State lobbying becomes billion-dollar business

Introduction

State lobbyists and the companies that hire them spent a record of more than $1 billion in 2005 to influence state lawmakers and officials, the Center for Public Integrity has found.

The almost 7,400 legislators in the 50 state capitals across the country passed close to 40,000 laws last year, according to figures from the State Net Web site. Those lawmakers also allocated an estimated $1.3 trillion in taxpayer money, according to The Fiscal Survey of States for 2005 released jointly by the National Governors Association and the National Association of State Budget Directors.

And working in the hallways of the nation’s 50 statehouses was a corps of close to 40,000 registered lobbyists paid to advance the agendas of almost 50,000 companies and organizations, the Center found. Nationwide, that averages out to more than five lobbyists for each lawmaker.

In the 42 states that reported lobby expenditures for 2005, the total was $1.16 billion, a 22 percent increase in reported spending from 2004. And in those states, the average spent per legislator on lobbying was more than $190,000.

Of the 40 states that provided totals in both 2004 and 2005, 27 of them — more than two-thirds — saw an increase lobby spending.

Some of the most influential lobbyists, the Center learned, were the spouses and other relatives of legislators that have joined the profession.

State-to-state disclosure differences

Lobby spending disclosure laws vary widely from state to state, and a state disclosure agency’s ability to pull together an overall total from thousands of records can change from year to year.

In 2005, California, Texas and New York, respectively, were the states with the highest lobby spending in the nation for the third year in a row. They are among the 25 states that required that the salaries and fees paid to lobbyists that year be disclosed.

Lobbyist salaries and fees account for the vast majority of spending, Center research shows. In Texas, for example, for every dollar the average lobbyist spends on gifts, entertainment and other expenses on their clients’ behalf, their clients spend $5 on lobbyist compensation.

In 2005, a total of $9.3 million went into Texan lobbyists’ pockets for work related to a single issue — school funding — according to a report by Texans for Public Justice (TPJ).

Ordered by the court to correct the massive deficit in dollars for education, the Texas Legislature spent two special sessions searching for a source of funding. According to the TPJ study, every solution met with a barrage of lobbying. A proposed “sin tax” on alcohol, tobacco and gambling spurred one gambling interest to double its lobbying dollars.

“We call it the ‘Wild West of money and politics,'” said Andrew Wheat, TPJ’s research director.

In Texas, the value of a lobbying contract is disclosed by range rather than a specific amount. The highest fee range is reported as “$200,000 or more.” Totals in the Center’s report are calculated based on the lower value for all reporting range.

“If anyone was using the high end of the [range] estimate,” Wheat said, “You wouldn’t know where to stop.”

Some of the increase in the 2005 nationwide total is due to the addition of lobby spending totals from state agencies in Pennsylvania and Nevada, which did not provide overall totals for 2004.

Pennsylvania’s 2005 report was its first since 2002, when its disclosure law was struck down by state courts. Absent the statewide law, a Senate rule had required lobbyists of that chamber to register and report, although there is no rule for their House counterparts. In February 2006, the Senate started posting expenditures for the lobbyists that communicated with their members.

Though the Pennsylvania total presents an incomplete picture of lobbying in General Assembly, lobbyists reported to the Senate that they spent nearly $125 million, including salaries and fees, or almost 11 percent of the nationwide total.

After years of Pennsylvania being the only state without a lobbying disclosure law in place, Gov. Ed Rendell in November signed a statute into law in November that will apply to all legislative and executive branch lobbyists.

Next year the state’s reported total could skyrocket — or it could plummet.

“It’s one of those devils in the details situations,” said Barry Kauffman, executive director of Common Cause/Pennsylvania.

Over the next few months, a committee will write regulations that execute the new state law’s provisions. “It’s possible that, if they take a minimalist approach to the regulations, the total could go way down,” Kauffman said.

In Nevada, the Legislature only meets in odd-numbered years, and lobbyists only disclose spending in those years. For that reason there was no data available in 2004.

While Nevada’s reported $161,500 in spending is modest when compared to other state totals, the amount was still a ten-fold increase from 2003. Nevada’s disclosure law also does not require that compensation be reported.

While Pennsylvania and Nevada’s 2005 amounts were additions, the oversight agencies of two states that provided totals in 2004 — Connecticut and North Carolina — did not in 2005.

Connecticut was not yet able to provide a total for 2005 because of computer problems at the Office of State Ethics, which oversees lobbyist registration and reporting. North Carolina also does not have 2005 figures available yet.

The other six states that did not provide overall lobby spending totals in 2005 were Alabama, Arkansas, New Hampshire, New Mexico, Rhode Island and South Dakota.

Changes in the states

While states had upgraded lobbying laws before the federal scandal involving Jack Abramoff, they continued revising regulations in 2006.

Some changes were small. The Indiana Senate put a rule in place that forbids out-of-state trips funded by lobbyists, trips that many say were not common even before the change.

Tennessee and North Carolina, however, saw major changes: a new ethics commission in the former and tougher gifts laws in the latter.

In the three years since the Center began comprehensively tracking state lobby spending, at least 27 states have strengthened or improved their lobbying regulations and disclosure systems.

These are some 2006 disclosure change highlights from around the country:

Alaska

Voters changed the definition of a lobbyist in an August primary ballot measure. The new trigger for registration is a person doing at least 10 hours of lobbying in a month. Previously, a lobbyist could work for 40 hours a month before being required to register.

Colorado

A constitutional amendment promising broad ethics reform succeeded as a ballot initiative in November.

Lobbyists will have to find a new way to spend the money they doled out last year for gifts to public officials; they are now prohibited from receiving gifts. Public officials also are prohibited from lobbying for at least two years after leaving state office.

These reforms follow earlier tightening of Colorado’s ethics laws. Since July, lobbyists have had to disclose the nature or bill number of legislation they are lobbying on, their clients’ positions on all bills specified and any potential financial impact the legislation would have on the lobbyist.

Lobbyists’ cash gifts to legislators also were banned earlier in the year. Such payments once were a way of skirting the in-session ban on campaign contributions. They also were said to help defray administrative and travel expenses, which rural lawmakers say weigh more heavily on them.

Florida

In December 2005, according to news reports, the Florida Legislature overwhelmingly approved a law that lobbyists are still seeking to have struck down in court. The law instituted a “zero tolerance” ban on accepting meals and other gifts from lobbyists for both legislative and executive officials. It also added a new disclosure requirement: Lobbyists now must report the fees they receive from clients.

A first effort to fight the law was transferred from state court to federal court. In September, a second suit designed to remain in state court was filed by two lobbyists. They argue that the disclosure requirement violates privacy rights guaranteed in the Florida Constitution. Although the new suit does not directly challenge the gift ban itself, in their favor would invalidate both provisions of the law.

Idaho

The first major overhaul of Idaho’s lobbying statute went into effect in July. It expands the existing law to executive branch lobbyists.

Indiana

The Indiana Senate in February established a rule prohibiting lobbyists from funding senators’ out-of-state trips.

Maine

The state Ethics Commission is now required to set up a more detailed public Web site featuring a registry of lobbyists and their employers. The site will provide profiles of each registered lobbyist that will include contact and employer information, as well as lists of all legislative actions in which each employer is interested. No launch date has been set; the commission is looking for a way to fund the changes.

A separate measure requires lobbyists to identify their employer when testifying before legislative committees.

Missouri

Beginning Jan. 1, 2007, lobbyists can no longer fund out-of-state trips for legislators and their staff or make campaign contributions during the legislative session.

Lobbyists also face stricter reporting requirements. Each expenditure disclosed must now indicate the lawmaker on the receiving end of the spending. Only gifts to the majority and minority caucuses in either chamber are allowed to be reported as a grouped expenditure.

Gov. Matt Blunt ordered his staff last May to refuse gifts from lobbyists (except items of “nominal” value) and to reimburse them for meals and tickets.

Montana

Voters approved a November ballot initiative instituting a two-year “cooling-off” period for elected and appointed state officials who want to become lobbyists after leaving public office. Gov. Brian Schweitzer proposed the initiative after a similar proposal failed in the Montana State Legislature last year.

New Hampshire

A bill signed in April requires executive branch officials to wait six months before working as lobbyists, according to The (Manchester) Union Leader. The law also delineates the roles lobbyists can play in public commissions and establishes an executive branch ethics commission.

New York

The state Lobbying Commission issued a new interpretation of the gift law already on the books: A lobbyist’s gifts to a legislator are limited to a total value of $75 per year, not $75 per gift.

North Carolina

Public officials, both legislative and executive, can no longer accept gifts from lobbyists, beginning Jan. 1, 2007. A law passed in August 2006, lists 10 exceptions to that rule, including educational materials of nominal value, food and beverage at public events and gifts from personal friends.

Another law that will go into effect in January 2007 will require monthly reporting of any lobbyist spending of more than $10, extend required disclosure to lobby spending on executive branch officials and impose a six-month cooling-off period. The law, enacted in August 2005, eliminates the infamous “Goodwill Loophole,” which allowed special interests to entertain legislators without having to report expenditures as long as they did not discuss specific legislation.

Pennsylvania

Gov. Ed Rendell approved the Lobbyist Disclosure Act on Nov. 1. Since the state Supreme Court struck down the previous lobbying law in 2002, no major lobbying legislation had made it out of the General Assembly. Now lobbyists and their employers will again register and file disclosure forms with the State Ethics Commission.

Tennessee

After much wrangling during a special legislative session, an ethics reform law designed in part to curb lobbying abuses was enacted in February. It establishes an independent ethics commission, imposes new restrictions on lobbyists’ ability to entertain lawmakers and contribute to their campaigns and sets a one-year cooling-off period.

Director of State Projects Leah Rush, researcher Neil Gordon and research interns David Jimenez and Elspeth Reeve contributed to this report.