California’s unions have built a $1B taxpayer-funded machine

California will not stop taxing its citizens. The state slaps a 63-cent fee on every gallon of gas. Sales taxes exceed 10% in some cities. The state’s highest earners pay a double-digit marginal rate to Sacramento on top of what they owe the feds.

One group, more than any other, has cashed in on this arrangement: California’s public-sector unions. For them, higher taxes are good business. More taxes means more state workers, which means more union members, more dues, and more power for union bosses. The union bosses, in turn, keep the dollars flowing, agitating for more tax hikes, more spending, and more state workers.

How powerful are California’s public-sector unions? In the calendar or fiscal year ending in 2024, 10 of the largest California-based unions with public-sector members collectively raked in more than $1 billion in dues and fees.

Many of these unions spend at least some of their revenues on lobbying. State politicians, playing their part in the scheme, devote more taxpayer resources to the public sector, inching California toward the kind of soft socialism that its leaders have long desired — no armed revolution necessary.

In the private sector, unions negotiate against a corporation, whose executives have skin in the game. In the public sector, by contrast, unions negotiate against the state, which is spending other people’s money.

In California, public-sector unions have exploited this dynamic to create a feedback loop that has made them the most powerful machine in state politics.

The state’s 10 most powerful unions have more than 1 million members. The unions’ combined membership equates to at least 6% of the state’s 2024 presidential-election voters and at least 29% of the state’s 2024 Democratic primary voters — more than enough to sway a statewide contest.

Those members pay annual dues. Some of the unions, in turn, send money to Democrats. And lobbying is another way that these unions can throw their weight around. Several unions employ an army of in-house “political organizers” who serve the unions’ political interests, day in and day out.

The unions don’t have to spend much money to see a return on investment. In 2024, the California Teachers Association spent $2.1 million to lobby for a $10 billion school construction bond. It passed, and while the CTA doesn’t pocket the money, new schools mean more education funding for teacher and staff salaries and hiring — a win for the unions, at an estimated cost of $18 billion, after bond interest, to taxpayers.

The final leg of the unions’ feedback loop is agitating for new taxes. SEIU’s United Health Care Workers–West (UHW) sponsored Proposition 40, the so-called “billionaire tax,” which would levy a 5% tax on the assets of all California billionaires. Most proceeds from the tax would flow to health care services, including Medi-Cal — a program that funds hospitals and other settings where UHW can harvest workers.

The bill for the union machine’s activities is coming due in Sacramento. California’s near-term budget balance depends on $20 billion in reserve withdrawals and suspended deposits and another $4 billion in borrowing. The Newsom administration projected a $14 billion structural deficit in 2026-27. The unions’ answer to every sign of fiscal limits is the same: Find more revenue.

Pensions carry costs decades into the future. California’s state and local retirement systems have more than $265 billion in estimated unfunded pension liabilities, according to the Reason Foundation.

California is approaching a tipping point. The population benefiting directly from government spending is poised to grow faster than the private economy expected to finance it. 

California’s unions built this power one payroll deduction, contract, training session, regulation and ballot measure at a time. Private enterprise has no comparable permanent organization. The union machine needs to win only periodically to lock in for good another program, tax, employment category or spending commitment, with each victory unlocking more power and resources. On the other side, the machine’s opponents must mobilize and win every time just to keep what they already have.

The technology sector is California’s last private power center with the wealth and independence to resist the union machine. As the state’s own nonpartisan Legislative Analyst’s Office has reminded the public, California’s budget partly hinges on fortunes generated by Silicon Valley.

That’s why the wealth tax is the final wake-up call for California’s technology sector — the final power base the unions have not captured. Unless private-sector workers begin to vote, spend and organize with the same discipline, California’s socialist revolution by other means will continue doing what it was designed to do: turn public money into political power, political power into still more public money, and replicate the model across the nation — with no end in sight.

Christopher F. Rufo is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and the author of America’s Cultural Revolution. Kenneth Schrupp is an investigative reporter at City Journal.

Download The California Post App, follow us on social, and subscribe to our newsletters