Unions Rule – Business Falters

Joel Fox
Editor of Fox & Hounds and President of the Small Business Action Committee

The public employee unions showed great muscle in yesterday’s election kicking away Proposition 32’s political contribution reform, helping Governor Brown win the Proposition 30 tax increase, and perhaps, helping Democrats gain two-thirds majorities in both houses of the legislature. Meanwhile, the business community failed to engage for the most part in countering the unions’ effort on the ballot measures and may likely have been unsuccessful in stopping the Democrats from gaining the two-thirds legislative advantage.

Proposition 32 was defeated by over 12-percentage points, 43.8% Yes to 56.2% No. The margin was larger than the two previous attempts to establish a payroll protection measure, 1998’s Prop 226 lost by 6.5%; 2005’s Prop 75 lost by 7%.

The union ground game and get out the vote campaign pushed the tax increase over the top. Polls showed a close race all along with internal polls indicating a 50/50 race with a trend heading toward the Yes side. The massive ground game and the last minute heavy media buy, especially focused in the Los Angeles area, pushed the measure to around 54%.

A big part of the union muscle was the amount of money poured into the campaigns. The No side spent somewhere between $60-$70 million on Proposition 32. The Yes on Proposition 30 campaign spent in the $50 million dollar range, outspending opponents 4 to 1 on the tax increase measure.

Meanwhile, the business community refused to engage on these two measures. Members of the business community often expressed the notion that the union control of Sacramento must be altered. Many also objected to the tax plan. Company executives who signed checks to support Prop 30 admitted they would vote against it because it didn’t solve California’s tax structure problem. Yet, they refused to openly oppose the governor and the unions.

How that strategy will play will be tested if the Democrats capture two-thirds vote in both houses. Some businesses will remind the governor of their support when new regulations, the elimination of tax credits, and new tax increases come popping up in the legislature, as they surely will.

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