Oil Cos. Pouring Money into Passing Calif. Proposition 26

SAN JOSE, Calif. -- While most of the attention up to this year's election has focused on whether California voters will suspend the state's landmark global warming law by approving Proposition 23, a new battle is emerging in the final weeks before Nov. 2 over another ballot question opponents contend would force ordinary citizens -- rather than big corporations -- to pay for environmental cleanup, public health problems, traffic and other harm industry creates.

According to a report by San Jose Mercury News , Proposition 26 would expand the definition of taxes, so that more fees imposed by state and local governments would require a two-thirds vote by the Legislature or local voters.

Supporters, led by the California Chamber of Commerce and oil companies such as Chevron and ConocoPhillips , believe tighter rules are needed to stop politicians from raising costs on a wide variety of products, from cell phones to gasoline to food.

"What Proposition 26 does is to protect consumers from these hidden taxes that state and local politicians disguise as fees," said Beth Miller, a spokeswoman for the Yes on 26 campaign.

Critics, however, call it a bailout for big business.

"I think Proposition 26 is as damaging as Proposition 23 is to California's environmental protection efforts," said Bill Magavern, state director of Sierra Club California. "It would block state and local governments from making polluters pay to clean up the damage they cause and to fund cleaner alternatives."

Californians pay a wide variety of fees, many for environmental oversight. Motorists buying new tires pay $1.75 a tire, for example, to fund state programs to recycle old tires. Some cities charge fees on businesses that sell alcohol to pay for police and public education programs to reduce drunkenness. Depending on how Proposition 26 is interpreted by courts, many such fees could require a two-thirds vote, the newspaper report stated.

"By expanding the scope of what is considered a tax, the measure would make it more difficult for state and local governments to pass new laws that raise revenues," the non-partisan state Legislative Analyst's Office (LAO) wrote. "This change would affect many environmental, health, and other regulatory fees."

The LAO said the measure could reduce state and local revenues by "up to billions of dollars annually," including $1 billion this year because it is retroactive to Jan. 1.

In recent weeks, as Proposition 23 -- bankrolled largely by Texas oil companies Tesoro and Valero -- has struggled to gain traction, other oil companies, along with tobacco and alcohol firms, have poured money into Proposition 26. State campaign finance records show in the last month, Chevron and the American Beverage Association have each donated $2 million; Philip Morris $750,000; Conoco-Phillips $500,000; Anheuser Busch $500,000; Occidental Petroleum $250,000; and Shell Oil $200,000.

These companies are funding a joint campaign seeking to pass Proposition 26 and to defeat Proposition 25, which would allow the California Legislature to pass a budget each year with a simple majority rather than the current two-thirds super-majority. In all, that campaign has raised roughly $16.8 million -- nearly half of it coming since Oct. 1, the report stated.

The No on 26 campaign has raised roughly $2.3 million. Major donors to the no campaign include the state Democratic Party, which put in $1 million, and the Service Employees International Union, which contributed $500,000.

Proposition 26 is also endorsed by the California Taxpayers Association, California Forestry Association, the Wine Institute, California Grocers Association and the California Manufacturers and Technology Association.

Opponents include the League of Women Voters, American Lung Association, American Cancer Society, California Labor Federation, Sierra Club and California Professional Firefighters.

Proposition 26 would not affect fees already on the books, although many could not be increased without a two-thirds vote. Nor would it affect fees paid by industry to specifically fund inspectors or permits. The Proposition 26 Web site says politicians would "have to get a two-thirds vote at the state level or voter approval at the local level for most increases."