify Proposition A, which would prevent cities from using an earnings tax to fund their budgets.  It's worded so that it applies to just two cities in Missouri -- St. Louis and Kansas City.

In fact, a quick check of campaign finance records filed with the Missouri Ethics Commission reveals that Sinquefield has provided just over $7.8 million of the funds raised so far by "Let the Voters Decide," the committee formed to qualify Proposition A for the ballot.  Just $400 has come from another source.