New Jersey Braces For Record Spending On Voter Referendums — July 6, 2016

By Terrence Dopp
Bloomberg Politics

Public-worker unions and advocacy groups in New Jersey are preparing to set records for campaign spending as voters consider constitutional amendments to require full pension payments, allow casinos near New York and dedicate gas taxes for transportation.

Spending by groups with the ability to raise unlimited sums could climb as high as $100 million as unions seek to end decades of retirement underfunding and casino operators hear profits calling, said Jeff Brindle, executive director of the New Jersey Election Law Enforcement Commission. One veteran of New Jersey politics said the spending could top that spent on the presidential contest in the Garden State.

As long as the outside groups don't explicitly urge the election or defeat of either a candidate or issue, they're allowed in many cases to to raise and spend unlimited sums on advertising and aren't required to disclose donors, under state law.

"Without a doubt, it will be the most expensive ever," Brindle said in an interview. "There is such an intense interest not only on the part of the public but also special interests."

Unlimited Spending

The Citizens United decision by the U.S. Supreme Court in 2010 allowed as free speech unlimited spending by corporations, labor unions, and the wealthy, often through super political action committees that are technically independent from candidates and must reveal their contributors. Yet it also led to increasing contributions to non-profit groups that spend money on campaigns even though their primary purpose isn't supposed to be politics. And they don't have to disclose their donors.

After the decision, instances in which donors could be clearly identified declined to 29 percent from 76 percent on average, according to the Brennan Center for Justice, a constitutional-rights advocacy institute. The New York-based nonprofit reported last week that such groups are increasingly turning their focus toward state and local races, where the impact can be much greater than on the federal level.

The process could mean spending on the New Jersey constitutional questions dwarfs the top of the national ticket — the presidential race between presumptive nominees Donald Trump, a Republican, and Democrat Hillary Clinton. Democrats hold a 2-to-1 registration advantage in New Jersey and no Republican presidential candidate has carried the state since 1988, striking it from the list of so-called battleground states.

Run Around

By taking constitutional questions straight to voters, Democrats who control New Jersey's legislature can side-step Governor Chris Christie, a Republican who was among the first in his party to endorse Trump. In the case of the casino proposal, it would require approval from the electorate, as would another plan to dedicate a remaining portion of the state's gasoline tax to the Transportation Trust Fund as part of a proposal to raise fuel taxes.

Another measure would enshrine in the constitution a requirement that the state make its full actuarial payment into the pension fund annually and deposit a fourth of the money each quarter. It follows unsuccessful court challenges to Christie's skipped payments into the fund, which has a deficit of almost $44 billion.

Vote Needed

The casino and transportation spending referendums have received all approvals to go on the November ballot, while the pensions measure requires one more simple majority vote in the Senate to be included. Richard McGrath, a spokesman for Senate President Stephen Sweeney, said the vote hasn't been scheduled.

Assemblyman Declan O'Scanlon, a Republican from Little Silver, said a pension-funding mandate could prove disastrous. He said the anticipated flurry of spending by public-sector unions could make it impossible for his side to be heard.

"I fear that the truth and power of mathematical reality will be drowned out," he said. "We will be facing hundreds of millions of dollars on the other side. We will be out and telling the truth, but we won't have that kind of money."

Atlantic City, once a key economic driver in southern New Jersey, has been pushed into state financial oversight after losing its onetime dominance over East Coast gambling. Casino revenue declined to $2.6 billion in 2015 from a peak of $5.2 billion in 2006 as Pennsylvania, Delaware, Maryland and New York expanded gambling. So far this year, total revenue is down 10 percent from last, when four of 12 casinos closed. The remaining eight include three properties operated by Caesars Entertainment Corp.; The Tropicana owned by Las Vegas-based Tropicana Entertainment, as well as others such as the Borgata Hotel, Casino & Spa.

Jeff Tittel, director of the state chapter of the Sierra Club, said having the measures on the ballot can be positive.

"The problem is if it becomes all about the funding and the spending," Tittel said during an interview outside of a recent packed Senate committee hearing on a gas tax increase.

"This is going to be a full-employment act for the political consultants and lobbyists," he said. "Much more money will be spent on this than on the presidential race in New Jersey, by far."

Democrats, along with unions representing teachers and government employees, have supported the pension proposal, which they said would reverse two decades of underfunding that have left the system with a record-low 48.6 percent of the money needed to fund benefits. Republicans contend it would tie the state's hands when revenue drops or unexpected costs arise.

Wendell Steinhauer, president of the New Jersey Education Association, said public unions will examine the creation of a joint fund to wage their campaign in support of the pension initiative. The group is regularly the biggest lobbying organization in New Jersey in rankings compiled by Brindle's group.

In the 2013 election cycle, when the current record of $41 million in outside lobbying was spent in a year when Christie and the entire 120-member Legislature stood for re-election, Steinhauer's union spent more than $19 million on lobbying and campaign contributions, state records show.

"We've gone to every court," he said, referring to numerous legal efforts to force Christie to increase pension funding. "There is only one thing left for us to do — that is to get this constitutional amendment on the ballot and passed."

Another referendum would ask voters to lift Atlantic City's casino monopoly, opening the door for gambling houses in the lucrative North Jersey market near New York. According to Brindle's agency, such groups spent about $5 million lobbying for the 1976 referendum that authorized gambling in the first place. He said a 2012 casino question in Maryland brought about $90 million in spending by casino interests.

Dena Mottola Jaborska of New Jersey Citizen Action, a Trenton-based group whose mission is to fight for economic and social justice, said she can't remember a year when there were this many high-stakes issues on the ballot.

"There is going to be beaucoups money spent on the casino question and the pension question. Those two alone are going to be big bucks," she said. "It means that it will take away all the energy and resources to work on anything else this fall. It's going to take money away from the presidential and congressional races."

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