Look for the union label …

In the early 20th century, corrupt railroad barons controlled the Sacramento statehouse and even wrote the laws. Voters got so sick of it they ushered in reforms including the ballot initiative and recall process.

Now, another bunch is spending huge sums, maneuvering legislators into office and secretly ghostwriting the laws—just like the railroad barons. And, just like the railroad barons, this crowd is out entirely for itself. The taxpayers and California can go blow.

If you guessed I’m talking about big labor unions—particularly unions that represent state workers—you must be a serious political junkie. Because the quietly subversive takeover of the Legislature by these unions has gone largely unnoticed over the decades.

Indeed, some media still cover Sacramento as if the state’s business leaders are the big power. As if, by some feat of magic, the largely emasculated Chamber of Commerce still throws its weight around and gets its legislative agenda passed into law.

On January 12, the chamber released its annual wish list for laws it supports. I chuckled, because its agenda will never make it out of Sacramento’s union-controlled committees to the floor of the Legislature. That’s been true for years.

So, I was intrigued to hear Governor Arnold Schwarzenegger’s State of the State address on January 5. He never uttered the phrase “labor union” during his gutsy speech calling for massive reform, but the phrase was hanging over his delivery just the same.

For example: His proposal to institute across-the-board budget cuts during years of revenue shortfalls is not only a good idea; it’s also a threat to the supremacy of government unions. Across-the-board cuts as described by the affable new Department of Finance Director Tom Campbell would mean that government departments, during years of revenue shortfalls, would be likely to institute layoffs in the sacred, full-employment shrine that is Sacramento. Remember, virtually none of California’s 325,000 state workers were laid off during the past five years, despite the $32 billion Gray Davis budget deficit, because no politicos had the nerve to send out pink slips to powerful unions who make or break their political careers. So, we borrowed instead. This is a key issue. Davis frequently announced fake “hiring freezes”—and then kept right on hiring. Journalists were never able to unearth more than a few dozen genuine layoffs of state employees. It’s a scandal, folks.

Schwarzenegger says the $50 billion taxpayers spend annually on schools—far more money per classroom, by the way, than California spent in the supposed 1970s heydays before Proposition 13—should produce much better results. He blames in part the failure to reward top teachers with higher pay or to get rid of bad ones. Unfortunately, thanks to the anti-reformist California Teachers Association, merit pay for teachers is banned—yet it is allowed in Colorado. And because of fierce meddling by unions such as United Teachers Los Angeles, thousands of incompetent “certified” teachers—alcoholics, desk sleepers, window gazers and so on—cannot be fired without years-long legal battles. Los Angeles Unified School District resorts to quietly transferring “lemon teachers” from one unsuspecting school to another, with parents unaware. It took a decade for Los Angeles officials to fire just 10 teachers, yet officials privately tell me that more than 1,000 of them shouldn’t work with children. For practical purposes, California teachers must commit a crime or suffer a breakdown before children are rid of them. Yet, California teachers earn more than most teachers on the globe. That’s why suburban Elk Grove got thousands of applications for a relatively small number of posts: Teaching in California is generally a 10-month occupation with juicy full-time benefits, fat pensions and senior salaries of $65,000 to $70,000.

Schwarzenegger thinks it’s time to unsweeten the incredibly sweet state-worker pensions for new hires as of 2007. Costs have exploded in part because workers are guaranteed a set amount for life no matter how poorly the investment does, and worker pay-ins are fairly paltry. Taxpayers pay the difference. Ken Mandler, editor of Capitol Weekly, a newspaper that specializes in coverage of state-worker salaries and benefits, says that because of huge state matching benefits, “the average state employee working as a secretary will have a pension worth nearly $1 million when they retire after 20 years.” Think of it. Middle-class California taxpayers, struggling to save modest 401(k)s, are forced to help state workers build up cool $1 million pension chests. Mandler says state workers get matching funds “equal to more than 10 times what IBM just offered its employees” this month. Mandler even teaches classes on how to land cushy state jobs. With state employees vastly out-earning regular Californians (the median state pay is now $59,000) these taxpayer-assisted, rich-man pensions are just outrageous.

Elected Democrats will never go along with reforming any of this. The truth is the ruling Democrats don’t fear Schwarzenegger and taxpayers like they fear the wealthy unions who put them in office and who can spend endless sums ousting them from office.

Highly organized civil-service workers, such as the 90,000-member Service Employees International Union Local 1000, can show up on a moment’s notice at any committee hearing in the Capitol, where they sit in matching purple T-shirts and intimidate legislators.

Statewide, only 16.8 percent of California workers belong to a public or private union, according to the federal Bureau of Labor Statistics. Unions are not the key feature of California’s working world. Yet they dominate the dark recesses of the legislative mind.

Assemblywoman Lynn Daucher, a moderate Republican from Brea who holds similar economic views to Schwarzenegger’s, says the special legislative session “will start falling apart in a matter of days.”

Senate President Pro Tem Don Perata seemed to indicate little chance of major reforms anytime soon, telling me he saw several of Schwarzenegger’s proposals as “negotiating positions, and many ideas that will be dealt with at later times.”

I predict the ruling Democrats will replay 2004 and 2003: They’ll deny that they have built a system of uncontrolled “autopilot” spending on social, welfare and other programs. Then, as in 2004 and 2003, they’ll propose 50 to 100 new taxes on Californians.

To understand why Democrats can’t admit that “autopilot” spending is the problem, it’s crucial to note that the enormous social, welfare and other fiefdoms in the budget directly employ tens of thousands of union workers. Each time a program swells, even if the program is a dreadful failure, union membership swells. And so does the union’s grip on the Legislature.

We saw this principle in action last spring, when Democrats killed Assembly Bill 2992, which was written to repeal another law, Senate Bill 1419, written on behalf of the unions to force schools to hire pricey union workers for low-skilled, non-classroom jobs.

The 2002 law is costing public schools an estimated $300 million a year, thanks to state Senator Richard Alarcón of Los Angeles—one of the most hard-line, pro-labor legislators in recent memory—who carried the law for the big unions.

A coalition of appalled Democrat-controlled school boards statewide begged the Democrats to rescind Alarcón’s law, saying $300 million was badly needed for classrooms. But the 240,000-member California School Employees Association (CSEA) union issued the Legislature its marching orders. The Dems buckled.

So, this year, another $300 million is going to dues-paying landscapers and dues-paying bus drivers and not to classrooms. And it’s also fattening the dues chest of the CSEA, which was the whole point of this sad exercise.

Aside from a few courageous ones, elected Dems are under the thumb of huge forces. Each year, they propose more taxes to pay for costly laws, rules and programs that these vast public unions dream up.

It’s no surprise that we’re hearing the first tax ideas already. Lt. Governor Cruz Bustamante recently blamed “tax loopholes” for much of the deficit. Shortly after that, the California Tax Reform Association (CTRA)—an avidly pro-tax, pro-union group—announced that if only a “mismatch” could be corrected between what the taxman should collect and what the taxman does collect, lawmakers would have an extra $17 billion to spend.

Lenny Goldberg, the CTRA’s executive director, insists he just wants to bring California taxes “up-to-date.”

Ah, so that’s the problem.

Goldberg wants to redo Proposition 13 to charge $4 billion extra to business property owners (Bustamante ran for governor on a similar massive tax increase), create a huge $3 billion telecommunications tax, jack up the sales tax, add another $2 billion income-tax surcharge on high earners (who just got whacked with a “millionaire’s tax”), halt tax loopholes and cheating (to get $2 billion—but I doubt it), and surcharge industries another $4 billion for being “polluters”—taxes these big-time job creators already pay (well, aside from those who’ve fled for Nevada, Arizona and Texas).

Schwarzenegger finally seems to grasp that Sacramento Democrats are not free agents but carry the union label. He seems to sense a real struggle ahead. As he said during his State of the State speech, “And we all know what’s going to happen. The special interests will run TV ads calling me cruel and heartless. They will organize protests out in front of the Capitol. They will try to say I don’t understand the consequences of these decisions.”

To me, he sounded very much like a governor mentally and emotionally preparing himself to take on some seriously nasty railroad barons.