PROPOSITIONS 126 and 134 : Loophole Lets Alcohol Industry Hide Its Role in Ads

SACRAMENTO —  Alcoholic beverage interests are bankrolling a multimillion-dollar campaign to promote Proposition 126, a proposal for a modest increase in beer, wine and liquor taxes, but you’d never know it from watching their television ads.

Taking advantage of an apparent loophole in state law, the alcoholic beverage industry is filling the airwaves with spots that promote Proposition 126 but do not carry the customary disclosure, “Major funding from the alcoholic beverage industry and the Beer Institute.”

The ads, many of which feature television and movie actor Tony Randall, began running throughout the state last week. Sponsored by Taxpayers for Common Sense, the industry-financed campaign organization, they urge voters to approve Proposition 126 and defeat Proposition 134, a rival ballot measure that imposes more severe tax increases on beer, wine and distilled spirits.

The ads have ignited protests from Proposition 134 proponents, who claim that the spots violate state disclosure requirements and have urged television stations to refuse to run them. “(This) is obviously a calculated attempt by the alcohol industry to mislead the voters,” wrote Lance Olson, a lawyer for Proposition 134 supporters.

But lawyers for the industry contend that they are within the law because state disclosure requirements only apply to ads that devote a majority of their air time to one initiative. San Francisco attorney Barry Fadem said the 30-second ads spend equal time on each proposition.

His interpretation was confirmed by the Fair Political Practices Commission, the state’s political watchdog agency.

“That unfortunately is a loophole which is of concern to the commission,” said spokeswoman Sandy Michioku, adding that the commission could discuss possible legislation at its meeting in December that would close the loophole.

Supporters of Proposition 134 and the original author of the disclosure laws, Oakland attorney Jim Rogers, disagreed with the interpretation, saying that the two propositions received equal attention in the ads because the purpose was to defeat Proposition 134. Proposition 126 was placed on the ballot by the Legislature at the industry’s request to defeat Proposition 134.

The disclosure requirements were written into law in 1988 by the passage of Proposition 105, a measure authored by Rogers and designed to protect the citizen’s right to know about everything from political funding to the disposal of certain household cleaners.

Rogers said he included the disclosure exemption for advertising in Proposition 105 so those who put out slate mailers would not have to make funding disclosures every time they took a position on an initiative. He said there was never an intent to exempt advertisements on propositions that dealt with the same subject from disclosure requirements.

The legal issues aside, Leo McElroy, media consultant for the campaign to pass Proposition 134, the so-called nickel-a-drink initiative, said the failure to make full disclosure in advertising could damage his campaign if it is allowed to continue.

He said the disclosure requirements have been “one of the best weapons” his under-financed campaign has had to use against the industry. While the industry has spent millions of dollars on television and radio advertising, he said he believed its impact on viewers and listeners has been minimized by requirements that it be shown who is paying for it.

In the latest ads, however, McElroy said the only disclosure is the printed notation “paid for by Taxpayers for Common Sense,” an organization whose name will have no meaning to most viewers.

“If they’re allowed in the final two weeks to hide behind that made-up name of theirs and not disclose who they really are, it could hurt us,” he said.

But Fadem predicted that most radio and television stations will ignore the pleas of Proposition 134 proponents for cancellation of the ads. “The stations know what the law is and I don’t think they’re even going to blink at a letter from the other side,” he said.