In 2004, Garry South was hired by a consortium of telecommunications companies, including SBC, to lead the campaign against Proposition 67, the so-called “phone tax” initiative that would have imposed additional fees on phone calls to fund emergency-room services and doctors. He brought together an eye-popping bi-partisan team of strategists, including consultants for both former Democratic Gov. Gray Davis and Republican Gov. Arnold Schwarzenegger, to persuade voters of the unfairness of regressively taxing phone calls to fund a totally unrelated activity.

South took the lead in publicly arguing against the measure, including debating its sponsors at a public forum sponsored by Town Hall of Los Angeles and conducting many media interviews. He pointed out that although the state’s emergency rooms were crowded and understaffed, it made no more sense to tax phone calls to solve the problem than it did to “tax strawberries or tires” for the same purpose. Economic studies undertaken by the campaign also found that such a tax would disproportionately affect young people, people of color and small businesses.

The campaign against Prop. 67 was so aggressive and effective, and the campaign team led by South so thorough in discrediting the measure, that it’s chief sponsor, the California Hospital Association, ultimately withdrew its backing and the campaign’s consultant, who had managed the effort to qualify the proposition for the ballot, quit. On Election Day, Prop. 67 went down 28-72 – one of the worst defeats of a contested ballot measure in California history, even though voters at the same time passed a tax increase on upper-income earners to fund expanded mental-health services.