Posts about Campaign Finance

Most sitting councilmembers aren't supporting this ballot initiative. Their desperate excuse is that a ban on direct corporate funding of campaigns could push corporate dollars into the shady world of political action committees.

But the council has the authority to regulate those PACs, so that argument rings hollow.

Those councilmembers would actually have you believe that the current system of direct corporate contributions to campaigns is transparent by comparison. Nothing could be further from the truth.

Corporate contributors make a mockery of campaign finance rules by cloning themselves to circumvent contribution limits. Corporate donors bundle checks from each of their corporate subsidiaries, even if those subsidiaries do nothing but write checks to councilmembers.

By giving money through these veiled spinoffs, corporations can give many times more than you or I can give. Is that fair? Should your neighbor be able to contribute 12 times more than you because he owns a business with 11 subsidiaries and you do not?

Often, these corporate contributors are land developers who establish each development as a separate limited liability company (LLC), and bundle checks from each LLC to politicians. Using LLCs is particularly shady, as the identities of their owners is legally not public information.

We can strike at the heart of this culture of pay-to-play in DC government by passing this ballot measure. Doing so would force councilmembers to be more responsive to ordinary citizens in order to finance their campaigns.

As long as our politicians bankroll their campaigns with bundled corporate checks, though, we can forget about regulating PACs or passing any other meaningful campaign finance reform. Just last December, the council voted down several amendments to include campaign finance reform in ethics legislation, by a vote of 12-1.

Dissenting councilmembers claimed they voted no because they wanted to wait to address campaign finance reform separately. We aren't holding our breath. Only 2 members co-introduced a comprehensive reform bill, but just last week the rest of the council found time to support a much narrower campaign finance reform fix, limiting money order contributions to $25.

That's a good step, but other issues are equally pressing. Or is the council only willing to deal with the problem of the day on the front page of the newspapers, and none other?

Our patience has run out. As long as corporate owners can walk to a sitting councilmember and, while discussing a city contract, hand them 12 checks from each LLC they own, residents cannot trust our elected officials.

No, Banning corporate contributions to campaigns is not sufficient to reform campaign finance. Yes, it will still be possible for PACs to influence DC Council legislation.

But Initiative 70 will make it a lot harder for corporations to buy votes, and will send a clear message to the Council that continued campaign finance reform, including PAC regulation, can be delayed no longer.

Sign a petition when you vote on April 3rd, or even better, volunteer for DC Public Trust and help collect signatures.

This is the official endorsement of Greater Greater Washington, written by one or more contributors. Active contributors and editors voted on endorsements, and any endorsement reflects a strong majority or greater in favor of endorsing the initiative.

Serious flaws create serious scandals

Some of the biggest flaws in DC campaign finance involve corporate contributions. Corporate entities are allowed to directly give money to candidates in DC, unlike under federal campaign finance law. Worse, many corporate entities have multiple subsidiaries, such as developers who create a separate LLC for each project, and are allowed to donate up to the maximum from each of them separately.

This is very common in DC campaigns. The fact that so many incumbents garner much of their campaign cash this way may be why not a single other councilmember voted for Wells' amendments to ban the practice.

That's not the only problem with campaign finance, though perhaps the biggest legal loophole. There are also ongoing federal investigations into the campaigns of Mayor Vincent Gray and Council Chairman Kwame Brown. Prosecutors are reportedly looking into whether the Gray campaign accepted numerous money orders that weren't really from separate individuals.

The District was reminded of those investigations in dramatic fashion this weekend when the FBI raided the offices of Jeffrey Thompson, who owns Chartered Health Plans, the District's largest contractor. He is also one of the most significant donors to district politicians.

Thompson and related entities have given more than $700,000 to various campaigns over the years, including massive sums to Gray, former mayor Adrian Fenty, and at-large councilmember Vincent Orange. The raids also targeted a public relations consultant to the Gray campaign.

Proposals seek to mend the system

Several reformists have emerged with concrete proposals to make campaign finance in the district more transparent and effective.

When Tommy Wells introduced his doomed campaign finance amendments to last year's ethics bill it seemed like his might be the lone voice for reform on the council. But today he joined Mary Cheh as the only cosponsor on her "Campaign Finance Reform Amendment Act of 2012."

According to a statement by Cheh's office, the bill would "prohibit pay-to-play, require disclosure of external fundraising activities, and... ban corporate contributions."

Meanwhile, the DC Committee to Restore Public Trust, led by activist and former council candidate Bryan Weaver and Ward 7 ANC commissioner Sylvia Brown, is pushing a ballot initiative that would ban direct corporate contributions to DC campaigns.

Organizers must collect over 22,000 signatures from registered DC voters to place the initiative on the November ballot. Volunteers plan to gather signatures at every polling place during the April 3 primary.

The initiative has garnered some high-profile backers. Councilmember Wells is providing organizational support and, while announcing her legislation, Councilmember Cheh said that she "wholeheartedly support the efforts of the District residents working on" the initiative. At-large candidates Peter Shapiro, Sekou Biddle, and David Grosso, as well as Ward 8 candidate Jacque Patterson, also have voiced support.

Several candidates running for DC Council in the April 3rd primary, May 5th special, and November 6th general elections are taking an additional step to show their commitment to campaign finance reform. Grosso, who is running for the independent at-large seat up for election in November and currently held by Councilmember Michael A. Brown, has proposed a "transparency challenge" to all council candidates.

The challenge asks candidates to proactively embrace campaign finance reform ideals by pledging to post information on their websites about the directors, managers, shareholders, and corporate structures of any companies that they receive donations from. Additionally, the challenge requires candidates to disclose the names of people who collect multiple donations for them as well as information on each individual donor.

So far, candidates Max Skolnik (Ward 4), Jacque Patterson (Ward 8), and Peter Shapiro (at-large) have pledged to join the challenge. Although, as of March 6, only Grosso has posted his information online. All participants are challenging sitting incumbents. So far, no incumbents have joined the challenge.

Incumbents fail to speak up or act

Unfortunately, aside from Mary Cheh and Tommy Wells, most members of the DC Council seemed unconcerned with campaign finance issues and unlikely to act on reform before the upcoming elections.

Muriel Bowser, primary author of last years ethics bill and chair of the council's Committee on Government Operations, stated that she intended to take action on campaign finance. However, she has since defended herself for accepting corporate donations and argued against banning corporate money outright, making it unlikely that she will support Cheh's bill.

It seems even more unlikely that a majority of councilmembers will act on any sort of campaign finance reform. Several have spoken out against reform. Notably, yesterday morning Jack Evans (D-Ward 2) joked about his dislike of Cheh's legislation.

The rest of the council should work with Cheh and Wells to craft a bill that will reform the campaign finance system while still allowing participation from all engaged parties. DC should ban corporate bundling and strengthen disclosure rules, to make it more apparent who is donating and ensure that corporations do not skirt contribution limits. Contractors and other corporations that do business with the city should face even further restricted in order to avoid obvious conflicts of interest.

DC's politicians have proven all too willing to take advantage of weak campaign finance regulations. But it seems as though the city is becoming sick of it. The DC council should step up, fight against this culture of corruption, and bring corporate influence over elections back from the stratosphere and down to the height of individual influence.

Some highlights include requiring councilmembers to file an annual affidavit in which they certify they paid all of their taxes and have not "been offered or accepted any bribes" or engaged in any "pay to play schemes." Really?

In the words of the teenagers I work with: "C'mon Son!!!"

The law fails to address or enact any real protections against "pay-to-play."

On November 30, Councilmember Tommy Wells (Ward 6) introduced two amendments to the bill. The first amendment would close a loophole that allows corporations to give numerous campaign contributions through subsidiary Limited Liability Corporations (LLC). Wells' amendment would limit corporations to just one contribution.

The second amendment banned companies with city contracts from giving directly to political campaigns, because councilmembers often vote on contracts for those same companies.

The Council rejected each of Wells' amendments by 12 to 1 votes. Wells seemed to have support from Cecily Collier-Montgomery, director of the Office of Campaign Finance, who said, "It certainly would make it a lot easier to enforce in terms of corporations and subsidiaries sharing a single contribution limit.

William Sanford, General Counsel of OCF went further, saying, "We agree that bundling should be prohibited and perhaps it could be more specifically addressed in this or other legislation."

Even Councilmember Jim Graham (Ward 1) openly stated during debate that every time a councilmember takes a check from a corporation, there is a string attached. Astutely, Mr. Graham has touched the heart of "Pay to Play."

When it became obvious that no other member of the council was was willing to ban subsidiary corporations from giving multiple contributions, Wells regrouped and offered a compromise for the final vote on December 20. He proposed sunlight provisions that would require LLCs to disclose their controlling interest, and require corporations with contracts with the city to disclose those contracts when contributing to local political campaigns.

Every councilmember talks about the importance of disclosure, transparency and sunlight, making this an obvious compromise. Don't ban a corporation's ability to bundle, just make the disclosure more transparent. As a friend of mine likes to say about the DC Council, "It's all about getting to 7 votes."

One would think this a no-brainer. Wells' office went back to Sanford, the OCF General Counsel, to ask for advice. He responded by saying, "The language you have suggested appears to require clarification of the relationship between subsidiaries and parent corporations which may have controlling interest. Therefore, from an enforcement standpoint it would result in a greater degree of transparency."

Armed with support of OCF and a willingness of the Council to create stronger "open government" laws, Wells brought his two sunshine amendments to the floor. Each amendment still fell 12 to 1.

And with that, the council punted on a golden opportunity to show the residents of DC that they are serious about ethics, committed to ridding our government of the corrupting influence of money, and that DC will no longer be the butt of jokes on late-night talk shows.

It is heartbreaking that in the capital city of the world's greatest democracy, the effort for transparency and accountability—values that people are giving life and limb for around the world—would fail so miserably and so anticlimactically.

Big money diminishes accountability, transparency and inclusiveness in our government. It determines who runs for office and where those candidates stand on the issues.

Money should not determine how our elected officials spend their time in the Wilson Building. Issues facing the city should do that. Problems facing the residents should come first.

The DC Council would do well in recognizing they still have some serious work to do if they are going to be taken seriously by voters.

Additionally, only 5 of the 13 Councilmembers raised more than $40,000 for their Constituent Service Funds last year, and 4 of them raised between $40,000 and $50,000. Only Jack Evans, who raised $85,000, would be really effected by the new limit.

The draft ethics bill further limits the use of Constituent Service Funds by defining more narrowly what they can be spent on. The loopholes, however, are obvious for all to see. They can't be spent on season tickets to sports events, but they can be spent on individual game tickets. They can't be spent to promote a Councilmember, but they can be spent on community events sponsored by the Councilmember.

In 2010 only three sitting Council members spent 25% or more of their CSF's on constituent needs (Vince Gray spent 28% on constituent needs before being elected mayor). Conversely, 6 Council members spent more than 60% of their funds on the "other" category. If these numbers were reversed, there still wouldn't be enough CSF money going to needy District residents.

At the end of the day, the amount spent by Councilmembers meeting the daily needs of constituents through these funds ($48,271) is a tiny drop in the bucket relative to the needs of a city in which 30% of children live in poverty. Instead of giving needy constituents crumbs from their table of wealthy donors, Councilmembers should address the root causes of poverty and unemployment that create these needs in the first place.

The campaign finance bills will:

• Set up reporting requirements for transition and inauguration committees, both a source of unreported contributions in the past for mayors and council chairs.
  
• Ban bundling of corporate contributions, to avoid having companies use many subsidiary LLCs to get around contributions limits as Bryan Weaver explained. I've asked for more information on how banning bundling will address this specific problem.
  
• Require any nonprofits that receive constituent service funds to have been around for 1 year, to avoid officials suddenly creating new ones that they control to either pay themselves or use the money as political favors.
  
• Recalibrate reporting deadlines to account for the new, earlier primary date.

Are there other measures that ought to be in ethics legislation? What about Mitch Wander's 3 "quick fixes" proposals?

What we really need is a radical overhaul of the city's culture and conduct to swing the long arc of good government for DC toward the sunlight. We need clear lines of what is permissible and not another layer of bureaucracy. It is time to turn over the Wilson Building and start shaking.

There are three critical areas of reform that if properly legislated, would bring sweeping reform to the city:

Seats on nonprofit boards

Most people see the conflicts raised in the Attorney General's lawsuit accusing Councilmember Harry Thomas Jr. (D-Ward 5) of misusing more than $300,000 in city money intended for youth baseball on an SUV and trips.

But what got little press recently was a deal struck by Vincent Orange (D-At Large)—from the dais no less—to vote in favor of a budget amendment if amendment supporters sided with his effort to secure $500,000 for the Lincoln Theater. This maneuver gave the amendment enough votes to clear the Council by a 7-6 vote.

What was not discussed during the deal-making is that Orange serves as the volunteer Treasurer for the nonprofit board that runs the Lincoln Theatre. Orange apologists pointed out that he receives no financial compensation from the theatre or its board and that the deal was done transparently so therefore this was not a conflict of interest. I strongly disagree.

On the same day the Council discussed the proposed ethics legislation, the US Supreme Court unanimously upheld a Nevada ethics law that governs when lawmakers should refrain from voting on official business because they might have a conflict of interest—even when that conflict doesn't create a financial gain for the elected official.

The council needs to adopt rules stipulating that any nonprofit that receives D.C. funds cannot have a member of the Council on its board of directors.

Secondary jobs

DC law allows members of the Council to have outside jobs. Further, District rules require lawmakers to make public their outside income sources only if an employer or client did business with the city or stood to gain from pending legislation during the past calendar year.

By contrast, political appointees in the federal government sign ethics forms that must include all clients or employers who have paid the appointee more than $5,000 during a one-year reporting period—regardless of whether the employer or client did business with the government.

Members of Congress (not the most ethical lot), under their Ethics Reform Act, are prohibited from engaging in professions that provide services involving a fiduciary relationship, including the practice of law and the sale of insurance or real estate.

Ethics analysts like Public Citizen have long said that although D.C. lawmakers appear to comply with the letter of the law, the city's rules don't go far enough. The time has come to restrict outside income in the same scope as members of Congress, or at least create detailed disclosure of all outside income.

Corporate campaign contributions

District campaign finance laws are modeled after federal laws, with one big difference: corporations are allowed to directly contribute to local campaigns. And many companies have found a way to give more than others.

A quick review of campaign records for the mayoral and city council candidates will show you which corporations tilt the scales to gain access to the Wilson Building by electing candidates with their business interests at the forefront.

For example, real estate companies own many properties that are separately incorporated. Each incorporated property may make the maximum contribution to a candidate or constituent services fund. It is illegal for a corporation to use subsidiaries or companies under its control to skirt contribution limits, but at the same time, it's perfectly legal for corporations and their owners to make multiple contributions.

Any ethics legislation approved by the Council must institute limits that bar this sort of corporate contribution bundling. It must also include clear disclosure requirements to inform citizens about potential conflicts of interest and influences.

These are just three areas of concern among many. If, instead of learning ethics from watching movies, the city council is serious about ethics reform, this is where they should begin.

As Albert Einstein said, "Relativity applies to physics, not ethics."