This article first appeared in the St. Louis Beacon, July 10, 2012 - Ballot initiatives are often viewed as democracy at work -- by changing public policy at the most grassroots level. But in reality, the support, especially the financial backing, for these statutory changes or constitutional amendments is anything but broad.
The Beacon looked at funding for ballot initiatives from 2008 through 2010 by analyzing records from the Missouri Ethics Commission and followthemoney.org. In general, it found that initiatives with a relatively narrow and small range of funders tended to win over the past two election cycles.
One major example of that trend is the 2008 proposal to remove loss limits from Missouri casinos. Financial support for the measure came almost exclusively from donations from Pinnacle Entertainment and Ameristar Casinos, two companies that stood to benefit from lifting the loss limits. Combined, the two donated roughly $14 million to the proposition – an amount that swamped efforts by opponents.
The financial infusion from the two casino giants was no secret; the numbers were posted on the Missouri Ethics Commission’s website during the 2008 election cycle. In fact, some opponents of the initiative used the donors as a reasons to vote against the measure.
In a spring 2008 edition of Pinnacle’s newsletter, Todd George, vice president and general manager of Lumière Place Casino & Hotels, said the two companies partnered to support the initiative after realizing that “to be successful, we must support our communities, our state, our employees, the families of our employees, and the future of Missouri.”
“This ballot item also provides a level playing field for the members of the Missouri gaming industry against the casinos and destination options in neighboring states,” wrote George, who then urged readers to sign a petition to put the measure up for consideration.
The experience with the loss limits initiative was not unusual, but the pattern of small, narrow base of funders isn’t absolute. In 2010, Proposition B, to restrict "puppy mills," had big donors, but it also had organizational and financial support from ordinary individuals. Some ballot measures – especially ones placed on the ballot by the Missouri General Assembly – didn’t even require campaigns to pass.
Voters this year will decide on whether to alter the state's court plan for selecting judges to the Missouri Supreme Court and the Missouri Court of Appeals, whether to bar the governor from setting up a health insurance exchange through executive order and whether to pass a constitutional amendment preserving the right to pray in public. Missourians could also decide on raising cigarette taxes, capping interest rates for "payday" loans, raising the state's minimum wage and ending state control of the St. Louis Police Department.
Ballot items get big donations
Not all the 11 ballot items voted on since 2008 have been expensive. In 2010 for instance, amendments to change the St. Louis County’s assessor into an elective office and to exempt former prisoners of war from property taxes passed without any organized committees pro or con.
And in 2008, constitutional amendments on storm water funding and English as the official language passed without any money being spent.
But when the question before voters was more controversial, relatively narrow groups of donors have often provided the necessary resources for initiatives to succeed. Such was the case for “Let the Voters Decide,” a campaign committee set up in 2010 to help pass a measure to require a vote on the earnings tax.
Rex Sinquefield was not the only donor to the campaign, but he was unquestionably the most prominent. In all, the retired financer contributed about $11.2 million to the successful campaign. (Sinquefield is a donor to the St. Louis Beacon.)
The earnings tax initiative was opposed by a group called “United for Missouri’s Priorities.” Formed a little more than a month before the 2010 election, it received about $878,000 worth of donations -- a small fraction of the money opponents had to spend. Included in the tally were $300,400 in donations from the National Education Association and an in-kind donation of $89,296.91 from the Service Employees International Union Missouri Kansas State Council.
Sinquefield has been an outspoken advocate of changing the state’s tax code. Besides his opposition to the earnings tax, Sinquefield pushed to replace the state’s income tax with a sales tax. That effort won’t make it on the 2012 ballot, but another measure that he helped fund -- to end state control of the St. Louis Police Department -- could.
For years, Sinquefield had donated primarily to candidates, party committees and political action committees. More recently, he’s refocused his contributions on ballot initiatives and organizations – such as the Club for Growth – that screen candidates before providing a donation.
“The thing that’s shifted has been a lot more focus on the issues that go to the voice of people,” said Travis Brown, a lobbyist who works for Sinquefield. “That voice then comes in bigger numbers."
In addition to the casino and earnings tax initiatives, other initiatives that passed during the time period analyzed had a narrow group of funders:
- The National Association of Realtors and a PAC set up by the Missouri Association of Realtors made up most of the $4.8 million raised to pass a 2008 measure to ban the legislature from ever considering a transfer tax for homes. It passed by an overwhelming margin.
- A 2008 ballot item mandating that energy companies devote a certain amount to renewable energy received about $200,000 from the American Wind Energy Association, $125,000 from Tradewind Energy, $120,000 from the Sierra Club and $100,000 from the Wind Capital Group. That measure ended up passing easily.
- Another ballot item in 2008 that paved the way for home health-care workers to unionize received $1.7 million in monetary and in-kind contributions from the Service Employees Union International. The item also passed.
- The Humane Society of the United States gave $2.12 million to pass Proposition B in 2010, an initiative that placed sweeping restrictions on dog breeding facilities. In addition, the ASPCA gave about $587,000 to the initiative, while the Best Friends Animal Society gave $259,738.54.
While the “Health Care Freedom Act,” an initiative that took aim at the 2010 federal health-care bill, did receive five-figure donations – including a $25,000 check from TAMKO Chairman Ethelmae Humphreys – most of the money came from relatively small individual donations.
John Patty, a political science professor at Washington University, has studied initiatives.
“Aside from a special class, which you might call moral initiatives – such as gay marriage initiative or occasionally you’ll see an abortion initiative – most initiatives are narrowly construed, either anti-government or anti-tax or special-interest initiatives,” Patty said. “If you look at any of them in terms of spending, again with the exception of those moral [issues], you find if there’s a lot of spending it’s always from a concerted donor or very small group of donors.”
That didn’t use to be the case, Patty said. A landmark initiative that curtailed property taxes in California, he said, was propelled by the advocacy and organization of a group of homeowners. Now, he said, such an arrangement is increasingly rare.
“The casino story here is part and parcel with the game in initiatives of this variety. Which is: ‘I would like to remove this law because it’s hindering our business,’” Patty said. “But that doesn’t necessarily mean they’re always bad ideas.”
Building a statewide machine
One reason big donations are necessary is the expensive nature of ballot initiatives.
A ballot initiative goes through two major stages. The first, gathering the signatures, often requires hiring companies to do that -- an expense that can cost hundreds of thousands of dollars.
Polling, research and focus groups also are common in the early phases, and of course, they cost money, too.
This phase almost always requires attorneys to craft the ballot language and fend off legal attacks from opponents. It’s become commonplace for someone to file a lawsuit challenging a measure’s ballot summary language or fiscal note. Sometimes, the fight over these matters can forestall a group's ability to gather signatures.
(The Missouri General Assembly can also place constitutional amendments or statutory changes on the ballot, although these, too, have been subject to lawsuits from opponents.)
Brad Ketcher – a St. Louis attorney involved in numerous ballot initiatives over the last few election cycles – said preparation for initiatives could cost anywhere from $800,000 to $1.2 million.
“If you’re going to take one of these things on and do it in a sophisticated way and do the preliminary legal and political research and use paid signature gathering, you’re going to need to invest close to $1 million just to get on the ballot,” Ketcher said.
Even if a measure gathers enough signatures, supporters still need to convince a majority to pass it. That means expensive TV ads across the entire state as well as consultants who craft messages for the campaign.
Having a narrowly focused, small group of funders can be both positive and negative, especially during the thick of the campaign.
“It’s a balance,” Ketcher said. “If your funding tends to be more narrowly drawn and there is opposition to your measure, you will get attacked on that -- although the polling tends to show that people really don’t care who’s funding the effort. Voters are glad to have their say on the measure and don’t tend to get hung up on who is funding the campaign.
“The advantage of having a narrower group of deep-pocket funders is that ballot measures are not cheap so it gives you the resources to do the necessary campaign,” he added. “Smaller groups make decisions on a campaign much quicker. You don’t have a large, unwieldy steering committee that you have to consult every time you make a strategic decision. And if the measure gets into trouble late, you can often make quick additional investments in the campaign to get it over the finish line.”
Ketcher – who was deputy treasurer for the committee that passed the dog breeding initiative – added that even though that initiative received large donations from animal welfare groups, it also received plenty of donations from individuals. St. Louis attorney Nancy Grove – who has given to both Republicans and Democrats over the years – donated $100,000 to the effort.
He also pointed out that the campaign used volunteers to gather most of its signatures, which is unusual.
“I would get an e-mail whenever there was an online donation,” he said. “When they would send out appeals for money, I would literally get an e-mail every 30 seconds for a day and a half. There was a substantial grassroots fundraising component to that campaign -- a little unusual in my experience, but not unprecedented.”
Killer opposition
One thing that both Ketcher and Patty agreed on is that it’s typically easier to defeat a ballot initiative than to pass one. The "no" side can often win the day with far fewer resources.
“It’s a lot easier to spend a bunch of money to kill an initiative than it is to get one passed,” Patty said. “That may be changing ... but I think that’s more a feature to the fact that more states like Missouri are … becoming more active with initiatives.”
Back in 2006, an initiative to raise the state’s cigarette taxes received big donations from the Missouri Hospital Association and the American Cancer Society. And it was able to mount a sophisticated advertising campaign that reached all corners of the state. But even though the opposing side didn’t have as much money, the initiative ended up failing by a narrow margin.
Ketcher noted that a measure to protect stem cell research from General Assembly restrictions nearly failed, even though the "yes" side had a substantial financial advantage.
“If you’re on the ‘no’ side, you can typically do much more with less,” Ketcher said. “It’s a substantial advantage having the ‘no’ side. If there is funded opposition to a ballot measure that’s complex or difficult to sell, it can get very competitive very quickly.”
All 11 ballot items that were voted on during the time period analyzed ended up passing. But the margins tended to be narrow when opposition was organized, even if that side didn’t spend as much money. Such was the case with the "puppy mill" or dog breeding initiative, which narrowly passed.
Interestingly, three initiatives that ended up passing during this time period – the loss limits measure, the dog breeding restrictions and the renewable energy mandate – ended up being altered by the legislature. In fact, changes to the dog breeding initiative briefly sparked a move to make it more difficult to alter popularly enacted statutory changes.
