California's Choice: Bigger Worker Paychecks or Bigger Union Coffers?

Will the crucial Proposition 32 initiative be approved this November by Golden State voters?

On November 6th, California voters will have an opportunity to choose whether or not they support serious fiscal reform. Proposition 32, aka the "Paycheck Protection" Initiative, has three main thrusts: it proposes a ban on both corporate and union contributions to state and local candidates; a ban on contributions by government contractors to the politicians who control the contracts awarded to them; and a ban on automatic deductions by corporations, unions, and government of employees’ wages to be used for political purposes. Corporations and governments are relatively unanimated by the initiative. On the other hand, organized labor is furious.

The reason is obvious. As evidenced by Gov. Scott Walker's victory in the Wisconsin recall election, coupled with overwhelming support for ballot initiatives curbing the power of unions in San Jose and San Diego on the same night, organized labor is being challenged like never before. Prop 32 is a long-overdue reality check on their ability to dictate terms to government officials beholden to union campaign contributions. Equally obvious is the reason why: a combination of overly generous wages and/or health and pension benefits is becoming fiscally unsustainable for countless state and local governments around the nation.

In California, 2.4 million government workers have enormous clout, courtesy of union leaders whose longstanding ties to Democrats have effectively turned that state into a one-party enclave. Despite a 2010 election that handed Democrats enormous losses across the country, their power in California remained unscathed. Democrats still control both chambers of the state legislature, and every statewide office.

The fight to rein in unions has produced mixed results. In November 2011, voters in Ohio overturned a law signed by Gov. John Kasich earlier in the year that sought to limit union power. Yet in Indiana, the state legislature passed “right-to-work” legislation in February 2012, that included a provision allowing workers to opt out of paying union dues. Wisconsin went through a saga that included massive demonstrations in Madison, Democratic legislators fleeing the state, a controversial ruling by a judge invalidating the measure limiting union power, the overturning of that ruling by the Wisconsin Supreme Court, and a mid-term re-call election affirming Scott Walker's victory. Yet despite everything, Wisconsin Circuit Judge and Democrat appointee Juan Colas struck down the measure yet again. Attorney general J.B. Van Hollen immediately filed an appeal. And since the Wisconsin Supreme Court ruled in favor of the law the last time, this looks like little more than an ill-conceived effort by unions, who have no interest in a verdict delivered by the democratic process. Even when it's delivered twice.

Thus, Prop 32 represents another huge challenge to the power of government unions. The measure's supporters point out that its passage would return power to individual voters who, under current legislation, have no idea how their contributions are used. "The payroll deduction is automatic; that money is going wherever the corporation or union decides it goes," said Jonathan Kraut, president of Net Check Investigations. "[Prop 32] allows an individual to decide where that money should go to some extent, and also, doesn't preclude them from making an individual contribution. This takes the power away from the people who run the corporations and the people who run the unions, who use other people's money."

Opponents claim that loopholes in the initiative that exempt LLCs, partnerships, and real estate trusts, make it a boon for special interests. "Under Prop 32, a corporation CEO, its board members, its executives, all could still make contributions to candidates," said Grant Davis-Denny, board member of California Common Cause. "Prop 32 exempts a number of forms of businesses that you would traditionally think of as corporations. The notion that this would somehow reduce the influence in corporations in Sacramento, I think, is a sham." One is left to wonder why individual contributions from people who happen to work for corporations constitutes a sham. Davis-Denny also contended that automatic payroll deductions "have long been a convenient way for people to pool their money to participate in the political process. Just like it's a convenient way to have money deducted to support our healthcare programs or retirement benefits," he contended. That is utterly disingenuous. Convenience isn't even a remotely viable substitute for free choice.

These rationalizations are nothing more but poor excuses to shield powerful union coffers and the wealth transfer from workers to the Democratic Party. The California Teachers Association is textbook example: in the last nine years, the CTA spent nearly $102 million on political contributions--99.92 percent of which went to Democrats. And much of that money was spent on causes totally unrelated to education, but near and dear to progressive interests. They included the implementation of a single-payer health-care system in California, the blocking of photo-ID requirements for voters, and campaign support to defeat Prop 8, the anti-gay marriage initiative supported by the electorate 52-48 percent, but overturned by the courts.

Currently, California Democrats out-number Republicans by 7.4 million to 5.2 million. Independents number 3.7 million, but 41 percent of them lean Democrat, versus only 29 percent who lean Republican. Such an edge would indicate that Prop 32 will suffer the same fate as two previous efforts to get Californians paycheck protection. Prop 226, initiated in 1998, was defeated by a 53-46 margin, and Prop 75, on the ballot in 2005, suffered the same fate by an almost identical margin.

This time the numbers are closer. A survey conducted last month by the Public Policy Institute of California indicates that Prop 32 is supported by 42 percent of the voters, with 49 percent opposed. The margin of error is 4.4 percentage points. If that survey held true on election day, it would seem a majority of Californians are still incapable of making some obvious connections.

What connections? Last June, Gov. Gerry Brown signed a state budget that purportedly closed a $15.7 billion budget gap. Yet a portion of the revenue stream in that budget is based on the assumption that California voters will approve a November ballot measure raising the state's sales tax, and increasing income tax rates on the wealthy. If they don't, Brown has threatened to cut $5 billion out of popular education programs. June was also the month that Stockton, CA declared bankruptcy, due in large part to $800 million in unfunded mandates for government workers' pensions and retiree health benefits. Los Angles may soon follow suit: it faces a $238 million budget shortfall in FY2012-2013--and $27 billion in unfunded pension liabilities for government employees, despite an annual budget that is only $7 billion.

In other words in California, despite catastrophic economic conditions, government unions continue to maintain a stranglehold on the public fisc. And they will continue to do so until the people wake up, and take their state back--or allow government unions to run it into insolvency. At that point California would undoubtedly ask the federal government for a bailout, courtesy of American taxpayers in the other 49 states. The bet here is taxpayers will answer that request with a familiar phrase usually associated with Las Vegas: what happens in California, stays in California.

Freedom Center pamphlets now available on Kindle: Click here.