SPECIAL REPORT: Out-of-State Corporate Money Floods Ohio Battle Over Anti-Collective Bargaining Bill

ALSO SEE: Democratic Boundaries: Corporate Cash vs. the 99 Percent.

About 60 people gathered at the AFL-CIO office in downtown Columbus, Ohio, to rally and volunteer their time on a sunny Friday evening in early October. They came from a variety of backgrounds: white and black, urban and rural, young and old. Armed with a phone bank and canvassing clipboards, they participated in a campaign to rally Ohio voters to repeal legislation known as Senate Bill 5. If passed, the law would limit collective bargaining rights on issues like staffing levels for Ohio's 360,000 public workers and require some public workers to pay more in pension and health care costs. The volunteers, dressed in T-shirts and jeans, are labor's foot soldiers in a political battle attracting national attention and political spending. It is a bitter clash of class, ideology and political tactics, pitting the public sector against the private sector, and Ohio's labor movement against a web of Republican front groups that refuse to disclose their campaign finances.

Senate Bill 5 proponents claim the bill will save tax dollars by allowing municipal leaders to make cuts without negotiating with unions and will put public worker's health care and pension costs in line with private-sector workers. However, these aggressive “reforms” targeting the bargaining rights and pocketbooks of teachers, police and firemen don't sit well with Ohio's hearty and traditionally centrist middle class. After Ohio's GOP-controlled legislature passed Senate Bill 5 by a single vote in March, 10,000 volunteers collected an unprecedented 1.3 million signatures to put the law up for a voter's referendum, as allowed by Ohio law. Voters will go to the polls on November 8 and vote “Yes” on state ballot Issue 2 to keep the law, or “No” to cast a veto vote.

The stakes are high for both sides and experts estimate the cost of the Issue 2 campaign could run from $33 million to $40 million, rivaling the cost of the 2010 gubernatorial campaign. If Ohio's public workers lose collective bargaining rights, then unions could lose political influence and momentum in a key swing state. But for Republican Gov. John Kasich, who defeated a Democratic incumbent in the 2010 GOP landslide and quickly championed Senate Bill 5, an embarrassing veto from voters would cast a shadow on the rest of his term and an ambitious agenda focused on tax cuts and privatizing prisons and economic development. A repeal would also disappoint Kasich's legion of out-of-state, big business supporters that spent millions helping elect him.

Kasich is playing defense and the repeal campaign has been ahead in the polls for months. Unions like the American Federation of State, County and Municipal Employees and the AFC-CIO smell blood. Labor has thousands of volunteers on the ground in Ohio, but its fundraising has extended beyond the grassroots. Faced with a Republican opposition raising unlimited – and so far unreported – electioneering funds to convince voters to keep Senate Bill 5 on the books, national union offices contributed a combined $3.7 million to We Are Ohio, labor's major vehicle campaigning for a repeal, which raised nearly $7 million by July. The national AFL-CIO alone contributed $1.5 million.

We Are Ohio and its union backers are disclosing their campaign finances, but Building a Better Ohio, the GOP-linked group spearheading the pro-Senate Bill 5 campaign and running television ads across the state, set up a nonprofit corporation to raise funds and avoid revealing its contributors and finances. The Republican Governors Association (RGA) and out-of-state conservative groups like The Alliance for America's Future are also defending Senate Bill 5 without disclosure.

A Truthout investigation into the political machine defending Kasich and Senate Bill 5, however, reveals how private interests can silently support the controversial legislation through groups like the RGA that funnel corporate cash into state campaigns to promote a broader agenda focused on weakening public-sector unions and privatizing state services.

Money raised across the country is paying for the television advertisements for both sides of Issue 2, mirroring the changing landscape of elections across the country. The Supreme Court's 2010 ruling on Citizens United vs. Federal Elections Commission and subsequent rulings opened the doors for corporations and unions to directly spend unlimited amounts on political advocacy and electioneering, which allowed the now infamous “Super PACs” (political action committee) like Karl Rove's American Crossroads to spend millions on campaign ads benefiting Republican candidates in 2010. Governor Kasich was one such candidate. A former Lehman Brothers banker, Fox News personality and American Legislative Exchange Council (ALEC) alumni, Kasich's campaign enjoyed support from private interests nationwide.

Fueled in part by a $1 million donation from Rupert Murdoch's News Corp. that matched a $1 million donation by conservative billionaire David Koch of Koch brothers fame, the RGA spent millions of dollars on TV ads and mailers to help elect Kasich and Gov. Scott Walker in Wisconsin. Both governors quickly turned around and pushed legislation targeting public-sector workers that inspired massive protests in Madison and the ongoing veto effort in Ohio.

The RGA spent more than $11 million supporting Kasich and called itself a “key investor” in his victory. With Kasich's approval rating hovering around 40 percent and his landmark Senate Bill 5 up for a citizens' referendum, the RGA has once again swooped into Ohio to protect its investment.

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The RGA is using Make Ohio Great, a nonprofit group, to run ads featuring Kasich discussing elements of Senate Bill 5, without explicitly mentioning the ballot initiative. This ensures that the group can avoid revealing its finances to state officials. Make Ohio Great and the RGA share the same address in Washington, DC, but the RGA is also keeping its finances in the dark.

Building a Better Ohio has told reporters it will identify its donors, but not donation amounts, in late October, but if major donors are its own corporate nonprofit, front groups like Make Ohio Great and the nonprofit front for the Ohio Chamber of Commerce, which pledged to defend Senate Bill 5, then voters will know next to nothing about who is funding the Republican campaign. Neither the RGA nor Building a Better Ohio responded to several requests for comment from Truthout.

According to its own records of Ohio's media markets, We Are Ohio told media outlets earlier this month that Building a Better Ohio and Make Ohio Great spent $2.8 million and $1.2 million on television ads respectively. We Are Ohio outspent both with $5.4 million, but a spokesperson told Truthout to “expect to see the floodgates open up from out-of-state special interests as we get closer and closer to election day.”

Ohio law requires private companies to report contributions to electioneering groups and five big Ohio businesses have reported giving a total of $235,000 to Building a Better Ohio. The source of the rest of the funding for the RGA's and Building a Better Ohio's campaigning remain a mystery. By examining records from the campaign to elect Governor Kasich, however, it's possible to shine a light on the silent defenders of his controversial legislation.

RGA and ALEC

Kasich is an alumnus of ALEC, a group that brings together state legislators and corporate leaders from companies like Bayer, Pfizer, Wal-Mart, Exxon-Mobile and Koch Industries to draft model bills for state legislators seeking to advance a conservative, pro-business agenda. The Center for Media and Democracy recently exposed 800 ALEC model bills, revealing an effort to weaken unions, cut environmental regulations and privatize state services. Kasich and Republican legislators that supported Senate Bill 5 received $563,000 in campaign contributions from ALEC corporations in 2010, according to watchdog group Common Cause, but that number is much bigger when factoring in the RGA.

Consider the Coca-Cola Company and Wal-Mart. Both are ALEC members with a record of opposing unions. During the 2010 election, Coca-Cola donated $7,000 directly to Kasich's campaign and $10,000 to his transition fund, but the company contributed $75,000 to the RGA. Wal-Mart didn't give Kasich's campaign any money, but donated $90,000 to the RGA. According to electioneering records, the RGA used the contributions to pay Strategic Perceptions and Target Enterprises, two media placement companies, for services and attack ads against Democratic incumbent Gov. Ted Strickland.

Coca-Cola and Wal-Mart joined dozens of other private companies from far beyond Ohio in contributing a total of $5 million to a media campaign attacking Strickland and supporting Kasich, according to campaign records. Nearly $950,000 came from more than two dozen private health care companies, ranging from pharmaceutical firms to companies offering hospice services to “employee health assistance” companies. Many of the donations ranged from $10,000 to $50,000, but ALEC member Pfizer gave $75,000 and Endo Pharmaceuticals gave $90,000.

Most of these health care companies do business outside of Ohio, so why did they help the RGA attack a Democratic governor there? According to We Are Ohio spokesperson Melissa Fazekas, both Kasich and Senate Bill 5 fit into a broader agenda.

“Senate Bill 5 makes it easier for state services to be privatized,” Fazekas told Truthout. “It keeps public employees from being able to come to the table and talk about the privatization of services, even if they could continue to do the job cheaper than a private industry … Gov. Kasich has already wanted to privatize prisons, the turnpike and the lottery. There is no reason not to believe this trend won't continue.”

Soon after the 2010 elections, RGA members made it clear that public employees and unions were going to be the GOP's next state-level targets, according to media reports. The attack on public employees may have gone too far in states like Wisconsin and Ohio, but the RGA and its corporate donors spent millions to elect Kasich, and now the RGA must protect its investment.

How SPUN! Is Spinning Ohio

In “Reasonable,” the main television ad paid for by the RGA's Make Ohio Great, Governor Kasich appears in casual dress outside a Ohio farm explaining why Senate Bill 5 makes “reasonable reforms” that are in line with the values of Ohio families.

“In these tough times, many Ohio families have tightened their belts. Government has got to do the same,” Kasich says amid images of firefighters and schoolchildren. “We're simply asking our government employees to pay their fair share, 10 percent of their pension and 15 percent of their health insurance – something most other Ohioans already do.”

No matter that the ad fails to explicitly mention Senate Bill 5 so Make Ohio Great can hide its finances, or that progressive groups have called out Kasich for giving his own staff members pay increases. With his approval numbers falling, the ad signals to voters that Senate Bill 5 is appropriate in tough economic times and is not an attack on Ohio's middle class, as opponents claim.

Kasich's ties to a shadowy PAC called Stop Public Unions NOW! (SPUN!), however, suggest his fundraisers may be telling donors a different story.

On March 16, just two weeks before Senate Bill 5 was made law, (SPUN!) officially entered Super PAC territory when it reported to the Federal Election Commission (FEC) its intention to make independent expenditures and raise unlimited funds. The treasurer of SPUN! is William Black, founder and manager of Oxford Communications LLC, an Arlington, Virginia-based firm that “specializes in direct marketing, fundraising and constituent contact” for conservative groups and touts its work for clients like the National Republican Congressional Committee and Governor Kasich.

On March 19, three days after Black registered SPUN! with the FEC, Kasich's campaign committee paid Oxford Communications $7,633 for “finance consulting,” according to campaign filings. On June 3, a few days after Issue 2 was placed on the ballot, Oxford Communications received $25,617 from Kasich's committee. In all, Kasich's campaign committee has paid Oxford Communications more than $70,000 for “finance consulting” since December 2010 and $566,366 since 2009.

SPUN!'s latest report to the FEC dates back to June 30, about two months before the Issue 2 referendum caught national attention. By that date, SPUN! had raised $10,700 and spent nearly $9,000, much of which went to media and marketing firms, including a database and direct marketing firm in Ohio, according to FEC documents. SPUN! only disclosed one donor, Oxford Communications LLC, which contributed $1,400. As SPUN! does not intend to endorse any federal candidates and instead rally against public unions, it is unlikely that any of its contributors will be revealed in the future.

The full impact SPUN! may have on the PR battle in Ohio remains to be seen, but its mere presence and political connections are indicative of a broader Republican agenda that goes beyond asking public employees to “pay their fair share.” SPUN! was launched as newly elected Republicans in the battleground states of Ohio, Wisconsin, Iowa and Michigan began targeting public unions, and the PAC could provide wealthy donors from across the country an easy way to spend on state-level debates.

Other out-of-state groups defending Senate Bill 5 are more visible than SPUN!. Americans for Prosperity, a conservative group funded in part by the Koch brothers, has held town halls across Ohio to convince voters that Senate Bill 5 is good for Ohio. The Arlington, Virginia-based Alliance for America's Future, founded by a former Ohio GOP operative and former Vice President Dick Cheney's daughter Mary Cheney, is sending out millions of mailers in support of Senate Bill 5, according to media reports.

Without financial disclosure, it's difficult to quantify the impact of the in- and out-of-state groups campaigning for Senate Bill 5. Kasich and Senate Bill 5 are still down in the polls, but the gap has closed as secret campaign funds began pouring into Ohio. Ohioans' support for a repeal dropped from 56 percent in July to 51 percent on September 27, with more voters undecided, according to a Quinnipiac University poll. But labor activists say they have something the Republicans do not and it's not just millions of dollars in out-of-state money.

People Power

At the AFL-CIO hall in Columbus, the volunteers canvassing and making calls to voters were in good spirits. They laughed together and shook hands, sharing jokes and stories from campaigns past. They ate pizza and hot dogs, preparing to make calls and knock on doors to talk with voters one by one. No one seemed phased by the idea that their efforts could be dwarfed by contributions from the wealthy and powerful.

“We'll never have the money to compete with them and they will always have money to their advantage,” said Glen Skeen, a labor activist and telecommunications worker in the private sector who was volunteering as a canvasser. “I think this gives us a chance to use our only real strength, which is face-to-face communication and getting out and talking to folks who work for a living … we'll never outspend them, but we can outwork them.”

Grassroots momentum only continued to build after thousands of volunteers collected a million signatures to put Senate Bill 5 on the ballot. Union leaders point to the massive volunteer effort as proof that a broad, grassroots campaign to veto Senate Bill 5 has invigorated the labor movement in Ohio and united private- and public-sector workers. “Obviously, this is a direct attack on public sector workers, but private sector workers recognize the fact that this is just the first move towards attacking collective bargaining in the private sector,” AFL-CIO spokesman Mike Gillis said as phone bank volunteers made calls in the union hall. “They don't really have any illusions that they aren't going to be next.”

Gillis said Building a Better Ohio and Kasich's other allies do not enjoy the same kind of support. They use stock photos in their ads, he said, while We Are Ohio features the firefighters, teachers and nurses who have united to fight Senate Bill 5.

Kris Harsh, an organizer with the progressive group Stand Up For Ohio, has been organizing rallies and events promoting a repeal for months. Earlier this year, he helped organize a 1,000-person march on Kasich's house outside of Columbus.

“A lot of teachers came out, a lot of the students came out with signs saying 'I'm here, I'm marching to support my teachers,'” Hirsh said of the protest. “The most interesting thing about that march was that the police who cleared the road for us were thanking us along the way for doing that. They had to obviously keep the order … but the police were more than happy to see us there.”

Those campaigning for Senate Bill 5 have not revealed their donors or finances and never responded to requests for comment from Truthout. But the campaign to repeal Senate Bill 5 has been clear about who its supporters are: unions and everyday Ohioans who support their public teachers, cops, firefighters and workers. Regardless of the results of the November 8 vote on Issue 2, middle-class Ohioans and the state's labor movement will have gained true common ground, building much-needed solidarity to confront the battles to come.