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In the late 1990s, the late Jay Michael and I coauthored a book, published by the University of California, that explored why and how interest groups employ lobbyists to represent them in Sacramento.

By Dan Walters

CalMatters

Opinion

Michael was a retired lobbyist who provided innumerable stories about what happens out of public view to shape legislation and other official policy, such as the notorious “napkin deal” Willie Brown brokered in a Sacramento restaurant that changed tobacco liability and other tort law. I framed the process in the context of an ever-changing state and a Legislature undergoing a cultural and ideological evolution.

At the time there were about 1,200 registered lobbyists working the Capitol, not only those who sought to affect legislation but those who concentrated on regulations, contracts, and other acts in California’s vast bureaucracy.

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Lobbyist Numbers Surge Over Past Decade

As a hobby, Chris Micheli, a lobbyist whose firm represents 15 widely varying clients, dives into legislative minutiae and recently generated data on the growth of lobbyist activity.

Micheli found that the number of lobbying firms has grown from 433 to 484 over the last 10 years. More interestingly, the number of registered lobbyists had nearly tripled from 1,270 when Michael and I were writing our book to 3,245 in the current legislative session.

That seemingly huge increase is, Micheli explains, a little misleading because it includes 1,116 newly registered lobbyists in 2011-12 due to a change in law. Reacting to a corruption scandal in the California Public Employees Retirement System, the Legislature required registration of “placement agents,” who persuade the immense pension system to place millions or even billions of dollars into their clients’ investment firms.

“While the number of registered lobbyists has grown by 1,975 over the past 25 years, more than half of those registrations are attributable to the addition of placement agents,” Micheli says.

“Even taking those registrations out of the total figure, the number of registered lobbyists has still grown over 65% during the past quarter century.”

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Financial Impacts Drive Lobbying Growth

The CalPERS scandal is a stark example of why interest groups employ lobbyists and why their numbers are likely to continue growing indefinitely.

The decisions officialdom makes often have immense financial impacts. The state budget, currently about $300 billion, is just one of those high-impact policy venues. Who gets shares of that money — and who doesn’t — is the subject of perpetual lobbying activity, and there are always winners and losers in what legislators and the governor decree.

In relatively lean times, the budget lobbying grows even more intense — a cyclic phenomenon now playing out as politicians wrestle with multi-billion-dollar shortfalls.

However, the budget is only one of many venues for the clashes of financial interests, and California’s left-of-center politics spawn an ever-expanding array of laws, agencies and officials with regulatory authority.

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Regulatory Decisions Shape Industry Fortunes

Decrees of regulatory agencies, such as the California Public Utilities Commission and the Department of Insurance, can make or break the bottom lines of regulated industries and professions. That’s very evident now as Insurance Commissioner Ricardo Lara copes with the fire insurance crisis.

Many high-value issues are virtually invisible — such as decisions over which drugs will be included on the Medi-Cal “formulary” and what the state will pay pharmaceutical companies for those medications.

When one combines the state budget with the electric power rates set by the Public Utilities Commission, the insurance premiums that Lara approves and countless other legislative and non-legislative issues, it becomes evident that decisions made in Sacramento control an immense portion of the state’s $3.5 trillion economy.

Therefore, those affected believe they need skilled professional advocates, much like anyone facing serious civil or criminal court actions needs a savvy lawyer.

Maybe it shouldn’t work that way, but in a state as immense and complex as California, it does.

About the Author

Dan Walters is one of the most decorated and widely syndicated columnists in California history, authoring a column four times a week that offers his view and analysis of the state’s political, economic, social, and demographic trends.

CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters. For more columns by Dan Walters, go to calmatters.org/commentary.

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