Bloomberg News

California Ballot Spending Led by Munger, Steyer, Joseph

August 28, 2012

More than a third of the $118 million raised for and against 11 ballot measures facing Californians in November comes from just three people.

San Francisco hedge-fund executive Thomas Steyer has poured $21.9 million into boosting business taxes, according to campaign finance records. Molly Munger, the daughter of Berkshire Hathaway Inc. Vice Chairman Charles Munger, has put $13.8 million into a tax increase for schools. George Joseph, chairman and founder of Mercury General Corp. (MCY:US), has plowed $8 million into a change in auto-insurance pricing.

“There are so many different things to be worried about with money in politics,” said Raphael Sonenshein, executive director of the Edmund G. “Pat” Brown Institute of Public Affairs at California State University, Los Angeles.

There are campaigns fighting over labeling genetically modified food, state budget rules, union dues, repeal of the death penalty, sex trafficking, changing the three-strikes law and Senate redistricting. It’s the longest list of ballot questions in a single California election since 2008.

“It may be a little bit less worrisome with individuals than with faceless institutions,” Sonenshein said. “But it means we are subjected to the vagaries of the personal philosophical interests of wealthy individuals.”

So far, campaign fundraising lags behind the $147 million spent on the November 2010 ballot questions, according to data compiled by MapLight, a nonpartisan research organization based in Berkeley.

Same-Sex Initiative

The record for spending on ballot measures was set in 2008, when $477.7 million was raised, including $107 million for a measure to end same-sex marriages in California, according to the National Institute on Money in State Politics, based in Helena, Montana.

The biggest brawl this year, at least in terms of spending, is an effort to require labeling of genetically modified foods. Companies including Monsanto Co. (MON:US), the world’s biggest seed producer, DuPont Co. (DD:US), the biggest U.S chemical maker by sales, PepsiCo Inc. (PEP:US), the world’s largest snack-food maker, Nestle SA (NESN)’s Nestle USA and Coca-Cola Co. (KO:US) have given $25 million to defeat the proposal.

Supporters, such as Mercola.com LLC, a closely held distributor of vitamins and nutrition products, and other health- and organic-food producers have collected $2 million for the campaign in favor.

Governor’s Tax

Labor and teachers unions have raised more than $18 million to help pass Governor Jerry Brown’s initiative to temporarily raise income and sales taxes, according to records with the California Secretary of State and data compiled by MapLight.

Brown’s plan would boost the state sales tax, already the highest in the U.S., to 7.5 percent from 7.25 percent. The proposal would also increase rates on income starting at $250,000, with those making $1 million or more, now taxed at 10.3 percent, raised to 13.3 percent, the most of any state.

Brown and Democrats are counting on the tax increase to provide $5.6 billion to the state budget for the fiscal year that began July 1. If voters reject the measure, $6.1 billion will be automatically cut from state spending -- $5.5 billion coming from schools, enough to pay for 15 days of classes.

Munger, a civil rights attorney in Los Angeles, is financing a rival initiative that would increase taxes on incomes of $7,316 or more, from 0.4 percent for the lowest earners to 2.2 percent for individuals making more than $2.5 million a year.

Munger Plan

It would raise $10 billion annually for 12 years and devote 30 percent of the additional revenue to pay school-bond debt for the first four years. For the remaining eight years, all the money would go to education.

“California is a huge state and it requires an investment of several million dollars to even get on the voters’ radar screen, and the forces that can usually make that kind of investment are labor unions and corporate interests,” said Nathan Ballard, a spokesman for Munger’s campaign. “When the altruistic individual like Molly Munger or Tom Steyer steps up and decides to invest in a ballot measure with the aim to improve public policy, that move should be applauded.”

Steyer, chairman of hedge fund Farallon Capital Management LLC, which had $19.2 billion under management as of Dec. 31, according to a government filing, is backing a measure to require out-of-state businesses to figure their California taxes solely on their sales in the state.

Companies are now allowed to cut their taxes by using a formula that factors in their property and workforce in the most populous state.

Alternate Method

Supporters say eliminating the alternate method would increase revenue about $1 billion annually, with half earmarked for the general fund and half for energy-efficiency programs.

Steyer didn’t respond to a telephone call requesting comment.

Mercury Insurance’s Joseph is helping finance a campaign that would allow auto insurers to prices based on how long a driver has maintained continuous coverage. His Los Angeles-based company spent $15.8 million in 2010 on a similar measure that voters rejected.

Joseph didn’t respond to a telephone call to his office seeking comment.

Labor unions have raised $10 million to defeat a ballot initiative that would limit their ability to raise and spend member dues on political activities. The almost $4 million collected to pass the measure has come mostly from a handful of wealthy men, including Munger’s brother, Charles, and Thomas Siebel, the founder of San Mateo-based Siebel Systems, acquired by Oracle Corp. (ORCL:US) in 2006.

“If you end up thinking that this is a poorly thought-out idea from some dilettante, then you vote no,” Cal State’s Sonenshein said. “The California ballot is strewn with examples of how easy it is to get on the ballot and how hard it is to win. The voters are not stupid.”

To contact the reporter on this story: Michael B. Marois in Sacramento at mmarois@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net


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Companies Mentioned

  • MCY
    (Mercury General Corp)
    • $45.75 USD
    • 0.03
    • 0.07%
  • MON
    (Monsanto Co)
    • $112.52 USD
    • 1.89
    • 1.68%
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