Even over the phone, you can practically hear the veins throbbing on Sen. John Marty's forehead. The Roseville DFLer has made a career out of pushing for squeaky-clean government in Minnesota--and here he has just learned that the law requiring public disclosure of elected officials' business doings boasts "a loophole of unknown size."
"So you mean a lobbyist who could not give me a gift under [state] law can just pay me however much money as an independent consultant?" Marty asks rhetorically. "The answer, apparently, is 'yes.'"
That answer may do a great deal to explain last week's news that a lawmaker from north central Minnesota kept quiet a hefty "consulting fee" from a university program he was instrumental in funding. As chairman of the Senate Agriculture and Rural Development Committee, Sen. Dallas Sams, DFL-Staples, sponsored legislation in the 1997 session appropriating $1 million for the University of Minnesota College of Agriculture. Later that year, UM administrators made a deal to pay Sams, who lists his occupation as "farmer/farm business management instructor," $12,500 to help develop agricultural education programs.
While the university initially drew up a contract with Sams, it later decided that he should be paid through a company called Media Integrated Training Services. The St. Paul firm, in turn, received the money from the Minnesota Agricultural Education Leadership Council, a university program which receives some $300,000 a year from the appropriation sponsored by Sams.
The payment was uncovered by the nonprofit watchdog group Citizens for Fiscal Responsibility, which obtained the information from a university audit of the transaction. The audit concluded that the university was within its rights to hire Sams, but that the way the payment was structured suggested that officials had hoped to hide the transaction. Sams, who could not be reached for comment on this story, has said publicly that his actions were legal and that Senate attorneys assured him there was nothing improper about the payment.
But to hear Marty tell it, the now-notorious deal is exactly the kind of transaction the public-disclosure laws were written to forestall. In 1974 state legislators voted to require all Minnesota elected officials to file an annual SEI, or Statement of Economic Interest, disclosing their occupation, employer, investments, real estate, and other financial data. Marty and others say the law's authors reasoned that after having disclosed potential conflicts of interest, officeholders would think twice about making deals that could smack of cronyism.
Sams did not list the $12,500 university payment on his 1997 SEI. Nor should he have, according to the state agency that oversees the filing process, the Board on Campaign Finance and Public Disclosure. In its instructions for filling out SEIs, the board tells officials that honoraria, the payments many lawmakers get for giving speeches to civic groups, must be disclosed if they exceed $50. But "payments for services as an independent contractor," the board's instructions specifically note, need not be disclosed, no matter what the amount.
That's because the board interprets the disclosure law to refer only to an official's "associated businesses"--companies in which he has a financial interest--explains Assistant Executive Director Gary Goldsmith. "We have given that answer fairly consistently and not infrequently," Goldsmith says. The board believes that a broader interpretation could create hassles, he adds, such as forcing attorneys elected to state or local office to disclose their entire client lists.
But David Schultz, president of the Minnesota chapter of the campaign-finance watchdog group Common Cause, doesn't buy that reasoning. "If [the board's] interpretation is correct, it clearly does open up a loophole large enough to drive a truck through," he says. The disclosure law's intent, he adds, was to "prevent conflicts of interest or the appearance of a conflict of interest. This interpretation circumvents what the law was intended to accomplish."
Neither Schultz nor Marty knows how Minnesota's disclosure rules compare to those of other states, but Schultz offers a general guideline: "States that generally don't require this to be disclosed are states that don't have very good disclosure laws." States with "good" laws, Schultz says, include Arizona, which requires candidates and officials to disclose all sources of personal income as well as the occupations and financial interests of their spouses. Schultz expects Common Cause to take up the matter at a board meeting this week.
Marty, meanwhile, plans to rattle his own clean-government saber. When the Legislature reconvenes in January, he intends to introduce a bill calling for disclosure of officials' independent-contractor income, as well as spending by advocacy groups on "issue advertising" and all lobbyist expenditures. Current law requires lobbyists to provide only a rough estimate of how much they spend trying to influence policy--between $500 and $50,000, for example, or between $50,000 and $150,000. They must also reveal campaign contributions of more than $100 to individual lawmakers.
"Currently, a lobbyist cannot buy a lawmaker dinner, but can give them a $100 campaign contribution without anyone knowing," says Marty, adding that he's not optimistic about his bill's chances, given that a similar measure failed last year. "Any time I touch this, I'm just slammed down so totally by other legislators about how this is private and nobody's business." He's no more hopeful about convincing the public-disclosure board to revisit its interpretation of the existing law, but says he plans to try. "I don't care what the law's intent was. I care about making sure we fix the law now, because this is outrageous."