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Action lacking despite opportunities to improve Arizona’s lobbyist reporting system

From lobbyists to lawmakers to advocacy groups, reactions to flaws in Arizona lobbying reports reflect an image of a system that needs to be improved.

Some call for increasing oversight, others for clarifying the laws and guidelines, narrowing loopholes or even banning certain kinds of lobbying. Lobbyists would like to see more clarity in procedures and statutes and ease in reporting.

But any agreement on solutions, not to mention the political will to enact them, still eludes lawmakers two years after the Fiesta Bowl lobbying scandal roped in dozens of politicians, top bowl officials and a handful of lobbyists.

Maricopa County Attorney Bill Montgomery, who investigated the scandal, summed up the lobbyist reporting system with one word: “inadequate.”

An analysis of the system points to a variety of problems.

Errors are abundant. Loopholes keep the public in the dark about which legislators are being lobbied. Vague laws yield multiple interpretations.

Legislators indicate they are almost always confused by what’s reported as being spent to influence them. Lobbyists and their clients sometimes cannot explain why amounts add up the way they do or why certain expenditures have been categorized they way they are.

Officials at the Secretary of State’s Office, who manage the reporting system, have trouble explaining what’s in it. Even Secretary of State Ken Bennett was unaware of more than $100,000 erroneously reported in his name until it was brought to his attention during an Arizona Capitol Times analysis of the report database.

And basically, nobody is paying any attention.

The Secretary of State’s Office is just a receptacle for filings. Reports are accepted, assumed to be accurate, then filed away.

Practically everyone who has dealt with the system can rattle off complaints and a wish-list of fixes. But efforts to improve a system intended to provide government transparency and public accountability have fallen flat.

The best hope for reform through legislation has been tabled until at least next year.

Some dissatisfied activists are talking about a citizens’ ballot initiative, a strategy that would circumvent the legislative process, but would make it difficult for lawmakers and lobbyists to correct unintended consequences.

2 years after the scandal

Montgomery concluded that he couldn’t prosecute anyone for the failures that led to the Fiesta Bowl scandal because the reporting system essentially is too difficult to understand and state law is overly vague and contradictory.

That scandal uncovered about 30 local, state and federal politicians receiving unreported trips, college bowl tickets and freebies in violation of the state’s gift ban. It also involved a scheme to reimburse employees of the Fiesta Bowl for political contributions, though there was no evidence the politicians knew of the reimbursements.

After Montgomery wrapped up the investigation in December 2011, a cry for reform reverberated through the Capitol community and the general public. But drafting effective legislation in the session that began just weeks later, wasn’t possible, Montgomery said.

“There wasn’t much time to sit down and brief leadership or find a sponsor,” he said. He added that achieving the wide agreement necessary for effective reforms would be a delicate proposition, given the effect they would have on the lawmakers themselves.

But Montgomery said there have been meetings as recently as the beginning of the current legislative session when he repeated the lessons he learned from the Fiesta Bowl investigation.

Reagan’s proposed reforms

Republican Sen. Michele Reagan of Scottsdale was one of the lawmakers named in the Fiesta Bowl scandal for taking free trips. She, however, was one of a small number of lawmakers who reported a trip on her financial disclosure statements, and was not asked to amend her filing. She said she “learned the hard way” about what kinds of gifts lawmakers can take from lobbyists, and she emerged from it with a renewed interest in lobbyist reform.

Reagan, now the chair of the Senate Elections Committee, has proposed several bills aimed at cracking down on loopholes in lobbyist reporting requirements and increasing transparency and accountability.

This year, she introduced SB1332, which would have required lobbyist expenditure reports to be filed monthly, instead of quarterly. It would have decreased the maximum value of expenditures that are exempt from certain reporting standards to $10 from $20. It would also have cleared up a nuance in the state law that defines lobbyists’ gifts in two different ways in two different sections.

The bill would have required lobbyists to provide legislators with a declaration of the value of certain expenditures and required lawmakers to report annually each expenditure made by a lobbyist on their behalf.

The bill also would have increased the penalty to a felony for violations of lobbyist regulations and reporting requirements.

As far as fellow lawmakers were concerned, Reagan said the proposal went over “like a lead balloon.”

Though it passed her Elections Committee and the Judiciary Committee, the bill was never scheduled for a vote by the full Senate.

Another bill she sponsored this year, SB1326, would have turned the Citizens Clean Elections Commission into a separate, autonomous independent budget and administrative unit within the Secretary of State’s Office. It would have tasked the commission with overseeing lobbyist registration and reporting.

The bill would have given the commission investigatory, compliance and enforcement authority for campaign finance matters, financial disclosure and the registration and regulation of lobbyists. It also would have increased the frequency of reporting lobbying expenses from four times a year to within 72 hours of making the expenditure.

Reagan said she doubts the public is bothered by whether she goes to dinner or events with lobbyists, but they do deserve access to the details in a timely manner on “when,” “where,” “how much” and “on whose behalf.”

She said a good first step to increasing reporting frequency would be to develop an electronic filing system that can be accessed by any smartphone.

“I can pay my bills with my phone, why can’t I report that I was at a fancy dinner with it?” Reagan asked.

Todd Lang, executive director of the Clean Elections Commission and a big supporter of SB1326, said the greatest need is for better disclosure. Getting there, he added, will take clearer laws, and a focus on education and enforcement of them.

“The secretary of state merger bill would have started that process,” Lang said.

Lang also echoed Reagan’s call for more frequent, if not real-time reporting.

“That’s something that’s eventually coming,” Lang said. “The public interest is there. The technology is there. It just needs to be done in a way that is not cumbersome. Folks on both sides of the aisle should get behind this.”

The bill never got off the ground, Reagan explained, partly because some Republican lawmakers had concerns about cementing the Clean Election Commission’s place in government and giving it enforcement authority. The lawmakers were philosophically opposed to the Clean Elections concept to begin with and would rather see it weakened with more piecemeal legislation or repealed altogether.

A different strain of opposition sprang from some Democrats.

Democratic Sen. Steve Gallardo of Phoenix said although he agrees with the aim of SB1326, he couldn’t support the measure because he doesn’t believe Clean Elections would remain truly independent under the Secretary of State’s Office.

Gallardo said the heart of the problem is that nobody is auditing lobbyists to ensure accuracy and accountability in their reports.

“We need a truly independent body to oversee any type of enforcement action, oversee the filing of these reports, to audit these reports,” he said.

Reagan said she plans to bring lobbyists and lawmakers together again to work on the bills and she plans to re-introduce them next year.

The Democrats’ proposals

In 2012, with the aftermath Fiesta Bowl scandal still smoldering, Gallardo, among other lawmakers, introduced legislation that put lobbying disclosure in the crosshairs.

When committee chairs refused to hear the bills, Gallardo offered a host of amendments to a comprehensive election reform bill during the Senate’s floor debate. His amendments would have banned campaign contributions from lobbyists, and banned lobbyist-hosted special events such as lunches on the Capitol lawn, as well as lobbyists paying for lawmakers’ meals, tickets and travel. The Republican-led Senate shot down each one, with only a few GOP dissenters.

Gallardo, who takes a stricter stance on lobbyist regulation and reporting requirements than most, said he wants an outright ban on all gifts, including small items like lunches or coffee. But he doesn’t think that will ever happen.

In lieu of a total ban, he said lobbyists should be required during the legislative session to divulge the cost, date, location and names of beneficiaries on a monthly basis. And lawmakers should be required to report the same. Though Reagan and Gallardo often disagree, this is one area where they have nearly mirroring proposals.

“Lobbyists should be reporting exactly what they’re doing,” Gallardo said. “How are they influencing lawmakers in order to get their legislation passed through the process? … And why should the burden only be put on the lobbyists? The legislators should be reporting it, too.”

He said the lobbyist reporting system needs real reform, though he doesn’t believe lawmakers have the political will to make the changes themselves.

“The only way we’re going to get some kind of lobbyist reform or ethics reform will be through the initiative process,” Gallardo said. “I believe that the people of Arizona will have to do an initiative and put it on the ballot, I don’t believe the political will is there to do it.”

The 2014 ballot

Lawmakers perennially introduce bills with ideas to improve transparency in lobbying and accuracy in reporting, but they have managed to avoid voting on the proposals.

Sam Wercinski, executive director of Arizona Advocacy Network, said the Legislature’s inaction on lobbyist reform has led him, like Gallardo, to believe the best option might be a citizens’ initiative.

Wercinski is working on language that would eliminate the exemptions to the gift ban and address other ethics issues such as conflict of interest rules. If lawmakers don’t take action on some of the issues this year, Wercinski said he may push to ask the voters to approve it on the 2014 ballot.

“I think legislators have had their opportunity to try and at least address all these freebies, and they haven’t been successful in doing it,” he said.

He acknowledged that lawmakers get useful information out of things like lunch on the lawn or conferences, but said if the public has to pay for a ticket, lawmakers should have to pay, too.

While Wercinski isn’t 100 percent sure about running an initiative yet, he said he will base his decision at least in part on whether lawmakers achieve any of the promised ethics and lobbying reform that they promised after the Fiesta Bowl scandal.

Other states have enacted effective reforms, Wercinski pointed out, and their governments haven’t collapsed.

Focusing on transparency

Peggy Kerns, director of the Center for Ethics in Government at the National Conference of State Legislators, said several states have faced deficiencies in lobbying activity reporting and addressed them. The strategy has been focused on increasing transparency, providing easy access to the reported information and regulating what can and cannot be done in the course of lobbying.

Kerns pointed to the “no cup of coffee” rule in states like Massachusetts, North Carolina, South Carolina and Wisconsin as the most extreme regulation on gifts. In those states lobbyists cannot pay for even a cup of coffee for legislators.

Other states like Alabama, Kentucky and Mississippi have adopted the “report everything” rule, where nothing can be given without documenting varying amounts of details about the cost, the recipient and the giver.

Kerns said her organization does not necessarily advocate for one system over another. Nonetheless it’s been a trend for states, over about the past 10 years, to strengthen lobbying disclosure laws, she said.

Kerns’ observations about other states were reflected in County Attorney Montgomery’s recommendation for Arizona at the conclusion of his Fiesta Bowl investigation: “Report everything or take nothing.”

Montgomery, however, believes outright bans could lead lobbyists to search for letter-of-the-law loopholes in whatever definition of gifts is codified.

His position now is that the remedy is full, frequent and fast disclosure of just about everything.

Lisa Rosenberg, a lobbyist for the Washington DC-based nonprofit Sunlight Foundation that advocates for government transparency, said real-time reporting benefits lobbyists by enabling them to keep tabs on who their competition is talking to and allowing them time for a rebuttal.

Rosenberg said one of the main problems the Sunlight Foundation sees at the federal and state level is vague reporting. That can be minimized by requiring lobbyists to report the exact bill they are trying to pass or defeat — or at least the categories they are arguing for or against.

Random audits of lobbyist reports can also instill more confidence in the process without requiring a lot of resources, she said.

“It’s just like taxes. Nobody wants to get audited, so hopefully most of us don’t cheat on our taxes,” she said.

Suggesting small changes

For the most part, lobbyists are focused on complying with existing laws. Nearly every lobbyist asked to comment on how to improve the system suggested small changes, frequently coming back to the notion that reporting in compliance with the laws is the prime concern. None said they had a complete reform package in the works.

Molly Greene, senior government relations representative and lobbyist at Salt River Project, one of the state’s largest power and water utilities, said it is worrisome that that less-than crystal clear reporting laws lead lobbyists to interpret them differently.

For her, clarity in the laws would be a way to reduce inconsistencies.

“You want to be able to minimize the ambiguity of the law,” she said.

Marcus Dell’Artino, a partner and lobbyist with FirstStrategic Communications & Public Affairs, said he would welcome a real-time reporting system that allows a lobbyist to track records and amend errors quickly and easily.

Jeremy Browning, lobbyist with and director of GovGroup, said he remembers regular meetings held by the Secretary of State’s Office, where lobbyists were invited to discuss expenditure reporting with the officials who oversee the system.

Browning said those meetings benefited anyone who had questions about general reporting practices or reporting circumstances that stumped lobbyists.

Reinstituting those meetings would be a big help in ensuring reporting compliance, he said.

Gretchen Jacobs, a lobbyist with Arizona Governmental Affairs, said she thinks transitioning the current annual reporting from paper-only to electronic reporting would be a significant improvement.

A lack of authority

Though the Secretary of State’s Office is charged with collecting lobbyist expenditure reports, it has no auditing or enforcement authority. The only way an investigation into reporting errors or false reporting is ever started is if a complaint is lodged with the office, which almost never happens.

Amy Chan, the office’s assistant elections director, said without the legal authority to audit, the office is little more than a filing cabinet for lobbyist expenditure reports. Even if the office had the legal authority or requirement to conduct audits, it lacks the manpower to delve into the thousands of reports filed several times per year.

Currently, when those in the office happen to come across obvious errors in the reports, or lobbyists just don’t comply with the filing deadlines, they send them a notice that they are out of compliance.

But asking people to comply doesn’t always work, Chan admitted, and someone has to have auditing and enforcement authority.

As of this week, around 200 lobbying entities are still out of compliance with the annual reporting deadlines. The Secretary of State’s Office has asked each of them to file before April 30 or risk having information on their non-compliance forwarded to the Attorney General’s Office for investigation.

The Series

This is the third and final installment of a series exploring the state’s lobbying reporting system.

April 12: The first part showed that the vast majority of lobbying activity, because of loopholes and vague guidelines, gets reported without any beneficiary attached to individual transactions. It also showed that many of the reports contain errors, some typographical, others due to incorrect categorization of transactions.

April 19: The second part broke down different types of spending — where transactions list a beneficiary — to show which lobbyists and lobbying entities are most active and which lawmakers receive the most attention from lobbyists.

April 26: The third part explores past, present and future proposals to fix the system.

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