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California’s June Propositions

Election year 2010 continues, with controversial measures to be decided
in the Golden State on June 8. John Matsusaka of the Initiative & Referendum Institute analyzes the players and pockets behind the five propositions, which tackle auto insurance pricing, two-party primaries, and public campaign funding.

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By John G. Matsusaka

In the June primary election, California voters will decide five ballot propositions, two citizen-sponsored initiatives, and three measures placed on the ballot by the legislature. Four of the measures are controversial, touching on voter concerns about the excessive influence of interest groups in state government.

Proposition 16, an initiative that requires approval by two-thirds of voters before a local government can use public funds to start a new electricity business, is the most high-profile measure this year, largely due to an extensive media campaign by PG&E, a publicly traded electric company headquartered in San Francisco. Spending by PG&E so far is in the vicinity of $35 million.

Since a two-thirds approval requirement is likely to deter local governments from entering the electricity business, the merits (or demerits) of the proposition depend on the repercussions of preventing local governments from providing power.

Proponents argue that local government providers will be inefficient and ultimately a burden on taxpayers. This argument taps into voter fears that government agencies may be captured by special interests and run for their benefit, not the benefit of ordinary citizens — in this case, the fear that public employees will gain control and be overpaid, leaving the taxpayers on the hook.

Opponents argue that fears of interest group capture are overplayed, and that deterring public provision will reduce competition in the electricity market, leading to higher rates. They note that almost all of the funding for the measure has been provided by a private electric company that enjoys a dominant position in Northern California, and argue that the initiative itself is a special interest project.

Proposition 16 is supported by various chambers of commerce and taxpayer associations, and opposed by local governments, public employee unions, some chambers of commerce, and major newspapers in the state.

Proposition 14 replaces the existing primary election system, in which only members of each party select their nominees, with a system in which voters of any party (and independents) can choose the nominees. Under the proposed top-two primary system, any voter can choose from any candidate of any party, and the two candidates with the highest vote totals appear on the general election ballot. The top two would normally include one Democrat and one Republican, but it’s possible that there could be two Democrats or two Republicans instead.

Proposition 14 was placed on the ballot by the legislature as part of deal to pass last year’s budget, in response to a demand by then State Senator Abel Maldonado.

Supporters of the top-two primary believe that the existing primary system leads to election of extremists since candidates need to secure the support of party regulars to be nominated. They argue that by allowing independents to vote, an open primary system will lead to the election of more moderate or centrist candidates. Scholarly research on this argument is mixed, but existing evidence from states that run open primaries suggests that the effect on extremism — one way or the other — is likely to be small.

Opponents argue that by undermining the role of political parties, the proposition will increase the influence of rich, organized special interests that operate outside the party system, and that the top-two system will make it impossible for third parties such as the Greens or Libertarians to qualify for the general election ballot.

The measure also repeals a constitutional provision requiring the ballot to show the party of each candidate, meaning that voters might not have easy access to information about the partisan affiliation of the candidates on the ballot.

Proposition 15, also placed on the ballot by the legislature, removes a constitutional prohibition on public funding of campaigns, and establishes a public funding system for the office of secretary of state. The secretary of state oversees elections, and proponents believe public funding will reduce the risk of the official being beholden to special interests.

The funds will come via fees charged to lobbyists and a voluntary tax check-off donation system. Candidates can opt in to the public funding system by raising $5 each from 7,500 registered voters, and will receive $1 million for the primary campaign and $1.3 million for the general election. If a qualified candidate’s opponent opts out, the candidate will receive additional funds to match his or her opponent’s expenditure.

Public funding systems have been tried in a few other states, notably Arizona, with some claiming significant changes and others saying that the status quo prevails. Proposition 15 is supported by Common Cause and the League of Women Voters, with primary funding from the California Nurses Association. This proposition is currently flying under the radar, with little campaign spending either for or against.

Proposition 17 is an initiative that allows auto insurance companies to charge a different price to customers who have been continuously covered, versus customers whose coverage has lapsed. Since voters approved Proposition 103 in 1988, insurance companies have been able to differentiate premiums based on coverage duration among their own customers, but haven’t been allowed to offer a different price to customers who want to switch from another company.

Proponents frame this as letting insurance companies offer a discount to drivers who have been continuously employed; opponents frame it as allowing insurance companies to charge a premium to drivers whose insurance has lapsed in the past. Both claims bear some truth: There would likely be a discount compared with current rates for continuously covered drivers, and a premium for drivers with lapsed coverage.

The initiative is primarily funded by Mercury Insurance — which has committed $10 million so far — and supported by numerous local chambers of commerce. It is opposed by many consumer advocates, including Harvey Rosenfield, the sponsor of Proposition 103.

Proposition 13 is the only noncontroversial measure. Placed on the ballot by the legislature, the measure modifies a minor property tax exemption for seismic retrofits of masonry buildings. It was approved unanimously by the legislature, and there does not appear to be an active opposition campaign of any sort.


Proposition 13. Makes minor changes in property tax exemptions for seismic retrofits.

Proposition 14. Creates a top-two primary system, removes requirement to list candidates’ political party on ballot.

Proposition 15. Allows public funding of campaigns, creates public funding system for office of secretary of state.

Proposition 16. Requires two-thirds vote of citizens before local government can enter the electricity provision business.

Proposition 17. Allows car insurance premiums to vary according to whether a person has had continuous coverage, as opposed to having gone without coverage.

John G. Matsusaka is Charles F. Sexton Chair in American Enterprise at the USC Marshall School of Business and president of the Initiative and Referendum Institute at USC. He is an expert on ballot propositions as well as government budgets, taxes and spending.

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