By Joe Mathews
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Extra info for California crackup: how reform broke the Golden State and how we can fix it
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Conservatives wanted more of the property tax relief to go to middle- and high-income homeowners, and they wanted even stricter limits on government spending. Local governments wanted to protect their revenue. After a whole legislative session of fighting back and forth, a first compromise bill came out of conference committee in September 1977 but failed to win a majority in the Senate. A second try at a compromise satisfied the Assembly, where Speaker McCarthy had the needed votes for passage and the governor’s commitment to sign the bill.
The commission formally removed the legislature from having any role in initiatives by deleting the “indirect initiative,” a little-used provision that had permitted initiative sponsors to offer their initiatives to the legislature first for action. More seriously, the commission eased the qualifying standards for initiatives that merely changed statutes (as opposed to initiatives that changed the constitution). Previously, initiative sponsors had had to collect a number of valid signatures equal to 8 percent of the number of people who had voted in the most recent gubernatorial election.
But it was in matters of corporate regulation that the Workingmen most badly miscalculated. To check the power of the Southern Pacific Railroad, the state’s most important corporation, the new constitution established a powerful railroad commission. This body was easily captured by the Southern Pacific itself, through extensive use of bribes. In purpose, the railroad commission was turned on its head, becoming the railroad’s primary bureaucratic tool for dominating California’s government and raiding its treasury.