California Proposition 32: Battle to Limit Special Interest Money is Marred by Special Interest Money


If you're into predicting presidential elections, California has never provided much of a challenge. Given its preference for Democratic presidential candidates in the last five elections, one can see why. Instead, when it comes to November elections, California stands out for a different reason: the state’s slew of ballot propositions make it a prime example in experimentation with direct democracy. Initiatives such as the notorious Proposition 8 (2008) ban on same sex marriage have brought the effectiveness of majority-vote ballot propositions into the limelight.

This November is no exception when it comes to monumental, and possibly monumentally terrible, California ballot propositions. With tax increases (Prop 30), a ban on the death penalty (Prop 34) and term limit reform (Prop 38) all on the ballot, it becomes difficult to determine which initiatives voters should support and which should be handily rejected. However, Proposition 32, which claims to stop special interests in California elections, certainly deserves special scrutiny.

Named the “Paycheck Protection” Initiative, Proposition 32’s key provision is a ban on the use of payroll deductions to contribute to political campaigns. The full language of the proposition reads: 

“[Proposition 32] restricts union political fundraising by prohibiting use of payroll-deducted funds for political purposes. Same use restriction would apply to payroll deductions, if any, by corporations or government contractors. Permits voluntary employee contributions to employer or union committees if authorized yearly, in writing. Prohibits unions and corporations from contributing directly or indirectly to candidates and candidate-controlled committees. Other political expenditures remain unrestricted, including corporate expenditures from available resources not limited by payroll deduction prohibition. Limits government contractor contributions to elected officers or officer-controlled committees.”

In writing, this initiative sounds like an imperfect but well-intentioned effort to restrict the influence of special interests in California elections. However, one must consider the differences in which unions and corporations/PACs raise money for political contributions before coming to the conclusion that Prop 32 presents an attempt at balance campaign finance reform. 

Payroll deductions are one of the primary ways that union groups fundraise for political campaigns. Corporations, which are purportedly affected the by restrictions in Prop 32, have other avenues through which they fundraise for and influence elections. In fact, two-thirds of the S&P 500 companies have established corporate PACs, with larger funds being more likely to have them than smaller firms  (Ninety percent of the S&P 100 companies have corporate PACs with only 40 percent of the bottom 100 of the S&P 500 having PACs. 

Trudy Schafer of the California League of Women Voters said it best: "[Prop 32] promises political reform but it's really designed by its special interest backers to help themselves and harm their opponents."

Two of the three top billionaire campaign spenders in California, Charles Munger and Perenchio are major contributes to the Yes on 32 campaign. Observers have found the Yes on 32 campaign to stop special interests by using an existing electoral system believed by many to be dominated by special interests and by running a campaign funded by special interests…ironic. That is not to say that the public interest spending by many California unions should not be considered “special interest” spending. Instead it is to say that making it difficult for certain interest groups to influence campaigns and governance while still leaving the door wide open for other interest groups is in fact a form of special interest campaigning, in favor of the later set of interest groups. This is not the kind of special interest "reform" voters should back in November.

California should look at broader approaches

What the state of California needs is even-handed campaign finance reform that strengthens the opportunity to influence elections for a broader range participants in the electoral system, rather than the few with enough funds to purchase elections and votes, including unions, billionaires and corporations.

Therefore, one should not just focus on restricting certain types of campaign fundraising, but, also on empowering a broader base of constituents in the electoral finance process. This is why small donor matching fund programs should be considered at the local or state level. New York City candidates for Mayor, City Council and several other offices have the option of participating in the small donor multiple match program, which provides a six to one match in funds for each small donation (up to $175). The New York City program has seen a surge in small donor contributions, grassroots campaigning and citizen engagement.

Increases in engagement and grassroots campaigning will greatly benefit the electoral process in California. If a small donor matching system was applied as an option in local and state elections, as well as, to ballot initiative campaigns, the state may move toward a more even-handed approach to campaign finance that not only limits special interest influence in the electoral process but also strengthens the influence of everyday voters. 

(Let's not delve into the brew of constitutional questions surrounding public campaign financing. Although, it's important to note that the NYC model mentioned here is an opt-in program.)

Small donor programs recognize that political contributions are not inherently undesirable; one just needs to ensure that a full spectrum of the electorate will be able to be influential with their political contributions.