The Scofflaw NEA

By Steven Miller
  • Monday, September 27, 2004

If you’ve ever wondered why Nevada taxes keep going up despite the wishes of most Nevadans, a big reason is unreported political money poured into the state by the National Education Association.

Nevada campaign finance laws require that groups organized to affect the outcome of ballot questions register as PACs and report the funds they receive and spend for politics. But for years the NEA has ignored these laws—while spending tax-exempt union dollars on campaigns for higher taxes on Nevadans.

In just the last four years, according to the NEA itself, the union’s so-called “Ballot Measure/Legislative Crises Fund” spent at least $875,000 in the Silver State on ballot measures to increase your taxes.

In 2001 the NEA ballot fund gave $250,000 to its Nevada State Education Association affiliate to fund an NSEA push for an income tax on all non-gaming Nevada businesses. Though the Nevada Supreme Court later found the measure unconstitutional, the NEA could still correctly boast in a memo to union delegates that the initiative campaign “… did give impetus to [the] largest tax increase in state history.”

The next year the NEA ballot fund gave $130,000 to the NSEA for polling that appears to have helped test-market language for the initiative petition circulated in 2003 and then successfully placed on the ballot in 2004.

This year the NEA ballot fund gave almost half a million dollars—$495,000—to pay premium rates to initiative-petition signature gatherers and otherwise support that same “national average” question on this November’s ballot.

According to a May 2004 NEA memo to union delegates, “Funds were disbursed to the ‘Nevadans for National Average’ committee to qualify the measure for the November ballot.” Significantly, “Nevadans for National Average”—a registered Nevada PAC—has also (according to a Friday check of the Secretary of State’s website) ignored state campaign-finance reporting laws.

The NEA’s scofflaw response to Nevada reporting rules is part of a much broader pattern. At the national level, the Internal Revenue Service is auditing the NEA. The investigation began two years ago, after the IRS received thousands of pages of internal NEA documents that explicitly contradict claims the union has made year after year that it spends no union dues on politics.

On this question, the Associated Press reviewed NEA tax filings from 1993 to 1999 and then reported in a series of stories that, notwithstanding union assertions on its tax returns that no union dues were spent on politics, the extensive internal memos showed the union was spending millions of dollars for such activities.

For instance, a July 1999 strategic plan stated the union budgeted $4.9 million for the 2000 election for such things as “organizational partnerships with political parties, campaign committees and political organizations.” Part of the money, the document said, would be spent on a “national political strategy” that involved “candidate recruitment, independent expenditures, early voting and vote-by-mail programs in order to strengthen support for pro-public education candidates and ballot measures.”

Legally the NEA can spend members’ dues on political activity if it desires. But funds so spent are no longer entitled to the union’s federal tax-exemption. Thus when the union and its affiliates evade state and federal political-finance reporting requirements, they also evade the designation of their expenditures as taxable. In effect, the union’s chronic evasion of its reporting responsibilities is a sneaky way of making average taxpayers subsidize the union’s political empire building.

Nevada is not the only state where the NEA intentionally finances its taxable political operations with tax-exempt general revenues.

“In state after state throughout this last election cycle,” says Mark R. Levin, president of the Landmark Legal Foundation, his organization has found that “NEA affiliates appear to have loaned union employees to run and work in campaigns [and] used tax-exempt members’ dues to post political advertising on Web sites in support of specific candidates, hold candidate rallies and hand out campaign literature and signs.” The Landmark foundation is the organization that gave the NEA internal documents to the IRS. Landmark had obtained them through an earlier legal fight.

The NEA itself has admitted, on the record, that 38 percent of its spending is not related to genuine union activities like collective bargaining, contract negotiation and grievances. Independent analysts who have been able to review union financial records estimate that actually 75 percent of all money collected by the union goes to politics.

It’s time that the State of Nevada made the NEA and its affiliates obey the law.

Steven Miller is policy director for the Nevada Policy Research Institute.

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