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Civic
Report
No. 72 October 2012
THE NAYS HAVE IT:
When Public Sector Unions Win in California
Daniel DiSalvo, Senior Fellow, Manhattan Institute for Policy Research
Executive Summary
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IN THE NEWS
California's Prop 32 Restores 'We the People', American Thinker, 11-2-12
Political Influence of California's Public-Sector Unions, WorkPlaceChoice.org, 10-19-12
When Public Sector Unions Win in California, UnionWatch.org, 10-19-12
DiSalvo on the Political Influence of California's Public-Sector Unions, NRO's "The Agenda," 10-18-12
Impact of 'direct democracy' on California's public unions, Washington Gaurdian, 10-18-12
Three bites of an apple leaves taxpayers holding a rotten core, PublicSectorInc.org, 10-17-12
The Union Steamroller in California, PublicSectorInc.org, 10-16-12
Opinion: For Prop. 32 voters, more proof of unions' political pull, Long Beach Press-Telegram, 10-15-12
Unions dominate California ballot propositions, The Orange County Register, 10-15-12
RADIO
KUHL 1400 AM's "The Andy Caldwell Show," 10-16-12
TELEVISION
PJ TV interviewed Daniel DiSalvo, 10-16-12
BLOGOSPHERE
Three Bites at the Apple: Public Sector Unions in California, Daniel DiSalvo, FoxandHounds.com, 10-17-12
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| Table of Contents: |
| Executive Summary |
| About the Author |
| Introduction |
| The Outlook for November |
| Background: A Closer Look at the Stakes in California |
| The History of Proposition 30 |
| Other Propositions |
| Analysis: Unions and the Direct-Democracy Ballot |
| Big-Ticket Ballots |
| The Fall Campaign |
| Conclusion |
| Endnotes |
| Appendix: Union Power in the State Legislature |
This November, California voters must decide two policy questions of great concern to public-sector unions. One is
a tax hike to stave off further cuts to state spending (there are two versions on the ballot with a chance of passing).
The other is a "paycheck protection" measure that would ban the practice of unions' deducting money from member
paychecks to spend on political activism. Public-sector union members stand to benefit from the tax increase, and they
are campaigning heavily for one version, Proposition 30, which is being promoted by Governor Jerry Brown. Conversely,
the unions stand to lose money and power if paycheck protection passes, and they are working hard to defeat it.
To understand what these political battles teach us about the outsize influence of public-sector unions in California
politics, this study examines how public-sector unions have fared on proposition campaigns since 1980. (1980 is the
starting year because it marks the beginning of the trend to decide major policy questions by "direct-democracy"
elections and because most public employees in California had been unionized by that year.)
The direct-democracy process—in which any person or group can place a question before the electorate, if they can
collect enough signatures in support of it—plays to the political strengths of public-sector unions. Union members are
easy to mobilize for signature drives and get-out-the-vote operations. Unions have a steady and stable revenue stream
for political activism, as monies are deducted directly from members' paychecks by government and funneled into
union coffers. Their members tend to have higher levels of education than most citizens, which correlates with more
electoral participation. In low-turnout contests, which ballot measures can be, union members can constitute a higher
proportion of the electorate. And unlike businesses and other stakeholders, public-sector unions focus on a few core
issues, thus concentrating their firepower.
This study tracks the effects of these unusual advantages. In the initiative process, we find that public-sector unions
have played a big role in pushing for higher taxes and thwarting reform—all in an effort to maintain a status quo that
favors their needs at the expense of the public interest. Unions are also highly influential in the state legislature, so their
effectiveness in the initiative process makes them arguably the single most powerful political force in the Golden State.[1]
Public-sector unions have taken a position on 42 percent of the 178 ballot initiatives over the last 30 years. Voters ratified
nearly half the measures they supported, and 75 percent of the measures that the unions opposed were defeated. In
other words, unions are fairly effective playing "offense," working to win their goals at the ballot box. But they are
extraordinarily effective playing "defense," using initiative campaigns to block proposals that threaten their interests.
Even these figures may understate the extent to which unions have succeeded in using initiative campaigns to meet
their policy goals: we found that whenever a proposal was especially important to the unions, such that they pulled
out all the stops in their campaign efforts, they almost always won.
In these big battles, public-employee unions often outspend and out-mobilize their opponents by huge margins. A
large majority of these fights have been over education policy, with the teachers' unions being the central actor. For
example, among the unions' victories was Proposition 98 in 1988, which mandated that 40 percent of the state's general
fund be spent annually on K–12 education and community colleges. That measure has greatly constricted the state's
fiscal flexibility, reduced efficiency in public education, and helped make California's teachers the most expensive in
the country. In opposition, the teachers' unions twice defeated proposals for school vouchers and other proposals to
bring more accountability to the state's public schools.
What does this analysis portend for the election this November? Our analysis suggests that the vote on the tax increase
is likely to be very close, and the unions will probably be able to defeat the paycheck-protection measure for a third time.
It is important to remember that politics has consequences for policy. In their campaigns, unions have won increased
government spending, less accountability and efficiency in education, and protections for their own political power. In
so doing, they have managed to stymie reforms that might well have improved the performance of California's public
institutions and lessened the severity of the fiscal crisis that the state now faces.
About the Authors
DANIEL DISALVO is a senior fellow at the Manhattan Institute's Center for State and Local Leadership and an assistant
professor of political science at The City College of New York. He received his doctorate in politics from the University
of Virginia, and is the author of Engines of Change: Party Faction in American Politics, 1868-2010 (Oxford). His work
focuses on American political parties, elections, labor unions, state government, and public policy. He has written on
these topics for both scholarly and popular publications, including National Affairs, The Public Interest, The Weekly
Standard, Commentary, the New York Daily News, the New York Post, The Forum: A Journal of Applied Research in
Contemporary Politics, The Tocqueville Review, Congress & the Presidency, and The Journal of Policy History.
Introduction
Last year saw several high-profile political battles over the collective bargaining rights, benefits, pay, and union power of
public-sector employees—most notably, in Wisconsin. There,
reform efforts led to months of demonstrations and political
struggles, culminating in recall drives against several officeholders. The
state's governor, too, faced a recall election, which he won. Though
public-sector unions mustered vast amounts of money and manpower
to defend their interests in these fights, they were ultimately defeated.
This fall, the nation will see another test of unions' ability to defend
the status quo: it is California's turn to wrestle with possible changes in
fiscal policy that strike at the heart of public-sector unions' well-being.
Though the Wisconsin fight attracted the most national attention, the
coming California battle may well be more important. One reason
is the Golden State's sheer size. With 37 million people, California is
home to 12 percent of the population of the United States and is the
ninth-largest economy in the world. It has the second-largest budget
in the country (after the federal government), and it had the largest
budget deficit ($16 billion) of any state this fiscal year. Any major
change in the way California does business is bound to have economic
and political ripple effects throughout the United States. California is
also an extreme case of fiscal disarray: it depends heavily on income
taxes, which are already high, and it has a pension system with some $500 billion in liabilities that is inadequately funded
(at 78 percent, when experts agree that the absolute
minimum level ought to be 80 percent). Politically,
too, California reformers face an outsize challenge.
The state's public-sector unions are among the most
powerful in the country, and 57 percent of state and
local workers belong to unions.
California's struggles with fiscal policy have been
placed in the hands of voters, who must decide at
the ballot box the fate of proposals for major change.
With the state legislature largely dysfunctional,
direct-democracy processes are the only practical
means for making significant changes in policy. This
situation makes fiscal policy the subject of expensive
statewide campaigns, in which both sides spend
vast sums to defend their positions. Direct voting
on ballot initiatives began in the Progressive era to
get around "the Octopus"—a corrupt legislature
dominated by railroad interests—and its proponents hoped that it would make politicians more
accountable and incite greater citizen participation
in politics. Instead, the ballot-initiative process in
California has become yet another costly venue for
special interests to do battle.[2]
This study examines how this ballot-initiative process
has affected, and has been affected by, one particular
interest group: public-sector unions. It thus relates a
uniquely Californian way of making public policy to
a national phenomenon: states' struggles to reform
their labor practices in the face of intense counterpressure by public-sector unions to retain gains that
they won in the twentieth century.
Two major issues on California's November ballot
touch on policies crucial to union interests. First is
the question of raising taxes, most likely in the form
of Proposition 30, a set of tax increases promoted by
Governor Jerry Brown and the state's main publicsector unions.[3]
An even greater tax hike, Proposition
38, also has a chance of passage. If either measure
passes, it will help temporarily stave off deep spending
cuts and thus reduce the pressure for more significant
reform in the way the state deals with its employees.
If both measures pass, the one with the most votes
will go into effect.
The second major issue, Proposition 32, would
deal a devastating blow to unions' political power.
It would prohibit direct donations to California
political candidates from unions and corporations.
More significantly for the unions, the measure also
would prohibit deducting money directly from their
members' paychecks for spending on political activism. This measure alone is likely to elicit $50 million
in political spending.[4]
California's public-employee unions bring immense resources in money, manpower, and political influence to the fight. They constitute an
enormously powerful interest group whose agenda
is to push for more government spending—which,
of course, benefits their members—and for higher
taxes to pay for it. Consider, for example, the
335,000-member California Teachers Association
(CTA). According to the California Fair Political
Practices Commission, this union spent over $210
million in the first decade of the twenty-first century on political campaigning—more than any other
organization in the state. And as policy analyst Troy
Senik notes in City Journal, "the CTA outspent the
pharmaceutical industry, the oil industry, and the
tobacco industry combined."[5]
Public-sector unionism in California today can be
divided into three major forces: the CTA and other
teachers' unions; those in the protective services (police, firefighters, highway patrol, and corrections officers); and the Service Employees International Union
(SEIU), which represents a potpourri of workers,
including noninstructional school staff, prison staff,
home health-care workers, and many others. All have
participated in political battles over ballot initiatives, in
order to advance their policy goals or block proposals
that they deemed were against their interests.
For this report, we analyzed 178 propositions placed
before California voters between 1980 and 2010,
to delineate the role of public-sector unions in the
process. We found that these unions have been more
effective playing defense: they are good at blocking
changes that they oppose but less successful at obtaining policy changes that they want.[6] This in no
way diminishes the political significance of union activism, however, because the power to block change
can be as significant as the power to produce it. Over
the years, unions have managed to stymie reforms
that might well have improved the performance of
California's institutions. And they have sometimes
won playing offense as well—securing victories that
often have had huge negative consequences for the
state's fiscal health. But there is a better predictor of
success than whether public-sector unions are on
offense or defense: how much they care about the
result. The general pattern in our findings is that
when these unions are heavily invested in an initiative's outcome, they win.
The Outlook For November
Though polls at this writing indicate that a majority
of voters favor Proposition 30, history suggests that
it faces tough odds this November 6. Over the past
three decades, the only tax-related ballot initiatives
that have passed in California were those that lowered taxes on the population as a whole (the only exception
was a measure that raised taxes by increasing levies
on cigarettes and other tobacco products). All directdemocracy efforts to increase income or sales taxes
have failed miserably. Nonetheless, Governor Brown
is campaigning hard for Proposition 30, saying that
it will determine the fate of education in California.
By framing the issue this way, he has won the support
of the teachers' unions. As we have mentioned, they
collectively form one of the most powerful political
forces in the state, so this alliance has given the measure a better than usual chance of approval.
As for Proposition 32, the paycheck-protection
proposition, California public-sector unions have
twice won campaigns to defeat this kind of ban on
unions deducting political money from paychecks.
These unions are currently on pace to outspend
supporters of this latest measure by five to one.[7]
As
we' ve noted, unions have proved most successful in
these campaigns when they were working to prevent change. On the other hand, a new political climate,
especially in the wake of national debate about
public-sector unions sparked by Wisconsin, might
make them less successful this year than they have
been in the past.
Background: A Closer Look at
the Stakes in California
Once an example of good government and well-run
public services, California is now regularly compared to Greece and referred to as a "dysfunctional"
or even as a "failed" state.[8]
For the past decade,
the state has been in near-permanent crisis. It has
regularly run budget deficits, using accounting gimmicks to stay within the letter of its constitutional
requirement to balance its books. Every year, the
state government pushes problems into the next
accounting cycle. Governor Brown has colorfully
described the state's budget process as a "pretzel
palace of incredible complexity."[9]
Matters became dramatically worse this year. The
state began 2012 estimating its annual budget deficit
as $9.2 billion. By June, that figure had risen nearly
60 percent, to $15.7 billion. The state's nonpartisan
Legislative Analyst—the equivalent of the Congressional Budget Office—estimates that the state will
face similar structural deficits for years to come.
Fiscal dysfunction is not confined to the state
government in Sacramento. Four cities—Vallejo,
Stockton, Mammoth Lakes, and San Bernardino—
have recently declared bankruptcy. The state's three
largest public-employee retirement plans—CalPERS,
CalSTRS, and UCRS—cover 2.6 million workers
and have unfunded liabilities of over $500 billion,
according to the Stanford Institute for Economic
Policy Research.[10]
Today, California's A-bond rating
competes with Illinois for the worst in the country.
California has 11 percent unemployment—a third
higher than the rate in the rest of the nation. Between
2000 and 2010, its economy grew by 17 percent—an
unimpressive rate, especially when compared with the
decade's 26 percent in Texas, where many California
companies have fled.[11] Population growth, once far
above the national average, is now no greater than
the United States' average and is poised to slip below
it in the coming years.
Why has nothing been done to address the root causes
of these difficulties? The incapacity of California
government to manage its own affairs is a long, complicated story, with many contributing factors and
blame widely distributed. Among the guilty parties
are the very direct-democracy procedures that are
the subject of this study, which make detailed debate
and political compromise difficult. Other significant
drivers include: supermajority requirements for passing revenue bills in the legislature; party polarization;
and voters who want extensive services but also low
taxes. There is no single culprit.
Into this mess has stepped Jerry Brown, who first
served as governor of California from 1975 to 1983,
and who was again elected to the post in 2010. He
has won some public-employee pension reform and
has proposed spending cuts and new tax revenues.
Few of his proposals, however, touch the deeper
problems in the state's finances, which stem from
the benefits for existing government employees and
retirees, Medicaid, the prison system, and California's
tax structure.[12]
Because changing the pension scheme
was anathema to public-employee unions, Brown's
plan was initially scuttled in the legislature (after
months of inactivity, a weaker version finally passed
in September). In the realm of annual spending,
Brown and the legislature have opted for budget cuts
in services whose recipients have much less political
clout than unions: universities, parks, the court system, and welfare recipients. In addition, they have
cut aid to local governments, which, in turn, must
reduce public services.
These are year-to-year cuts, not structural reforms.
Rather than undertake deeper changes, Governor
Brown has sought to raise more revenue. He cannot
do this in the legislature, where a feeble but strongly
antitax Republican Party has just enough votes to
block the necessary supermajority for a tax increase.
Hence, once again, a fiscal question is being put
before the voters directly, after Brown's organization
collected approximately 800,000 signatures to put a
measure onto the November ballot.[13]
The History of Proposition 30
At first, Brown proposed a temporary increase in
sales taxes for four years, along with a rise in income
taxes on the affluent for five years. The governor
optimistically estimated that the increases would
yield additional revenue of some $7 billion a year.
However, Brown ran into opposition from public employee unions that wanted to tax the rich more
and eliminate the sales-tax increase. Last March, those
unions and the governor reached a deal. Their merged
proposal became Proposition 30, which proposes a
smaller sales-tax increase (from today's 7.25 percent
to 7.5 percent, down from Brown's original proposal
of 7.75 percent). The income-tax provision is billed
as a "millionaire's tax," but if endorsed by voters, it
would create two new brackets and impose a 10.3
percent tax rate on income over $250,000 but less
than $300,000; a 11.3 percent tax rate on taxable
income over $300,000 but less than $500,000; a 12.3
percent tax rate on taxable income over $500,000 but
less than $1 million; and a 13.3 percent tax rate on
income over $1 million (Table 1).
 Having reached an accord with the governor, publicsector unions are now backing the revenue raiser.
Both he and the unions have framed the measure as a
way to repair the overall budget and benefit the public schools. Governor Brown argues that the increased
tax burden must be borne for the sake of the state's
children. As he put it: "This is not about any other
issue. It's not about the environment, it's not about
pensions, it's not about parks. It's about one simple
question: Shall those who' ve been blessed beyond
imagination give back 1 or 2 or 3 percent for the
next seven years, or shall we take billions out of our
schools and colleges to the detriment of the kids?"[14]
Other Propositions
Typically for California, two other tax-related measures, which contradict Proposition 30, have also
made it onto the ballot. Only one, though, has
attracted the money needed to have any chance of
passage: Proposition 38. It is an even more robust
version of taxes-for-education than Brown's. It is the
brainchild of Molly Munger, a well-to-do civil rights
lawyer (who is the daughter of Charles Munger,
Warren Buffett's partner at Berkshire Hathaway).
Her measure would raise more money—estimated at
some $10 billion a year over 12 years—by increasing
income taxes across the board, not just those of the
affluent.[15]
And it would earmark most of the new
revenue for public education, explicitly preventing it
from being used to address the current budget crisis.
If both tax hikes pass, the one that receives the most
votes would become law.
Munger herself is largely paying for the campaign
for her initiative. Unions are providing much of the
money and muscle in favor of Proposition 30. And,
of course, some business and taxpayer groups are
fighting both measures.
Analysis: Unions and the Direct-Democracy Ballot
The seeds of outsize union influence on California
politics were planted in the late 1970s. Earlier in
that decade, a series of court decisions required the
state to address large disparities in spending in its
school districts. The effect in many jurisdictions was
to increase spending on public education, such that
many localities sought new revenues through higher
property taxes. In reaction, a statewide tax revolt led
to the passage of one of the most famous of California's direct-democracy initiatives: Proposition 13.
This law capped property-tax increases at 2 percent
of a property's assessed value, required a two-thirds
majority in the legislature for any tax increase, and
sought to slow the growth of local governments.[16]
Those governments, which depended heavily on
property taxes, now found themselves unable to pay
for education and other services that their constituents demanded. They turned to the state government.
Hence, Proposition 13 had huge consequences for
the state's public finances.
Even as the state became more involved in paying for
once-local services, it was opening the door to more
government spending in other ways: this was the
period when it began permitting public employees to
exercise collective bargaining rights and unionize. In
1968, Governor Ronald Reagan signed the MeyersMilias-Brown Act, permitting collective bargaining
and unionization in local governments. Building on
that step, Governor Brown, in his first stint in office,
extended collective bargaining rights to nearly all
public employees in the state. He signed the Public
Educational Employer-Employee Relations Act in
1976 (K–12 schoolteachers), the Dillas Act in 1978
(state workers), and capped it off in 1979 with the
Higher Educational Employer-Employee Relations
Act (university employees). The result was a huge
wave of unionization among government employees
in the 1980s.
Meanwhile, the initiative process itself was becoming
more important in California politics. The success of
Proposition 13 alerted interest groups and politicians
to the power of direct democracy. In the 1960s, only
nine such initiatives qualified for the ballot; even in
the 1970s, there were only 22 propositions before
the electorate. In the 1980s, though, 46 initiatives
reached the California ballot. Policy by initiative is
now firmly established: in the last decade, 74 initiatives have been placed before voters.[17]
There are a number of good reasons to take 1980
as the starting year for our analysis. It was then that
public-employee unions began to emerge as formidable
political players, and it was then that direct democracy took off as a factor in California politics and policymaking. By the early 1980s, unions had major assets to
bring to any statewide ballot fight: money, manpower,
organization, and legal protections to bring to bear
for, or against, any proposal that touched on their
interests. They soon discovered that direct-democracy
campaigns play to their strengths. With their common
workplace, unions have a membership base that is easy
to mobilize for signature drives and get-out-the-vote
operations. They have a steady and stable revenue
stream, as monies are deducted directly from members'
paychecks by government and funneled into union
coffers. Their members tend to have higher levels of
education than most citizens, which political scientists have found correlates with more avid electoral
participation. And in low-turnout contests, which
ballot measures can be, union members can constitute
a higher proportion of the electorate.
 To evaluate the impact of public-sector unions on
these campaigns, we examined 178 initiatives from
1980 until 2010.[18]
Of those, 73 were voted into law
and 105 were rejected (a 41 percent passage rate).
We coded each measure as "liberal," "conservative,"
or "other."[19]
Liberal initiatives were those that raised
labor or environmental standards or that increased
public spending or taxes. Conservative initiatives
went in the opposite direction in those areas or
emphasized social issues such as blocking illegal immigration, halting affirmative action, or banning gay
marriage. Issues not easily categorized as liberal or
conservative—such as gaming on Indian reservations
or electoral reforms—were coded "other."
All told, there were 93 liberal, 39 conservative, and
45 "other" initiatives. A total of 32 liberal initiatives
passed and 61 failed (a passage rate of 34 percent),
while 20 conservative measures passed and 19 failed
(a 51 percent passage rate). Liberal measures were
thus slightly below, and conservative measures slightly
above, the overall passage rate. These figures suggest
that liberals are more likely to propose measures and
to be successful at getting them onto the ballot than
are conservatives in California. But conservatives are
more likely to see voters enact their initiatives than
are liberals. To cite a few examples, conservatives have
succeeded in passing measures that limit taxes, get
tough on crime, restrict marriage to heterosexuals,
eliminate bilingual education, and place restrictions
on illegal immigrants.
Next, the measures were coded by whether publicsector unions were in favor, opposed, or neutral.[20]
We
used state voter guides to determine the unions' positions. These contain the arguments for and against a
measure and are signed by supporters and opponents
with their organizational affiliation.[21]
We found that
unions took a position on 74 of the 178 measures (or 42 percent) and were in favor of 30 measures and
opposed to 44 (Table 2). Of those they opposed, 11
passed and 33 were voted down. So the unions were
able to block about 75 percent of the initiatives that
they opposed, 17 of which were conservative, 15
liberal, and 12 neither. Of those that public-sector
unions favored, 14 passed and 16 were rejected, for
a passage rate of 47 percent.
The unions were a help in enacting mostly liberal
goals: they supported only four conservative initiatives but backed 23 liberal initiatives and three that
we classified as neither liberal nor conservative. The
passage rate for measures that the unions supported
was higher than the overall passage rate. The rejection rate for measures that the unions opposed was,
however, much higher than the overall rejection
rate—hence our conclusion that public-sector unions
are more successful on defense (stopping initiatives)
than on offense (winning things they want).
However, not all ballot measures are equal. Some have
been exceptionally important for public-employee
unions (and have had profound consequences for
California). In the campaigns around these unusually
important initiatives, California's public-employee
unions have fared extremely well.
Big-Ticket Ballots
We isolated the 15 propositions that stand out as
particularly important to public-employee unions
(Table 2).[22]
These were major battles on which the
unions spent huge sums of money in efforts to convince the electorate and mobilize their members. This
more qualitative analysis reveals that when unions
pull out all the stops for a ballot-initiative campaign,
they almost always win. Of these major initiatives, the
unions supported six and opposed nine, and voters
enacted only one of those that they fought (ending
bilingual education in 1998). On the other hand,
voters ratified four of the six measures that the unions
supported. And the two that failed went down by
quite narrow margins. (One of these proposals would
have allowed school districts to issue their own bonds,
if approved by a simple majority of voters rather than
the existing two-thirds requirement; the other would
have put limits on lobbying and established limits on
campaign contributions and spending.) In sum, out
of the 15 ballots most dear to them over the last 30
years, the unions have lost only three times. It is an
impressive record.
What issues motivated the unions to pull out all
the stops? Education, clearly central to the teachers' unions in California, tops the list: ten of the 15
measures touched on education issues. On "defense,"
six of the nine initiatives that the unions opposed
were education-related. These political triumphs had
huge policy consequences. Led by the CTA, publicsector unions managed to block proposals for school
vouchers (twice), teacher evaluation and testing, new
requirements for teacher tenure, and a relaxation of
education spending requirements. On "offense,"
four of the six measures that unions supported were
designed to funnel more money into the schools. On
all these propositions, the unions spent substantial
sums (Chart 2). Indeed, on some of them, they almost
entirely underwrote their side of the campaign. In
most of these campaigns, the teachers' unions and
their allies significantly outspent their rivals. A few
of the votes were close; but in most cases, the union
position won an overwhelming majority. No wonder
former Governor Pete Wilson described the CTA as
a "relentless political machine."[23]
The most important of all these education-related
measures was Proposition 98 in 1988. It required
that 40 percent of the state's general fund be spent
annually on K–12 education and community colleges. That year, the CTA spent $4.5 million, a very
large sum in those days, to promote it. The CTA's
victory, by a slim margin, was one of the most significant pieces of legislation in the last 30 years of
California history. It also demonstrated the power of
the teachers' unions. As political scientist Terry Moe
asked: "How often is a special interest group able to
commandeer 40 percent of a state's entire budget for
its own realm of policy?"[24]
The consequence was a
severe constriction of the state's fiscal flexibility. By
guaranteeing such lavish funding, Proposition 98 also
reduced accountability, as school districts have had to
worry less about the most efficient allocation of resources. By using its influence on local school boards,
the CTA channeled much of the new monies—about
$450 million a year—into increasing teacher pay.[25]
California now boasts the highest average teacher
salaries in the country.
In opposition, the teachers' unions have vehemently
opposed voucher plans, which they see as a threat to
their survival. School vouchers have made it onto the
ballot twice in California: Proposition 174 in 1993
and Proposition 38 in 2000. In both instances, the
teachers' unions single-handedly bankrolled the opposition campaign.[26]
In the 1993 campaign on this
issue, the CTA spent $12.5 million, outspending supporters 8 to 1. In addition, it persuaded March Fong
Eu, the secretary of state, to significantly change the
proposition's title from "Parental Choice" to "Education Vouchers."[27]
According to education scholar and
former teacher Myron Lieberman, the more controversial title dropped Proposition 174 ten points in the polls, where it had initially been well received by
voters.[28]
In the 2000 ballot fight, the teachers' unions
spent some $21 million. In both cases, many other
interest groups in California—such as the NAACP,
the PTA, and the ACLU—publicly opposed school
vouchers. Yet they spent almost nothing to defeat the
proposals at the ballot box.
 The teachers' unions have also blocked efforts to
impose greater accountability measures on California's public schools. In 1998, the CTA spent nearly
$7 million to defeat Proposition 8. The measure
would have allowed the use of student performance
as a criterion for teacher evaluation and required
teachers to take credentialing tests in their fields. In
2005, Governor Arnold Schwarzenegger, in his supposed "Year of Reform," proposed a measure aimed
at teacher tenure in K–12 education that would have
extended the apprentice period for teachers from two
years to five. Another measure would have set limits
on state spending and relaxed the education spending
requirements imposed by Proposition 98. The CTA
alone spent $57 million, mortgaging its Sacramento
headquarters, to fight these and other measures.
Given their record, it is understandable that many
consider public-employee unions in California quite
simply the most effective interest group in state politics. Our analysis finds that the unions often outspent
their opponents handily on many issues. In 2005, for
example, the unions and their allies spent $54 million
to defeat Proposition 75 (another version of paycheck
protection). The measure's supporters mustered a
measly $5.8 million. Governor Schwarzenegger's
state-spending cap elicited zero support while its
opponents, led by the unions, shelled out $28 million. Including the paycheck-protection measure of
that year, in 2005 all public-sector unions combined
spent a whopping $90 million in opposition to initiatives they deemed against their interests, according
to the National Institute on Money in State Politics.
Supporters of these measures didn' t even come close.
What about the other side of the coin—measures
favored by business? A look at these campaigns
finds that they typically involve less spending and
that opponents and proponents tend to be evenly
matched. This suggests that other groups that spend
in initiative campaigns are spread across many different issues. In contrast, the role of the unions is
concentrated on a few priorities and is thus outsize.
This finding comports with reporting by The Wall
Street Journal, which found that organized labor, led
by the SEIU, spends far more on political activity
than is generally thought.
[29]
Some have claimed that
public-sector unions are regularly outspent by business interests (however defined). Our analysis finds
that, at least in the California's direct-democracy
process, this is a myth.
The Fall Campaign
What does this analysis portend for the fall campaign?
The tax increase faces an uphill battle. Governor
Brown appears to recognize this, having said that
his campaign must "generate the moral equivalent
of war" because "people must understand that we
have to make sacrifices if we want to have a future."
Over the last 30 years, voters have enacted only
6 out of 21 tax-related initiatives. All but one of
these either reduced the tax burden or made it
more difficult to raise taxes. Two of the measures
were nearly identical repeals of gift and inheritance
taxes. Another indexed taxes to inflation, thus reducing "bracket creep." Yet another repealed sales
taxes on certain foodstuffs. And Proposition 62 in
1986 made it more difficult for local government
to raise taxes, requiring a two-thirds majority of
the governing body. Meanwhile, direct-democracy
campaigns to raise income and sales taxes have all
failed, sometimes miserably. Proposition 167 in
1992, which sought to raise income-tax rates (and
repeal a previous sales-tax increase), was rejected by
voters: 59 percent were opposed, and 41 percent
were in favor. Proposition 217 in 1996, which
sought to reinstate higher rates on top earners, lost
by the narrow margin: 51 percent were opposed,
and 49 percent were in favor. In 1990, an initiative
to increase sales taxes to fund drug enforcement and
prevention was summarily dismissed: 68 percent
against, 32 percent in favor. As we' ve mentioned,
the only tax hike that passed by initiative in our
study period was Proposition 99, which in 1988 raised taxes on cigarettes and tobacco. The voting
behavior of the California electorate chimes with
extensive national polling, which suggests that the
American public wants the impossible combination
of extensive government services and low taxes.
Hence, even though Brown's tax hike is framed as an
effort to "save the children," it looks like a heavy lift.
After strong initial showings in the polls (when voters
were not focused on the stakes), the measure's public
support had declined to a bare majority by midsummer.[30]
As of this writing, polls indicate that many
are uncertain as to how they will vote.[31]
Working
against the electorate's historical aversion to tax hikes,
though, are all the resources of the teachers' unions,
which, as we have seen, have been rather successful
on high-profile measures that are important to them.
Therefore, this vote remains a close call.
As for the paycheck-protection proposal, history
suggests that it will not pass, as it has failed by
nearly identical margins (47 percent in favor, 53
percent opposed) twice before—most recently in
2005. In both cases, opponents of the measure
vastly outspent and out-mobilized its supporters.
This is occurring again this autumn: opponents,
led by the unions, had raised twice as much money
for the campaign as had supporters by mid-July.
Still, this time around, a few factors may change
voters' calculus. First, the dire condition of the
state's finances is more readily apparent than ever
before, and voters may make some connection between the power of public-sector unions and state
spending. Second, the recent battles in Wisconsin
have highlighted these issues nationally and served
to inform citizens about the debate over unionized
government. Third, corporate political activism
is limited by the measure, which (as some liberal
groups have complained) may increase support for
it as a law that reins in all special interests, rather
than targeting unions.[32]
Conclusion
Public-employee unions have used the ballot process in
California to stave off changes that they opposed and
have occasionally won things that are very important
to them. They exploit their inherent advantages over
other interest groups in member turnout and get-out-the-vote operations. When they care about an item on
the ballot, they are often the biggest spender—sometimes virtually the only one—on a campaign.
What is in the unions' interest is probably not in
California's. Even if one of the viable tax-increase
initiatives passes this fall, it will not likely solve the
problems of the schoolchildren in whose name they
are being offered. Pension commitments and other
key drivers of California's fiscal problems will quickly
gobble up the new revenues. Even though the measures are framed as a way to save public education in
the state, little money is ultimately likely to be left
over once the state pays other bills.
California's problem is a set of structural drivers of ever
greater state spending, not a lack of revenue. Since
1996, state spending has more than doubled, from
$45.4 billion to over $92.5 billion.[33]
The drivers of this
growth are benefits for existing government employees
and retirees, Medicaid, the prison system, and the
tax structure. Many of these costs are relatively fixed
and thus constrain the ability of budget makers to do
anything about them. Bond payments and pension
contributions, for example, are largely untouchable.
K–12 school funding is fixed at 40 percent of the
general fund budget and is determined by a complex
formula. More than half of the general fund budget
is set on autopilot to increase government spending.
Consequently, the solution offered in the ballot measures does nothing to address the real problem. Even
if a tax increase passes this fall, we will not be surprised
if California politicians are soon back to propose new
tax increases in the very near future.
ENDNOTES
- Allysia Finley, "Gloria Romero: The Trials of a Democratic Reformer," The Wall Street Journal, August 31, 2012; Steven
Malanga, "The Beholden State," City Journal 20, no. 2 (spring 2010); and Joel Kotkin, "The Golden State's War on
Itself," City Journal 20, no. 3 (summer 2010).
- Richard J. Ellis, Democratic Delusions: The Initiative Process in America (Lawrence: University Press of Kansas, 2002).
- "Jerry Brown's Tax Initiative Officially Qualifies for November," The Sacramento Bee, June 20, 2012, http://blogs.sacbee.com/capitolalertlatest/2012/06/gov-jerry-browns-tax-initiative-officially-qualifies-for-november.html.
- Jon Ortiz, "Move Over Wisconsin—The Union Battle Is Beginning in California," The Sacramento Bee, June 10, 2012.
- Troy Senik, "The Worst Union in America," City Journal 22, no. 2 (spring 2012).
-
This finding comports with the conventional wisdom in the academic literature that interest groups are better at
blocking than at advancing their goals through direct-democracy procedures. For a good review of this literature and
a contrarian's perspective based on data from California, see John M. de Figueiredo, Chang Ho Ji, and Thad Kousser,
"Financing Direct Democracy: Revisiting the Research on Campaign Spending and Citizen Initiatives," The Journal of
Law, Economics, & Organization 27, no. 3 (2011): 485–514.
-
Jon Ortiz, "Union Chips in $2.5 Million to Fight Proposition 32," The Sacramento Bee, August 14, 2012, http://blogs.sacbee.com/the_state_worker/2012/08/union-chips-in-25-million-to-fight-proposition-32.html.
- "Not Quite Greek, but Still Weak," The Economist, June 16, 2012; and William Voegeli, "Failed State," Claremont
Review of Books, December 17, 2009.
- "California governor calls for higher taxes, 4-day state workweek to fill $16 billion gap," NBCNews.com, May 14, 2012, http://usnews.nbcnews.com/_news/2012/05/14/11697542-california-governor-calls-for-higher-taxes-4-day-state-workweek-to-fill-16-billion-gap?chromedomain=bottomline&lite.
- Howard Bornstein et al., "Going for Broke: Reforming California's Public Employee Pension Systems," Stanford Institute
for Economic Policy Research (April 2010).
- Edward Luce, "From the California Dream to a Cautionary Tale," Financial Times, June 10, 2012.
- According to the State Budget Crisis Task Force, "California, the most populous state in the country, has the largest number of Medicaid enrollees, 7.5 million. Among the six study states, it also has the highest percentage of its
population enrolled in Medicaid, 29 percent. California has been able to roll a number of its state-funded health care
programs into Medicaid, thereby gaining federal participation in funding of these programs. Even with the addition of
federal funds, however, the state's annual spending per enrollee, $3,364, is the lowest among the six study states and
well below the national average of $5,337; its Medicaid spending as a percent of state General Fund spending, 11.8
percent, is also well below the national average of 15.8 percent."
-
The number of signatures to get a measure onto the ballot must be equal to at least 8 percent of the total votes cast
for governor at the last gubernatorial election.
- Brown cited in George Skelton, "Gov. Brown's Proposed Tax Increase? Yes, It's about Pensions Too," Los Angeles Times,
August 29, 2012, http://articles.latimes.com/2012/aug/29/local/la-me-cap-pensions-20120830.
- Munger's proposition would raise taxes on a sliding scale, starting at $7,316 in taxable income for single filers and
$14,632 for joint filers.
- Some have argued that the school equity lawsuits that resulted in the Serrano v. Priest (1976) decision were a major
factor in creating the conditions for the tax revolt and Proposition 13. As the source of school funding moved from local to state governments, California per-student spending on education fell to among the lowest in the nation. Proposition 98 was, then, partly a response to the new source of funds and sought to lock in a commitment from the state
government. See William A. Fischel, "Did Serrano Cause Proposition 13?," National Tax Journal 42, no. 4 (December
1989): 465–74; and idem, "How Serrano Caused Proposition 13," The Journal of Law & Politics 12, no. 4 (fall 1996):
607–36. See also Martin R. West and Paul E. Peterson, "The Equity Lawsuit: A Critical Appraisal," in School Money Trials: The Legal Pursuit of Educational Adequacy, ed. West and Peterson (Washington, D.C.: Brookings Institution, 2007).
- "The People's Will," The Economist, April 2011.
- Much of the data was generously provided by John G. Matsusaka of the Initiative & Referendum Institute at the University of Southern California, http://www.iandrinstitute.org.
-
The coding method follows a study by Daniel J. B. Mitchell, who used the University of California Hastings College
of the Law data set. See Mitchell, "Unions and Direct Democracy in California: A New Pattern Emerging?," California Policy Options (2008): 197–221. My research assistant, Andrew Marcum, did the first cut of coding. I then coded
the measures. We agreed on over 90 percent of the coding decisions. When there was disagreement, it was usually
over whether a measure deserved a partisan code or should be placed in the "other" category, not whether it was
liberal or conservative.
-
It should be noted that by attempting to concentrate solely on public-sector unions, some cases where public- and
private-sector labor were at odds were overlooked. In addition, some nominally private-sector unions have local affiliates that comprise public-sector workers. Therefore, the reader should be advised that there is some static in the data.
- In addition, the arguments themselves may cite groups that are either for or against the proposition.
- Of course, another analyst might choose a few different propositions to be included in the list of the most important,
but there is likely to be broad agreement on most of those included here.
-
Quoted in Richard Lee Colvin, "Wilson Is Lampooned at Teachers Union ‘Boot Camp,' " Los Angeles Times,
August 26, 1998.
- Terry M. Moe, Special Interest: Teachers Unions and America's Public Schools (Washington, D.C.: Brookings Institution,
2010), 299.
- Senik, "The Worst Union in America."
- Moe, Special Interest, 298.
- Senik, "Worst Union in America." The state attorney general's authority over ballot titles stems from a 1974 measure,
Proposition 9, which mandated the creation of a Fair Political Practices Commission.
-
Myron Lieberman, The Teacher Unions: How the NEA and AFT Sabotage Reform and Hold Students, Parents, and
Teachers Hostage to Bureaucracy (New York: The Free Press, 1997.
- Tom McGinty and Brody Mullins, "Political Spending by Unions Far Exceeds Direct Donations," The Wall Street Journal,
July 10, 2012.
- David Siders, "Gov. Jerry Brown's Tax Measure Holds Uneasy Lead in the Latest Polling," The Sacramento Bee, June 9,
2012, 1A, http://www.sacbee.com/2012/06/09/4549500/gov-jerry-browns-tax-measure-holds.html.
- "CBS 5 Poll: Obama Wins California, Feinstein Re-Elected, Voters Split on Props," http://sanfrancisco.cbslocal.
com/2012/09/12/cbs-5-poll-obama-wins-california-feinstein-re-elected-voters-split-on-props.
- "Good-Government Groups Call Proposition 32 Deceptive," Los Angeles Times, July 23, 2012, http://latimesblogs.
latimes.com/california-politics/2012/07/california-good-government-groups-call-proposition-32-deceptive.html.
- Conn Carroll, "Welcome to California: America without Republicans," The Washington Examiner, July 13, 2012.
Appendix: Union Power in the State Legislature
The Democratic Party dominates California's legislature. In the past half-century, the Republican
Party has had majorities on only one occasion in
each of the two houses of the state legislature. The
GOP's state senate majority lasted for two years,
while the one in the assembly lasted less than a year.
California's Democrats are closely allied with public employee unions in the state. As Sacramento Bee columnist Dan Walter has remarked, the Golden
State's "public employee unions wield immense—
even hegemonic—influence" over the Democratic
majorities in the state legislature.[1]
The control exercised by public employee unions was brought home
to many when a 2010 video went viral. It showed
an official of the Service Employees International
Union (SEIU) in a legislative chamber telling elected officials: "We helped to get you into office, and
we got a good memory… Come November, if you
don' t back our program, we' ll get you out of office."[2]
While Walters and other commentators have often
remarked on the power wielded by public sector
unions in the state legislature, it is worth taking a
closer look at their role helping California's representatives get elected.
Electoral rules help reinforce connections between
Democrats and the unions. California's gerrymandered legislative districts foster little meaningful
competition between the political parties. What
electoral competition there is in California takes
place within the parties at the nomination stage.
Whoever wins the primary contest in a so-called
"safe district" usually walks away with the general
election. Without party labels to guide voters, candidates turn to endorsements. Within the Democratic Party, the endorsement of the public sector
unions looms above all others in importance. The
unions offer both money and manpower to candidates they support. According to the Los Angeles Times, the California Teachers Association, the
state affiliate of the National Education Association,
"has deep pockets, a militia of more than 300,000
members to call on and a track record of making or
breaking political careers."[3]
Public employee unions have distinct advantages
over other interest groups in pressuring legislators.
First, they have regular access to them through the
collective bargaining process. Other interest groups
must fight for such access. Second, they have a cadre
of experienced activists that can be quickly mobilized for get-out-the-vote operations and protests on
the steps of the state capitol. Third, the regular revenue streams provided by dues check-off and government collection of union dues allow the unions
to finance extensive lobbying operations. Other
groups must constantly struggle for resources and
have greater difficulty maintaining a vigilant presence in Sacramento. Fourth, a number of California
legislators are themselves former public employee
union members. Other interest groups can only
look upon with envy upon this network.
Finally, public employee unions are among the most
active groups in California's electoral process. They
are among the leaders in direct donations to candidates and make significant independent expenditures
on behalf of their favorite sons and daughters. As
Table 3 indicates, public sector unions are regularly
among the top three donors to legislative candidates.
In many of the years when the unions were the number two donor, they were only outpaced by general
trade unions. In combination, public and private labor unions outspent the next largest contributor to
candidates by two to one. (See Charts 3 and 4).
Furthermore, while other groups move up and
down the donor rankings, depending presumably
on the issues at stake in a given election year, public
sector unions remain consistently at the top of the
heap. Bear in mind that these figures only reflect
the direct donation of public employee unions to
candidates' campaign coffers. They do not include
the independent expenditures the unions also make
on behalf of candidates.
Public sector unions donate overwhelmingly to
Democratic candidates (Table 5). Compare the year
2002 in tables 4 and 5. That year the unions gave 90 percent of their donations to Democrat and 5 percent to Republicans. On the other hand, the finance,
insurance, and real estate industries combined split
their contributions nearly evenly between the parties, giving 53 percent of their contributions to
Democrats and 45 percent to Republicans.
Beyond these aggregate figures, it is instructive to
consider a few examples. Take the saga of the state's
charter school cap in 1998. California had a legal
cap of 100 charter schools for the entire state. The
teachers' unions were adamantly opposed to raising
the cap and allowing more charter schools. Democrats in the state legislature, following the teachers'
union line, refused to raise the cap. Reed Hastings, a
Silicon Valley entrepreneur who later founded Netflix, financed a ballot measure to lift the charter cap
with $15 million of his own money.
The CTA was opposed to Hastings' move, as it
would have to spend far more than $15 million to
defeat the measure, which would severely cut into
the funds it had to spend on candidates in the general election. In a series of private meetings, the CTA
got Hastings to back off. It agreed to raise the cap by
100 schools the following year. Of course, neither
Hastings nor the CTA alone had the legal authority to change California law. Only voters or the legislature could do that. Yet the union and businessman
brokered the deal nonetheless. Democrats were happy to raise the cap once the CTA blessed the idea.
The legislature dutifully produced a bill conforming
to the CTA's private agreement with Hastings and
passed it into law
Take another extraordinary example: the major expansion of public employee benefits in 1999 and
2001. The Service Employees International Union,
California Correctional Peace Officers Association,
and the California Teachers Association all strongly
backed the election of Democrat Gray Davis in 1998.
Davis came into office with solid Democratic majorities in both the state senate and assembly. Davis
then signed Senate Bill 400, which increased state
workers' retirement benefits by lowering the retirement age, re-jiggering the benefit formula, or both.
The bill also granted a 6 percent boost in benefits
to those who had already retired and increased survivor benefits. The state's retirement fund, CalPERS,
where the unions exercise some influence, claimed
that: "[N]o increase over current employer contributions is needed for these benefit improvements."[4]
In
the wake of this change, however, the pension fund
earned far lower returns than were projected, forcing
the state (i.e. taxpayers) to contribute some $27 billion to make up the difference.
In sum, the Democratic Party handily controls all
of California's electoral institutions. And the biggest contributors to that party in terms of direct
donations, independent expenditures, and campaign foot-soldiers are public employee unions. The
unions' influence in the legislature combined with
their record of success in the Golden State's direct
democracy process makes for a powerful one-two
punch. The results have pushed the state's finances
to the edge of a cliff.
Appendix: Endnotes
- Dan Walters, "Democrats strengthen unions noose," Orange County Register, July 10, 2009.
http://www.ocregister.com/opinion/unions-19986-bankruptcy-public.html.
- http://unionwatch.org/seiu-spokesperson-threatening-california-lawmakers-with-union-retaliation/.
- Eric Bailey, "Proposition 98, which guards funding for state's schools, is tested again, Los Angeles Times, July 17, 2009."
- David Crane, "Taxpayers covering Legislature's bad bet," San Francisco Chronicle, June 19, 2012.
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