Businesses Want Labor Off Payroll

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Businesses Want Labor Off Payroll
Proposition 32 supporter Duane Hart

Most elections, Duane Hart keeps a wary eye on the ballot for measures that could harm his business. But this year, the Sun Valley print and mail shop owner is wholeheartedly backing a measure on the November ballot that would limit the ability of unions to raise money for political purposes.

Proposition 32, the so-called “paycheck protection” initiative, bans unions and corporations from using payroll deduction money for political purposes.

It would also prohibit companies and unions from contributing directly to the campaigns of elected officials. And it would ban contractors from contributing to the campaigns of officeholders who would have a say in awarding them contracts.

In each case, Hart, who owns Academy Mail in Sun Valley, believes Proposition 32 would allow his 49-year-old company to win more government contracts.

“Right now, things are really stacked against small nonunion companies like mine,” Hart said. “This initiative could make it a much more even playing field for me and open up new bidding opportunities for all private-sector contractors.”

But it will be tough to get voters to approve the measure. Labor unions, especially public employee unions, have mounted an all-out effort to defeat the initiative. In the first quarter, the unions’ side raised $4 million, four times what Hart’s side managed to raise, according to filings with the Secretary of State’s Office.

“This is just the latest scheme by the same group of anti-union activists behind previous measures to eliminate unions from politics,” said Steve Smith, spokesman for the California Federation of Labor in Oakland.

While the measure would stop corporations from contributing directly to candidates or ballot measures, it would allow corporate contributions to independent committees that could then spend money to support candidates or measures.

“There’s a phony veneer of fairness going on here,” Smith said.

Blocking labor

Union opponents have tried to block labor money several times in the past. The most recent example came in 2005 as part of a government reform package by then-Gov. Arnold Schwarzenegger.

Each time, labor unions spent millions of dollars – much of that from member payroll deductions – and convinced voters to reject the measures.

Unlike the Schwarzenegger-backed measure, which only targeted public-sector unions, Proposition 32 would prohibit all unions – as well as corporations and government entities – from using employee payroll deduction money for political campaigns without the annual written consent of each worker.

Proponents argue that under the current system, union members are often forced to contribute to politicians or political causes that they may not like.

Much of Proposition 32’s money comes from conservative and Republican organizations such as the Lincoln Clubs of Orange and San Diego counties. Also contributing have been major Republican figures such as Charles Munger Jr., son of billionaire Charles Munger, the right-hand man of Warren Buffett, and other prominent Republican business executives. Those include former Jefferies & Co. Chief Executive Frank Baxter, Public Storage Co. founder and Chairman B. Wayne Hughes and former Los Angeles Mayor Richard Riordan.

Nonunion business owners – especially those such as Hart who want local government contracts – also support the measure.

If passed, the measure could have ripple effects. Unions could have more difficulty fighting bans on project labor agreements, which favor union contractors. The few attempts so far to pass bans have proved successful; last year, voters approved PLA bans in the San Diego County cities of Oceanside and Vista.

To date, nonunion contractors have been reluctant to place PLA bans on the ballot in most cities in Los Angeles County because of the clout of building trade unions. As a result, PLAs have spread at a rapid clip among local government agencies, from the Los Angeles Unified School District to the Department of Public Works to both the ports of Los Angeles and Long Beach.

“If Proposition 32 passes, it could make it easier to get PLA bans passed,” said Eric Christen, executive director of the Coalition for Fair Employment in Construction in Poway, which represents nonunion contractors and has been the main group behind the PLA ban ballot measures.

Christen said his group intends to qualify PLA ban initiatives for Los Angeles and other cities in Los Angeles County by the end of this decade.

Local government contractors could also benefit in other ways. If public employee unions find themselves unable to raise as much money, they might not have the money to fight efforts to privatize government services. For example, Service Employees International Union Local 721, which represents workers at the Los Angeles Zoo, is fighting the city’s efforts to turn over operation of the zoo to the private sector.

Print shop owner Hart said privatization of government services would allow him to compete for contracts to do work that’s currently performed by public-sector employees.

Favored treatment

The measure’s ban on contractor contributions to officeholders could also make it more difficult for big contractors to get favored treatment by donating to politicians.

“I’m in favor of the contractor contribution restriction,” said B.J. Atkins, who runs an environmental consulting practice in Santa Clarita. “The current situation is just flat wrong. There are conflicts of interest all over the place.”

Atkins, who co-owns Atkins Environmental Help Inc., said that small companies – he has four employees – lose out to bigger contractors that are able to make sizable contributions to local elected officials.

“We could benefit as a company,” he said. “This would level the playing field a bit.”

But the contractor contribution ban may not meet with universal support among local businesses. Many large businesses see political contributions as an acceptable cost of doing business. Building contractors contribute as a way to smooth the path for approvals of their projects, while other contractors hope to get a leg up in the bidding process.

“I would not be at all surprised if major business groups go neutral or even oppose this measure as a result,” said Kevin Korenthal, chief executive of Kore Communications, a public relations firm in Santa Clarita that represents nonunion businesses that support the measure.

The California Chamber of Commerce, for example, has not yet taken a position on Proposition 32.

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Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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