Business on ballot in November vote.

This November's statewide ballot is shaping up to be one of the most crucial in years for business interests. Besides a stark choice for governor, the ballot will contain nearly a dozen measures that could have sweeping impacts on the state's business climate for years to come.

Grabbing the headlines have been the four bond measures that would raise $37 billion for much-needed infrastructure projects throughout the state, including highways, goods movement, school facilities, housing and levee repair. Business interests pushed hard to get these measures on the ballot and are expected to campaign vigorously for them.

But there are a whole host of other initiatives that are drawing the scrutiny of business. Among these: measures hiking taxes on cigarettes, oil and property; a proposal sharply limiting government seizures of private property; and a public campaign financing initiative that would clamp down on corporate campaign contributions.

"There have been ballots with big measures aimed at business before, but I don't recall one with so many measures across such a wide range of areas that have the potential to dramatically impact specific industries or the state's business climate," said Allan Zaremberg, president of the California Chamber of Commerce.

Indeed, there are so many measures that many business groups have gotten off to an early start taking positions on them, just days after the polls closed for the primary election. Last week, for example, the Valley Industry and Commerce Association endorsed the four infrastructure bond measures.

With the exception of this infrastructure package, there was no grand strategy to craft a ballot that could have so much impact on the state's business climate. Rather, a confluence of outside forces brought these issues to the fore.

"The property seizure measure emerged because of a controversial U.S. Supreme Court decision last year; the oil tax is important because of high gas prices; the limits on corporate campaign contributions was in response to last year's ballot measure to limit union campaign contributions, and so on," said Darry Sragow, consultant to state Assembly Democrats.

However these measures got on the ballot, business interests will be forced to spend tens of millions of dollars staking out their positions during the fall campaign, less than a year after they raised nearly $50 million dollars for Gov. Arnold Schwarzenegger's special election initiatives that failed last year.

That means prioritizing which measures are most important, either to a particular industry or to the overall business community. Virtually every business association contacted last week said that passing the infrastructure bond measures is their top priority.

"We have to make the strongest case possible for these infrastructure bonds," said Bill Hauck, president of the California Business Roundtable, which has identified nearly $100 billion in infrastructure projects that need to be funded over the next 20 years. "We cannot sit on these problems much longer; we're already seeing negative impacts on our economy from decades of neglect."

The four measures include $20 billion for highway, mass transit and port-related projects, $10.4 billion for school facilities, $4 billion for levee repair and flood control and $2.8 billion for affordable housing--the lack of which is seen as an impediment to attracting good workers.

A separate bond that qualified for the ballot would allocate $5.4 billion to clean up water supplies and improve state parks.

When first placed on the ballot last month, the infrastructure bond package was expected to win easy approval from voters, especially with Gov. Arnold Schwarzenegger and Democrat legislative leaders all promising to campaign for it. But the defeat of a $600 million library bond earlier this month and poll results showing tepid support for the affordable housing bond could signal a very tough campaign ahead.

Business interests are also supporting a measure to safeguard gas tax funds collected under Proposition 42 for congestion relief projects. Shortly after voters passed that measure in 2000, the state Legislature raided the funds to balance the budget; only last year were the funds finally freed for transportation projects.

Business groups are most concerned about the campaign finance reform measure sponsored by the California Nurses Association. The initiative is currently pending signature verification.

The CNA proposal is a double-whammy of a hit on business: not only would it restrict corporate contributions to $1,000 for specific candidates and $10,000 for specific measures, but to fund the public financing component, banks and corporations would be hit with an annual tax increase of $200 million.

"This initiative would virtually deny the ability for anybody besides a labor union to participate in the political process," Zaremberg said. "It's especially pernicious when a company or an industry has to defend itself in a campaign by other forces to put them out of business."

But proponents of the initiative argue that it would only place corporations on the same level playing field as unions and individuals.

Most business groups are also expected to oppose a measure to tax oil companies for any oil they extract from California soil that's expected to raise $400 million a year for research into alternative fuels. The main argument against the proposal is that it would raise gas prices for businesses and consumers.

The $2.60 per pack cigarette tax hike raising $2 billion a year for hospital services is another matter. The state Chamber is opposed, with Zaremberg calling it a "ridiculous tax on one industry (tobacco) imposed by another (hospitals)."

But the Los Angeles Area Chamber of Commerce supports the tax, saying it provides vital funding for the state's overstretched hospital system.

And the most controversial of all for the state's business interests is the measure restricting government seizures of private property, known as eminent domain. The measure threatens to split business right down the middle. Many businesses, especially large retail corporations, support the use of eminent domain as a way to expedite major redevelopment projects. But many small businesses want to see eminent domain restricted, since they are often targeted for property seizures to make way for large redevelopment projects.

Full Slate State

California's November ballot contains an unusually large number of
propositions important to businesses.

Measure                              Major provision(s)

Transportation                       Limits ability of Legislature to
Investment Fund                      raid gas tax funds for non-
                                     transportation purposes
Highway Safety, Traffic Reduction,   $20 billion for highway, mass
Air Quality, Port Security Bond      transit, port infrastructure and
                                     air emission reduction projects
Housing and Emergency                Would raise $2.8 billion for
Shelter Bond                         affordable housing and emergency
                                     shelters
Education Facilities Bond            $10.4 billion for various facility
                                     improvements at schools and
                                     universities
Disaster Preparedness and            $4 billion to strengthen levees
Flood Prevention Bond                and other flood control projects
Water Quality and Parks Bond         $5.4 billion to clean up water
                                     supplies and improve state parks
Cigarette Tax                        Imposes additional tax of $2.60
                                     per pack to raise about $2 billion
                                     for hospital services
Oil Extraction Tax                   Would raise about $4 billion
                                     annually for alternative energy
                                     programs from a tax on oil
                                     extracted from California
Parcel Tax *                         Imposes $50 tax on every property
                                     parcel to raise about $500 million
                                     for classroom expenditures
Property Seizures *                  Would prohibit local governments
                                     from using eminent domain to seize
                                     property unless that property
                                     remains in the public domain
Campaign Finance Reform *            Sets up public financing system
                                     for campaigns and hikes bank and
                                     corporation tax to fund system;
                                     places strict limits on corporate
                                     contributions

Measure                                Business Position

Transportation                                   Support
Investment Fund
Highway Safety, Traffic Reduction,               Support
Air Quality, Port Security Bond
Housing and Emergency                            Support
Shelter Bond
Education Facilities Bond                        Support
Disaster Preparedness and                        Support
Flood Prevention Bond
Water Quality and Parks Bond                     Support
Cigarette Tax                                      Split
Oil Extraction Tax                                Oppose
Parcel Tax *                             Mild opposition
                                          to no position
Property Seizures *                  Split and undecided
Campaign Finance Reform *              Strong opposition

* pending state signature verification

Source: Business Journal research