Steve Peace: California Revolutionary

Steve Peace knows about the consequences of partisan politics. As a Democrat in the California legislature in the late '80s, he voted one time too many with Republicans and paid the price. Party leaders stripped him of committee posts, cut his staff budget, and banished him to a smaller office. They even took away his front-row parking space.

Now Peace has a shot at vengeance. On June 8, Californians approved a ballot measure written by constitutional lawyers he hired to start a revolution in the nation's most populous state. Under Proposition 14, also called the Top Two Primaries Act, voters will be able to vote for any candidate in an open primary. The top two vote-getters, regardless of party affiliation, then move on to the general election. Peace and his backers say when the measure becomes law in 2011, contenders won't have to cater to their parties' extremists to win a primary, and voters will elect more centrist, pragmatic leaders who campaign honestly. "We have two political parties that are becoming narrower and narrower," says Peace. "Today, if you behave like a kook, you get rewarded."

Peace, 57, acknowledges he's often considered a bit kooky himself. Outside California he's best known as the producer of 1978's Attack of the Killer Tomatoes!, a Hollywood spoof in which Peace, as Lt. Wilbur Finletter, wields a saber in the final scene's fight to the death against a swarm of murderous fruit. In state politics his star moment was pushing through a 1996 bill that deregulated the electricity market. When blackouts and price spikes whipped the state in 2000 and 2001, Peace became infamous.

Passed last year by both chambers of the California legislature and approved by 54 percent of voters, Proposition 14 was backed by a strange-bedfellow coalition that included Republican Governor Arnold Schwarzenegger and Willie Brown, a longtime Democratic leader who served 15 years as speaker of the State Assembly and eight years as mayor of San Francisco. Even former Governor Gray Davis, who was forced out after a recall vote in 2003, signed on, though he offers a more qualified endorsement of Peace. "With Steve you get the best and worst ideas imaginable," says Davis. "A couple are brilliant, four are crummy, and two are probably illegal. He's a geyser of ideas."

Having won over California voters, Peace's movement is going national. New York Mayor Michael R. Bloomberg has impaneled a commission that is, among other things, exploring an open primary initiative for New York City's November ballot. (Bloomberg is the founder of Bloomberg LP, which owns Bloomberg News and Bloomberg Businessweek.) Voters elsewhere may soon be considering the option as well.

Appealing to Business

Seated in a leather chair in a San Diego conference room, Peace wears a patterned dress shirt tucked into jeans, though how it manages to stay tucked in is a mystery. An excitable man, he springs out of his chair to animate stories. His noisy reenactment of his response when a campaign worker bungled the printing of campaign flyers brings a knock from the office wall next door. The flyer episode happened 30 years ago.

Before winning election to the state legislature in 1982 as a Democrat representing a conservative area, Peace produced the original Attack of the Killer Tomatoes! as well as three sequels. "We were young and dumb and got lucky," he says. He and a partner co-produced a cartoon version that ran on News Corp's (NWS) Fox and there was even a 1999 Greek-language copycat called The Attack of the Giant Mousaka. He's working with a company in Singapore on a remake of the original.

Despite his novelty hit, Peace says he always felt pulled toward politics, noting what he calls the political overtones of the Killer films in which a bungling leader paints a rosy picture for the public while civilization is under siege. In the Assembly, Peace was given a spot on the Ways & Means Committee. "There was an expectation that I was a marginal member who would help them make their numbers." He and four other moderate Democrats wanted to influence policy, and in 1987 they began siding occasionally with the GOP, which controlled 36 of 80 seats. The insurrection of the Gang of Five, as it was known, crumbled after Democrats made gains in the 1988 election, and Peace and his cohorts were stripped of committee posts and staff. "The light went on for me," he says. "It is easy to get wrapped up in the bubble of the parties. It almost takes an out-of-body experience to challenge the system you're a part of."

Elected to the State Senate in 1993, he became chairman of the Energy, Utilities & Communications Committee. The electricity deregulation debacle—which he blames on the creation of artificial shortages by law-breaking Enron traders—helped derail a potential run for Secretary of State in 2002 when term limits capped his legislative career. After serving one year as California's chief finance director, he went to work as an adviser to John Moores, chairman of the San Diego Padres and founder of JMI Services, which has investments in real estate, sports, entertainment, and technology. Moores and Peace frequently discussed the sorry state of California's political system, which they believed could be fixed only if independent voters got more involved and bridged the eternal gap between tax-cutters and labor constituencies. Over the previous 15 years the number of registered independents had doubled, to 20 percent of the electorate. But their influence was muted by their being less likely than their Democratic and Republican peers to turn out at the polls.

Moores agreed to contribute $1 million for Peace to launch the nonprofit California Independent Voter Project, which set out to educate and mobilize these elusive independents. Amid the various efforts to engage them, Peace and his colleagues began tinkering with legislation for open primaries. They made slow, methodical progress until one morning in February 2009. Peace was eating breakfast in an upscale Palo Alto restaurant, sipping a cup of green tea, when he received, in quick succession, a call from the Democratic leader of the State Senate, then one from the Republican governor's chief of staff.

The lawyers hired by the Independent Voter Project had just finished preparing this legislative proposal, and Peace was contemplating the arduous task of gathering the 694,354 signatures needed to get the measure before the electorate. The news from Sacramento was that the $85 billion annual budget was one vote shy of passing, and if it didn't go through, the state might have to start paying employees with IOUs. Abel Maldonado, then a Republican state senator who would soon become lieutenant governor, had agreed to vote "yes" if Democrats would agree to an open primary ballot measure. Peace had the document to make it happen. "I was shocked," Peace says, about receiving the call. "In an instant, it changed everything."

Things developed quickly from there. Although the measure didn't have the support of Meg Whitman, the former eBay (EBAY) chief executive officer running for governor, Peace had strong backing from the business community. Reed Hastings, CEO of Netflix (NFLX:US), kicked in $257,328; Eli Broad, former CEO of Sun- America, gave $100,000; and Oakland A's managing partner Lewis Wolff contributed $5,000, according to campaign finance data from the California Secretary of State. "I think we need to cross party lines to survive," says Wolff. "This will cause more moderates to get elected."

Is Michigan Next?

California's budget problems became a national spectacle in the past decade, but the seeds of dysfunction were sown in 1933. In the midst of the Great Depression, state lawmakers passed a constitutional amendment requiring two-thirds of the legislature to approve a budget. Only two other states, Rhode Island and Arkansas, require a supermajority to pass every spending plan.

Governance in California got appreciably harder in 1978 when voters approved Proposition 13, which mandated a two-thirds vote in the legislature to raise taxes and also set limits on property tax increases. Since then, California voters have piled on the mandates, making the job of budgeting even harder by setting unsustainable levels of spending on education, early childhood development, wildlife protection, and more. In prosperous times, with an economy as powerful and diverse as California's, it is marginally possible to satisfy all these interests. In hard times it is not.

For 21 of the last 30 years, including 2010, California has begun its fiscal year without a spending plan. This year's budget deficit is projected to be $19.1 billion, putting the world's eighth-largest economy in danger of not being able to pay for office supplies and special education programs. As budget problems have intensified, so has political extremism. "Sacramento," says Allan Hoffenblum, a former Republican consultant and publisher of the California Target Book, the bible for state political junkies, "has become the Disneyland for ideologues."

The hope of Prop 14 advocates is that it will support centrist lawmakers who will "do long-term economic development planning rather than year-to-year budget battles," says Samuel Garrison, vice-president of public policy for the Los Angeles Area Chamber of Commerce, which backed the initiative. "It promotes pragmatic candidates who are building consensus and are better focused on attracting and retaining businesses."

Peace says that Prop 14 is about more than improving the business climate—that it'll get regular citizens to believe that things can get done. Political scientists, however, aren't so sure it will be such a breakthrough. "A lot of this is wishful thinking," says Barbara Sinclair, professor emeritus of political science at the University of California at Los Angeles. Weakening the parties won't necessarily mean smarter, more responsible, or even more middle-of-the-road officeholders, she says. If top-two elections produce lawmakers with a hodgepodge of allegiances, "it would make it more difficult for government to function."

That's how many Democrats and Republicans see it, too. Divided over almost everything else, they tend to unite in disdain for open primaries. "It isn't going to do anything but get more business-friendly Democrats in office," says John Burton, chairman of the California Democratic Party. Mark Standriff, a spokesman for the California Republican Party, says the GOP is consulting with other parties about a legal challenge.

A decade ago the state's political parties succeeded in overturning a similar measure. In 1996, voters approved an open primary initiative, only to have it thrown out when the U.S. Supreme Court sided with the state's Republican, Democratic, Libertarian, and Peace & Freedom Parties, which claimed their rights to free association were violated because nonparty members helped choose party candidates in the first round of voting.

Under that legislation, those who moved to the general round were the top winners from each party, not of the total vote. Peace's legal experts, however, have modeled Prop 14 after a Washington State law that uses a different approach: A primary candidate may identify a party preference but not his or her registration, so voters can't know with certainty if a candidate is allied with a particular party. In 2008 the U.S. high court, citing that distinction, upheld the Washington law.

Meanwhile, Peace says, he's hoping Prop 14 fever spreads. Louisiana and Washington have primaries where the two candidates with the most votes advance, and if California's amendment survives legal challenges, others may follow; a Michigan lawmaker has introduced a bill to make his state next.

Even if Prop 14 meets legal resistance, Peace's group continues to function as a democracy lab. Among several new ideas for California: shrinking the campaign season by moving primaries from June to September and banning fundraising when the legislature is meeting, which it does about seven months a year.

The motivation to keep the political movement going, Peace says, is supplied by his first grandchild, a 9-month-old boy. "His odds of living in a democratic society are no better than 50 percent," Peace says. "In the last 50 years there has been a steady march away from the fundamental principles of democracy, which is compromise. Instead we're moving towards the Third World model of democracy, where, if you don't like the outcome, you pick up your guns—literally or figuratively." At the very least, it could provide the underpinnings for the next Killer Tomatoes plot.

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