Oil and tobacco companies face off against environmentalists on Prop. 26

Margot Roosevelt
Monday, November 1, 2010

In the last two weeks of the campaign, oil companies have poured millions of dollars into promoting Proposition 26, a measure on Tuesday's ballot that would require a two-thirds vote, rather than a simple majority, for the state Legislature and local governments to assess many fees on business.

Proposition 26 proponents, including the California Chamber of Commerce, tobacco and alcohol companies, as well as oil companies, call their effort the "Stop Hidden Taxes" campaign. Environmentalists and green-tech promoters, who have responded with millions of dollars of their own, call the initiative a "sneak attack" and "Prop. 23's evil twin" referring to a separate ballot initiative to suspend the state's global-warming law. Until recently, Proposition 26 was so far under the public radar that no polls have asked voters about it.

As of this weekend, internal campaign surveys showed an even split on it among voters who have made up their minds; more than a quarter, however, are undecided — often a sign that a ballot measure will fail. Chevron has contributed $3.9 million, the single biggest corporate donation, to an $18.3-million joint campaign fund to push Proposition 26 and combat Proposition 25, an initiative to overturn California's requirement for a two-thirds vote on state budgets. Proposition 26, said Morgan Crinklaw, a Chevron spokesman, "closes a loophole in California law."

Mandating a two-thirds vote, he said, "will help get California's economy moving again and promote job growth." Until late October, the No on 26 campaign was limping along with contributions from the Democratic Party and various unions. The pro-26 campaign had been airing a TV spot for several weeks, and as oil and tobacco companies stepped up contributions, the opponents' internal polls showed the measure gaining support.

The Yes campaign's 30-second spot shows a handful of elected officials around a table in a windowless room with the voiceover: "Politicians are using a loophole to fund big salaries and expense accounts with hidden taxes on food, beverages and many services." On Oct. 23, San Francisco hedge fund manager and philanthropist Thomas Steyer, co-chairman of the No on 23 committee, gave $1 million to the No on 26 campaign.

Silicon Valley venture capitalist John Doerr gave $400,000. That money, along with $900,000 from the California League of Conservation Voters, brought the No campaign funds up to $6.5 million, enabling it to launch three 15-second TV spots last week. "Wonder why the big oil companies are bankrolling Proposition 26?" asks one. "Prop. 26 will allow polluters to pass costs onto taxpayers, including the cost of cleaning up and preventing oil spills."

Environmentalists fear that Prop. 26 will make it almost impossible to enforce regulations under AB 32, the state's ambitious climate change law as well as to enact fees aimed at combating pollution and hazardous waste. In robocalls to voters this weekend, actor Leonardo DiCaprio urged a "no" vote, saying the measure "lets polluters off the hook." And in Los Angeles, the Green LA Coalition, an umbrella group, sent out mailers Friday calling for phone bank volunteers to battle "Prop 26: the most dangerous measure you haven't heard about."

Beth Miller, a spokeswoman for the Yes on 26 campaign, said Proposition 26 will target legislative maneuvers that avoid a two-thirds vote by lowering taxes on one group and increasing them on another. "The energy industry, and alcohol and tobacco industries, are often unfairly targeted," she said. Proposition 26 opponents say that oil companies support the initiative not only because it would require a two-thirds vote for upcoming fees related to the state's climate law but also because it could prevent an increase in funds to clean up oil spills.

Given legislative gridlock, it would be difficult to achieve a two-thirds majority for any fee hikes, they say. The state's Oil Spill Administration Fund is fed by a five-cent per barrel fee on crude oil unloaded at California ports. "The OSA is already underfunded," said No on 26 spokeswoman Heidi Pickman. "Think what it will cost 20 years down the line to prevent or respond to oil spills. Someone's going to have to pay for it, and if it isn't Chevron, it's the taxpayers."

But Maureen Gorsen, a former general counsel of the California Environmental Protection Agency, who now works as an industry lawyer, issued a rebuttal, saying that environmental laws would not be affected. The Legislature, she noted, supported oil spill response fees by a nearly unanimous vote. margot.roosevelt@latimes.com


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