Negotiations and Agreements

By May, several of the Assembly bills to implement Proposition 99 ended up in the Assembly Health Committee. Bronzan, the committee chair, decided to consolidate all of the Proposition 99 bills into one omnibus bill. The voluntary health agencies convinced him to incorporate the language of Watson's SB 1099 into his bill and to drop AB 1695. No

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dominant bill emerged in the Senate, so the legislative leadership agreed to have the Senate pass a related bill that had already passed the Assembly, then let a conference committee consisting of members of both houses work out the final implementing legislation for Proposition 99. That bill was Assembly Bill 75. Authored by former Willie Brown staffer, now Assembly Member, Phil Isenberg (D-Sacramento), AB 75 dealt with some of the Proposition 99 medical accounts and could thus be used to resolve issues related to the other accounts as well. Since it was the only bill that was close to being ready for a conference committee and Isenberg was an acceptable chair to all the major parties, including the Deukmejian administration, Speaker Brown, and Bronzan, he became the chair.^[11] According to Isenberg, “By the time my little bill doing nothing got over to the Senate, it was the only survivor. And all the giant gorillas of the Legislature had killed each other, because they didn't want anybody else to have control over the issue. …Also the interest groups became very interested in doing that because as time passed there was an actual chance the money wouldn't be divided for a while and there's nothing worse if you expect to get some money than the thought that the getting may be delayed.”^[11] The Conference Committee included Assembly Members Isenberg, Bronzan, and Bill Baker (R-Walnut Creek) and Senators Keene (D-Benicia), Herschel Rosenthal (D-Los Angeles), and Ken Maddy (R-Fresno), some of whom represented significant interests that had been involved in developing the Proposition 99 legislation. Maddy, the Republican Senate minority leader, represented the administration's interests. Watson, the tobacco control forces' strongest advocate, was left off the committee.

Although the tobacco industry stayed out of public view, it was very active behind the scenes. The tobacco industry spent $2.2 million on lobbying in the 1987-1988 election cycle and another $2.2 million in 1989-1990 (compared with only $274,394 in 1985-1986 before Proposition 99 passed).^[9] Between the 1985-1986 and 1989-1990 election cycles, tobacco industry campaign contributions to California legislators more than doubled, from $266,488 to $563,366.^[9] Assembly Speaker Willie Brown had received $124,900 for the twelve-year period between 1976 and 1988. In 1989-1990 alone, he received $62,250, more than any other member of the Legislature and more than most members of the US Congress. Senator Ken Maddy (R-Fresno), the leading Republican on the AB 75 Conference Committee, received $38,500 in 1989-1990, more than twice the $19,500 he had received between 1976 and 1988.^[9]

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During the summer, the Conference Committee staff, lobbyists, and other key individuals worked out the specific language for spending the Health Education Account. By the time the committee met, according to John Miller, “We pretty much knew how we wanted to spend the money and had…defeated or derailed most of the really ugly [suggestions for spending the money]. What remained of the ugly ones, we had already accepted. …The process inside the Conference Committee was to actually put it into words and put dollars beside each agreement.”^[12] For the most part, the voluntaries had been successful in defending the language originally in Watson's SB 1099, which had also been sent to the committee to consider in its deliberations. However, they also believed that in order to achieve the necessary support for the provisions in Watson's bill, they would need to come to an agreement with the other organizations that had made a pitch for Health Education Account revenues.

According to Miller, the strategy he and Najera settled on was based on their perception that they had little real support inside or outside the Capitol.

We had unreliable allies (Heart/Cancer); a fearsome opponent (tobacco); various supporters (hospitals, counties, CMA); an indifferent Legislature; and a mildly antagonistic administration (Deukmejian). We also had a completely untested, unproven theory on reducing smoking. We did have popular support, but it was broad, shallow, and skeptical.

In our estimate, the tobacco industry had the political capacity to bury tobacco control. They could do so either by diverting the funding, or by implementing the mandated program so ineffectually that diversion was unnecessary. This could be done by their “insider” methods.

Tony [Najera] and I resolved that we would avoid an absolutely direct confrontation. We were not strong enough to prevail against a united tobacco/Republican/medical provider coalition, and we determined to buy (literally) time to establish an effective, highly visible, and hopefully popular anti-tobacco program. …We resolved to make financial and programmatic concessions when we had to (we had more than enough money) and to associate ourselves with powerful friends such as the CMA, the counties, and Western Center. We did not know the full extent of their duplicity during the first few years, but we did know their support of Prop 99 was opportunistic and we were aware they would pursue their own narrow interests if events evolved in such a direction.^[13]

They completely discounted their ability to mount an effective public campaign directed at the Legislature, abandoning their most powerful weapon, public opinion.

At the end of June, the Coalition had reached an agreement with Senator

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Keene and his competing bill, SB 1392.^[12] Under this agreement, funding would be evenly divided among local county-based anti-smoking programs, school-based anti-smoking programs, and state-run competitive grants. Money would also be used for an anti-tobacco media campaign. Thus, SB 1099 now included assurances that local jurisdictions would receive a share of the Proposition 99 funds.^[14] According to the June 30, 1989, minutes of a meeting held by the Coalition, the negotiations with the SEIU and health officers resulted in the following allocations: 10 percent of the available funds in the Health Education Account ($12 million) for media, 30 percent ($36 million) to schools through CDE on an entitlement basis, 30 percent ($36 million) to state grants through DHS, and 30 percent ($36 million) to local health departments on an entitlement basis. This meant that over half of the money was going to the county level on a noncompetitive basis, which the voluntaries had been trying to avoid because they worried that it would disappear into local school and health department budgets. They believed that a centrally run program conforming to state standards would be stronger and more likely to actually reduce tobacco use. Sending some of the money to the counties was seen as a way to stop SB 1392 and to make the counties happy but not necessarily as a route to strong programming.^[12] This ambivalence about the value of the local programs was to continue in subsequent versions of the Proposition 99 implementing legislation.

The pressure was also heavy to include some funding for CHDP from the Health Education Account, along the lines that Nielsen, Merksamer had suggested to the Tobacco Institute seven months earlier, in December 1988.^[7] From a political standpoint, CHDP was popular with several legislators, key lobbyists, including SEIU and the Western Center for Law and Poverty, and the administration. Funding for CHDP directed additional funds to the counties, which also pleased them. Steve Thompson was an important player in the decision to move Health Education Account money into CHDP.^[15] In return for the Coalition's support of CHDP, the administration agreed to support SB 1099 and to include anti-tobacco education in the CHDP screening interview. According to Carolyn Martin, a volunteer who represented ALA on the Coalition, “DHS was to meet with the voluntaries to develop the anti-tobacco education component of CHDP. That never happened. Instead, they just added three questions about smoking to the screening interview. That was DHS's idea of an `effective tobacco education program.' Ha!”^[16]

Rather than making a strong public argument that spending Health Education Account money on CHDP violated the intent of the voters, as

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they had done when Governor Deukmejian proposed using the medical service accounts to supplant funding for local medical programs, the Coalition agreed to divert some money from the Health Education Account to CHDP. In a June 26 memo, Miller told Watson, “If the administration wanted to steal some of the Education funds for themselves, and were willing to let us establish good programs in return, we would let them steal a little (say 20 or 25 million). Anything we can do to reduce the block-grant structure of the program is also welcome.”^[17] On June 30, with the American Heart Association abstaining, the Coalition passed a motion to go along with the diversions: “The Coalition supports funding for CHDP, $20 million for year one and $20 million for year two [of the two years that AB 75 covered], from the reserve account [in the Health Education Account]. These funds are to be used exclusively for anti-tobacco education. The program will be subject to standard accounting and evaluation procedures. There will be a two year sunset.”^[18] The decision to divert funds from Health Education to medical services through CHDP established a precedent for deviating from the will of the voters as well as for funding medical services from the Health Education Account. As Isenberg observed, “This support would haunt them in years to come.”^[19] Giving up $39.1 million for CHDP (out of $271.9 million appropriated from the Health Education Account over two years) in exchange for getting a decent bill, viewed from a Sacramento insider's perspective, was a reasonable and appropriate action. From the standpoint of mobilizing public support to protect the anti-tobacco programs, it was not.

To protect the anti-tobacco programs mandated by Proposition 99, public health advocates could have framed the issue for the public simply as “following the will of the voters.” By agreeing to diversions, the voluntaries surrendered the “voter mandate” rationale, clearing the way for medical groups and others to frame the fight over Proposition 99 revenues as sick children versus health education or as just another fight over money among Sacramento special-interest groups. The health groups lost the moral high ground. Moreover, the fact that the Coalition agreed to funding medical services from the Health Education Account demonstrated to the CMA, the tobacco industry, and others that they did not have to pass a new initiative to move Health Education Account money from “unacceptable” tobacco control to “acceptable” medical services; they could negotiate it.

The die was cast.

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