Will Voters Unplug Labor's Money Machine?

By Richard Lacayo

Two years ago, when Frank Ury was running for re-election to an Oakland County, Calif., school board, he met some very heavy opposition--the California Teachers Association. Ury, a conservative who favors school vouchers and a back-to-basics curriculum, says the teachers' union contributed $70,000 to his opponent. At the same time, he recalls, individual teachers gave him $25 donations. "They apologized because they said it was only cancelling out what the union was spending to defeat me," he says. "I just didn't think that was right."

Ury lost, but maybe only in the short term. He sharpened his grievance to a very fine point. It's now aimed straight at organized labor--and not incidentally, the Democratic Party--in every part of the country. With two other conservative activists, he drew up Proposition 226, a ballot initiative that California voters will decide on June 2. It would require unions to get annual written permission from each member before using any part of membership dues for political purposes.

For individual union households, the sums involved are small. The 285,000 members of the California Teachers Association, for instance, are each assessed just $32 a year for political uses. But that adds up. Two years ago, the C.T.A. contributed $2 million to California candidates and parties. If Prop. 226 eventually deflates union financial power, it could remake the political map of California: it could affect races for the state legislature that will control the crucial reapportionment of congressional districts following the Census in 2000.

Not just California is at stake. In the 1996 election, the AFL-CIO spent $35 million nationally, most of it in ways that favored Democrats. Now the G.O.P., which tried and failed two years ago to get a bill nearly identical to Prop. 226 through Congress, is hoping that 226 will propel the dues-permission idea across the U.S. At least eight states are considering the same kind of ballot measure. Supporters of 226 say it's a fairness issue. Why should union members have to finance campaigns for candidates or ideas that the workers may not support? In recent years some California unions have backed the controversial initiative to legalize medical marijuana and opposed the popular referendum on illegal aliens. "This is one of those issues, like term limits, racial preferences and tax reform, that can't move through Washington, so it's moving through the states," says Grover Norquist of Americans for Tax Reform.

Ury's idea was getting nowhere until help came from Norquist's group and J. Patrick Rooney, a conservative Indiana insurance executive who had launched a privately funded school-voucher experiment in Indianapolis. Together they provided most of the financing, nearly half a million dollars, for the petition drive that put 226 on the ballot. Then California Governor Pete Wilson signed on. For Wilson, who as mayor of San Diego regularly battled public-employee unions in the 1970s, Prop. 226 also provided the satisfaction of payback to the teachers' union. Over the years, the C.T.A. has squared off against him on school vouchers, statewide-testing standards and class-size reduction. "The most urgent need for 226 was to combat the ability of the teachers' union to kill education reform," he says.

Though his 1996 presidential campaign was a short-lived bust, Wilson is not taking himself out of the running for 2000. A high-profile role on 226 won't do him any harm with party conservatives. He's pushing hard, lobbying conservative donors in Washington and Republican Governors around the country. Chuck Mack, president of the Teamsters Local 70, calls 226 "the most serious attack on labor since they tried to turn California into a right-to-work state in 1958." The unions won that one, but at that time 40% of the state's work force was unionized. Now it's just 16%, and polls show that many union members are backing 226, at least for now. Though polls indicate that support for the measure has dropped from 70% earlier this year to 55% last week, labor knows it has just a little time left to get out its message.

With the exception of Donald Fisher, CEO of Gap, Inc., who has been a prominent donor to the 226 effort, California businesses have been staying out of this fight. To make sure they do, labor has threatened to introduce counter-initiatives that could negatively affect the tax status of corporations that make political contributions. And by some interpretations, Prop. 226 could be used to require corporations to get their stockholders' permission before making political contributions.

Around the U.S., labor and Democrats are taking Prop. 226 very seriously. Bill Clinton has spoken against it. Party leaders are worried that labor's focus on 226 is claiming money that would otherwise go to Democrats in this year's midterm congressional elections. The AFL-CIO has pledged to raise $13 million to fight the initiative. That's nearly half the $28 million it plans to spend on the entire midterm campaign this fall. But if 226 succeeds, the unions may have a lot less to spend in the future.

--Reported by James Carney/Washington and Elaine Lafferty/Los Angeles

With reporting by James Carney/Washington and Elaine Lafferty/Los Angeles