Soundings

Judith Miller
David Crane’s California Quest
A nonpartisan group aims to elect “courageous” legislators in the Golden State.
Winter 2012

David Crane is looking for a few good men and women—three or four, to be precise. A wealthy investor, lifelong Democrat, and economic advisor and friend to former California governor Arnold Schwarzenegger, Crane is seeking “courageous” candidates from any political party committed to tackling tough fiscal issues in California’s legislature. Crane acknowledges that serving in Sacramento isn’t glamorous. But that’s where money and power reside in California, and any effort to address the state’s monumental problems must include the 80-member assembly and 40-member senate.

To identify quality candidates and provide the financing that might help sway a few key races, Crane recently cofounded Govern for California, a nonpartisan group launched with two other wealthy residents: Ronald Conway, a Republican angel investor who handled some of Schwarzenegger’s investments; and Gregory Penner, a political independent and a partner in an investment-management firm. This political venture-capital fund wants to get as few as five principled candidates elected to break the stalemate in a state legislature long dominated by special interests.

Crane argues, perhaps too optimistically, that only a few new faces are needed to achieve substantial reform. “Replacing just a handful of the 120 members with a few courageous, honest, and effective legislators would dramatically improve public services, the state’s investment and job climate, and enable California to eliminate its structural budget deficit,” he says in an interview over lunch at a café in San Francisco’s Marina District. “A state senator from Bakersfield has more impact on the lives of 40 million Californians than a U.S. Senator.”

The project sounds straightforward. But having battled Sacramento’s gridlock, Crane knows that it’s anything but. For one thing, most Californians don’t care about the state legislature or appreciate its enormous power. Few understand that it directs the spending of roughly a quarter of a trillion dollars a year, levies $120 billion in taxes and fees, oversees the education of 9 million students, provides funding for the incarceration of 150,000 state prisoners, finances essential infrastructure, maintains parks, and determines the pension and other benefits of hundreds of thousands of state and local public employees. “Most Californians would be hard-pressed to name their own legislator, much less any of the others,” Crane complains. The Democratic and Republican parties, moreover, have traditionally controlled entry to state politics through election primaries, insisting on fidelity to party dogma.

All this could change soon, thanks to reforms adopted under Governor Schwarzenegger. In 2012, Californians will vote in districts whose boundaries were drawn by a presumptively impartial committee—not by the legislature, which has turned gerrymandering into an art. And voters will choose candidates through an “open” primary system that picks the two most popular vote-getters, regardless of party, for a runoff.

San Jose mayor Chuck Reed, a Democrat now in his second and final term, argues that these changes could make a difference. “They open the door to pragmatic problem solvers rather than ideologues,” says Reed, whose efforts to reform San Jose’s public-service pension system have sparked widespread controversy but also voter support: he won reelection in 2010 with 77 percent of the vote. In the state legislature, Reed says, “you need to sign up either with the labor team”—that is, the public-service unions that control the state Democratic party—“or the other team,” meaning the tax cutters on the Republican side. “If you don’t toe the party line, you are punished,” he adds. “You don’t get money for reelection; your office is a closet somewhere away from the action, or you could face a recall effort.”

Crane thinks that change is possible because state legislative races require relatively modest financing and are often determined by a small number of voters. The average state legislative race costs about $1 million, he says—cheap compared with federal offices. Engaged citizens who concentrate their spending on a few candidates can make a real impact. Finally, he says, because 100 of the legislature’s 120 seats are contested every two years—the 80 assemblymen run every two years and the 40 senators every four—change can be both rapid and dramatic.

Crane is familiar with California’s harrowing fiscal straits. The budget will see a nearly $13 billion budget shortfall in this and the coming fiscal year, he says. Public-sector pensions now account for twice as much of the budget as they did when Schwarzenegger was elected. The official gap between California’s obligations to its state employees and what it can afford to pay them is about $105 billion, and even that figure—thanks to accounting legerdemain—probably represents about half of the real figure. While California must spend more than $30 billion annually on public-sector salaries and benefits—a 65 percent increase over the past decade—spending on various social services is either flat or down over the same period: 5 percent less for education and no increase for parks and recreation.

Richard Ravitch, New York’s former lieutenant governor and, like Crane and Reed, a deficit hawk, worries that it may be tougher than Crane thinks to find good candidates. “It’s a tough, crummy, underappreciated job,” Ravitch tells me. “Your life and your office are filled with lobbyists demanding things. And the temptation to succumb to lobbyists’ offers and one’s party’s demands is large.” But, Ravitch adds, if anyone can talk people of character into running for the legislature, it’s Crane, who also serves as director of the task force that he and former Federal Reserve chairman Paul Volcker have formed to address the states’ budget crisis.

Crane says that his realization about the legislature’s potential power came in 2009, when former state senator Abel Maldonado made his support for the budget and tax increases that Schwarzenegger was seeking contingent on the legislature’s agreeing to a proposal to put an open primary system on the ballot. “It was one man’s vote that made the difference,” he recalled.

In addition to raising money for worthy candidates—Crane says that he has identified some prospects whom he hopes to announce publicly in early 2012—Govern for California plans to inform voters about legislators who promise their constituents one thing but vote for another. “All we need are a handful of legislators who refuse to continue playing the game,” says Crane. “An ethical block of five.” Perhaps. But the well-funded unions and lobbyists won’t give way easily, and they’ve already taken aim at Crane: union opposition has led the University of California system to defer his confirmation for its board of regents.

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