A pricey campaign all about the money 

click to enlarge The mighty California Teachers Association is not excited about Proposition 32, which it regards as an effort to muzzle its voice. - COURTESY ART
  • Courtesy art
  • The mighty California Teachers Association is not excited about Proposition 32, which it regards as an effort to muzzle its voice.

Proposition 32 on November’s ballot would prohibit unions and corporations from using money deducted from employee paychecks for state and local “political purposes” broadly defined as giving money to candidates, candidate campaigns or independent expenditure committees.

According to the Legislative Analyst’s Office, the proposition also “prohibits government contractors (including public sector labor unions with collective bargaining contracts) from making contributions to local officials who play a role in awarding their contracts.”

In the special statewide election of 2005, Californians defeated a similar proposition by 500,000 votes. Back then, opponents spent $54.1 million and proponents only spent $5.8 million. Billionaire Sheldon Adelson gave $100,000 to the effort. So far this time, we have $3.5 million on the “yes” side and $8.2 million on the “no” side.

California Watch keeps a list of the 50 top spenders on state political campaigns. The California Teachers Association leads the pack, having spent $118 million dollars between 2001 and 2011, $46 million more than the number two spender. Thirteen other groups on the list are unions.

A recent online poll by the California Business Roundtable and the Pepperdine School of Public Policy shows 60 percent favoring the proposition, including 23 percent “strongly” in favor. Smarting from a decisive defeat in the Wisconsin recall, unions know they are in the fight of their lives. One union website calls Prop. 32 “The Death Star for Unions.” They will spend accordingly.

For the campaign in favor of Prop. 32, Thomas Siebel has given $500,000 and Charles Munger, Jr. — brother of Molly Munger, who is bankrolling Prop. 38 on November’s ballot — has given more than $350,000. Some $225,000 appears to be from a leftover warchest supporting the 2005 measure.

This race will get far more heated as Election Day nears but, in the meantime, we voters can watch with amusement as either side collects truckloads of contributions for a campaign about just such truckloads.

 

Municipal defaults could cost us all

 

This down financial environment has taken the stigma out of having a bad credit score. so So local governments have basically stopped paying their JCrew credit cards in order just to keep the lights on. 

Many of us have been there.

Moody’s credit rating agency just issued a report on what it deems a disturbing trend: municipalities selectively choosing not to pay bond debt. This “unwillingness” to pay certain debts is a related, but different animal from an “inability” to pay because there is no more cash.

According to the report, during the last year “we have seen a break in that history with some distressed municipalities selectively defaulting on contingent liabilities while staying current on their general obligation debt.” Stockton is already on the list and San Bernardino is on the way. 

The kinds of debt that are most vulnerable to default are “nonessential projects” like sports arenas, and projects that are supposed to be self-sufficient but are backed by a government guarantee. Of course, if municipal bonds lose their status as airtight investments, interest rates will go up at a time when few cities can afford to pay the additional amount.

Welcome to the real world.

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Melissa Griffin

Melissa Griffin

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