The 'Spending Lobby' Allies Push for Taxes

By Ron Roach

How does the "Spending Lobby" seek mass acceptance of its objectives?

 It may seem difficult and often unpopular to argue against tax relief and for higher taxes, but those are primary missions of the California Tax Reform Association (CTRA) and the California Budget Project (CBP) on behalf of their supporters. These organizations develop and disseminate information with similar messages: Government needs to spend more on social programs and increase the tax burden to businesses and successful individuals.

 Formed in early 1978 in the midst of tax-cutting Proposition 13 fever to oppose that landmark measure, the nonpartisan, nonprofit CTRA's official purpose is listed on state records as "social welfare." The CTRA's executive director is Lenny Goldberg, who came to Sacramento on the staff of then-Assembly Member Tom Bates of Berkeley. He has acknowledged that virtually all of the CTRA's money comes from public employee unions.

 Besides lobbying the Legislature, Mr. Goldberg is known as the chief architect of mammoth tax-hike initiatives that hammer business interests or some of the more successful Californians: Proposition 167, rejected by voters in 1992, and Proposition 217, which voters defeated in 1996. He is promoting yet another tax-hike initiative - one that would increase taxes by billions of dollars for the November 1998 ballot.

All of Mr. Goldberg's ballot initiatives have been financed by public employee unions, according to campaign finance reports.

 A relative newcomer is the California Budget Project, a satellite of the liberal Center on Budget and Policy Priorities, a Washington, D.C.-based think tank. The CBP is the third leg of the Spending Lobby stool. The apparent purpose is research and advocacy to support pro-tax positions lobbied by the CTRA and public employee unions.

The CBP was founded in December 1994, and the agent for filing incorporation papers was Jim Shultz, head of Advocacy Institute West in San Francisco and a lecturer at San Francisco State University. He is a critic of Proposition 13 and an advocate of a property tax split roll with higher taxes on businesses.

The CBP's official purpose as a nonprofit, nonpartisan organization is to promote an understanding of fiscal issues of the state of California to ensure a "healthy public sector based on a fair and equitable tax system," according to its mission statement.

 In 1996, CBP reported grants, gifts and contributions of $308,690 and individual donations of $8,780. Its executive director is Jean Ross. She was a consultant to the Assembly Revenue and Taxation Committee when it was chaired by Johan Klehs. She left the legislative staff after Republicans, in November 1994, won a majority of the Assembly seats.

Asked where her organization gets its funding, Ms. Ross has replied that support includes grants from Ford and Irvine. Ford Motor Company and the Irvine Company are, of course, big business interests. However, the Ford Foundation of New York reports that it is no longer financed or associated with Ford Motor Company. It is generally recognized as a supporter of liberal causes. The James Irvine Foundation, based in San Francisco, is totally separate from the Irvine Company in Orange County.

 More telling of the CBP's philosophy is its Board of Directors. The 1996 list reads like a who's who of Spending Lobby advocates and supporters. Besides the aforementioned Mr. Shultz and Ms. Ross, they include Dean Tipps of the Service Employees International Union, Casey McKeever of the Western Center on Law and Poverty and Steve Barrow, an advocate on child welfare issues. Mr. Tipps and Mr. Barrow are former lobbyists for the California Tax Reform Association.

 Other sources of CBP funding have included the Annie Casey Foundation of Baltimore, the William and Flora Hewlett Foundation of Menlo Park, the Henry J. Kaiser Family Foundation of Menlo Park, the Mott Foundation of Flint, Michigan, the Rosenberg Foundation of San Francisco, the Urban Institute and the Foundation Consortium for School Linked Services in Sacramento.

 Naturally, CBP projects tend to reflect philosophies of funding sources and its leadership. One recent CBP report recommended a number of new laws in the field of unemployment insurance (UI) that would liberalize benefit and eligibility rules. It was essentially a point-for-point recitation of labor's UI agenda as proposed months earlier in the Legislature. One UI reform suggested by the CBP report passed the Legislature as SB 202, by Senator Hilda Solis, but was vetoed by Governor Pete Wilson.

Why are there so many government lobbyists lobbying government?

It is widely believed that passage of Proposition 13 in 1978, which reduced property tax revenues to local government and limited their growth, is a primary reason there are so many government lobbyists. More power of the purse was vested in Sacramento. Following passage of the tax-cutting initiative, the Legislature and then-Governor Jerry Brown responded with a huge "bailout" bill for local government. Public schools also had to turn more to Sacramento for funding.

 In the early 1990s, in a budget-balancing move, the state shifted several billion property tax dollars to schools, triggering a new scramble for diminishing dollars and a heavyweight lobbying effort to reverse the property tax shift.

 There also appears to be an arm's race, or a take-or-be-taken environment.

John P. Quimby Sr., a former Assembly member who lobbies for San Bernardino County, told the Riverside Press Enterprise in a 1997 article by Sam Delson: "I wish government wasn't for sale like this, but the fact is you have to hustle to get your share. Local governments without lobbyists see the ones with representation doing better so they say, 'We need to get our butts on board and get one or they're going to steal everything from us.'"

Eric Ziegler, city manager of Taft in Kern County, told The Associated Press in a 1995 article that his city spent $16,500 for a lobbyist in 1994 because it needed representation on labor law, public records and tax issues. "Most cities that have lobbyists acquire them in self-defense," he said.

 Donald Peterson, lobbyist for a number of rural counties, cited Proposition 13's impact on government finance in a 1995 McClatchy News Service article. "As long as we have the kind of system wherein local government depends on the largesse of the state ... it needs representation of some type," he said.

 "The stakes are enormously high," said Lynn Suter, whose clients include Alameda County, in the 1995 McClatchy News Service article describing her work to maintain construction plans for a Nimitz Freeway offramp and prevent an annual $5 million revenue loss to the county.

 - Ron Roach.