AFL-CIO Must Report Political Spending

U.S. District Court Judge Gladys Kessler January 23 exempted most major unions from complying with new financial disclosure rules during this presidential election year. Under her ruling, however, the AFL-CIO must report for this year.

Kessler’s ruling means most union bosses will be able to spend their members’ dues for political purposes this year without having to disclose exactly what they did with the money.

Kessler did affirm the Bush Administration’s new disclosure rules, despite the AFL-CIO’s demand that they be overturned. But she said that unions will not have to abide by them until their first fiscal year starting on or after July 1, 2004. For most unions, whose fiscal years begin on January 1, that pushes the disclosure deadline past the election.

But not for the AFL-CIO, whose fiscal year begins on July 1.

Kessler said the unions would suffer “irreparable harm” if they were not given more time to prepare for the new requirements. Labor Secretary Elaine Chao had issued the final rule on the requirements Oct. 9, 2003, and they were scheduled to go into effect January 1. Reports for 2004, however, would not have been due until March 31, 2005.

The upgraded disclosure form, called LM-2, makes union finances — including their political expenditures–somewhat more transparent, though not nearly as much as many conservatives would like (see “Labor Department Moves Against Union Corruption”)

After Kessler issued an initial ruling in December delaying application of the rules, Labor filed a motion asking her to apply them to unions whose fiscal years begin on July 1 or later–which she granted.

It is hoped that the new disclosure rules will inhibit the sort of corruption discovered in the Washington, D.C., Teachers Union. Barbara Bullock, the former president of that union, was sentenced to nine years in prison on Jan. 31, 2004, for embezzling $2.5 million in dues over six years.

Unions with annual revenues of over $250,000 will be required to fill out the new LM-2 form. Despite its improvements, it lumps together in one broad category expenditures for lobbying and political activities. Also, aggregate payments under $5,000 to one contractor need not be reported, and no independent audits are required as they are for corporations.

“We believe this is an important step toward transparency,” said a Labor official.