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This article is from the In-Depth Report Earth 3.0: Solutions for Sustainable Progress

California's Political Environment May Prove Too Toxic for Green Energy Propositions

Myriad special interests combined with state budget woes mire two environmentally friendly ballot initiatives
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© Andy Gehrig

LOS ANGELES—It would seem that measures promoting renewable energy and alternative fuels would be shoo-ins here where gas prices are among the nation's highest. Two thirds of Californians polled say they want their state to be a leader in advancing technologies that reduce pollution and combat climate change.

But a pair of ambitious ballot initiatives—Proposition 7 (aka "Big Solar") and Proposition 10 ("Big Natural Gas")—designed to do just that appear to be in trouble because of growing fiscal concerns. Prop 7 would require utilities to procure half of their power from renewable resources by 2025 and Prop 10 calls for a $5-billion bond, with most of the money earmarked for rebates for consumers who purchase natural gas and other fuel-efficient cars.

California finds itself in one of its periodic political meltdowns. The powerful union representing state prison guards is pursuing a recall of Republican Gov. Arnold Schwarzenegger. Business and good government groups, saying California's politics are broken, are calling for a constitutional convention. The governor and state legislature reached agreement on a budget for the current fiscal year that was more than two months late. And that budget is full of so many accounting gimmicks and so much borrowing that a deficit of several billion dollars could reappear before Christmas. The state treasurer publicly called it "the most irresponsible budget of the past half century." Privately, supporters of both energy initiatives say that widespread concern about the state's finances and government remains a serious obstacle to their chances of winning in November.

The legislature has record low approval ratings—15 percent in The Field Poll (a California opinion survey) last week, which is lower than Richard Nixon's state ratings when he resigned as president in 1974 in the wake of the Watergate scandal and the lowest rating for any elected official, group or organization in the history of the Field Poll. And voters are not much happier about the deluge of ballot measures they face each election cycle. Wary of unintended consequences, voters have approved just 30 percent of ballot initiatives offered this decade, the lowest approval rate since the 1950s, according to a recent study by the Center for Governmental Studies in Los Angeles. Ballot initiatives were first made part of the state constitution in 1911.

"Voters have become more careful consumers when it comes to initiatives," says pollster Mark Baldassare, president and CEO of the Public Policy Institute of California. "They recognize that special interests are a part of the initiative process... and they'll ask the 'yes' side to make the case—not necessarily for the generic idea, but why exactly this measure for this time for this thing."

It doesn't help that the chief backers of Prop 7 (Arizona billionaire Peter Sperling, son of John Sperling who founded the for-profit adult education institution, University of Phoenix) and Prop 10 (Texas oilman T. Boone Pickens) know more about energy than they do about California. Pickens's national profile gives Prop 10 better prospects, but both initiatives face uphill battles, in large part because their campaigns are on the wrong side of four rules of the state's initiative politics.

"Big Money" can't pass a measure, but Big Money can defeat a measure
Sperling and Pickens each have billions of dollars and can spend as much cash as they want. (There are no limits on donations to ballot measure campaigns). Ditto their opponents. But few measures, no matter how financially flush their campaigns, can survive an onslaught of negative advertising. And the “No on 7” campaign, funded by investor-owned utilities and other energy companies, has been flooding the airwaves with so many anti–Prop 7 spots that backers are being painted as the underdogs.

"Our hope has to be that this turns into the David and Goliath story," says Prop 7 supporter David Freeman, former head of the Los Angeles Department of Water & Power.

Prop 10's opponents have been slow to raise money. But help may be on the way, because the state's top business and labor groups are against it and may fork over funds to defeat it.

Bonds are good politics, except when times are bad.
This is good and bad news for Prop 10, which is a $5-billion bond. Over the past 32 years, California voters have approved 72 percent of the 109 bonds on the statewide ballot, according to figures compiled by The Field Poll's Mark DiCamillo. But during the last sustained economic downturn in California—in the early 1990s—just three of 13 bonds passed.

Voters, concerned about California's mounting debt and the credit markets, have soured on borrowing, preferring tax increases as a way to fund government programs. Opponents believe Prop 10 is especially vulnerable, because it's a general obligation bond, meaning that the $5 billion would have to be paid back from the state's general fund, which pays for education, health and other popular programs. The cost of repayment is estimated at $10 billion over 30 years. "I think this makes Prop 10 totally beatable," says Richard Holober, executive director of the Consumer Federation of California, which opposes Prop 10. "California is in a budget disaster that is insoluble."

Successful ballot initiatives generally involve issues that lawmakers have failed to tackle.
Propositions 7 and 10 seek to legislate in areas in which the state lawmakers and regulators are already making progress. The state currently has mandates in place on renewables (Prop 7 would strengthen these existing rules), and Schwarzenegger has been a relentless champion of alternative-fuel vehicles that would be subsidized under Prop 10. (One of his Hummers—Schwarzenegger bought the first civilian Hummer ever made—runs on biofuel these days and smells like French fries, he says).

"Initiatives are for things the legislature won't do," says Ralph Cavanaugh, energy program director at the Natural Resources Defense Council, who says he supports the goals of Prop 7 but opposes the initiative because he believes the legislature should deal with this issue. "In California, you have the strongest pro-renewables governor, legislature and regulators in the country."

In the ballot initiative business, simpler is better.
Props 7 and 10 are two of the most complex measures ever to appear on the ballot. Prop 7 is 42 pages long, Prop 10 runs 23 pages. (By comparison, Proposition 8, a high-profile effort to ban same-sex marriage, is a single sentence.)

Complex measures risk getting lost—even in nonpresidential election years—when there are 10 measures on the statewide ballot, and they also provide no shortage of details for opponents to attack. Already, opponents of Prop 7 and 10 are claiming that various "drafting errors" would produce outcomes that could slow the adoption of renewable energy technologies.

Whatever the merits of these arguments, California voters likely have too many reasons to vote no on the measures. Big Solar and Big Natural Gas have their supporters. But they may prove no match for the state's Big Dysfunction.

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