Study finds $565 million spent on lobbying in the states in 2000

Introduction

Lobbyists in 34 states spent $565 million wining, dining and influencing state legislators and members of the executive branch in 2000, according to “The Fourth Branch,” a new study by the Center for Public Integrity.

The study was compiled in conjunction with the release of Capitol Offenders: How Private Interests Govern Our States, the Center’s new book examining ethics in all 50 state legislatures.

The expenditure totals in “The Fourth Branch” are based on reports from 34 states. Fifteen states do not provide annual totals for lobbying expenditures, and one state, Tennessee, does not require lobbyists or their employers to report any type of expenditure.

Of the 34 states that do provide annual expenditure data for lobbyists, 11 do not require lobbyists, or their employers, to include the amount of their compensation when reporting their spending.

Thus, the $565 million figure is far lower than the actual amount of money spent on lobbying state governments.

Larry Sabato, political scientist at the University of Virginia and founder of its Center for Governmental Studies, said consulting fees charged by lobbyists are usually the bulk of a lobby shop’s expenditures. “It’s an impressive enough number right there,” he said, even without compensation included in those 11 states. “It’s a lucrative business. The fees that they pull in are just incredible.”

Sabato calls state lobbying a “growth industry” due to the continuing shift of legislative responsibility from the federal government to the states that began in the 1970s.

Beltway lobbyists are often the target of public scorn and skepticism, but many Americans fail to realize that the stakes are just as high in the nation’s statehouses where ethics rules are often much looser than in Congress. State legislators are the key decision-makers on dozens of key issues that affect Americans, including public safety, healthcare, education and the environment.

Lobbyists typically have greater influence in the states, where their targets are usually part-time, often under-paid legislators with little staff help.

How the states stack up

Of the 22 states that reported total expenditures and salaries, California by far led the pack. Lobbyists in 2000 spent $180 million lobbying the state’s government. New York was a distant second with $66.3 million, Massachusetts third at $47.7 million, Pennsylvania fourth with $46.7 million and Washington state rounded out the top five with $31.3 million.

Conspicuously absent from the top of the list are several very large states that do not require the reporting of compensation paid to individual lobbyists, including Florida, Illinois and Ohio. Texas requires lobbyists to report compensation; however, the state does not include it in total expenditures because it gets disclosed on a separate form. The other states that do not require the reporting of salaries are Georgia, Kansas, Louisiana, Idaho, West Virginia, Utah and Wyoming. (Nevada does not require the reporting of salaries; in fact, when the legislature is not in session—which is every even-numbered year—lobbyists aren’t required to report any of their expenditures.)

Fourteen states don’t calculate totals at all. They are Alabama, Arkansas, Colorado, Delaware, Iowa, Michigan, Missouri, New Hampshire, New Mexico, North Carolina, North Dakota, Oklahoma, Rhode Island, and South Dakota.

In addition to calculating total expenditures, the Center also created a database of every special interest registered to lobby in any of the 50 states. A total of 36,959 businesses, associations and interest groups are registered to lobby in the 50 states, a ratio of one lawmaker per every five lobby groups, the Center discovered.

The top five on that list is again led by California (2,324). Second is Texas (2,119), third is Florida (1,665), fourth is Illinois (1,594) and fifth is Michigan (1,575). The Center counted groups registered to employ lobbyists – the total number of lobbyists is actually much higher.

Of those entities, the most prevalent industry represented is insurance with 2,269 businesses or associations registered at the state level. Health services is second, with 1,870; followed by education (1,859); local government (1,481) and health professionals (1,375). The insurance business topped the list by a wide margin. Why?

“I think a quick easy answer is it’s a state regulated industry,” said Gretchen C. Schaefer, a spokeswoman for the American Insurance Association. The McCarran-Ferguson Act, passed in the 1940s by Congress, left regulation of the industry largely in the hands of the states.

The American Insurance Association, the leading property and casualty insurance trade organization in the nation, was registered in 48 states at the time the Center collected its lobbying information.

“Not only do we have proactive efforts to work on getting proposed legislation, but there’s an awful lot of time spent killing bills that are bad. It’s a very complex industry,” she said. “A lot of our lobbying time is often spent educating the legislators themselves.”

A snapshot of industry influence

In early 2000, the Center obtained lists of lobbyists from each of the 50 states. Researchers sifted through thousands of pages of paper records and extracted the 36,959 businesses or organizations that employ lobbyists (organizations registered in multiple states are counted more than once). Then, they spent six months researching those businesses to determine the type of work they do. While the data does not count total lobbyists, it does provide a snapshot of industry lobbying activity. The industry breakdowns allow for state-to-state comparisons.

Larger states tend to have more lobbying organizations than smaller states, naturally enough, and industry lobbyists tend to be concentrated in the states where the businesses they represent are most active. For example, heavily wooded Washington has more forestry lobbyists than any other state. Florida, with its aging population, leads the nation in health care lobbying. Coal-rich West Virginia, where environmentalists decry the practice of knocking down mountains to expose coal seams, has more mining lobbyists than any other state. Texas boasts 111 lobbying organizations for the oil and gas industry, the most in the nation. The state also leads the pack in chemical-manufacturing and waste management lobbyists, followed closely by California and New Jersey.

Some concentrations aren’t so intuitive. Texas, by a 2-to-1 margin, registers more insurance lobbying organizations than any other state. There are 222 insurance companies and associations registered to lobby in Texas, or more than one per legislator. Illinois is practically overrun with lawyers. Eighty-three legal organizations or firms are registered to lobby. California has more lobbying interests than any other state, but of particular interest is the number of lobbyists representing Native American interests. There are more tribal organizations registered to lobby in that state than in any other. A controversy over whether the state should rein in the number of casinos on reservations explains part of their interest in influencing the legislature. California also leads the nation in television, movie and entertainment industry lobbyists.

Players in the legislative process

The lobbying corps in statehouses across the country does more than persuade legislators to see things their way. They are a basic element in the lawmaking process itself. In many states, part-time legislators with limited staffs simply do not have the time to become intimately familiar with every piece of legislation that passes their way.

“To make us more effective, we’ve got to have more staff…to decrease the influence of lobbyists. We need to have people who can help us do research,” said Indiana Sen. Greg Server in Capitol Offenders.

Server spoke from experience. He told the Center that, when faced with a technically complex telecommunications bill, he had to rely on lobbyists to help him understand it, and to help him cast his vote. “It comes down to this,” Server said, “‘Who do you trust the most?'”

Bernie Horn, policy director for the Center for Policy Alternatives, a progressive think tank that works on state issues, agrees. State legislators are “underpaid, understaffed and overwhelmed with work,” Horn said. Their lack of resources makes them vulnerable.

“State legislators as a whole pass 75 times more legislation than Congress,” Horn said. “They’re susceptible to influence even when they’re well meaning.”

Lobbying at the state level is quite a different matter than lobbying at the federal level. It is a tall order to keep track of what amounts to 50 different mini-congresses across the nation. But to smart companies, it is an advantage to be exploited: What they cannot achieve at the federal level, they can achieve incrementally by targeted lobbying campaigns at the state level.

For example, the trial lawyer-friendly Clinton administration vetoed “tort reform.” The legislation had been backed by the insurance industry—which foots the bill for expensive product liability, auto, and other litigation—and other businesses. Tort reform makes it more difficult for people to sue when they’ve been harmed and limits damages when they win. While the measure died with a stroke of Bill Clinton’s pen, similar bills have met with great success in the nation’s statehouses, particularly in Texas, where then-Gov. George W. Bush made passing such a bill a legislative emergency.

State lobbying interests have national reach

Like the insurance industry, many other companies that do business nationwide are well aware of the fact that they need a presence in state legislatures. According to the Center’s study, a total of 51 companies or interests are registered to lobby in 25 states or more. The majority of them—represent four industries: insurance, pharmaceuticals, tobacco and alcoholic beverages.

Twelve insurance-related interests—companies and trade groups—were registered to lobby in at least half the states. Pharmaceutical makers have 10 companies or trade groups in this category. Tobacco and the alcoholic beverage industry round out the most active lobbying industries with six companies and three companies, respectively, registered to hire lobbyists in at least 25 states.

Anheuser-Busch Companies Inc. is a good example. The giant brewery is registered to lobby in all 50 states. The company’s interests go beyond the making of beer and include everything from adventure parks to turf farming and metalized paper label printing.

As for the future, there is strong evidence to suggest state-level lobbyists will become even more influential in the coming years, according to Sabato of the University of Virginia. Many legislators are being forced out by term limits and are being replaced by men and women who don’t possess the same political savvy.

“Many of these lobbyists are well trained and have been around sometimes for decades,” he said. “I always look to see in a system whether there is institutional memory. If it’s [within] the legislators, they’re in a good position to deal with the lobbyists. If the lobbyists have it, then they are in a great position to do something for their clients.”

Errata

Page 281: The total amount entities spent lobbying in Pennsylvania in 2000 should be $46,739,349, and Pennsylvania should be ranked 4th, behind New York and Massachusetts.

The total amount entities spent lobbying in Montana in 2000 should be $252,093, and Montana should be ranked 32nd. That moves Vermont up one notch in the ranking, to 18th, along with all states through West Virginia. The original $5,239,329 amount included calendar year 1999 and 2000.

The total spent on lobbying in 2000, from the 34 states that reported an overall total, is $565,094,196.