Lawmakers in Southeast call for ethics reform

Introduction

As lawmakers in three Southeastern states prepare for the 2013 legislative session, they’re finding bipartisan agreement on an unlikely agenda: ethics reform. Leaders in South Carolina and Florida have begun work that lawmakers and watchdogs say could lead to the states’ first meaningful reforms in decades. And in Georgia, proponents of stronger rules are rallying behind a slate of measures they hope may finally pass in what has long been a recalcitrant Legislature.

The initiatives all seek some regulation of money and influence. The proposals take aim at independent political spending, asset disclosure and gifts from lobbyists in an effort to bolster transparency and rein in the spiraling costs of running campaigns. In some cases the reforms could go deeper, as lawmakers try to attack the roots of corruption by strengthening ethics oversight and enforcement.

“There’s been a real sea change in terms of the atmosphere around ethics reform,” said Josh McKoon, a Republican state senator in Georgia, which ranked last among the states for corruption risk in 2012’s State Integrity Investigation —a collaboration of the Center for Public Integrity, Global Integrity and Public Radio International.

Lawmakers in several other states — Missouri and Idaho among them — have said they may push reform in the 2013 session. But nowhere does it appear as likely as in the Southeast, where several factors, including a series of scandals, have pushed the issue onto the public agenda. Good-government groups and legislators in each of three states have used their rankings in the State Integrity Investigation to argue for substantive changes. Georgia and South Carolina received failing grades, and Florida received a C-minus.

But critics caution that this isn’t the first time politicians in these states have called for change, and much of the talk could prove to be just that. Apart from a narrow rule change in Florida, policymakers have taken few actions beyond voicing grand but general commitments to reform and creating several commissions to examine the issue. Georgia’s movement is being pushed by second-term legislator McKoon, who failed to rally much support last session. And while observers in Florida and South Carolina say they fully expect legislators to cast votes on reform bills in this session, the long legislative process could still whittle them down to little more than weakened gestures.

South Carolina

It’s perhaps an understatement to say that South Carolina state government has had a bit of an image problem in recent years. First, in 2009 then-Gov. Mark Sanford absconded to Argentina on a romantic affair that eventually led to his paying a $74,000 fine to settle ethics charges. Last March, a state judge sentenced Lt. Gov. Ken Ard to five years’ probation and levied a $5,000 fine after Ard pleaded guilty to charges that he mishandled campaign money in the 2010 election. More recently, House Speaker Bobby Harrell has been accused of pocketing campaign funds by labeling them as reimbursements. And then there was the F from the State Integrity Investigation.

“A lot of those things have all generated a real push for some meaningful ethics reforms,” said GOP state Sen. Wes Hayes, who recently left his position as chairman of the Senate Ethics Committee to take a more senior leadership post. A recent poll found that a majority of South Carolinians support strengthening ethics laws.

In her State of the State address on Jan. 16, Republican Gov. Nikki Haley cited South Carolina’s failing grade from the State Integrity Investigation as evidence of the need for reform.

“Every single one of us knows that’s not good enough,” she said, “that the people of South Carolina deserve better, and that is our responsibility—no, that is our obligation—to give it to them.”

Four panels are holding hearings and readying recommendations for reform legislation: one appointed by Haley; one Senate committee led by Hayes; and two House panels, one formed by each party.

All four are likely to address campaign finance this session, which began January 8. As a result of a 2010 federal court ruling, South Carolina has no effective limits on independent expenditures. In the 2012 campaign, Hayes and other incumbents suffered withering attacks in television ads paid for by groups with money from anonymous donors, which led to a bipartisan consensus to address the gaps brought about by the court decision.

John Crangle, director of Common Cause South Carolina, said the abundance of unlimited, anonymous campaign spending through independent groups has driven up the cost of running for office. “There’s a lot of concern that ordinary people are just being frozen out of the process,” he said. “It’s the Wild West.”

Another top concern: ethics oversight. An independent Ethics Commission enforces the rules for many state officers, but lawmakers are not among them. The state constitution gives legislators the right to “punish its members for disorderly behavior.” Although there’s debate over whether this is an exclusive right, legislative committees have always handled ethics complaints against lawmakers. Crangle said this practice can lead to conflicts of interest. While the House Ethics Committee is charged with investigating the complaint against Harrell, for example, each of the Republicans on the committee has accepted donations from his leadership PAC. (This session, the House Ethics Committee will consist of five members of each party, rather than five Republicans and one Democrat, as it did last session.)

Some officials have proposed allowing an independent body to investigate ethics complaints for all branches of government. Investigators would then forward recommendations to either the House or Senate Ethics Committee — for complaints against legislators — or to the Ethics Commission — for everyone else — to get a final ruling. Such a system would lend a degree of independence to investigations without requiring an amendment to the state constitution.

Hayes said such a body could help alleviate the burden on the chronically underfunded Ethics Commission, which has seen its annual budget appropriation cut from $725,000 in 1999 to less than $323,000 last year. “You can pass laws till you’re blue in the face,” Hayes said, “but if you don’t have anyone to enforce them, it doesn’t really mean much.”

It’s unclear what shape such an independent body would take, though, or how it would be paid for. And it would likely face limits on what it could investigate, said Kenny Bingham, chairman of the House Ethics Committee.

One proposal, from the attorney general, calls for a public integrity unit comprising officials from five agencies, including the Ethics Commission. The unit would draw on existing funding to the agencies and therefore not require new revenue. It would not accept complaints, but would rely on legislative committees to pass on cases that they currently investigate on their own.

Another option would give the investigative power to the Ethics Commission. Cathy Hazelwood, general counsel for the commission, said it’s too soon to say what that would cost but guesses that it would require a minimum of two additional staff members, or at least $150,000 more a year. Crangle said that coming up with the money might be easier now that revenue has been increasing as the economy improves. Legislators have also proposed increasing registration fees for lobbyists, which together with other fees generate most of the commission’s budget.

But none of these steps go far enough, according to the editorial board of The State, one of South Carolina’s leading newspapers. In a December editorial, the paper argued that legislators must give up the power to sanction their peers: “That’s what will restore the public’s confidence that our legislators are working for the good of our state rather than the good of themselves.”

Haley has said she will endorse the recommendations of the panel she appointed — headed by two former attorneys general — whether or not she agrees with them. Hayes said the Senate committee will wait to learn that panel’s recommendations, which are expected in late January, before issuing its own. Lawmakers will then need to turn the recommendations into legislation.

“The big problem will be whether the General Assembly does anything about it,” Crangle said, adding that he doubts that Speaker Harrell will back meaningful reforms. “There’s going to be a hell of a lot of resistance.”

Harrell’s office did not respond to requests for comment. He has not spoken extensively on the issue but did comment for a press release that accompanied the announcement of the House committees in October. “These reforms and added transparency efforts will help ensure the public that our ethics laws are being followed and enforced,” he said, “making it much more difficult for members to be unfairly attacked for actually complying with the law.”

Florida

Florida has not suffered the same level of high-profile scandal that South Carolina has, but the reform movement there has been growing over the past few years. Tea Party activists supported Gov. Rick Scott’s run for office in 2010 in part because of what they thought was his commitment to ethics and transparency. Scott issued an executive order after his election that established a new code of ethics, but he has not pushed for major legislative reforms. His commitment to the issue could finally be tested, though, because the new leaders of the House and Senate have begun their tenures by highlighting ethics.

Both the incoming Senate President Don Gaetz and newly appointed Speaker Will Weatherford, both Republicans, have said repeatedly over the past few months that they will push ethics reforms this session, which begins March 5. Weatherford re-created the House Ethics and Elections Committee for the first time in six years and has said he wants to rein in independent campaign groups.

Gaetz took the first steps toward reform by pushing through new conflict-of-interest rules in the Senate, which members approved in an organizational meeting in November. The rules prevent senators from voting on matters if they could have a “special private gain” from the vote. The idea is to prevent senators from voting on bills that affect specific companies in which they have a financial interest without preventing them from voting on a measure affecting an entire industry they have some connection with. Senators must also take “every reasonable effort” to disclose their conflicts before a vote. Previously, they were allowed to vote on matters whether or not they had a conflict of interest and were required to disclose the conflict only after the fact.

Because the reforms were passed as Senate rules, and not law, it will be up to legislators themselves to resolve any disputes over the disclosures. Dan Krassner, executive director of Integrity Florida, an independent watchdog group, said his organization will push for the Legislature to write the new rules into law, which would allow citizens to register complaints with an outside body.

“An independent ethics enforcement agency or the Florida Commission on Ethics would be a stronger enforcement policy than lawmakers’ own colleagues,” he said.

Lawmakers have also expressed support for a couple of changes that the Ethics Commission, which enforces the state’s ethics laws, has been requesting for years. One would strengthen the commission’s ability to collect unpaid fines for late financial disclosure forms. The other would allow it to take referrals of ethics complaints from other state agencies. Currently, the commission can initiate an investigation only if it receives a sworn complaint, a fact that contributed to the state’s F grade for its ethics enforcement agencies from the State Integrity Investigation. Under the present system, a complainant cannot remain anonymous and can be held liable for legal fees if the complaint contains false allegations. Referrals would allow officials, such as state attorneys, to accept anonymous complaints and conduct initial investigations before sending them to the Ethics Commission. Because no one has introduced specific plans, however, no one knows how much such a change would cost.

Many of the steps may appear incremental, Krassner said, but they represent a notable change nonetheless. “It’s been 36 years,” he said, “since Florida has had its legislative leaders talking about ethics reforms.”

On Jan. 15, the Senate Ethics Committee began drafting a sweeping bill that could include several of these proposals. The committee will vote on the measure soon to send a version to the full chamber in March.

Some advocates of stronger reforms remain skeptical, however. Beth Rosenson, an associate professor of political science at the University of Florida, said the most important reform would be to give the Ethics Commission the power to initiate investigations on its own, a move the Legislature has never supported. The compromise of accepting referrals, she said, is “not quite good enough.”

And Henry Kelley, a local Tea Party activist, said he doesn’t think the new Senate rules will produce much change. Legislators are required to disclose their sources of income, but no one audits the disclosures. “If somebody doesn’t want to play by the rules,” he said, “it’s rather easy to do that.”

Legislators are required to report only a snapshot of their finances, which means that a senator could sell company shares worth millions of dollars the day before filing and the transaction wouldn’t appear in the disclosure report. A legislator could also vote on a bill one day and then enter into a financial relationship with an affected company the next, and no one would know. Krassner said he’ll urge legislators to change this loophole.

Kelley is not optimistic about what he sees as the most important problem: eliminating so-called committees of continuous existence, opaque campaign funds that legislators can use to raise and spend unlimited amounts of money. “I can’t buy a guy dinner, but I can hand him an envelope with $10,000 in it,” he said, citing the state’s ban on gifts from lobbyists. “It gives the impression of ethics laws, without the teeth.”

Weatherford and Gaetz have said they support banning the committees, perhaps in coordination with raising the current $500 cap on individual donations to candidates. But Kelley doubts the measure will pass this session, and no one is discussing tightening rules on lobbyist disclosure, which the State Integrity Investigation identified as a weak spot. “That’s another area where Florida has room for improvement,” Krassner said.

The prevailing view from reform advocates is that all of the talk coming out of election season will face a major test once the session begins. “As realists, we doubt that Florida’s Legislature is about to enter the Promised Land of campaign finance reform,” The Palm Beach Post wrote in a recent editorial. “But if Rep. Weatherford and Sen. Gaetz want to lead Tallahassee in that direction, let’s go along for the ride.”

Georgia

According to the State Integrity Investigation, no state has more room for improvement than Georgia, which ranked dead last on corruption risk. Legislators are not required to disclose gifts they receive from lobbyists (though lobbyists are supposed to report them). Open records laws don’t cover the legislative or the judicial branch.

The State Integrity Investigation overview page paints a troubling picture of the relationship between government and industry in the Peach State. “Executives of insurance companies, public utilities and other regulated entities have become the largest single source of campaign money for regulators running for re-election,” it says. “Utility officials raise money and work to help re-elect incumbents; a lobbyist for the cable TV industry managed one incumbent’s campaign in 2008.”

For several years, the Georgia Alliance for Ethics Reform, a coalition of liberal and conservative activists, has been pushing for ethics reform with little success. Alliance members came up with a 26-point plan that they proposed in 2011, said William Perry, executive director of Common Cause Georgia, but no legislators adopted the cause.

Last session, however, the movement started gaining traction. Sen. McKoon began pushing for several measures in his first term, albeit with little success. Local news outlets covered the issue and eventually published several columns and editorials. Then, McKoon and Perry said, the state’s ranking in the State Integrity Investigation helped transform ethics into a campaign issue last year. “People said, ‘We hear Georgia was worst in the nation in ethics, what do you intend to do about that?’ ” Perry said.

The central issue now is a possible cap on gifts from lobbyists, which currently have no limits. In 2010, for example, lobbyists funded a $17,000 trip to Europe for GOP House Speaker David Ralston and his family to learn about high-speed rail projects. “We’ve seen an explosion in the amount of money that’s being spent on the General Assembly,” McKoon said. Georgia lobbyists spent $1.4 million last year. “That’s distressing.”

McKoon and the activists were able to get nonbinding resolutions calling for a cap on gifts on the July primary ballots last year, and an overwhelming number of voters supported the measures. An editorial in the Columbus, Ga., Ledger-Enquirer said it sent an “unmistakable” message to lawmakers. “Georgians want their political leaders to be accountable to the citizens who elect them, not to the moneyed interests that fund their campaigns and coddle them once they’re in office.”

Now Common Cause and other groups are pushing for a $100 limit on each gift. On Jan. 14, the first day of the session, the Senate passed a rule implementing a $100 cap on gifts from lobbyists. The rule contains several loopholes, however, including an exception for travel and lodging for events as long as they are “related to the Senator’s official duties.” McKoon said that legislators are likely to introduce several bills in the coming months to write a $100 cap into law.

Perry said that after a gift cap, his second priority is to restore the Government Transparency and Campaign Finance Commission’s rule-making authority and to push to provide more money to the body. In 2009, the legislature stripped the commission of its ability to write new rules. One result is that the commission has been unable to collect all of the late filing fees that legislators owe. If a lawmaker fails to submit a disclosure report, for example, the late fee increases as time goes on. State law says the commission must inform the lawmaker by certified mail before increasing the fine. However, the legislature has not given the commission the money for postage, and therefore many fines are simply not collected, Perry explained.

Lawmakers have cut the commission’s budget by more than 40 percent since 2008, more than it has for any other agency, Perry said. It’s become clear, he said, that the commission needs money for things such as office supplies and new computers, but many lawmakers remain reluctant to increase funding. “The whole thing boils down to the fact that they don’t want to open up the can of worms, because everything else can come with it.” The cuts have effectively reduced oversight by preventing the commission from fulfilling its duties, and that suits some lawmakers just fine, Perry said. “We have those great laws, but our commission has no ability to carry them out.”

For this session, McKoon has pre-filed bills to amend the state constitution to ensure permanent funding for the Government Transparency and Campaign Finance Commission and to allow the attorney general to call for grand juries to investigate corruption cases. McKoon’s funding amendment would provide 0.00025 percent of the annual budget to the commission, which for 2013 would work out to roughly $4.5 million, four times what the body currently receives. Other possible bills would call for more-stringent revolving-door rules for outgoing public officials and expand open records laws.

The new senate president pro tempore, David Shafer, has said he’ll support the gift restriction, but he recently gave a less full-throated endorsement of broader reform to The Atlanta Journal-Constitution. “It is important that we have strong ethics laws, but in the end, ethical behavior comes from within the individual,” he told the newspaper. “There is only so much that laws and rules can do.”

While many of these measures may not pass, advocates for reform say there’s a marked shift. “We’re literally going zero to 60 in two legislative sessions,” Perry said. When the coalition began its effort the session before last, they weren’t able to get a single bill introduced. “Now ethics is poised to probably be the No. 1 issue in the session.”