SACRAMENTO, CA - The California budget passed on time and without new taxes, but California taxpayers pleased with this development should know that, once again, they are paying the bills for union propaganda, activism, and even partisan politics.

When he signed the budget on June 30, Governor Arnold Schwarzenegger failed to veto $6 million, inserted by Democrats, for a Labor Institute at the University of California. The Labor Institute was created at the behest of the California Labor Federation in 2000 with a $6 million appropriation, and received a total of $22.8 million in direct taxpayer funding from 2000 to 2005.

The Labor Institute brought together former union organizers and leftist academics at the UC Berkeley and UCLA campuses to operate as what observers described as a "union think tank,'' overseen by state union bosses who sat on the Governing Council and Advisory Board. At one point more than 25 people were working directly for the Labor Institute, which since 2000 has produced dozens of biased studies in support of union-backed state and local legislation -- and timed the media release of these studies to just before key votes. These studies attacked the employment practices of businesses and individual corporations in almost every sector of the economy.

While camouflaging itself as a neutral, scholarly and academic program, the Labor Institute provides biased media spin during labor disputes between unions and businesses. It convened training seminars for union organizers and funded summer internships for college students to organize in conjunction with unions. What the Labor Institute called "research" was merely anti-business propaganda. The Labor Institute also promoted a biased version of labor history to be taught in California public schools. The institute compromised the image of the University of California by producing shoddy, amateurish work under the university name.

Legitimate think tanks do not engage in partisan politics. The Labor Institute, however, trained union activists to fight the recall of Gray Davis, on whose watch the institute began. Shortly after ousting Davis, Governor Schwarzenegger struck $2 million from the Labor Institute as part of mid-year budget revisions. Although his proposed 2004-05 budget eliminated all funding from the program, the Governor ended up signing a budget that included $3.8 million for the Labor Institute.

The governor vetoed the full $3.8 million intended for the program in the 2005-06 budget. Yet the program would not go away. According to information that Associated Builders and Contractors of California obtained in May through a Public Records Act request, the University of California still managed to find total funding of $2,633,615 for "Labor Research Programs'' in 2005-06, despite the lack of direct appropriations. Documents show that the University of California's Labor Research Programs received $1,383,615 as a permanent budget from the University in 2005-06 and an additional $1,250,000 in temporary funding.

The $1.25 million in temporary funding was "redirected from research programs that were also initiated as legislative priorities and have received large amounts of State funds in the past.'' Apparently the University of California, also under fire in an executive pay scandal, has extra money sitting around to perpetuate programs that lose their state funding.

The governor failed to veto funding for a program worthy of elimination in a state with a budget deficit of more than $4 billion. The UC Labor Institute now enjoys a fresh $6 million in taxpayer dollars to harass California business, concoct bogus studies, conduct union activism, and engage in partisan politics. Unions have every right to do all that, of course, and may even call their institute a think tank. But the unions themselves, not California taxpayers, should pay the bills.

Kevin Dayton is Senior Fellow in Labor Union Studies at the Pacific Research Institute. He can be reached via email at dayton@abc-cal.org