Measure to Outlaw Corporate, Union Political Contributions

Campaign finance reform is once again a hot-ticket item on the California ballot.

This election cycle, campaign reform takes shape in state Proposition 32, a controversial measure on the November ballot that is intended to curb the influence of special interests and big money in California politics.

If passed, Prop. 32 would more closely align state contribution laws regarding corporations and unions to federal campaign finance laws, which already prohibit political contributions by the two entities.

The ballot measure seeks to ban:

• Contributions by unions and corporations to political candidates
• Contributions by government contractors to politicians who award and oversee contracts
• Automatic deductions from union, corporate and government employee wages for political activity

If Prop. 32 passes, the implications would be different for unions than for corporations.

At the state level, unions currently funnel payroll funds — automatically deducted from membership dues — to three main activities: collective bargaining, legislative action and political campaigning. This measure would effectively ban unions from using payroll funds for political purposes.

The measure would not affect the current law that allows union members to opt out of contributing to a union’s political action committee. Similarly, employees would not be banned from contributing to their employer’s committee or union, so long as it is voluntary and authorized annually in writing.

Corporations would feel the pinch largely at the management level.

Currently, corporations can give directly out of their “corporate coffers” to political causes without consulting or notifying shareholders, according to Bob Stern, former president of the Center for Governmental Studies and principal co-author of California’s 1974 Political Reform Act.

Under Prop. 32, corporations could no longer contribute directly from their profit, revenue or income sources.

Corporations and unions alike could give indirectly through voluntary contributions made by individuals on behalf of an organization, via independent expenditure committees commonly known as super PACs, or through nonprofit charitable organizations that are not required to disclose backers.

Prop. 32 has become one of the most heated measures up for vote this election. Supporters see it as a surefire way to clean up Sacramento and thwart special interests that “buy off political campaigns,” said Yes on 32 campaign spokesman Jake Suski, who emphasized the need to put politics back into the hands of voters.

“There are no loopholes, no exemptions,” Suski said. “[Prop 32 goes] as far as the law allows.”

Thanks to recent Supreme Court rulings, donors can give unlimited sums to political committees, or super PACs, that are independent from and do not coordinate with candidates. Super PACs and out-of-state entities are not subject to the restrictions under Prop. 32.

Opposition members cite these exemptions as unbalanced loopholes that will marginalize the voice of unions while allowing wealthy donors to continue backing politicians.

“Reform by definition is even-handed and leads to a positive outcome. This is neither,” said California Labor Federation spokesman Steve Smith, whose organization represents 1,200 unions with 2.1 million members statewide.

Stern said the measure is an attempt to curb special interests on both sides, but that its effects are largely anti-union.

“At the state level it would affect balance of power in cities and counties where labor unions dominate elections … that’s a good thing because they dominate those races,” he said. “But at the state level, and in some of the bigger cities, it would tilt the balance of power [toward corporations].”

There are no limits to contributions made to political committees. As a result, large-scale donations are flooding in to bolster both support and opposition for Prop. 32.

A total of 16 committees — five in support, 11 in opposition — have formed around the measure, according to the most recent reports filed by California’s secretary of state. Two committees were recently terminated.

Committees supporting Prop. 32 have raised over $21 million, less than half of the nearly $47 million raised by the opposition, according to the same data.

Large-scale individual donors supporting the measure include former Univision CEO and influential Republican donor Jerry Perenchio, who donated $800,000, and Stanford physicist and Republican activist Charles Munger Jr., who donated over $11 million. Munger helped lead the effort to create the citizens’ panel responsible for redrawing district lines in 2010.

The conservative-leaning nonprofit American Future Fund, with ties to the billionaire brothers Charles and David Koch, also contributed over $4 million to support the proposition.

While individuals donated large amounts in support of Prop. 32, most donations to the opposition came from organizations, political action committees and unions.

AFSCME, the largest public services employees union, donated over $3 million; the California State Council of Service Employees Issues Committee donated more than $5.6 million; and the California Teachers Association contributed over $18 million.

Mission District residents have not donated to any committee supporting or opposing Prop. 32, according to the secretary of state’s data.

Though it is backed by many conservative financiers, the ballot measure is not seen as pitting Democrats against Republicans.

Former state senator and senate majority leader Gloria Romero, now director of the California arm of Democrats for Education Reform, argues that there is an emerging movement of Democrats who are willing to reform teachers unions. Her organization endorses Prop. 32, a stance that is uncharacteristic of most education-based unions and committees.

Romero is also a member of California Faculty Association, which opposes the measure. She said that her union did not survey its members before taking a stance.

“[The committee contributions by unions] are a war chest collected from rank and file by the executive boards without consent about where it’s directed, and supports candidates that are contrary to the needs of their own membership,” Romero said.

On the other hand, the California League of Women Voters, a non-partisan organization, opposes the measure, saying  it does nothing to stop super PACs from spending without limitation.

Two similar measures, introduced in 1998 in 2005, specifically sought to ban unions from using automatically deducted payroll funds for political contributions without prior written consent from members. Both were defeated by a slight majority.

All committees will file a final pre-election finance report on Oct. 22.