The American Legislative Exchange Council brings together corporations (from Koch Industries to Coca-Cola), conservative state legislators, and rightwing think tanks to fabricate model bills that advance their common interests: reduce government regulation and taxes; increase the transfer of wealth from average Americans to the super rich. ALEC working groups, research memos and draft bills push for predatory lending and against EPA regulating greenhouse gases, for restricting access to voting and against living-wage standards for workers. A treasure trove of 800 model bills has just been uncovered by the Center for Media and Democracy, and the Los Angeles Times provides good examples of how the bills ripple through state legislatures, often without being linked to the shadowy organization – but they’re backed up with millions in campaign contributions by ALEC members. Common Cause is challenging the organization’s claim on its IRS reports that it does zero lobbying. You’re invited to sign Common Cause’s petition calling on the IRS to investigate ALEC for misusing its tax-exempt status.
You are welcome to submit comments to this moderated blog. Please treat others with respect, avoid partisan rhetoric, and help us provide a fact-based discussion of issues related to North Carolina’s political landscape. Thank you.
Tuesday, May 31st, 2011
IMPORTANT UPDATE: We are pleased to confirm that the newest version of the Senate budget DOES NOT include a provision to combine the State Board of Elections, State Ethics Commission and the lobbying regulation division of the Secretary of State’s office as described below. We are hopeful that this bad idea will be permanently shelved in favor of preserving disclosure and transparency.
For Release Monday, May 30, 2011
Contact: Bob Hall, 919-489-1931
Shotgun Merger of Agencies Shields Officials from Scrutiny, Hundreds of Campaign Reports Are Already Not Audited
A nonpartisan watchdog group is sharply criticizing a proposal in the state Senate’s budget bill to merge and cut the funding for three agencies that now oversee the ethical conduct and campaign activities of state legislators, thousands of other public officials, and hundreds of lobbyists.
The proposal would combine the State Board of Elections, State Ethics Commission and the lobbying regulation division of the Secretary of State’s office into a new agency by January 1, 2012, and put it under the control of General Assembly leaders. The newly created State Board of Elections and Ethics would have a smaller staff, less money and a nine-member board with six members appointed by legislative leaders and three by the governor.
“These are the agencies that guard the public’s trust in government. They hold officials accountable for the honest performance of their duties, and they’re already straining to do their jobs right with limited resources,” said Bob Hall, executive director of the Democracy North Carolina. “The way this merger is being pushed so rapidly, crammed inside a budget bill without a thorough study, is completely irresponsible and highly suspicious. You have to wonder if the Republicans are trying to cripple these agencies and throw them into a state of confusion during the upcoming election.”
The new agency would have 20 fewer positions (15 currently filled) and $1.4 million less a year* to register voters, administer elections, oversee the conduct of public officials and political appointees, regulate lobbying and campaign financing, and enforce more than a thousand pages of state law.
Hall said his concern over the merger was heightened after discovering one area where funding cuts are already blocking public accountability and transparency. A review by Democracy North Carolina of files at the State Board of Elections found that hundreds of campaign finance reports for candidates to the General Assembly in 2010 have not yet been audited, in violation of state law.
“The public has a right to know how money is moving through our election system, who’s cheating and who wants to buy influence,” said Hall. “More cutbacks and this shotgun merger will just shield politicians from scrutiny and reduce transparency, just the opposite of what Republicans promised.”
NC General Statute 163-278.24 says campaign reports must be examined “within four months after the date of each election” to “determine whether the statement conforms to law and to the truth.” Candidates file up to six reports during an election cycle to disclose details about their contributions and campaign spending. But due to budget cutbacks, the State Board of Elections has been forced to lay off clerical and other staff, leading to a large backlog of reports to analyze.
Democracy North Carolina discovered that 651 (44%) of the 1,492 reports filed by the winning and losing legislative candidates in the 2010 general election have not even been entered into a database for preliminary analysis by the Board of Elections staff, much less been audited for errors, missing information, and possible criminal violations.
Paper copies can be viewed through the Board’s website, but some are illegible and it’s impossible to perform the required audit until the information is keyed into the Board’s database. Getting the information from the disclosure reports into the Board’s database is the first step of the auditing process and also makes campaign contributions accessible in a searchable format on the Board’s website.
Hall noted that the Board’s database still does not contain any of the campaign reports for 2009 or 2010 for 49 of the 170 General Assembly winners, including Senate Majority Leader Harry Brown and House Majority Leader Paul Stam. Paper copies of the reports were submitted but they remain unprocessed.
Altogether, 405 of the 960 reports filed by the 170 legislative winners in 2010, or 42% of the reports, have not been entered into the database for processing and have not been audited.
In addition, hundreds of reports for political action committees (PACs) and local and state political parties have also not been entered into the Board’s electronic files for processing.
(You can view a committee’s report at http://www.app.sboe.state.nc.us/webapps/cf_rpt_search/ and see if the report is only an Image of the paper report or if the Data has been entered into the Board’s data file.)
“There’s a perception that record amounts of money flooded the General Assembly elections in 2010, but we still don’t have a handle on where it all came from, who deserves kudos for reporting accurately, and who’s violating the law by withholding information,” said Hall.
“The 2012 election will be unbelievably expensive, with hot national and state contests and more spending by secretive groups, corporations and unions following the Supreme Court’s decision in the Citizens United case,” he said. “Some politicians, but not all, are just as happy to keep us in the dark.”
Hall noted that many freshmen Republicans were elected on a promise to increase transparency in government, but they submitted their disclosures report in paper form only, rather than expedite the audit process by filing them electronically.
“Instead of crippling agencies charged with protecting honest government, more candidates should be required to file reports electronically to expedite the auditing process,” he said.
*The Senate’s proposed state budget would make the following cuts:
AGENCY FUNDS CUT STAFF POSITIONS CUT
State Board of Elections $1,002,408 14 positions (10 currently filled)
State Ethics Commission $ 219,519 2 positions (1 currently filled)
Sec. of State Lobbying Division $ 200,791 4 positions (4 currently filled)
Totals $1,422,718 20 positions (15 currently filled)
Tuesday, May 31st, 2011
For Release Thursday, May 26, 2011
Contact: Bob Hall, 919-489-1931
Legislation to Increase Charges on Small Loans Follows Surge in Contributions from Consumer Finance Industry
A campaign finance watchdog organization is raising questions about whether an unusual pattern of contributions given by donors in the consumer loan business is connected to a bill now moving through the North Carolina General Assembly that will benefit their industry.
During the last election, donors with consumer finance companies gave most of their campaign contributions to Democratic legislators until late August 2010, when they suddenly switched and began pouring more than $100,000 into the campaigns of 15 Republican newcomers challenging Democrats in hot races, as well as the top three Republican leaders in the General Assembly.
“The industry made a substantial gamble in 2010 by shifting its money from incumbent Democrats to Republican challengers and now it appears to be reaping the benefits of that investment with a bill to enrich the industry,” said Bob Hall, director of Democracy North Carolina, a nonpartisan watchdog organization that has filed campaign finance complaints against both parties in the past.
Harry Melton, president of Amity Finance in Gastonia, told Hall that his industry’s trade group, the Resident Lenders of NC, gets recommendations from its lobbyists in Raleigh about who to support with donations. “We have lobbyists that make recommendations to us,” said Melton. “On an individual basis, they let us know who would be favorable to our industry.”
Melton has served on the Resident Lenders PAC committee, but like many industry leaders, he gave more personal donations to legislative candidates in the two months after August 15, 2010, than in the past decade – including to candidates far from his home – with the goal of electing “friendly” state legislators. He is now following progress on a bill in the state House to help his industry.
The bill, H-810, would allow consumer finance companies to raise interest rates to 36% on small loans and increase other fees. The companies say they need to earn more from their loans, but the head of the state North Carolina Banking Commission says the industry is profitable and the legislation is not needed. Representatives of military bases in North Carolina and a coalition of consumer groups also oppose the legislation.
Hall said Republican leaders have kept the bill moving forward despite the formidable opposition. In April, House Republican leaders changed plans and decided to skip routing the bill through the Finance Committee, where its fate seemed in question because of bipartisan opposition.
“It’s hard to explain what’s driving this legislation without following the money,” said Hall.
The new Republican House Speaker Thom Tillis and Majority Leader Paul Stam received $27,200 from consumer finance company donors, including $2,000 after the election was over from Security Finance Corporation PAC, the political action committee of a South Carolina loan business.
In the spring of 2010, Security Finance PAC gave 100% of its money to incumbents, with 75%
going to Democrats, but in late August it changed strategies and began giving all its money to Republicans, with 75% going to 14 challengers of incumbent Democrats.
“That’s very unusual,” said Hall. “More than 90 percent of PAC money goes to incumbents in North Carolina, because those officials are in a position to deliver benefits immediately and when they run for reelection, they have better than a four-to-one chance of winning.”
The Residents Lenders PAC, which represents commercial loan companies, also began giving to Republicans challenging Democrats in September 2010. Six Republican challengers received a total of $4,000 from the PAC, plus $3,500 from Security Finance PAC and more than $25,000 from individuals associated with finance companies in North and South Carolina.
Altogether, 19 Republican legislative candidates – and no Democrats – received five or more donations from finance company PACs and executives, many living hundreds of miles from the candidate’s district. Many donors had not given in a legislative contest in the previous 10 years.
According to the analysis by Democracy North Carolina:
● Consumer finance executives and their PACs donated $65,600 to 15 Republican legislative candidates in highly contested races, including 12 held by Democrats and three open seats. Only 3 of the 134 donations to these 15 candidates were made before the middle of August 2010.
● In addition, these donors made 47 contributions totaling $45,450 to the soon-to-be Senate President Pro Tem Phil Berger, House Speaker Thom Tillis and House Majority Leader Paul Stam. All but 2 of the contributions were made after mid-August.
● By contrast, incumbent Senate President Marc Basnight, Speaker Joe Hackney and Majority Leaders Martin Nesbitt and Hugh Holliman received a total of only $3,600 after mid-August – four donations from the Resident Lenders PAC and nothing from consumer loan executives.
● Before mid-August 2010, the consumer finance donors and their PACs gave more money to Democratic legislative candidates and committees than to Republicans – $15,550 versus $12,300.
● After August 15, the donors gave $126,670 to Republican legislative candidates – more than seven times the $17,400 they gave to Democratic candidates in the final months of 2010.
● Altogether, these consumer finance donors and their PACs gave $172,320 to legislative campaigns in the 2010 election cycle, compared to $30,250 in 2008 and $77,500 in 2006.
● House Speaker Thom Tillis and Republican Majority Leader Paul Stam received nothing from consumer finance donors for the 2010 election until late August. After that, they received nearly three dozen industry-related contributions – a total of $13,950 for Stam and $13,250 for Tillis.
● Of the 17 finance company executives who gave four or more donations to different legislative candidates in 2010, 8 had not made a reported donation to a legislative candidate in the past decade (L. Elmer Britt, David S. Hicks, R. A. “Pete” James, Harry R. Melton, Larry W. Shive, Thomas D. Payne, Daniel L. Thompson, and R. Wayne Smith ) and 6 gave at least 4 times as much as they had given to legislative candidates in any previous election cycle this decade (Gail N. Blanton, Priscilla D. Butler, Glen H. Hall, Royce E. Everette Jr., Al J. Pridgen Jr., and R. David Reese).
● In addition to 3 Republican candidates who won open Senate seats (Thom Goolsby, Brent Jackson, and Bill Rabon), 12 Republicans running against incumbents received multiple donations from finance company donors, often from individuals many miles away; all 12 won: For House – Jeff Collins, Ralph Hise, Stephen LaRoque, Tim Moffitt, Tom Murry, Norman Sanderson, and Mike Stone; for Senate – Jim Davis, Rick Gunn, Wesley Meredith, Louis Pate, and Dan Soucek.