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The American Legislative Exchange Council, which backs free-market legislation in the states, has been controversial in part because its membership includes major corporations as well as state legislators. Largely unnoticed has been the influence wielded by a third group of ALEC members: state-based think tanks. Two of those think tanks took center stage at last weekend’s ALEC Task Force Summit in Charlotte.

The Arizona-based Goldwater Institute and the Michigan-based Mackinac Center between them successfully shepherded five model bills through ALEC’s Commerce, Insurance, and Economic Development Task force — all targeting public sector unions.

Goldwater representative Byron Schlomach introduced two bills, one requiring that public employees approve their state employer’s automatic deduction of union dues from paychecks every year. Another would prohibit union officials from taking paid leave from public sector jobs to perform union duties.

Michigan’s Mackinac Center sent labor policy analyst Paul Kersey to introduce three more bills targeting unions. One of those model bills is already Michigan law, requiring public sector unions to make audits of their financial activities public. Another Mackinac proposal would require public sector union members to vote on their union membership every three to five years, and a third would make it easier for public and private employees to decertify their union.

Members of the commerce task force confirmed that the five union bills were approved in Charlotte and will become ALEC model legislation if ALEC’s board of directors does not initiate a formal review of the bills within 30 days. ALEC will then likely encourage its member legislators to introduce the model bills back in their home states. Since its founding in 1973, ALEC has successfully pushed hundreds of state-based laws. According to the ALEC website, legislators introduce nearly 1,000 bills each year that are based on ALEC model legislation, and 20 percent of them become law.

Documents released by the left-leaning group Common Cause ahead of the Charlotte meeting offered an unprecedented look at the ALEC agenda. Amid heightened scrutiny, ALEC restricted press access and shortened the summit to one day. ALEC did not return calls requesting information.

A history of influence

Dozens of state-based think tanks, many of them part of a Heritage Foundation-affiliated umbrella group called the State Policy Network, have long held sway within ALEC.

“A very large proportion of the bills are sponsored by these think tanks,” says Nick Surgey, a legal associate at D.C.-based Common Cause, which claims ALEC is actually a lobbying group, not a charity. “But behind that next layer is another set of unknowns about who is pushing the think tanks’ agenda.”

Some, but not all, of Goldwater and Mackinac’s financial supporters have been revealed. In 2010, the last year for which information is available, the organizations had budgets of approximately $3.5 million each, which have been supported with grants from the Charles Koch Charitable Foundation, the Walton Family Foundation, and the State Policy Network — groups that also fund ALEC.

Goldwater and Mackinac are both part of the State Policy Network, which is headquartered in Arlington, Va., and boasts 59 member organizations across all fifty states. The network was founded in 1992 “at the urging of Ronald Reagan,” according to its website. The policy group is a sponsor of ALEC events and also made grants to 18 free-market organizations in 2010, including $25,000 to the Mackinac Center. In 2008, it gave $50,000 to Mackinac, and $30,000 to Goldwater.

Together, Goldwater and Mackinac draw money from twelve of the same conservative foundations, according to analysis by Media Matters Action Network.

State laboratories

Before the union bills were approved at ALEC’s conference last weekend, some of them were sponsored in the Arizona and Michigan legislatures by ALEC members.

“Arizona is a petri dish for extreme legislation,” says John Loredo, a former House minority leader there.

The Arizona legislature has one of the largest contingents of ALEC legislators in the country. The last eight Arizona Senate presidents have carried the ALEC membership card, including former Sen. Russell Pearce, who sponsored the state’s SB 1070 on immigration, which later became ALEC model legislation and is currently under review by the U.S. Supreme Court.

Phoenix-based Goldwater advocated for a package of bills sponsored by ALEC member Sen. Rick Murphy, R-Glendale, targeting public sector unions in the last legislative session, which ended May 3. The bills included the two introduced by Goldwater at ALEC to prohibit paid union leave and require employees to authorize annually automatic deduction of dues from their paychecks.

None of the bills, though, became law in Arizona. Unions and Goldwater squared off in testimony while the legislature considered the union bills. The think tank’s Nick Dranias said “collective bargaining laws threaten the very foundation of our republic,” in the Senate committee’s hearing on SB 1485, which would have ended bargaining for public employees. The committee agreed, recommending the bill for passage, but it did not come to a vote before the full legislature.

“We believe these bills are just a balancing measure,” said Goldwater President Darcy Olsen. “It doesn’t take away the voice of public employees, it just puts them on a par with the rest of the taxpaying citizens of Arizona.”

A separate bill to restructure hiring and firing practices for public sector workers did become law in May after Gov. Jan Brewer vowed to make it a legislative priority at a Scottsdale ALEC summit in 2011. Sponsored by an ALEC legislator, Rep. Justin Olson, R-Mesa, the law allows state employers to fire public sector employees “at-will,” leaving them no appeals for termination.

Sheri Van Horsen, President of AFSCME Local 3111, said the state’s unions are considering a legal challenge or ballot referendum to overturn the law. Because it exempts public safety unions, Van Horsen argues that it is unconstitutional under the equal protection clause.

Of the three model bills that Mackinac’s Kersey introduced at ALEC, only one has become law in Michigan — a provision requiring every union to post an audit of its financial activity online. The other two bills have not been introduced in the Michigan legislature.

Kersey says his model bill, the “Election Accountability for Municipal Employees Act,” would set up a schedule by which public sector employees vote on unionization every three to five years, and would require a majority of all eligible members — not just voting members — to maintain union representation.

The other bill Kersey introduced as model legislation would alter the requirement that at least 30 percent of workers in a bargaining unit approve a petition to vote on ending union representation. Kersey’s model bill would lower that requirement to 10 percent of a bargaining unit’s members and would apply to public- and private-sector unions.

The Midland-based Mackinac Center has played a central role in pushing the GOP-controlled legislature to outlaw collective bargaining for public unions, supporting Gov. Rick Snyder’s year-old “Emergency Manager” law, which has ended public sector bargaining in several cities where the state has appointed a manager. The emergency manager in Pontiac, Mich., a former Mackinac Center adviser, abrogated city contracts with police and firefighters unions last year.

Mackinac also backed Gov. Snyder’s signing of a law in March to prohibit automatic union dues collection for school employees in the state. Four of Michigan’s public sector unions filed an April lawsuit in federal court to reverse the law, claiming it unfairly singles out school employees’ unions, including the powerful Michigan Education Association. The unions also claim the law is “retribution for political speech.” Gov. Snyder signed the law just days after labor’s announcement of a ballot initiative to enshrine collective bargaining in the state constitution.

Lobbying status

The Mackinac and Goldwater centers have faced challenges from state officials, mirroring liberal groups’ national efforts to hold ALEC accountable for lobbying. Common Cause filed a April 20 whistleblower complaint with the IRS, calling on the free-market group, which files as a 501(c)(3) public charity, to register as a lobbyist and disclose how much it spends advocating legislation.

The state-based think tanks are also under scrutiny for frequent correspondence with legislators and testimony at state capitols, and for drafting model bills like the ones both groups brought to ALEC last weekend.

Arizona’s secretary of state sent Goldwater letters asking the think tank to register last year. “We believe you’re lobbying, you should sign up,” Assistant Secretary of State Jim Drake told The Arizona Republic in January.

“I know people look at us and say this must be coordinated effort,” says Goldwater’s Olsen, “That is not how we operate. We’re not a lobbying organization, we’re not doing guerrilla warfare — we’re a think tank.”

Following the letters from the state, however, Goldwater did register some of its representatives as lobbyists.

Olsen notes that the organization wrote the language for a ballot initiative to outlaw card check and institute secret ballot elections for unions — which passed in 2010. Goldwater’s lawyers have joined Arizona in defending the law against a lawsuit brought by the National Labor Relations Board.

Michigan Democratic Congressman Sander Levin asked the IRS in March to review the Mackinac Center’s advocacy role, and evaluate whether indeed it should retain its tax-exempt, public-charity status — which, under IRS rules, allows only limited lobbying.

Levin referenced a number of e-mails in which Mackinac advisers gave state lawmakers detailed advice on legislation that would cap the state’s health care payments to Michigan public sector employees. The e-mails concluded with a message from Mackinac’s Senior Legislative Analyst Jack McHugh, who wrote to Republican ALEC legislator Tom McMillin that “Our goal is to outlaw government collective bargaining in Michigan.”

IRS officials told Levin’s office they would have a closer look at Mackinac’s tax status. In April, the think tank denied wrongdoing. “We are 100 percent confident that we have complied with all laws pertaining to our 501(c)3 status,” Mackinac’s Michael Jahr told the Lansing-area Daily Press & Argus.

Levin’s letter notes that Mackinac Center answered “no” to the question of whether it had engaged in lobbying on its 2010 filing with the IRS. “I am concerned about the response to this question,” he wrote.

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