Koch Funneled $1.2 Million to Governors Battling Unions

Koch Industries Inc. and its employees and subsidiaries spent $1.2 million in the last election helping to elect Republican governors who are now trying to take away bargaining rights of state workers.

Republicans Scott Walker of Wisconsin and John Kasich of Ohio, who won election last November with Koch support, are pushing to limit the ability of public-employee unions to negotiate for salaries and benefits. Senate Democrats in Wisconsin walked out in protest, preventing a quorum in the Republican-controlled chamber.

The Koch-backed advocacy group Americans for Prosperity helped organize a rally on Feb. 19, set up a website and today announced a $342,200 ad campaign in support of Walker.

“This is a very well-financed, well-coordinated assault on labor unions,” said Craig Holman, a lobbyist for the Washington-based advocacy group Public Citizen. “If they can break the backs of organized labor, they will have accomplished a great deal toward deregulating the American society.”

Protests in Ohio and Wisconsin spread yesterday as organized labor planned rallies, vigils and press conferences in at least 27 states. Workers in Indiana protested a proposal by Governor Mitch Daniels, a Republican elected in 2008, to curb collective bargaining and House Democrats stayed away from the chamber, blocking action.

Source: Koch Industries Inc. via Bloomberg

Charles Koch, CEO of Koch Industries Inc. Close

Charles Koch, CEO of Koch Industries Inc.

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Source: Koch Industries Inc. via Bloomberg

Charles Koch, CEO of Koch Industries Inc.

Public-employee unions contributed $20.5 million to federal campaigns for the 2010 elections, more than 80 percent of it to Democrats, according to the Center for Responsive Politics, a Washington research organization. In Wisconsin, the American Federation of State, County and Municipal Employees made $83,888 in donations, all to Democrats, according to the National Institute on Money in State Politics, a Helena, Montana-based research group.

Koch Backing

Koch, a closely held energy and chemical company based in Wichita, Kansas, is controlled by the billionaire brothers David and Charles Koch. Along with other corporations, Koch Industries has often opposed organized labor on regulation and free trade, Holman said. Now they see a chance to cripple unions in the name of balancing budgets, Holman said.

The $1.2 million in Koch support for Republican governors includes $1.1 million given to the Republican Governors Association, which spent more than $3.4 million in support of Walker, according to Common Cause, a Washington-based advocacy group that opposes the governor’s proposal.

The RGA yesterday set up a website endorsing Scott and its chairman, Texas Governor Rick Perry, posted a statement calling the Wisconsin chief executive’s actions “a defining moment for our country and the conservative movement.” Perry received $76,000 from Koch for his re-election campaign last year, more than any other candidate, according to the National Institute on Money in State Politics.

Mark Miner, a spokesman for Perry, said Koch backs the governor’s policies. “Governor Perry is a pro-business, job creation governor who believes in low taxes and limited government,” Miner said.

In addition, Koch gave $43,000 directly to Walker, his single largest corporate source; $11,000 to the Wisconsin Republican party; $22,000 to Kasich; and $34,000 to the Ohio Republicans.

Koch also supported the 2008 campaign of Indiana’s Daniels, according to the National Institute on Money in State Politics. The RGA received $25,000 from Koch that year and was the biggest source of campaign cash for Daniels, institute records show.

Wal-Mart Spending

In addition, Americans for Prosperity spent $1.2 million in support of Republican candidates for Congress last year, Federal Election Commission records show. Koch Industries’ federal political action committee contributed $1.3 million to candidates for the 2010 elections, 90 percent of it to Republicans, according to the Center for Responsive Politics.

Wal-Mart Stores Inc., the Bentonville, Arkansas, subject of a campaign by the United Food and Commercial Workers Union, also contributed to the campaigns of Walker and Daniels, and donated more than $340,000 to the Republican Governors Association for the 2010 elections, according to the Internal Revenue Service and the National Institute on Money in State Politics.

“We have a long history of supporting elected officials on both sides of the aisle,” said Lorenzo Lopez, a spokesman for Wal-Mart. “We contribute to candidates who are supportive of issues important to our customers, associates and shareholders.”

Koch Comments

As for Koch Industries, the company “never had discussions with either of these elected officials related to the legislation now under consideration,” said Philip Ellender, president of government and public affairs for Koch Cos. Public Sector LLC, which says it provides legal, government and public affairs services for Koch Industries.

“Koch Industries is pleased to see elected officials take up initiatives that might avert looming fiscal crises at both the state and national level with the aim of spurring job creation and reducing public debt,” Ellender said.

Democratic and Republican governors alike have discussed reducing employee pay and benefits as they address deficits. Florida Governor Rick Scott, a Republican, proposed cutting the number of state employees and making them contribute to their pensions. At the same time, he said he didn’t support taking away collective bargaining rights, guaranteed under his state constitution.

‘Eliminate Collective Bargaining’

“Walker is trying to eliminate collective bargaining,” Scott said yesterday in a radio interview in Tallahassee. “As long as people know what they’re doing, collective bargaining is fine.”

The Florida Republican Party, which received $40,000 from Koch, gave $5.2 million to Scott’s campaign. The RGA gave $130,000.

“New governors got elected promising to focus on jobs, and instead they are settling political scores,” said Lee Saunders, secretary-treasurer of the AFSCME, based in Washington.

Ohio lost more than 600,000 jobs in the last decade, said Rob Nichols, a spokesman for Ohio Governor Kasich.

“We need to reduce the cost of government and make the state economically competitive if we are going to be able create jobs and save Ohio,” Nichols said.

“Simply put, this is about fixing a broken system,” said Mark Jefferson, executive director of the Wisconsin Republican Party. “When the left tries to throw the campaign donations out there, it’s because they know they’ve got a problem on the merits.”

Eddie Vale, a spokesman for the AFL-CIO, the largest U.S. labor federation, said the Wisconsin governor was trying to break unions, not solve a fiscal crisis.

“Taking away your right to belong and bargain with your union, and how you fund your union, is meant to eliminate them,” Vale said. “The workers agreed to all of his concessions on pay and benefits but he’s still insisting on taking away their rights.”

Wisconsin Power Plants

Walker’s proposal also would allow Wisconsin to sell power plants without seeking bids.

“His efforts look suspiciously like payback to his corporate benefactors,” said Common Cause President Bob Edgar, a former Democratic U.S. representative from Pennsylvania.

“The main point of the heating plant provision was to allow the state to start the process of looking at selling off the heating plants,” said Cullen Werwie, a spokesman for Walker. “We have no idea who is going to buy these heating plants, so any speculation as to who will operate these plants, if indeed they are sold, is premature.”

Koch’s businesses in Wisconsin include Flint Hills Resources, a refining and chemical company; Koch Pipeline, which operates a pipeline system in the state; C. Reiss Coal, a supplier of coal used to generate power; and Georgia-Pacific, a tissue maker, according to the company’s website.

Office for Lobbyists

Since 2003, Koch companies have completed more than $32 billion in acquisitions and investments and almost $11 billion in capital expenditures, according to the Koch website.

“We have no interest in purchasing any of the state-owned power plants in Wisconsin,” said Ellender, the Koch Cos. Public Sector president, in an e-mailed statement. “This is a dispute between public-sector unions and democratically elected officials over how best to serve the public interest.”

The company opened an office for its lobbyists in Madison, Wisconsin, near the state capitol, the Capital Times reported yesterday.

To contact the reporter on this story: Jonathan D. Salant in Washington at jsalant@bloomberg.net.

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net.

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