Corporations Don't Like A Law? Just Pay Millions For A Ballot Measure

CalMatters

Published Nov 5, 2020 12:43 PM

Jeff Clayton remembers the day, two years ago, when California passed a law that would put his industry out of business in the state. The ban on money bail -- which Democrats advanced saying it would bring more fairness in the criminal justice system -- would devastate companies in the American Bail Coalition that Clayton heads.

He phoned a political consultant in Sacramento, who told him: "You guys are the plastic bag guys now," Clayton recalled.

Translation: If you want your industry to survive in California, do what plastic companies did after the state outlawed single-use plastic bags. Put up millions of dollars to ask voters to overturn the law on the ballot.

So bail companies spent $11 million on a campaign to overturn California's ban on cash bail -- a gamble that paid off this week when voters defeated Proposition 25.

"The California Legislature tends to go too far at times," Clayton said. "As long as that stands, I think many businesses will be put in a position to have to do something like this."

Asking voters to repeal or overhaul a law passed by the Democratic-controlled Legislature is becoming a common strategy for corporations financially threatened by progressive policies coming out of Sacramento. Ride-hailing companies succeeded at it this week, too, convincing voters to pass Proposition 22 and exempt Uber and Lyft from state labor law.

The passage of Prop 22 marks a victory for delivery and rideshare businesses like Uber, Lyft and Postmates. (Robert Anasch/Unsplash)

Another one is already in-the-works: Tobacco companies have launched a referendum drive asking voters to overturn the state's ban on flavored cigarettes and vaping products within days of Gov. Gavin Newsom signing it into law in August.

The repeal efforts aren't always successful. Voters upheld the plastic bag ban in 2016, and it's too soon to know if the tobacco measure will qualify for the 2022 ballot. But companies can gain even when they lose, because once a referendum to overturn new laws qualifies for the ballot, they are put on hold. That can buy a targeted industry another two years to operate in California.

Historically it was uncommon for special interests to try to repeal a law by going to the ballot. (A repeal is known officially as a "referendum," while the term "initiative" refers to proposals to change a law or pass a new one.) Over more than a century from 1912 to 2016, California voters faced only 50 referenda, compared with 376 initiatives.

But it could become more common, given the bail industry's success at the ballot, said Democratic political consultant Gale Kaufman.

"My guess is you'll see more and more of that as a result," she said. "That will be the new trick."

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Kaufman worked on the opposite sides from the bail industry and the gig companies in this election, running campaigns for Prop 25 to maintain the ban on cash bail, and against Prop 22 to stop gig companies from exempting themselves from a law that requires most businesses to treat their workers as employees rather than independent contractors.

California lawmakers said it was time for commercial bail bonds to go but the industry is fighting back. (Thomas Hawk/Flickr Creative Commons)

Labor unions largely funded the No on 22 campaign, to the tune of about $20 million. But they were outgunned by five app-based companies -- Uber, Lyft, Doordash, Instacart and Postmates -- that poured more than $200 million into passing Prop 22, making it the most expensive ballot measure in state history.

"They are writing their own law and spending what it takes to win," Kaufman said.

Businesses see it differently. From their perspective, spending at the ballot keeps their businesses alive and allows Californians to serve as a check on labor unions and other progressive interests that hold too much sway in the Legislature. Democrats now have such a huge majority that they can completely sideline Republicans, and sometimes the more moderate members of their own party. That power has led Democrats to overreach, said Rob Lapsley, president of the California Business Roundtable.

"As the Legislature's makeup is getting much more progressive it's getting much more out of step with Californians when it comes to business and jobs," he said.

"And you're going to see business defend itself, unequivocally, whether they have to do it in court, or whether they have to do it at the ballot box. If this is the way it's going to go, then there will be more use of that in the future."

At our Voter Game Plan you can find:

Key races we're following in Orange and L.A. counties.
A guide to ballot propositions and special measures.
FAQs about the election and voting-by-mail.
News stories about the election.

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