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Lawmakers coddle a flawed system

By Gregory Weaver, Suzanne McBride and Linda Graham Caleca / The Indianapolis Star/News

INDIANAPOLIS (Feb. 14, 1996) -- Gifts starting pouring in as soon as new Rep. Irene Heffley walked in the door of the Statehouse.

Free calendars. Tote bags. Fortune cookies. Tickets to the Indianapolis 500. Pen lights. Movie passes. Apples.

The Indianapolis Republican found the buffet of gifts so distasteful that shortly before the current legislative session, she pledged to partake no more.

Hers was a symbolic and rare gesture in the Indiana General Assembly, where gifts and campaign donations from lobbyists flow freely and rules are so loose that lawmakers monitor themselves.

In Wisconsin, Heffley's gesture wouldn't have been necessary. All gifts to lawmakers there are banned. In Kansas, lobbyists can give gifts, but they can't spend more than $40 a year on each lawmaker. Indiana could learn from an increasing number of states that restrict or ban gifts from lobbyists, cap campaign contributions, encourage limited campaign spending and independently review ethics complaints.

Hoosier lawmakers -- in the midst of growing criticism -- are debating some solutions this year.

Yet critics say tougher proposals already have died -- specifically three measures that all would have put limits on campaign contributions.

Of the proposals still on the table, one calls for voluntary spending limits and partial public financing of campaigns. But Senate Minority Leader Robert Hellmann, D-Terre Haute, said it "is to campaign finance reform what a single step is to a thousand miles."

Another calls for campaign finance records to be computerized for better public access. Yet another would ban contributions by investors in riverboat gambling operations.

But if recent history is a guide, even those measures will be ignored, sidestepped or deep-sixed.

Hoosier lawmakers have gone to great lengths during the past 15 years to kill meaningful reform proposals. As a result, they have protected and even weakened a system that:

--Leaves lobbyists unbridled to provide lawmakers with as many gifts, trips and free meals as they see fit.

--Puts virtually no limits on the gush of campaign cash that special interests give or that candidates receive.

--Allows individual lawmakers to solicit contributions even while they are determining the fate of bills during the heat of a legislative session.

--Lets lawmakers judge for themselves whether one of their brethren has committed an ethical breach.

--Allows legislative leaders to appoint the commission that regulates lobbyists and their relationships with those very lawmakers.

Rep. Mark Kruzan, D-Bloomington, isn't optimistic that meaningful reforms are on the way. He believes lawmakers won't be forced to consider solutions to the problem until a political scandal arises.

"Then we'll start to get some real campaign reform," Kruzan said.

Heffley, elected in 1994, did her small part by sending a letter to lobbyists last November. She told them her decision to reject freebies would "serve to remind us both that laws are based on principles, not presents."

But one gesture by a single lawmaker does little to solve the problem -- the tide of gifts, trips and campaign donations lavished on legislators by special interests trying to bend laws in their favor.

"It's not going to be something that will catch on," predicted Edward Feigenbaum, a Noblesville attorney who publishes the political newsletter Indiana Legislative Insight.

As co-author of the Federal Election Commission's periodic review of campaign finance laws in all 50 states, he knows all too well that Indiana ranks at the bottom of that list.

That's because lawmakers are reluctant to reform.

First of all, they insist they're not influenced by gifts and favors anyway. Some say they don't want or use the gifts. Nor do some care about fancy receptions.

"I don't want to eat greasy food after I've been here for 10 hours and my children are at home waiting for me and I'm tired," said Rep. Candy Morris, R-Indianapolis. "It isn't a perk."

And they stress that if they have ethical conflicts, it's because they are part-time lawmakers with jobs outside the Statehouse. They say a full-time legislature of professional politicians isn't the answer, either.

House Speaker Paul Mannweiler, R-Indianapolis, argues that reforms don't help the public overcome its cynicism about government. "They basically think all politicians are crooks," he said.

Just a state away, Kentucky officials say reforms are painful but worth it. It took convictions of 18 lobbyists and lawmakers on corruption charges to bring change to the Bluegrass State. The scandal led to the creation of an independent nine-member board that oversees lawmakers and lobbyists.

Kentucky's reforms resulted in obvious benefits, said George Russell, director of Kentucky's election commission. The Legislature, he said, "is more responsive to the average citizen and less beholden to a PAC (political action committee) that once was able to give them thousands of dollars."

Though Indiana lawmakers have avoided a major scandal since the early 1980s, they recently took two giant steps backward in their regulation of campaigns and lobbying. "It's as if they want to invite scandal," charges attorney Russell Sipes, who is on the board of the citizens watchdog group Common Cause of Indiana.

Two major setbacks

Sipes said the first setback came in 1991 when lawmakers stripped the secretary of state's office of its authority to regulate lobbyists. That happened after then-Secretary of State Joseph Hogsett attempted to strictly interpret and enforce the state's lobbying disclosure law.

Now, a watered-down, vague law is administered by an ethics panel chosen by House and Senate leaders themselves. It's called the Indiana Lobby Registration Commission.

Common Cause is challenging the lobbying law in Marion Superior Court, saying it violates the constitutional separation of powers by giving the commission judicial and administrative powers. The second setback came last year when lawmakers invited political gridlock by handing control of the Indiana Election Commission to co-directors -- one a Republican and one a Democrat.

The agency, already hard-pressed to enforce the few campaign contribution limits on the books, used to be run by an appointee of the governor.

Critics like Feigenbaum now fear that those dueling directors could make administering campaign finance laws even more difficult. Those same naysayers, though, praise the current co-directors for staying above the political fray so far.

The laws are impotent because legislators largely have been left to their own devices, said David Maidenberg, former director of the state's election agency. If a lawmaker commits an ethical breach, it's other lawmakers who decide if there was wrongdoing.

All ethics complaints are turned over to House and Senate ethics committees, which are composed exclusively of legislators.

Those committees rarely meet, and members are hamstrung by their conflicting roles as colleague and investigator. Members shouldn't judge members, said Earl Mackey, executive director of the Kentucky Legislative Ethics Commission. "That's hard for any profession."

Many states, including Kansas, have consolidated the regulation of legislative ethics, campaigns and lobbying under one agency.

Kansas sets an example

Kansas is considered a model. Besides limiting lobbyists' gifts to $40 per lawmaker each year, Kansas restricts contributions from individuals and political action committees. Ethics complaints are heard by a board that includes no current lawmakers.

Kansas lobbyists and PACs also can't make contributions while the Legislature is in session. Furthermore, lobbyists are required to wear badges in the Capitol that clearly identify themselves and their clients.

Arizona, Kentucky, Tennessee and South Carolina -- all touched by legislative scandals in recent years -- also have passed stricter campaign finance laws. "Everybody should take the Kansas approach," Feigenbaum said, arguing that Indiana legislators shouldn't wait for a scandal before they act.

Scandal is precisely what led to Indiana's first comprehensive lobbying law.

In the early 1980s, two former Republican leaders of the Indiana Senate -- Martin K. "Chip" Edwards and Phillip E. Gutman -- went to prison on corruption convictions.

In response, Indiana legislators passed a law requiring lobbyists to register with the secretary of state's office and to disclose their expenses twice a year.

"I am a Republican and I believed that the Republicans had a special responsibility to clean up the mess created by Republicans," said Stephen C. Moberly, a former state representative who helped craft that law.

But in 1991, that law came under fire from lobbyists and lawmakers when then-Attorney General Linley Pearson issued a strict interpretation that required lobbyists to spell out nearly every cent they spent lobbying.

Pearson believed lobbyists should have been disclosing financial arrangements with lawmakers, including money that flowed through mortgages, credit cards and insurance policies.

His opinion said lobbyists also should divulge salaries, office rent and postage.

Much of that no longer must be reported under changes hastily -- and somewhat angrily -- approved by the General Assembly in 1992.

Legislative leaders who voted "yea" insist to this day that the law wasn't weakened. It wasn't an effort, they insist, to hide the flow of money and favors between lobbyists and lawmakers.

Instead, they argue that Pearson's opinion went too far.

"I don't think it was (relaxed)," said Senate President Pro Tempore Robert D. Garton, R-Columbus. "Some people think it was. But we're into semantics, interpretation."

A convenient excuse?

Moberly disagrees. He said the controversy over Pearson's opinion gave lawmakers a convenient excuse to gut the law.

Now, he said, "I don't think the legislature can police itself when it's appointing the commission that polices lobbyists."

Even the commission's new director and attorney, Annette Fancher Sheldon, insists she was not hired to be a watchdog.

Disclosure rules are fuzzy, she conceded. For instance, receptions must be reported but "entertainment" does not.

So when a question arises, Sheldon said, she asks lobbysts, "What do you think is right in your heart?" Then she urges them to do just that.

The commission hasn't even been able to come up with a definition of what constitutes lobbying under the new law, Feigenbaum pointed out.

The result has been wide-ranging interpretations of what types of lobbying expenses must be disclosed.

Some organizations, like the Indiana State Teachers Association, say they report every conceivable expense. That includes salaries of their full-time lobbyists and the cost of their offices.

But other special interests only calculate the time lobbyists spend talking to lawmakers face to face. They don't add up hours spent roaming the Statehouse hallways or advising clients on how best to influence lawmakers.

For example, the Indiana Chamber of Commerce, one of the state's largest and most powerful lobbying forces, reported spending about $36,000 in the first six months of 1995. But that figure doesn't include the full salaries of its eight lobbyists. In comparison, ISTA reported spending about $147,000 during that same period.

"My organization gets reported as one of the top-spending lobbying organizations when I know there are other groups who spend just as much or more than us, but they aren't fully disclosing their expenses," said Robert N. Margraf, chief lobbyist for ISTA.

Outsiders are startled

Even more startling to regulators in other states is this fact:

Legislative leaders select every member of the Indiana commission that administers the lobbying law and regulates lobbyists' relationships with lawmakers.

If the commission decides to investigate a lobbyist, it must get approval from legislative leaders to subpoena documents.

That troubles Dannie Trautwein, executive director of the Nebraska Accountability and Disclosure Commission, who said:

"I would think that at the very least the legislature would want to remove the perception that they could control this process or protect lobbyists who also happen to be their friends." i

Hoosier lawmakers also are reluctant to join a growing number of states that ban or limit lobbyists' gifts to lawmakers.

Garton, the Senate Republican leader, said gifts don't influence lawmakers. And Speaker Mannweiler said states like Wisconsin have accomplished little by prohibiting lawmakers from taking so much as a free cup of coffee.

Roth Judd, director of the Wisconsin Ethics Board, said that's not true.

"I think you'll find that most voters in Wisconsin think they have an honest government," Judd said.

On nearly every front, Indiana lags far behind.

While other state legislatures and even Congress force lawmakers to wait a year after leaving office before signing on as lobbyists, Indiana has no such rule. About a dozen former lawmakers now lobby.

Indiana also trails 30 other states that have tried to reduce the influence of special interests by capping campaign contributions from political action committees and wealthy individuals.

Kansas limits those contributions to $1,000 a year for each state representative candidate and $2,000 a year for each state Senate candidate.

Those contributions know no bounds in Indiana -- nor do key lawmakers show any interest in curbing the flow of campaign cash.

House Elections Committee Chairman Robert Behning, R-Indianapolis, said contribution limits infringe on First Amendment rights to speak and spend freely.

So spend freely is exactly what special interest groups do. In 1994, ISTA's political action committee spent about $311,000, more than any other PAC.

And Indianapolis liquor wholesaler Edwin T. French gave about $34,000 to candidates and the political party caucuses in both the Senate and the House.

A few lawmakers tried this year to push through limits on contributions -- but their proposals bit the dust.

Sen. Greg Server, R-Evansville, wanted to limit a PAC's contributions to $2,000 among all state representative candidates and $2,000 among all Senate candidates.

Spending targeted instead

But his proposal has been replaced by a bill that would set voluntary limits on campaign spending -- not on contributions or on the amount a candidate could raise.

Garton backs that bill because he's not fond of contribution limits. He said they unfairly penalize challengers who have to spend more to buy name recognition.

Under the proposal Garton likes, candidates who limit campaign spending would receive some public money, funneled through the two political parties. That money would come from taxpayers who, through an income tax checkoff, could contribute up to $5 when filing their state income taxes.

The proposal calls for Senate candidates to spend no more than $75,000 in order to receive $7,500 in public funds. House candidates who spend no more than $50,000 could qualify for $5,000.

Even so, those amounts would more than cover the average legislative campaign. In 1994, House candidates raised an average of $30,000, while Senate candidates raised an average of $60,000.

Too tough to tackle?

If you listen to Indiana's lawmakers, campaign finance reform is an impossible mission.

"It's real difficult to structure true election reform without it penalizing one party over another," said House Minority Leader John Gregg, D-Sandborn. "It's real, real tough to do."

When asked if he would push reforms if Democrats assumed control of the House in 1996, Gregg answered, "I don't know."

Indiana's only limits on contributions apply to corporations and unions. They are not allowed to give more than a total of $2,000 to all House candidates. The same limit applies to Senate candidates.

But violations can't easily be detected. The understaffed Indiana Election Commission only spot-checks lawmakers' reports for errors.

John Koenig, the election commission's co-director, said finding violations would involve manually poring over each candidate's campaign finance reports and tallying up total contributions from unions or corporations.

Those reports are not on computer for easy analysis. The paper records fill a bank of filing cabinets in the commission's office. Besides, corporations and unions can legally skirt those limits by forming PACs -- which can give unlimited funds.

A proposal, which already has cleared the House this year, could fix all that. But a similar proposal died last year.

Both called for the commission to computerize campaign finance records, making it possible to check for corporate violations with just a few keystrokes. Most lawmakers and the government watchdog group Common Cause agree that computerizing records would go a long way toward allowing the state to enforce campaign laws already on the books and enhance public access to campaign records.

But it's unclear whether that or any other reform will pass the General Assembly this year.

Yet another study suggested

In fact, key lawmakers are saying the best approach might be to delay reforms for a year so a blue-ribbon panel could study the issue and make recommendations to the legislature in 1997.

But committees have studied reforms during two of the past four summers -- and the resulting legislation either has failed or had little impact.

Rep. Vaneta Becker, whose proposal to limit campaign contributions died this year, thinks it's time to act.

"My only concern is that most (study) commissions are an excuse to delay or do nothing and I do think it's time to do something," said the Evansville Republican.

It's up to voters to decide if reforms come -- now or ever.

"There really is one thing that influences legislators more than money, and that is fear," said Rep. Kruzan.

"Voters ultimately have the single source of power as to whether you serve in the General Assembly -- or you don't." Projects writer Janet E. Williams contributed to this story.

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