California’s Proposition 29 Is Yet Another Ballot Initiative That Could Hamstring the State

The defeat of a California ballot initiative authorizing a cigarette tax demonstrates that while Golden Staters may loathe smoking, they are more worried about how ballot initiatives play havoc with state spending, writes Joe Mathews.
June 6, 2012 |
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How messed up is California government? In Tuesday’s state elections, the interest group that struck the biggest blow for representative democracy and good governance was Big Tobacco.

That blow, in the form of a nearly $50 million advertising campaign, was struck against Proposition 29, a statewide ballot initiative to tax cigarettes by $1 per pack to fund cancer research.
 
Prop 29 appeared to be a sure winner until the final days of the campaign. How could it go wrong–in a state that likes sin taxes, hates smoking, and prides itself on being an international center of scientific research?
 
The answer—as returns showed a surprising, narrow defeat—lay in the state’s perpetual budget crisis and in a little-noticed but growing split among elites in California over how to respond to that crisis.
 
On one of side the divide were determined, doctrinaire liberals and moralistic moderates, who supported Prop 29 because tobacco companies opposed it. On the other were pragmatic Democrats and independents who supported cigarette taxes, but worried that devoting money to cancer research—under the peculiar, broken budget system in California—would do unintended damage to government programs that help progressive constituencies, especially poor children and college students. (Leading conservatives, for their part, opposed Prop 29 because it was a tax, and they didn’t participate in the debate.) 
 
Prop 29 was a particularly awkward—and revealing—platform for pragmatists, because it put them on the same side as the tobacco companies they loathe. It also put them at odds with the good guys supporting Prop 29—public-health groups, the American Cancer Society, and cycling icon Lance Armstrong, whose charity contributed more than $1 million to the initiative.
 
The initiative they backed—under the guidance of a former leader of the state Senate—deliberately walled off the receipts that would have been generated by the new cigarette tax from the general budget. Instead, money would be put into trust funds that politicians couldn’t touch—and then divided up among the research areas favored by the health groups that paid for the initiative.
 
These sorts of ballot initiatives—that set aside funds for a popular purpose—are common in California. And so Prop 29 was quickly embraced, polling well above 60 percent in surveys and even stronger in Northern California precincts. Bay Area newspapers endorsed it, and The Sacramento Bee went so far as to editorialize that the cigarette tax would be a good idea even if the money it raised were burned in the middle of the street.
 
But as the initiative drew more attention, skeptics emerged, particularly among the more realistic Democrats of Southern California (yes, Hollywoodland is an outpost of hardheaded realism compared to the Bay Area; all things are relative). Unemployment in Los Angeles remains above 13 percent, much higher than in the quickly recovering Bay Area, and the notion of burning money in the streets in these cash-strapped times wasn’t attractive.
 
Big Tobacco did drive home one important message: that Prop 29’s provisions would be locked in and could not be changed.
 
As the campaign went on, some interest groups and media argued that the state had been burned before by similar measures. Previous ballot initiatives had set aside tax money, including cigarette-tax money, for popular programs such as early childhood development, mental health, and stem-cell research. Those programs remained gold-plated, with surplus funds to spend. But the broader budget—and particularly health and human-services programs for families with children, seniors, and the disabled—were being starved. The state had a robust stem-cell-research agency—while it was gutting its university systems and raising tuition. Prop 29 would do more of the same, taking money from the state revenue base to fund a gilded program—leaving less for schools, higher education, and core health programs funded out of the general fund.
 
To this perspective, the American Cancer Society and Lance Armstrong appeared to be making a raid on a depleted state treasury.
 
The Los Angeles Times issued an editorial opposing Prop 29, making these arguments, and other commentators (including yours truly, via California’s NBC stations) made similar points. This made Prop 29 supporters furious. Led by former Paramount Pictures chair and CEO Sherry Lansing, Prop 29 supporters labeled those with objections to the measure on budget grounds dupes and tools of the tobacco industry.
 
This was a difficult charge to answer, because the No on 29 campaign, backed by Philip Morris USA and the R.J. Reynolds Tobacco Co., was on the air with ads that were at best misleading. Tobacco’s core arguments against Prop 29 were not about the budget. Instead, the companies argued that the cigarette tax money, collected on California purchases, could be spent on research outside the state (which was technically true, but practically unlikely) and that the measure would create a “huge new bureaucracy” (if anything the opposite was true—the initiative didn’t establish enough bureaucracy to manage the expected $735 million in new annual funds effectively).
 
But Big Tobacco did drive home one important message: that Prop 29’s provisions would be locked in and could not be changed. That’s the core problem with ballot initiatives in California, the only state where laws enacted by ballot initiatives can’t be changed except by another vote of the people. But the fact is little understood by voters, who don’t realize they are locking the state into perpetual obligations. As a result, California voters have passed dozen of measures that set spending and tax decisions in amber—making it nearly impossible for governors and legislators to balance budgets.
The combination of serious newspaper criticism and tobacco ads slowly raised doubts about the details of Prop 29. Intriguingly, the debate did not change California’s views on smoking or tobacco companies (majorities still detest both) or on the value of higher cigarette taxes. The Public Policy Institute of California found in its most recent survey that support for cigarette taxes remained steady and high—at 63 percent. Instead, Californians appeared to be thinking about the full impact of making tax and budget policy in this way, at the ballot.
 
This kind of thinking isn’t something Californians are used to doing. The state’s voters have a long history of voting for measures based on emotion—damn the budget consequences. Californians have a particular affection for establishing new programs that they themselves (most Californians aren’t smokers) don’t pay for.
So the defeat of Prop 29—while a setback for a worthy cigarette tax policy that would save lives—represents a perverse sort of progress. Californians may be growing up a bit and waking up to the reality that their addiction to locking up funds in good works is a threat to the common good.
 
And then there’s the day-after-the-election hangover. Like the fellow who wakes up in his own vomit on the floor of the hotel room next to a girl he never cared for, Californians wake up from this election lying next to tobacco companies, but perhaps realizing that this is rock bottom and it’s time to change.
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