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Insight | TIMES BOARD OF ADVISORS

Take the Initiative to Reform the Process

December 01, 1996|JUDY B. ROSENER | JUDY B. ROSENER is a professor in the Graduate School of Management at UC Irvine. She is the author of "America's Competitive Secret: Utilizing Women as a Management Strategy."

In 1911, when Hiram Johnson was governor of California, the initiative process, a way for citizens to circumvent their elected officials, became law. Its purpose was to check the power of the Southern Pacific Railroad, which at the time was believed to control the state Legislature, judges and the media.

Today, 85 years later, the initiative process competes with the Legislature as a generator of public policy in ways never imagined by the governor who championed its creation as a way to foster direct democracy. Many observers of government agree with Ray Remy, president of the Los Angeles Chamber of Commerce, that "the initiative process now has aspects of democracy run amok." This belief is based on the fact that while it takes only $1 million to qualify an initiative for the ballot, it takes many more millions to oppose one.

Douglas Jeffee, principal in Issues Management Network, a firm that consults with business on initiatives and public policy issues, says that rarely does a corporation or industry place an initiative on the ballot. More often, they prefer to use the traditional legislative process with public hearings and opportunities to carefully shape potential policies. Yet the business community (however defined) cannot rely on the legislative process alone. Since businesses are often the target of initiatives that they feel will adversely affect them, they are often forced to raise large sums of money in opposition.

For example, Alison A. Winter, president and chief executive of Northern Trust Bank of California, says that excessive costs to the banking industry are created by the need of corporations such as hers to join with others in educating the public about how certain ballot measures negatively impact their operations.Proposition 211, an initiative on the ballot last month, is a case in point. This initiative, which would have allowed frivolous lawsuits to be brought against businesses, was placed on the ballot by a small group of trial lawyers who specialize in frivolous lawsuits.

At first glance, the proposition seemed like a way for stockholders and others to curb irresponsible corporate activities. It took a $15-million campaign financed primarily by the business community to inform voters of its deceptive nature. Winter notes that since it is the responsibility of elected legislators to represent and be responsive to the public at large--as well as to special interest groups--the cost to business of having to educate the voting public about the implications of initiatives seems unwarranted.

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Most initiatives that have a negative impact on business fail because they are poorly drafted, vulnerable to court challenge and often perceived as harmful to the economy. However, it is not clear whether this failure is due to the sophistication of voters or the expensive campaigns waged by businesses to oppose them.

For this reason, monitoring and participating in the initiative process has become a major cost of doing business in California and also a problem for residents who find it difficult to obtain reliable information about a long list of ballot measures.

Perhaps the greatest cost of the initiative process to business is uncertainty. With the proliferation of initiatives (the number qualified and adopted has increased fivefold since the 1960s), economic uncertainty has also increased. Robert Haskell, senior vice president of Pacific Mutual Life Insurance Co. in Newport Beach, says he is aware of corporations in California that are thinking about relocating out of state and of others reluctant to locate in California because of the dollar and uncertainty costs associated with the initiative process.

The California Commission on Campaign Financing, formed in 1984 as a nonprofit bipartisan commission, consists of 24 prominent Californians from the business, labor, legal, agricultural, political and academic communities who issued a report in 1992 titled "Democracy by Initiative."

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Robert Stern, co-director and general counsel to the commission, says that after a comprehensive two-year study of the California initiative process, commissioners agreed that the initiative process should be retained, but changed. "Reform is not easy," Stern says, "but it can be done."

The report contains a carefully thought out package of 20 specific recommendations for change and the steps needed to implement them. For example, one recommendation calls for holding a public hearing on the merits of any initiative once it has 25% of the signatures required for qualification. It also recommends that the petitions identify in bold type the measure's two largest financial backers.

During the next two years, there would seem to be a great opportunity to improve the initiative process in California. That opportunity can be found in the 1992 commission report that is, or should be, on the bookshelf in the governor's office. As one of his final acts, Gov. Pete Wilson could send a gift to the business community and the public they would long remember.

At the same time, it would be a fitting legacy of his administration, given the divisiveness of recent initiatives he has vigorously supported, that it be packaged and ready to send to the voters for approval as a constitutional amendment. All it needs is the governor's stamp of approval, and a campaign to make it a winner at the next election. An initiative to reform the initiative process would be a ballot measure every voter could support.

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Judy B. Rosener can be reached by e-mail at jbrosene@uci.edu

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