The discovery in 1848 of a glittering metal in the sandy shallows of the American River sent thousands of people scrambling over the Sierra Nevada to California. Four years later, most miners had given up the aim of striking it rich, as loneliness and disappointment had taken their toll. California, though, was forever changed.
The state is now on the verge of a second stampede for riches. But this time it won’t be bearded roughnecks and saloonkeepers reaping the rewards. This boom is for the state’s well-heeled political consultants.
To be sure, California has long been a lucrative state for consultants. A few ballot initiatives stir up controversy each cycle, and the top issue campaigns often have massive budgets. With the death penalty, three-strikes law, union dues and tax increases set to be on the ballot in 2012, this November won’t be an exception. It will likely lead to the state’s consultants reaping their biggest windfall in decades.
It’s far from the lone bright spot in the consulting market. Nationally, firms are benefiting from a highly competitive presidential cycle, runaway spending from well-funded Super PACs and a congressional landscape shuffled by redistricting.
“This is going to be, in fact already is, a very good year for consultants,” says Tom Edmonds, who heads the International Association of Political Consultants. “Just try to place a television buy in any key state and you’ll know instantly that lots of political money is being spent.”
Given California’s new top-two primary system and an increasingly competitive playing field, opportunities in the state have exploded. With other states looking at deploying a version of California’s new system, strategists will be keeping a close eye on how the state’s experiment plays out, and whether the end result is a more permanently competitive landscape in California.
“Those two things together are just a goldmine,” Democratic consultant Richard Schlackman says of the combination of the state’s new primary system and congressional map. Though before Beltway consultants get any ideas about moving out west, the local competition wants to disabuse them.
“Nothing to see here,” jokes Democratic strategist Roger Salazar. Tongue firmly in cheek, he warns the potential competition not to come scrambling westward in search of fortune. “I want all consultants eyeing California to stay away.”
Salazar’s good-humored warning isn’t being heeded. Inside a squat, beige office building in West Los Angeles, Brandon Hall has set up an outpost for his Seattle-based firm, KullyHall. Together with his partner, Dan Kully, they had been known as a West Coast consulting shop, but didn’t have a presence in California until Hall signed the lease on their L.A. office on April 1. "With the change in California, there's going to be a lot more business available," says Hall, who mans the sparsely furnished operation along with a staffer. "We want to be able to play a role in California politics.” That isn’t exactly an easy thing for out-of-state consultants, who can be viewed as carpetbaggers by the local political community.
“California politics has always been, from a consulting standpoint, very insular,” says Hall. “You had California consultants and then you had everyone else … There has been in the past, I think, [a feeling] ‘keep the national consultants out of California.’"
The ripening market in California is down to a simple equation: More competition means more work for political consultants. That’s how it adds up for George Gorton. “You don’t hire a consultant when you have a dead lock on the district,” says the veteran California GOP operative.
It’s not just business that’s generating the gravitational pull to the West Coast. Hall, who managed Senate Majority Leader Harry Reid’s (Nev.) successful reelection bid in 2010, spent a year at the firm’s office in Washington, D.C. But it wasn’t a good fit. "It didn't make sense from a business standpoint to be there," he says. "We're better able to service our clients when I'm here. It's easier to go visit them and spend time on the ground."
Being based in in Los Angeles, he adds, there’s a "huge quality of life difference."
That sentiment is shared by other consultants who’ve set up camp in Southern California. When Mike Dorsey was scouting locations for a satellite office for Mission Control, the Connecticut-based mail firm he works for, he didn’t opt for one of the shiny high-rise office building along Wilshire Boulevard. He chose a space near Venice Beach. Who needs K Street, it seems, when you’ve got Abbot Kinney Boulevard?
California has long been the competitively sterile, neglected sugar mama of American politics. Donors in the state have shelled out more than $320 million to federal candidates over the last four years, according to one estimate by the Center for Responsive Politics. But with much of that money going out of state, the political environment has been woefully uncompetitive. In the last decade, only one House seat, currently held by Rep. Jerry McNerney (D), has flipped. The last Republican senator elected in California was Pete Wilson, who left Washington in 1991 to run for governor.
But at the federal level this year, the state has some real races on its hands. California’s Citizen Redistricting Commission drew about a half dozen borderline swing districts when it reworked the 53-seat map. "For years, there’s been a lack of competitive congressional races in California,” says Hall. “The top-two [primary] certainly creates a different dynamic, but also the redistricting created so many more competitive races and with that is the ability to work on a lot more races."
There’s Rep. Dan Lungren (R) facing a rematch against a million-dollar-man challenger in Democrat Ami Bera. Rep. John Garamendi (D) has a more heavily GOP district and a strong challenger in Colusa County Supervisor Kim Dolbow Vann.
Then there were also the intra-party contests, the most famous of which pitted Democratic Rep. Howard Berman against Rep. Brad Sherman in the primary for the 30th district. A pre-primary tally for the two old bulls has them burning through $5,668,579 combined – and that’s without the spending by outside groups.
The type of primary contest fought by Berman and Sherman is what observers expect will breathe some new competition into California politics. The new system, which was employed for the first time June 5, allows the top-two vote getters in congressional races—and contests for statewide and legislative offices—to advance to the November election.
Under the old rules, the Berman-Sherman fight for the San Fernando Valley seat would have been decided in June. Now, that race will extend until November as the two congressmen have progressed, guns blazing, under the top-two rule. The presence of newly founded Super PACs is also being felt in the Berman-Sherman contest—another avenue of new business for California-based operatives. A pro-Berman Super PAC bought $500,000 in cable television advertising ahead of the primary.
Eliminating the party nominations for every office except president means that, even in the deep blue North Bay suburbs or solid red San Diego County, there’s an invigorated contest for votes. “You’ve got a tremendous opportunity out there,” says Mark Standriff, a Republican consultant who recently struck out on his own after serving as spokesman for the state GOP. “The challenge is connecting with the candidates to make them understand that there’s someone out there who can guide them through this new, uncharted territory.”
Standriff, a former radio host who is advising GOP Senate nominee Elizabeth Emken, says the full-service firms in California are the ones best positioned to take advantage of the increase in political spending. “You’ve got a lot of firms out there that have full-service boutiques so the client doesn’t have to go shopping around,” he says. “These are the ones finding [the] most opportunities.”
The firms getting the California opportunities need to be based here, consultants note. Hall’s firm has been advising Berman’s campaign. During the primary, he often spent hours at the congressman’s Encino campaign office. "If you're there and you're pitching against a consultant who's further away, it's an inherent advantage," says Hall. "I think that's particularly helpful in California, because it's been run by California consultants for so long and national consultants have a hard time." Hall is also advising House candidates Ann Kirkpatrick in Arizona and Dina Titus in Nevada. Both women are seeking a return to office after being unseated in the last cycle.
"I'm a five-hour drive from both those clients and those are both big races," he says.
In California, the top-two primary also applies in state Assembly and Senate races, where spending exploded this year. Four years ago, candidates spent $23.2 million in the primaries for state legislative races, according to a tally by the California Secretary of State’s office. In 2012, the amount spent almost doubled to $43.6 million.
Part of the reason for the spending increase, consultants say, is that Republican candidates now believe they have a better chance of competing in Democratic-leaning districts because of the new system. That means staffing up in June as though it’s the general. It’s not as much the case on the Democratic side, according to Eric Hogensen, a direct mail consultant based in the Los Angeles area.
“Instead of the primary being the main point—when a Democrat wins the primary, it’s over— now the primary’s in November. That’s when the main activity happens,” he says.
What’s certain is that the new primary system requires more targeting precision. After all, the swing voter in some contests could be a member of the other party. With that mind, Schlackman predicts, mail spending is set to increase dramatically.
California has some of the most expensive media markets in the country. It can cost $1 million to run a weekly TV ad on KTLA in Los Angeles. TV time in San Francisco costs $695 a ratings point. “There’s only so much TV time you can buy,” Schlackman says. “There’s going to be a lot more spending on Internet ads, mail and phones.”
Mail piece designers are really the ones reaping the benefits of the new primary system, says Wayne Johnson, who is based in Sacramento. For media consultants like Johnson, “it’s not been a gold rush,” he says. Since the appeal is no longer aimed squarely at the party base and instead needs to be tailored to persuadable voters, Johnson says.
He also has a different take on the math that’s aroused some of his colleagues. “One thing about having so many competitive races,” Johnson says, “there’s less money in each of them.”
It’s more than just competitive congressional elections in California that have helped launched the new boom. Big city mayoral races are also lucrative contests for consultants. San Diego will elect a new mayor in November, and Los Angeles holds its mayoral contest in spring 2013 in addition to its city council contests, where candidates can spend as much as some congressional aspirants.
It’s particularly big money for Southern California mail consultants. Since local candidates are often priced out of TV advertising, they rely on mail pieces to get their message out.
Another factor: term limits. California has a 14-year term limit for state lawmakers, which means that many up-and-comers in the Legislature are about to find themselves out of a job. That’ll mean more primary challenges and more open-seat races for legislative office.
And in a state famous for its propositions, 2012 will likely enhance the state’s reputation for messy and expensive direct democracy. There are several propositions that could spark a flurry of spending by outside groups. Taxes will likely be the paramount issue. Gov. Jerry Brown (D) and his allies are pushing a tax increase on those making more than $250,000 to help close the state’s revenue shortfall. Brown’s proposal, though, is up against a rival plan pushed by attorney Molly Munger.
Munger, a wealthy Los Angeles resident and the daughter of billionaire Charles Munger, co-founder along with Warren Buffett of Berkshire Hathaway, has already spent more than $3 million of her own money to back the $10 billion tax increase proposal.
On the union issue, for instance, total spending could reach close to $90 million. The proposition prohibits unions from making automatic paycheck deductions for political expenditures, and millions alone went into gathering the 900,000 signatures to make sure the question, known as paycheck protection to conservatives, got onto the ballot.
Johnson, the Sacramento media consultant, estimates that $140-$150 million could be spent in total on issue campaigns alone. “And that’s maybe low,” he says. “November’s going to be wild.”
If the top-two primary system is popularized by California, the targeting techniques the state’s consultants pioneer could follow, and they could be the ones moving east in future cycles.
Schlackman predicted that it could take three cycles with the open primary for the level of competition to die down. Republican consultant Gorton also thinks the boom is likely to continue, though, in part because of the new primary format. The so-called jungle primary means that support from the traditional party structure is less important for a candidate’s success. Gorton predicts that independent candidates will be increasingly competitive as a result.
“Once we have one elected person from an independent party,” he says, “you’re going to see that really take off.”
Hall, the newly-California based Democratic consultant, said the primary system has woken up some of the long-time incumbents in Golden State politics.
"I think we're just staring to see the beginning of a decade of competitive congressional races in this state," he says. "I think you're see a lot of incumbent members of congress who have been around for a long time are starting to say, 'we have to start pay attention to this,’ and looking to build teams."