Monthly Archives: April 2013

Fact-Checking Claims About the Inexplicable Union Exemption in SB 346

Several claims made yesterday by Rep. Geren in the State Affairs committee preceding the vote on SB 346 are not accurate, and need to be corrected before the House votes on this. I’ll update this post later with citations to the video itself.

First, every news account I’ve seen of this says the bill targets 501(c)(4)s. That may be true, but it’s not limited to 501(c)(4)s. The bill applies to any group “not meeting the definition of a political committee” but that engages in $25,000 in political expenditures (unless, of course, it happens to be a union).

In explaining why labor unions are exempt, Geren said a few interesting things.

First, he claimed that unions aren’t a problem because they already disclose contributions. Not true. Unions are organized under IRS Code section 501(c)(5). They file IRS Form 990 once a year, but the list of contributors is not publicly available, even if the union engages in political ads. As this chart from the Campaign Legal Center shows, c5s (unions) are in the same disclosure category as c4s.

When asked why unions are exempt, he said “because we didn’t want them to think we’d be looking into their c5s” (I’m paraphrasing). So basically he’s fine “looking into” everybody else’s finances, but if a union engages in the same political activity, he doesn’t think it’s important to know where the money came from.

Also, if a union set up a separate account, even if it were registered as a 501(c)(4), it would still be exempt by the clear language of the bill. Section 254.281(b) reads:

This subchapter does not apply to a labor organization or any subordinate entity or associated account of a labor organization.

This directly contradicts statements at the hearing that if a union set up a 501(c)(4), it would have to disclose. It would not, because of the language above.

He also claimed that this bill only requires disclosure of contributions made with the intent of helping fund “political expenditures” under the Election Code (which would only be for election ads and not issue ads). If this were true, it would be similar to what is currently the case under federal law (at least pending a ruling in Van Hollen). But again, not true. The bill says donations (even dues payments) are disclosed if “at the time of making the payments, the members or donors have reason to know that their payments may be used to make political contributions or political expenditures or may be commingled with other funds” used for such purposes. The commingling language totally refutes the claim that only donations meant to be used for the ads are disclosed.

UPDATE: Also: contrary to statements at the hearing, unions can accept funds from nonmembers–in fact, there is a long line of Supreme Court cases hashing out how unions can use dues required from nonmembers. See, e.g., Knox v. SEIU Local 100, 132 S. Ct. 2277 (2012). It’s true that nonmembers, and even members, can dissent from the union’s use of their dues funds to the extent they go to political spending. But the fact that a dissenting union member or non-member employee can object to the union’s political spending (and get a refund of any dues payment that went for such spending) does not mean the union can’t accept funds from an outside third party who wants to help fund the union’s political advertisements or activities. And this, afterall, is the real issue. If it’s true (as Craig McDonald testified in the hearing) that political money will find its way to the loophole, the Legislature is about to create a gaping, one-sided loophole that liberals will surely exploit. Conservative groups will have to disclose their donors, but moneyed liberals will be free to fund partisan election ads through union accounts without disclosure.

Last year the Wall Street Journal ran an eye-opening piece (“Political Spending by Unions Far Exceeds Direct Donations,” July 10, 2012) (link updated to accessible article) about the millions in union political spending that has flown under the radar. This is spending from union non-PAC accounts. In other words, the exact accounts the Texas Legislature is excluding from its “disclosure” bill. And the explanation that it’s not important because we already know who the union members are (1) fails to distinguish unions from other groups that would be covered under this law (e.g., we also generally know who the members of the local chamber of commerce are); and (2) fails to account for the possibility of non-members making contributions in a deliberate attempt to skirt the disclosure rule by taking advantage of this exception.

Democrats are going to laugh all the way to the bank if this bill passes without amendment.

*This post has been updated to include the preceding two paragraphs.

SB 346 Approved by State Affairs

State Affairs committee just passed this bill (the constitutional flaws of which are discussed here) 12-0, with no apparent thought as to why unions should be excluded. If you’re reaching out to regulate a type of political spending which should incur donor disclosure, and if unions engage in that spending, then why exclude them from the requirement? Shocked no Republicans on the committee raised this issue.

SB 346 Violates the First Amendment and Favors Labor

There is a bill in the Lege that will burden free speech and give labor unions a leg up on all other political groups in the state.  SB 346 needs to die.  It was passed without much attention through the Senate and is now in the House, and will be considered in a State Affairs hearing Wednesday (in the afternoon).  But as attention has increased so has the controversy. See Jay Root’s article in the Tribune yesterday.

The bill would basically expand the legal definition of “political committee” to capture more groups and require them to report the name, address, and other information with respect to persons who donate more than $1,000 to the group. At first glance, that sounds innocuous. But it is entirely unnecessary given the current definitions in the Election Code.  It would also impose a substantial burden on many nonprofits and chill free speech.

It is totally unnecessary because Texas already has an incredibly broad “political committee” definition.  Any group of two or more persons is a “political committee” if they have “a principal purpose” of accepting political contributions or making political expenditures.  Without diving into the legalese, this means if you solicit contributions from your friends to use toward an election advertisement, you and your friends are already required to report who the money came from and what it paid for.  But the bill reaches out to grab groups that “do not meet the political committee definition.” What is the take-home? If this bill passes, nobody will be able to tell for certain who is regulated, and donations to many nonprofits and membership organizations would be chilled.

But there is a more glaring issue. While nobody can say for sure who is covered, we at least know who isn’t.  Labor unions are specifically excluded.

This line-drawing favoring a single class of speaker in the electoral system is blatantly unconstitutional. The Supreme Court said recently that “the Government may commit a constitutional wrong when by law it identifies certain preferred speakers.”  Citizens United v. FEC, 130 S. Ct. 876, 898-99 (2010).  This is not a new principle; it is fundamental to the First Amendment.  Government cannot pick winners and losers in the political process. Any such legislative line-drawing must be independently justified, even apart from justifying the additional recordkeeping and reporting burden imposed on nonprofits that admittedly are not “political committees” under Texas’s already broad definition. The Lege would have to explain why it had a compelling reason to exclude labor unions. This bill is unconstitutional even without the carve-out; but the carve-out for labor makes it worse. And it’s impossible to explain, given that if any non-political-committees are overtly political, it is certainly labor unions.

Unions are increasingly agitating for Democrats. Want evidence? Watchdogwire reported this month that the local Heights IBEW hosted the first organizational meeting held in Houston by Battleground Texas—the group established by a former Obama campaign operative with the express goal of turning Texas blue. In fact, Battleground Texas apparently has specific plans to work with and through labor unions for its partisan goals. See Williamson County Conservative blog post.

This bill’s unconstitutional line-drawing is a legal problem for sure. It is unconstitutionally vague, it purports to regulate groups that may not be regulated, and it is not appropriately targeted. But it’s also a political problem for conservatives, because the law would favor labor unions over everybody else. It should not move out of committee.