California Voters’ Guide 2012: Proposition 32
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Policy Brief

California Voters’ Guide 2012: Proposition 32

Among a daunting package of ballot questions, here is the free minds and free markets perspective on proposition 32.

Adrian Moore
Vice President of Policy

Proposition 32: Restrictions on Union and Corporate Campaign Contributions and Payroll Deductions for Political Funding

Proposition 32 would prohibit unions, corporations, and government contractors from contributing to candidates and their committees and from automatically deducting money from worker’s paychecks to use for political purposes.

Fiscal Impact

The Legislative Analyst’s Office estimates that enforcement of Prop. 32 will cost around $1 million each year.

Arguments for Proposition 32

Supporters of Prop. 32 say a lot of facts indicate that special interests, not voters, control Sacramento:

  • 79% of campaign contributions made to California’s legislators now come from donors who live outside their districts.
  • Corporations, business associations, and unions gave $89 million to state politicians’ campaigns for the 2010 elections alone.
  • On one day in February 2012, while the state budget was being negotiated, there were 18 fundraisers in Sacramento with a $1000 minimum ticket price.
  • 40% percent of proposed legislation was written by lobbyists and those bills were much more likely to pass the legislature.

Supporters argue that we need to cut off campaign contributions so that politicians will pay attention to the voters instead of catering to the special interests. The way to do that, they say, is by banning direct corporate and union contributions to candidates the same way federal law does for national candidates, and many other states currently do as well.

Supporters also argue that automatic payroll deductions for political spending fuels excesses by corporations and unions and gives them control of the agenda rather than the employees who actually provide the funding. Supporters say Prop. 32 will still preserve every employee’s right to contribute to campaigns directly by means other than payroll deduction (for example, by check or by monthly debit from an account or credit card), but ensures that those contributions are voluntarily authorized by the employee in writing each year.

Finally, supporters say that “pay to play”, where contributors are rewarded by government contracts, occurs at all levels of government and that Prop. 32 puts a stop to it by banning contributions from government contractors to elected officials who control the contracts awarded to them.

Supporters of Proposition 32

Website: http://yesprop32.com/

  • Citizens for California Reform
  • National Federation of Independent Business – California
  • Senator Gloria Romero (Ret.), East Los Angeles
  • Democrats for Education Reform (DFER)
  • John Arguelles, Retired CA Supreme Court Justice
  • George Shultz, Former U.S. Secretary of State
  • Howard Jarvis Taxpayers Association
  • Marian Bergeson, Former CA Secretary of Education

Largest Donors to Yes Campaign as of October 1, 2012

  • American Future Fund: $4,080,000
  • Charles Munger, Jr.: $992,204
  • Thomas M. Siebel: $500,000
  • William Bloomfield, Jr.: $300,000
  • Larry Smith: $260,701
  • Jerry Perenchio: $250,000
  • Citizen Power Campaign: $230,317
  • B. Wayne Hughes: $200,000
  • Lincoln Club of Orange County: $168,633
  • William Oberndorf: $150,000
  • Protect Prop. 13 (Howard Jarvis Taxpayers Association): $125,000
  • Robert J. Oster: $101,000
  • Frank E. Baxter: $100,000
  • Timothy C. Draper: $100,000
  • William L. Edwards: $100,000

Arguments Against Proposition 32

Opponents of Prop. 32 argue that it does not apply equally to all special interests. They say it does not restrict business Super PACs and independent expenditure committees from working to elect or defeat candidates and ballot measures. They argue that if Prop. 32 passes, Super PACs, including committees backed by corporate special interests, will become the major way campaigns are funded.

They also argue that Prop. 32 does not restrict corporations as much as proponents say because it exempts thousands of big businesses, which aren’t technically “corporations,” but rather other forms of business structure. Moreover the restriction on using payroll-deducted funds for political purposes hits unions much harder than corporations, they say, because 99 percent of California corporations don’t use payroll deductions for political giving. But they would still be allowed to use their profits to influence elections.

Finally, opponents argue that Prop. 32 restrictions on withholding from employee paychecks for political purposes are not needed because they are already voluntary. They say it is unreasonable for Prop. 32 to prohibit payroll deductions for political purposes even if employees give permission, and make the same case against requiring written permission for voluntary contributions to be used for political purposes.

Opponents of Proposition 32

Website: http://www.stopspecialexemptions.org/

  • The California Labor Federation
  • California Teachers Association
  • California Faculty Association
  • California Common Cause
  • SEIU/California State Council of Service Employees
  • Peace Officers Research Association of California
  • California School Employees Association
  • American Federation of State, County and Municipal Employees (AFSCME)
  • California Labor Federation
  • California League of Women Voters
  • California Professional Firefighters
  • California Democratic Party
  • California School Employees Association

Largest Donors to No Campaign as of October 1, 2012

  • California Teachers Association: $18,165,362
  • SEIU/California State Council of Service Employees: $8,848,131
  • AFSCME: $3,142,892
  • California Professional Firefighters: $2,602,580
  • California School Employees Association: $1,601,347
  • California Faculty Association: $1,530,146
  • Peace Officers Research Association of California PAC: $1,376,846
  • California Labor Federation (AFL-CIO/Change to Win): $1,372,431
  • California/American Federation of Teachers: $800,000
  • International Association of Firefighters: $500,000
  • Professional Engineers in California Government: $500,000
  • Thomas Steyer: $500,000

Discussion of Proposition 32

There is little doubt that California state politics and policies are driven to a large extent by special interests. They lobby the state government with great success to get more taxpayer money spent to their benefit, to restrict competition, and to exempt them from rules everyone else has to follow.

The most effective way to address that problem is by giving the state less power-less tax money to spend, and less power to restrict competition or arbitrarily pick winners. Restricting the money special interests spend on politics is much easier to conceive of, but it is not as effective. It is a bit like “whack-a-mole” because special interests always find a new way to influence politicians. That said, spending restrictions can have some effect.

Prop. 32 boils down to a few things.

First, it would prevent unions and corporations from giving directly to candidate’s campaigns, but would not restrict them from spending the same money in the election itself in promoting any candidate. This probably wouldn’t change the amount spent on elections, but it would give candidates less control over total spending in campaigns and less control of the messages that spending spreads.

Second, Prop. 32 would prevent government contractors from giving to politicians who make decisions about giving out government contracts. That is certainly a good idea, a way to avoid obvious conflicts of interest that verge on outright bribes.

Third, by banning automatic payroll deductions for political purposes, Prop. 32 would force unions to change how they raise money for politics. Right now they use money that is automatically taken from members’ paychecks, and a member has to really buck the system-facing disapproval if not downright pushback from superiors in the union and peers as well-to go and ask that their money not be used for political purposes they may not agree with. Prop. 32 turns that around by saying unions cannot take it out of member’s paychecks, even if the member agrees, but that instead members have to go and voluntarily contribute to the union’s political funds. They can still do it automatically with a monthly charge from their credit card or bank account. This means unions will have to actively seek money for political purposes from their members, rather than expect it from them as a matter of course.

Corporations don’t typically rely on payroll deductions for political purposes, so it would not have much effect on how they fund those activities.

You can see from the vast sums the unions are spending to oppose Prop. 32 whose ox it gores. The changes for corporations will be minor, other than those who are government contractors. But the changes for unions will be substantial. It’s not that they could not spend as much on politics under Prop. 32 as before, but rather that they will have to change their ways to get it. Right now they get money for politics from almost every single member, because members know if they want the benefits of union membership, or they have to be a member to hold their job, that trying to opt out of the political part of how their union dues are used only invites ostracism and can stunt their career. When unions have to convince members to contribute to political spending the bar is raised considerably and experience shows they cannot raise nearly as much money from their members for politics as before.

Propositions

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