Ethics Reform Bills Aim for Status Quo

South Carolina State House Happenings


At the moment, the two hottest issues in the State House going under the banner “ethics reform” are income disclosure and independent investigation of lawmakers. There’s a problem, though: Neither bill purporting to address these issues would accomplish significant reform.

A quick analysis of both proposals:

(1) Income disclosure

Why does income disclosure matter? Currently, remember, state lawmakers are required to disclose almost nothing about their sources of income. That means, among other things, that they can be paid by special interests to support and promote legislation without the public knowing anything about it – and it’s all entirely legal.

Any reform to the state’s disclosure requirements should aim to expose conflicts of interest. That is the whole point of disclosure, and that is what the legislature’s proposal would mostly not do.

In fact, under the legislature’s leading income disclosure bill – H.3186 – a whole lot of income could still remain undisclosed. For instance:

  • DOT commissioner Mike Wooten could still choose not to disclose his company’s contracts with local governments – even though, as a member of the commission, it constitutes a clear conflict of interest.
  • Rep. Kenny Bingham, head of the Lexington-based company American Engineering, could still choose not to disclose contracts with the state-supported Will Lou Gray School, the Adjutant General’s office, and the Department of Corrections.
  • Sen. Hugh Leatherman, whose company received $30 million in state payments from 1993 to 2013, mostly from DOT, still wouldn’t have to disclose a dime of it under H.3186.
  • Leatherman’s son-in-law, DOT Commissioner John Hardee, works for Lamar Advertising – a subsidiary of which, South Carolina Logos Inc, has a massive multiyear contract with DOT – and he still wouldn’t have to disclose this form of income.

The bill avoids real disclosure requirements in two main ways:

First, it doesn’t require politicians to disclose money they make from most government contracts.

The government contract loophole in H.3186 would allow lawmakers to avoid disclosure of government sources of income (government contracts, subcontracts, etc.) that far exceed their legislative pay. The law is written in such a way that officials only have to disclose a contract between a firm they work for and the government entity they serve with. In other words, lawmakers would only have to disclose contracts between the private business they work for and the General Assembly. But most government contracts go through executive departments or agencies, not through the legislature itself.

Further, elected officials would only have to disclose the total dollar amount of a contract between a private firm and government agency they work for. But in order to understand a potential conflict, the public needs to know the amount in compensation the politician actually earns.

Finally, the bill says nothing about disclosure of sub-contracts from firms that do business with government. Thus politicians would still be allowed to profit off government contracts, with the public none the wiser, as long as the company they work for contracts with another firm working for the government.

Second, the bill would allow politicians to keep doing business with lobbyists, lobbyist principles, and local governments – and keep it all secret.

The other major loophole comes from a provision requiring the disclosure of the source of income received by the elected official, his or her immediate family member, or a business with which he or she is associated. When that money comes from a lobbyist or lobbyist principal, a state or local governmental entity, or a source regulated by the governmental agency with which the public official serves, it doesn’t have to be disclosed as long as it’s received through a commercial transaction in which “fair market value” is paid.

In other words, the politician could contract with lobbyists, lobbyist principles, etc., as long as the entity doesn’t overpay in an obviously improper way. Of course, an entity seeking to influence public policy could then purchase enormous quantities of goods and services from a lawmaker’s business, and the lawmaker would not have to disclose anything as long as he doesn’t overcharge in an egregious way (“fair market value”).

Income Disclosure Table

(2) Independent investigation

Why do we need independent investigation? Because right now, lawmakers are responsible for policing each other’s ethics violations. No one else in state government has that kind of self-policing power, and lawmakers shouldn’t have it either.

The legislature’s main proposal on independent investigation – H.3184 – wouldn’t fundamentally alter the current arrangement. That’s true for three reasons:

First, although lawmakers wouldn’t conduct the initial investigation – that job would be left to an understaffed Ethics Commission – they would be in charge of punishing.

The bill proposes to address legislative self-policing by moving the investigation of lawmakers accused of ethics violations from the House and Senate Ethics Committees to the State Ethics Commission, which currently handles ethics complaints against members of the executive branch. However, the bill would leave the ultimate determination of guilt as well as the power to punish lawmakers for ethics violations entirely in the hands of the legislative ethics committees. The most meaningful part of the ethics process, enforcement, would be left in the hands of lawmakers.

Second, lawmakers would still be influencing their own ethics violations by appointing the people who investigate them.

The initial investigation of complaints by the Ethics Commission wouldn’t even be truly independent, since lawmakers would get to appoint members to the commission. To be more specific, the Republican and Democratic Party caucuses of both legislative chambers would each appoint one commissioner to the newly constituted Commission. (These are the same caucuses that have long insisted they are not public bodies, despite using public resources, in order to avoid compliance with Freedom of Information requests.)

And third, lawmakers would gain new powers to investigate other agencies.

H.3184 would expand legislative power by allowing lawmakers to appoint members to a body that judges public officials in other branches of government. In effect, a bill being promoted as a means of correcting the legislature’s immunity from the law would actually give lawmakers new powers over state government.

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