By John Hrabe

Conservative activists see Proposition 32, California’s latest paycheck protection measure, as a potential game changer.

“When Prop. 32 passes, unions will be on an even level with other power groups,” said Stephen Frank, a Republican grassroots activist and publisher of the California Political News and Views. “This will have a major effect on campaigns.  Remember, Brown received tens of millions of dollars from unions in 2010–few individuals were willing to donate to him.”

Long-suffering activists like Frank have been fighting an uphill battle with unions for years. There was Proposition 226, back in 1998, which lost by 7 percentage points. Just seven years later, in 2005, proponents tried again with Proposition 75, and were once again defeated.

Now another seven years later, proponents vow in true Sisyphean fashion that this year is the year. They finally might be right.

Unlike past measures, Prop. 32 includes a ban on corporate contributions, in addition to the limitation on union dues. The campaign has also been bolstered by an unlikely supporter, former Democratic Assembly Majority Leader Gloria Romero. As the state director of Democrats for Education Reform, she has signed the ballot argument in favor of Proposition 32 and brought much-needed bipartisan gravitas to the campaign. Romero is also the campaign’s most persuasive spokesperson.

“If we don’t deal with how the beast is fed, and what maintains that, and what gives it status and opportunity to run roughshod over the educational lives and futures of six million kids in California, then shame on us,” she told the Wall Street Journal’s Allysia Finley. “It’s do or die.”

It might be do-or-die for paycheck protection proponents, but the state’s powerful labor unions won’t expire, even if voters pass Prop. 32 in November. That’s because unions will likely use legal and regulatory challenges to delay implementation for years, or possibly prevent the measure from ever taking effect. And the corporate contribution ban could prove to be a double-edged sword: it will help earn votes at the cost of more legal challenges.

Hurdle One: Constitutional Challenges

Prop. 32’s legal troubles start with the inevitable constitutional challenges. The measure was carefully crafted by arguably the best initiative drafter in the business, Tom Hiltachk, the managing partner at Bell, McAndrews & Hiltachk, LLP. In drafting Prop. 32, Hiltachk accounted for recent Supreme Court decisions, such as the high-profile Citizens United case, which upheld corporate and union campaign contribution rights. Nevertheless, some First Amendment experts believe that campaign finance law is far from settled.

“Proposition 32 sails between the rock of Supreme Court protection of corporate and union speech and the shoals of unconstitutional restrictions on such speech,” said Dr. Craig Smith, director of the Center for First Amendment Studies. “If it passes, it will be challenged in court and then we’ll see how broadly the Citizens United ruling will be applied.”

Dr. Smith believes that Prop. 32 “tries to skirt” the Citizens United decision and a subsequent case out of Montana “that applied the Citizens United ruling to the states.” In the Montana case, American Tradition Partnership vs. Bullock, the Supreme Court overturned a Big Sky bid to block campaign contributions by mining interests.

Take Your Pick: Business Loophole or Expansion of FPPC’s Regulatory Power

Constitutional challenges won’t be the only obstacle. Michael Houston, a partner at the Newport Beach firm Cummins & White, LLP, raises two other obstacles to Prop. 32’s implementation: 1) how state regulators interpret the definition of a corporation; and 2) whether the measure supersedes local campaign finance regulations.

Colloquially, the term corporation is used interchangeably with business. State law, however, isn’t as simple. In addition to publicly traded corporations like Facebook or Chevron, there are a slew of different categories of business entities, including limited liability companies, limited partnerships, general partnerships, limited liability partnerships and unincorporated associations.

Proponents say, not to worry, the measure will apply to all entities.

“There are no loopholes or exemptions in Prop 32,” reads a Yes on Prop 32 fact sheet. “The federal government has applied the corporate ban to anything that is treated as a corporation for tax purposes and the FPPC will likely follow suit.”

Houston concedes that the FPPC could follow the Federal Election Commission’s example of “looking down the chain of an entity’s ownership to inquire whether a business entity is comprised of a corporate member.” But, that’s not a guarantee, nor would it be good public policy.

“Do we really want the FPPC getting more regulatory power to define something that easily could have been defined in the measure?” he asks. “That the measure implicitly authorizes regulatory rule-making really isn’t a good argument if one claims to believe in limited government.”

Conservatives that routinely carp about regulatory expansion and judicial activism may be left defending a measure that doesn’t contain a clear legislative intent. Consequently, they’d be making the case for a new precedent to apply corporate regulations to the wider universe of business entities.

Charter City Exemption?

The confusion of what constitutes a business entity pales in comparison to the ambiguity over how the measure would conflict with local campaign finance restrictions. Under California’s state constitution, local ordinances of charter cities and counties supersede state law.

“The only state laws that undercut a contrary charter provision are (1) constitutional amendments and (2) state laws that expressly address areas of statewide concern,” said Houston, who routinely advises municipalities on how to resolve conflicts between local ordinances and state law. “Obviously Prop. 32 is neither.”

Because proponents drafted Prop. 32 to be applicable to both state and local campaigns, Houston says. that leads to a “thorny issue.”

“The real question becomes what happens in a city like Santa Ana, which has charter provisions limiting contributions but allows corporate contributions,” he said. “Would Prop 32 be interpreted to ‘imply’ a corporate ban in Santa Ana or, comparatively, would Santa Ana’s adoption of a charter that regulates local political contributions be viewed as occupying this field and be interpreted as a local constitutional decision by the local citizens to allow corporate contributions by the fact the ordinance is silent on the issue?”

Prop. 32’s ambiguity will likely be resolved by the courts. And after the courts have their say, the paycheck protection fight could continue at the local level with city and county campaign finance reform measures. There’d be plenty of financial incentive. After all, local governments negotiate contracts with police, fire and service employee unions.

No doubt, grassroots activists like Frank would just relish the chance to keep fighting.

“This is about freedom of choice,” said Frank. “It is interesting that the union leaders who support a woman’s right to choose do not support a worker’s right to choose not to pay dues or donate to causes and candidates that harm them.”

By John Hrabe

Labor unions rarely agree with their archenemies, the proponents of paycheck protection.

Proposition 32, the “Stop Special Interest Money Now Act,” has only hardened those battle lines. The measure would substantially change the way political campaigns are financed in California. It would prohibit government contractors from contributing to candidates, ban unions and corporations from imposing payroll deductions for political activities and prohibit unions and corporations from making direct contributions to political candidates.

Proponents of the measure promise that the reform package “removes special interest money from politics” and will “end special interest power.” Opponents say that Prop. 32 is designed to limit unions’ political power, with negligible effects on businesses’ political speech. While the two sides don’t agree on the virtue of limiting unions’ speech, both agree that the measure will substantially decrease unions’ spending on political campaigns.

Gabriella Holt, the president of Citizens for California Reform and co-sponsor of Prop. 32, made that case in a recent San Francisco Chronicle opinion piece. “A vote for Prop. 32 removes the ability of special interests to buy off politicians and put their interests ahead of our children and our families,” she wrote.

Holt’s position is echoed, albeit for different reasons, by the state’s biggest labor unions.

“Prop. 32 would severely restrict union members in both the public and private sector from having a voice in our political process,” the California Labor Federation argues on its No on Prop. 32 website. “As a result, teachers, nurses, firefighters, police and other everyday heroes would be unable to speak out on issues that matter to us all–like cuts to our schools and colleges, police and fire response times, patient safety and workplace protections”

There’s a political incentive for both sides to exaggerate the measure’s effectiveness, but does the measure really live up to the hype?

Labor Unions California’s Most Powerful Special Interest Group

Labor unions, especially public employee unions, are the most influential special interest groups in Sacramento. Case in point, the California Teachers Association’s shameful defeat of Senate Bill 1530.

The bill, authored by Sen. Alex Padilla, D-Pacoima, would have made it easier for school districts to fire teachers that are accused of sexual, violent or drug-related offenses that involve children. But, this no-brainer bill couldn’t muster the requisite votes to pass out of the Assembly Education Committee. The only groups opposed to the bill were the state’s powerful labor unions, including the California Labor Federation, the California Federation of Teachers, the California Professional Firefighters, the California School Employees Association, the California Teachers Association, the Peace Officers Research Association and the United Teachers Los Angeles.

Why on earth would firefighters and police officers support greater legal protections for accused sex offenders and physically abusive teachers?  Prop. 32’s proponents say that’s exactly the point — union leaders don’t share the views of their rank and file members.

“There is a giant disconnect between union members and the union bosses that spend their money,” explained Adam Abrahms, a management-side labor lawyer who also serves as a vice-chairman of the California Republican Party. The state GOP has endorsed Prop. 32. “While roughly 40 percent of union members are Republicans, over 90 percent of labor money goes to Democrats.”

He added, “In the public sector, unions use forced dues to select their bosses and then sit at a one-sided table alongside their chosen politician to divvy up the public largess, without anyone speaking for the taxpayer.”

Proponents say Prop. 32 would correct that problem by allowing rank and file members to opt-out of political dues. Meanwhile, unions could continue to deduct mandatory dues for collective bargaining and other activities.

Unions Spend Billions on Political Activities

Union political spending isn’t chump change. According to a Wall Street Journal analysis from earlier this year, nationally unions supplied federal candidates with more than $1.1 billion in campaign contributions through their political action committees from 2005 to 2011. The Heritage Foundation’s Amy Payne noted that the PAC contributions are supplemented by another $3.3 billion for political activity from non-PAC accounts.

Opponents of Prop. 32 don’t dispute big labor’s big money politics.

“The two largest players, the California Teachers Association and the State Council of the Service Employees International Union, together account for $168 million of spending, well over half of labor’s total spending,” confirmed John Logan, a San Francisco State University professor who is opposed to the initiative . “Prop. 32’s restrictions against spending through payroll deductions — which is how unions raise money for political campaigns — would virtually eliminate this public interest spending.”

Logan’s claim — that Prop. 32 “would virtually eliminate this public interest spending” in California– assumes that unions would sit passively back and fail to adapt to the change in state campaign finance law. Unions in other states sure didn’t throw up their hands and accept defeat.

Washington’s Paycheck Protection: 60 Percent Increase in Union Spending

In 1992, the state of Washington passed one of the country’s first paycheck protection measures. Although labor unions blocked the measure for years with legal challenges, the law itself was largely ineffective.

Six years after Washington voters approved the law, then-Seattle Times columnist Michelle Malkin warned against overhyping Washington’s paycheck protection law. The unions, Malkin wrote, found workarounds that increased their campaign spending.

“No longer able to collect dues for political purposes without consent, but still able to compel general dues collection, the state teachers’ union simply redefined its ‘political’ program as a ‘Community Outreach Program’ and — voila! — $924,000 in political contributions began pouring into its coffers as of April 1993,” the conservative columnist wrote. “That’s 60 percent more in annual political funding than the union collected before I-134 passed. Some protection.”

A 2006 Heritage Foundation report by James Sherk concluded that hard money bans simply increase other soft money spending.

“Unions may well have found ways to circumvent the intent of most of the paycheck protection laws passed by the states, funding ways to spend their members’ dues on politics even when their members object,” the Heritage Foundation observed. “Circumstantial reports certainly suggest that union leaders simply ramp up their unconstrained soft money spending when their members have the option of opting out of hard money donations.”

Human Events’ Doug Stafford offered an even more discouraging point. When it’s all said and done, rank and file members that take advantage of their right to opt-out of mandatory political dues receive negligible refunds.

He wrote, “After all, even if the Supreme Court upholds this law [Washingtons state’s paycheck protection measure], employees will only receive small refunds of no more than $25 per year, because most of the union’s political spending is, by design, outside the reach of this campaign finance regulation.”

Californians could expect a similar result if Prop. 32 passes.

“Prop. 32 does not undermine union’s power to participate in politics,” acknowledged Abrahms.  “It only limits their ability to forcible and surreptitiously take money out of their members’ checks.”

Paycheck Protection Measures Ineffective?

Bradley A. Smith, a former chairman of the Federal Election Commission and one of the nation’s foremost experts on campaign finance law, has questioned the effectiveness of state paycheck protection measures.

“In reality, however, these paycheck protection laws have not lived up to their advertising or returned a material amount of funds to employees,” he wrote in a 2007 Detroit News opinion piece. “By embracing the campaign finance regulatory approach, its promoters are trying to use the tools of the political left — that is, government regulations — to solve a problem caused by government.”

Smith, who now serves as the chairman of Center for Competitive Politics, can hardly be described as a union shill. He believes “the real problem is that forcing employees to pay any dues — for politics or anything else — is fundamentally unjust.”