Benefits
Beating Big Money
Initiative and referendum helps citizens overcome the big-money advantage many special interests currently enjoy. No wonder well-funded special interests oppose initiative and referendum, because they so often dominate the current political process in state legislatures, while having had little success with I&R.
More money is always an advantage over less money, but studies dramatically show that money plays a much smaller role in I&R than in candidate races. Wealthy interests are simply not able to pass initiatives by outspending opponents, nor to block citizen-led measures.
Professor Liz Gerber of the University of Michigan has studied the role of money in the initiative process. In her book, The Populist Paradox (Princeton University Press, 1999), she analyzed surveys of interest group activities and motivations, as well as campaign finance records from 168 different direct legislation campaigns in eight states. Her research concluded economic interest groups are severely limited in their ability to pass new laws by initiative. Simply put, money is necessary but not sufficient for success at the ballot box. By contrast, research found that citizen groups with broad-based support can much more effectively use direct legislation to pass new laws. When they are able to mobilize sufficient financial resources to get out their message, citizen groups are much more successful at the ballot box, even when economic interest groups greatly outspend them.
Voters become skeptical when a large amount of money is spent trying to pass an initiative. Real world results show that the more money spent on passing an initiative, the less likely the initiative is to win. The initiative and referendum process is a place where the side with the most money doesn’t necessarily win. I&R is critical in allowing citizens with a needed reform or a better idea to overcome big money opposition.
Resources
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I&R Institute: “What Impact Does Money Have In The Initiative Process?”
The initiative process presents an environment that consistently allows financial advantages to be offset by other political assets. Separate studies by Daniel Lowenstein and David Magleby show that even when proponents of initiatives outspend opponents by a two-to-one margin or more, most of these “big spending” measures lose at the ballot box.
—“The Initiative Process: Where People Count” by Paul Jacob from the book Taking the Initiative, edited by Larry Sabato
Important Court Decisions on Money in Initiative Campaigns
U.S. Supreme Court
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Buckley v. Valeo, 424 U.S. 1 (1976)
Landmark First Amendment protection case pertaining to campaign spending. The ruling helped establish the fact that spending on ballot measure campaigns cannot be limited.
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The U.S. Supreme Court held that a California city’s ordinance to impose a limit on contributions to committees formed to support or oppose ballot measures violated the First Amendment. The Court based its decision on the right of individuals to bear and obtain information. In doing so, it equated free political spending with free speech.
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The Supreme Court has supported the notion that one-sided spending is not a crucial factor in ballot issue elections. In this case, the U.S. Supreme Court invalidated a Massachusetts statute prohibiting business corporations from making contributions or expenditures “… for the purpose of … influencing or affecting the vote on any question submitted to the voters, other than one materially affecting any of the property, business or assets of the corporation.”
State Courts
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The California Supreme Court declared that the Political Reform Act couldn’t limit expenditures by ballot measure committees.
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Hardie v. Eu, 18 Cal.3d 371 (1976) S.F. No. 23450. Supreme Court of California. November 29, 1976.
The California Supreme Court found unconstitutional the Political Reform Act’s cap on expenditures for qualifying ballot measures since it violated First Amendment rights.
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Michigan Chamber of Commerce v. Austin, 832 F. 2d 947 (1987)
The federal appellate court ruled that Michigan’s provisions limiting corporate contributions to ballot measure campaigns violated the right of association and free speech guarantees of the First Amendment. Another portion of the Michigan statute, prohibiting corporations from making independent expenditures on behalf of political candidates from general treasury funds, was upheld by the U.S. Supreme Court in Austin v. Michigan State Chamber of Commerce, U.S., ll0 S. Ct. 1391 (1990)
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The court of appeals affirmed judgments of the district court. The court held that the First Amendment does not permit restricting corporate expenditures as a means of expression on public issues presented through a state’s ballot initiative process.