Extra-Special Interests

A look at who's really paying for this year's crop of props

When Arizona's founding fathers wrote the state's Constitution, they embraced a progressive movement that included the idea that citizens should be able to pass their own laws: They included an initiative provision that allows people who gather enough signatures to put questions in front of voters every two years.

Today, that petitioning process has become a tall hurdle to successfully jump. Asking voters to change a state law in 2008 requires 153,365 valid signatures from voters, or 10 percent of the number of votes cast statewide in the 2006 general election; if you want to propose a constitutional amendment, you need to gather 230,047 signatures, or 15 percent of the number of votes cast two years ago.

As a result, initiatives have moved away from empowering the average citizen and toward becoming a plaything for well-heeled special interests to experiment in democracy, design their own regulations or exempt themselves from taxation. (Although it's important to keep in mind that just having plenty of money doesn't guarantee success, as the backers of several initiatives--including plans to increase the sales tax to pay for transportation projects, preserve state-trust land and prohibit affirmative-action programs--discovered when their petitions were disqualified due to a lack of valid signatures earlier this year.)

This year's ballot initiatives are all driven by big-spending special interests--and a lot of that money is being used to cover up the fact that some of the props do pretty much the exact opposite of what they claim to do.

The most obvious example is Proposition 105, aka Majority Rules, a proposal that would require the support of a majority of all registered voters--not just the ones who cast votes on Election Day--to pass an initiative that raises any taxes or fees.

In essence, that would mean that all nonvoters--including those who couldn't be bothered to cast a vote, have moved out of state or have even died--would be counted as "no" votes.

Opponents of the initiative--including the Tucson Weekly--say that rather than "majority rules," the initiative could more accurately be characterized as "minority rules."

Even in years when Arizona voters are relatively energized--such as 2006, when 60 percent of the voters went to the polls--a small minority of "no" votes would counter a big majority of "yes" votes. That year, a proposition that banned smoking in bars would have failed if just 17 percent of voters had rejected it, because it included a 2-cent tax on packs of cigarettes to pay for enforcement. (The proposition became law with about 55 percent of the vote.)

Steve Voeller of the Arizona Free Enterprise Club says that expecting 83 percent of the voters to support a proposition before it becomes law is a reasonable threshold. "If you're going to go around the Legislature with your tax increase, you ought to be able to meet a higher threshold. ... We need to make it more difficult for special-interest groups to raise taxes."

Voeller says that those special-interest groups have to be stopped from using the initiative process to sock Arizonans with higher taxes. But the only tax increase in recent memory that affected virtually all Arizonans--a .6-cent sales-tax increase to help fund education that passed in 2000--wouldn't have been subject to the Majority Rules requirements, because it was put on the ballot by the Legislature. The other tax increases that have passed at the ballot box have targeted specific groups--such as smokers two years ago--or have been measures targeting matters such as allowing the state to share gambling money with Indian tribes.

The initiative's primary sponsor is Jason LaVecke, who owns MJKL Enterprises, a chain of Carl's Jr., Green Burrito, Red Burrito and Hardee's franchises. LaVecke, through a variety of fronts, has contributed more than $1.2 million to the campaign. (Other contributors include local auto dealer Jim Click, who has kicked in at least $50,000, and various booze distributors, including $5,000 from Hensley and Co., whose board is chaired by Cindy McCain, wife of GOP presidential nominee John McCain.)

The most recent report shows the campaign has spent more than $1.5 million on the effort, most of which has been paid to the Lincoln Strategy Group, which is run by political consultant Nathan Sproul, the former executive director of the Arizona Republican Party who made headlines--along with some new enemies on the political right--earlier this year with negative attacks that called state Rep. Russell Pearce a Nazi sympathizer and a wife-beater. (Despite Sproul's attacks, Pearce won the GOP state Senate primary in District 18 in a landslide.)

Opponents of the initiative include health-care organizations, educators, environmentalists, firefighters and others who recognize that the initiative route is often the only avenue they have to boost spending, especially because another voter-passed constitutional amendment requires a two-thirds majority in the Arizona Legislature to pass a tax or fee increase.

Those special interests are mobilizing to stop Prop 105 with two political committees. The first, The Voters of Arizona, has collected roughly $390,000, including $250,000 from the National Education Association, as of Sept. 22. A second political committee, Protect Your Vote--No on 105, was formed just last week with a half-million dollar contribution from John Sperling, the billionaire founder of the University of Phoenix.

Elected officials are also lining up against it, including Tucson Mayor Bob Walkup (who had to admit that he was wrong when he previously stated that Majority Rules would affect propositions placed on the ballot by elected officials).

The initiative has even drawn opposition from the Arizona Game and Fish Commission. Bill McLean, the chairman commission, noted that two initiatives passed by voters since 1990 that support wildlife funding through lottery and Indian-gaming dollars would have failed had Prop 105's rules been in affect.

In a statement announcing the Fish and Game Commission's unanimous vote against the proposition, McLean warned that "Arizona citizens concerned with conservation of wildlife and wildlife habitat should be vitally concerned about this proposition. ... Protecting critical wildlife habitat and wildlife funding will not keep pace if this initiative passes."

Voeller concedes that the people behind Prop 105 are a special interest, but he draws a distinction between the anti-tax special interests and the pro-tax special interests.

"We're putting the burden on interest groups that seek to increase the tax burden on all Arizona taxpayers," Voeller says.

Sproul is also the consultant behind Proposition 202, aka Stop Illegal Hiring, a business-backed proposal that would gut Arizona's current employer-sanctions law.

Stop Illegal Hiring has a wider funding base than Majority Rules, although LaVecke is playing a role, as is another fast-food mogul, Mac Magruder.

Stop Illegal Hiring purports to get tough on employers who hire undocumented workers, but in reality, it would provide them with new defenses that would make it harder for officials to strip them of their state business licenses. That has outraged activists such as Pearce and former gubernatorial candidate Don Goldwater, who have become leaders of the GOP's scapegoat-illegal-immigrants wing.

However, supporters may not have even tried to get this initiative on the ballot had Pearce and Goldwater not insisted that the employer-sanctions law passed by the Legislature last year wasn't strict enough. When the pair continued to push an initiative effort after the Legislature passed its version, some members of the business community realized they'd better offer voters an alternative.

The big difference between the two: The business community was willing to put up the money to get their initiative on the ballot; they had spent more than $765,000 as of Sept. 22. In contrast, Pearce and Goldwater were relying on volunteer efforts and the slim amount of funding they could squeeze from their supporters. In the end, it wasn't nearly enough; Goldwater and Pearce fell so short that they didn't even bother turning in their petitions.

Now the duo have turned toward opposing Stop Illegal Hiring--but they're learning it's pretty hard to beat an initiative that appears to crack down on illegal immigration. A recent Cronkite-Eight Poll showed that 63 percent supported Prop 202, while just 19 percent opposed it.

A political committee that's opposed the initiative, No on Prop 202, has reported raising zero dollars since it was formed in July.

Then there's the Freedom of Choice in Health Care Act, Proposition 101, which purports to prevent the government from stopping anyone from making their own decisions about health care.

But once you get past the rhetoric, it appears the initiative is aimed at a single bill that Rep. Phil Lopes of Tucson has brought up annually for the last three years--an effort to expand the state's current health-insurance program to everyone in the state. Under Lopes' plan, which is similar to health-care reforms that have been proposed in New Mexico and California, everyone in the state would pay into the same program, creating a risk pool of all Arizona citizens. People who now have insurance would make the same payments to the state-run outfit, while those without insurance would pay based on what they could afford.

It's not as if Lopes' bill has much of a chance; over the last three years, he managed to get exactly one hearing on the bill.

Nonetheless, a group of mostly medical professionals have spent more than $477,000 on the initiative campaign, which would ensure that Lopes' bill--or anything similar--never gets anywhere.

But Arizona Health Care Cost Containment System Director Tony Rodgers has warned that Prop 101 could have unintended consequences and spell trouble for the state's indigent-care program, which contracts with various providers. Since the state is obligated to provide AHCCCS patients with health-care benefits, Rodgers worries that clients could claim the state can't limit their health-care options--which could then cause the state's health-care costs to skyrocket.

Supporters of the initiative say Rodgers is wrong and have sued the state, saying that public resources are being used to affect the outcome of the election.

The initiative process is also being used by various industries that want to write their own regulations or exempt themselves from taxes.

The Arizona Association of Realtors is funding Proposition 100, aka Protect Our Homes, which would amend the Arizona Constitution to prohibit the state from enacting any tax on real-estate transactions.

The real-estate crowd is unhappy that elected officials sometimes float the idea of creating a real-estate transfer tax--essentially, a sales tax on the sale of homes or other properties. To put an end to that talk, they have invested nearly $2.7 million in the campaign as of Sept. 22.

Protect Our Homes has no organized opposition, but it's often confused with the Homeowners' Bill of Rights, another proposition on the ballot (Proposition 201) which would force homebuilders to offer 10-year warranties on homes and make it easier for homebuyers to sue homebuilders. Prop 201 is being pushed by the Sheet Metal Workers' International Association, which had spent about $363,000 on the effort as of Sept. 22.

The union, however, is being outspent by homebuilders, who have formed Arizonans Against Lawsuit Abuse to campaign against Prop 201. The builders have raised more than a million dollars, which is being spent to push the claim that the proposition will lead to frivolous lawsuits and increase the cost of housing.

The big question: Will voter confusion over the names doom both props?

The biggest spending this year comes from the payday-loan industry, which is offering up the Payday Loan Reform Act, or Proposition 200.

Critics of payday lending--a business that has exploded across Arizona since lawmakers allowed lenders to exist in 2000--say that the loans trap many Arizonans in a cycle of debt, with interest rates that come out to 459 percent annually. As a result, payday lenders collect as much as $149 million a year in interest and fees from Arizonans.

Payday lenders generally lend money for a short period of time for a set fee, which can be up to $17.65 per $100 borrowed. So if a person needs to borrow $500, he gives the lender a check for $588.25 that the lender will cash at a designated date.

But if that borrower discovers that he can't pay off the loan, he may return to the payday-loan company and get a new loan of $588.25--and then must agree to pay additional lending fees. As that cycle continues, the debt grows deeper and deeper--a process called "roll over" in the industry.

The package does reform the industry to some degree. Lenders will only be able to charge $15 per $100 borrowed instead of $17.65, for example. They would also be prohibited from offering new loans to pay off old loans; instead, they'd be obligated to allow customers to pay back loans in four equal payments.

But the proposition will primarily allow payday lenders to remain in business under regulations they have written themselves. If it doesn't pass, payday lenders will go out of business, because the current state law that allowed them to open up in the first place expires in 2010.

Worried that lawmakers won't pass a lifeline that Gov. Janet Napolitano would be willing to sign, the payday lenders turned to the initiative process, forming Arizonans for Financial Reform. As of Sept. 22, they had already spent a staggering $10.7 million on the campaign, which is being chaired by Phoenix political consultant Stan Barnes.

Barnes argues that payday lenders offer an alternative to paying bank fees from bounced checks or missed credit-card payments, which are often much higher than the interest on a payday loan.

Barnes says that payday lenders are especially important during the current economic slump.

"The economy is at a terrible and historic low point," Barnes says. "If Proposition 200 does not pass, then this credit option which many people use will be eliminated. Eliminating a credit option in a down economy is not a good thing."

A former lawmaker himself, Barnes believes the state would be better off if the Arizona Legislature would regulate the payday-loan industry rather than allowing them to write their own regulations.

"The industry is not happy about having to go through the expense and the effort of asking voters to reform and preserve the option," Barnes says. "The Legislature should have done this, but it failed. And since the Legislature failed, the industry had to act in order to maintain any ability to do business in Arizona."