Statehouse Sellout


WAITING TO DEAL: Lobbyists crowd against the window outside the Indiana House chambers to keep an eye on state representatives at the Statehouse.
Staff Photo / Frank Espich


First of 3 parts.
Index to the series





By Janet E. Williams and Suzanne McBride / The Indianapolis Star/News

INDIANAPOLIS (April 12, 1997) -- Before state lawmakers ever cast votes on some of the most contentious bills, the battle is over.

Impassioned speeches delivered on the floors of the Indiana House and Senate often don't matter. Logical arguments and policy discussions sometimes come far too late.

Oh, legislators still are public servants with opinions and feelings that help guide their decisions on a myriad of issues. But lawmakers don't operate in a realm where the simple merit of ideas is king.

They must contend with a tobacco company lobbyist offering to take them to dinner, a paid advocate for the nursing home industry who wants a private talk in the hallway, or some other special interest group dropping a reminder about the large contribution made to a political campaign.

That's often when the outcomes are decided.

It's purse-string politics, and it's a hard habit to break.

After a year of intense scrutiny and public outcry over the clout of special interests, it's business as usual at the Statehouse.

Legislators have all but ignored protests from thousands of Hoosiers who have demanded change and want lawmakers to serve the public.

They still dine with lobbyists and go to fancy receptions after a day at the legislature. They still take gifts. They still go on expense-paid trips.

But most importantly, they still rely on special interests to fund their campaigns and, in return, look favorably upon their benefactors' legislative needs.

Nothing illustrates the influence of special interests in this session more clearly than two lobbying powerhouses -- the nursing home and tobacco industries.

Both gave significant amounts of money last year. And both skillfully negotiated the process to get major pieces of legislation passed this year.

As those two groups were getting what they wanted, legislators were paying lip service to campaign finance reform. But lawmakers' most potent proposals would change almost nothing.

None of the proposed reforms addresses the heart of the problem -- that the huge sums of money poured into political campaigns buy access and influence most Hoosiers never could imagine.

What's worse, it's virtually impossible for average citizens to navigate the maze of documents that are supposed to tell them who's giving money to their legislators.

If lawmakers are serious about reining in the influence of special interests, they better do it fast because the 1997 legislative session is expected to end April 25.

If they choose to do nothing, the issue will disappear from the legislature's agenda for at least a few years because there's an election in 1998. And no one likes to consider major change with Election Day looming.

Some political observers say if reform eludes the Indiana General Assembly -- even after unprecedented public outcry -- then nothing can prod the legislature into reforming itself.

So far, there's been good reason to worry. Many legislators still are hesitant to give up the special interest money they've come to depend on.

Last year, legislative candidates running in 125 House and Senate races accepted a staggering $6.7 million from special interests. That's 76 percent of the total $8.8million contributed to state legislative candidates in 1996.

That doesn't include the approximately $160,000 contributed to the 25 senators who weren't even running for re-election in 1996. Most of that money -- 84 percent -- came from special interests.

Nor does that include the $9.7million that businesses, unions and other special interests reported spending on salaries, gifts, receptions and meals to lobby legislators.

These groups are called special interests because they push narrow legislative agendas, sometimes at the expense of the general public. They spend money on lawmakers for one reason: access. They want access to the legislators who decide whether a bill that helps or hurts them becomes law.

As The Indianapolis Star and The Indianapolis News showed last year in an investigative series, Statehouse Sellout, special interest groups that gave the most money generally got what they wanted from the legislature.

They still do.

Flexing lobbying muscles

The nursing home and tobacco industries show clearly that money speaks loudly at the Statehouse. Those two groups alone gave legislative candidates and the political parties more than half a million dollars last year.

When those two groups went up against the lobbyists for smaller groups with less money, there was little doubt who would win. The nursing home and tobacco lobbyists prevailed.

It also didn't hurt that some lobbyists working on behalf of the tobacco interests used to be lawmakers themselves -- Phillip Bainbridge, Nelson Becker, Thomas Fruechtenicht and Mark Palmer.

Rep. Michael Murphy saw firsthand the power of tobacco's lobbying muscle last month when he took on the industry with House Bill 1133, a proposal to force manufacturers into listing all the ingredients in cigarettes.

Murphy called the proposal a consumer-rights measure that would for the first time give Hoosiers detailed information about what's in a cigarette.

"Virtually every lobbying group in the state was against this," said Murphy, an Indianapolis Republican.

Among the opponents were well-known tobacco firms like Philip Morris and a business organization, the Indiana Manufacturers Association. They argued that the law would force businesses to reveal trade secrets.

Murphy said he thought he had a chance -- until the final hours before the vote when he saw tobacco lobbyists pulling lawmakers aside and slipping them notes to press their case.

"They have awesome power. You just witnessed it today," Murphy said after his bill was defeated 59-39. "The tobacco companies just hire everyone's friend."

This is the kind of lobbying that goes on every day outside the chambers, where 150 elected representatives meet to do the public's business. Special interest groups and their lobbyists have an enormous stake in the bills that become law:

• As a result of their lobbying this year, the tobacco interests won't have to tell Hoosiers their cigarettes contain antifreeze and Freon, a chemical used in air conditioners.

• Successful lobbying efforts mean nursing home owners won't face new competition for another year and the public has fewer choices in long-term health care for loved ones.

The money contributed by special interests drowns out the voices of average citizens who don't have the same resources, said John Bonifaz of the National Voting Rights Institute in Boston. His group is pushing campaign reform throughout the nation.

"It's clear that those who have access to money are speaking much more loudly than other citizens," Bonifaz said. "The monied interests who control our elections ultimately control our government and our politics. Ordinary citizens are left out in the cold."

Special interests, big money

When ordinary citizens do contribute, they typically give $25 or $50 to their representative or senator. Well-organized special interest groups and their political action committees give 10 times as much and contribute to many more lawmakers and challengers. They also carefully target their contributions.

That's why House Speaker John Gregg, D-Sandborn, Republican leader Paul Mannweiler, R-Indianapolis, and Senate President Pro Tempore Robert Garton, R-Columbus, attract such hefty donations from special interests. Everyone wants to make an impression with powerful legislative leaders.

In 1996, Gregg received about $112,500, 79 percent of which came from special interest groups; Mannweiler got more than $175,000, 68 percent of which came from those organizations; and Garton received about $41,000, 80 percent of which came from special interests.

Neither Gregg nor Mannweiler faced serious opposition in last fall's election, and Garton wasn't even a candidate. But all three wield immense influence over what legislation gets passed.

And it's not just legislative leaders who attract the money. Contributions flow to lawmakers who sit on committees making important decisions that affect those special interests.

The nursing home industry is a good example.

Last October, its political action committee, the Indiana Health Care PAC, gave Rep. Timothy Brown $750 while two men with interests in the nursing home industry contributed a combined $1,000. Those three contributions alone made up one-fourth of all the money Brown received in the final reporting period.

Brown of Crawfordsville had no opposition last year. He serves, however, as the ranking Republican member on the Public Health Committee, which decides whether many nursing home bills make it to the House floor for a vote. Last year, Brown sponsored legislation limiting competition among nursing homes.

One campaign finance reform advocate said there's only one reason why a contributor gives money to candidates who have marginal opposition or none at all.

"Obviously, it's more than just a goodwill gesture," said Julia Vaughn, policy director of the citizen watchdog group Common Cause. "There is no other reason to give other than to create a favorable impression or gain access in some way."

That favorable impression

That favorable impression was crucial when the nursing home industry persuaded lawmakers to go against their longstanding principles and override a bill that then-Gov. Evan Bayh vetoed last year.

Conservative Democrats and Republicans advocate a free and open market, yet most decided that existing nursing homes should continue to be protected from competition.

That's not hard to explain, says Rep. Win Moses, D-Fort Wayne.

"I had one legislator tell me, 'Win, this is not about philosophy; this is about contributions,'" Moses said. He got $1,000 from nursing home interests in 1996. Last year alone, the nursing home industry gave legislative candidates and political parties about $143,000. And that's on top of the $133,000 it gave in 1994 and 1995.

A good chunk of the 1996 money -- nearly $58,000 -- came from the industry's political action committee, the Indiana Health Care Association PAC.

That money is relatively easy to find in the campaign finance reports candidates file with the Election Commission. What's a whole lot harder to track is the tens of thousands of dollars pumped in by individual nursing home owners and corporations.

Unless citizens know the names of those individuals and corporations, the money is virtually invisible. Few people know that Anderson-based Countryside Manor Partnership operates a nursing home, or that Ava Smith of Tarpon Springs, Fla., is the former chairwoman of the Indiana Health Care Association's board.

Nor do many Hoosiers know that the Miller brothers of northeast Indiana have ties to the nursing home industry. And they give big.

V. Richard Miller, a former Republican state senator, and his brother Wally, a registered lobbyist, gave about $56,000 to candidates and the political parties last year. That's on top of the nearly $30,000 they gave in 1994 and 1995. Attempt to offset influence

Those amounts surprised V. Richard Miller. But he shrugged it off, saying it's easy to lose track of how much he gives because he makes dozens of contributions.

These donations went to leaders of both parties and to numerous candidates, and contributions tell legislators he's interested in issues that affect nursing homes, said Miller.

People like him must contribute in order to offset the influence of unions, added Miller, a state senator from 1976 to 1988.

While Miller might be concerned about other special interest groups, he is quick to boast that the nursing home industry is a formidable lobbying force, thanks in part to the Miller brothers.

"I was the health care guru when I was there. I still get (legislators) who call."

The influence of the Millers and others doesn't surprise senior citizen advocates -- like Ruth Sears -- who have found themselves at odds with the nursing home industry on many issues.

"Nobody has as much clout as the industry. They have so much money, and they're so influential. They've given so much to the legislators that it's very difficult for volunteer organizations such as we are to stand up in opposition to them," said Sears, the longtime state president of United Senior Action.

The group, which represents 16,000 senior Hoosiers, urged lawmakers to uphold the governor's veto of the nursing home competition bill -- House Enrolled Act 1280. The legislation, known as certificate of need, prohibits anyone from expanding nursing homes or opening new ones unless existing facilities are 90 percent filled.

Opposite sides of the lobby

United Senior Action says the measure protects bad nursing homes and keeps prices high. As a result, many people are being forced into substan dard homes because well-run facilities are full and can't expand, senior citizen advocates say.

"In Indiana, we have a closed market because that's what the nursing home industry has heavily lobbied for," said John Cardwell, a lobbyist for Citizens Action Coalition.

Industry lobbyists, however, defend the certificate-of-need system, arguing that nursing homes should be treated differently from other businesses because the state closely regulates long-term care.

"It's difficult to say it's anti-competitive because it's not a free market to begin with," said lobbyist John Holmes, director of legislative affairs at the Indiana Health Care Association.

Holmes is among at least nine professional lobbyists who keep a close watch on this and other issues for the nursing home industry. They have a lot to protect.

Few businesses are as dependent on taxpayer dollars as nursing homes. On average, nearly 70 percent of their budgets come from Medicaid, and this year alone, they're estimated to receive about $745 million in state and federal funds.

V. Richard Miller acknowledges his stake -- his firm MMM-Invest Inc. leases land, buildings and equipment to operators of 31 nursing homes.

"I pay attention to what's going on because my rent check depends on (nursing homes) getting paid," he said. "If the government comes in and shuts down Medicaid, they lose 67 percent of their income."

United Senior Action doesn't have the same kind of financial stake in the legislative process -- and that hurts it.

This session, the group backed a bill that would have increased the personal monthly allowance nursing home residents receive from Medicaid -- from $30 to $60 a month. This is the only money they have to spend on clothing, toiletries and other items.

The bill, estimated to cost about $6 million a year, didn't get a hearing in the House or Senate.

When money is difference

Paul Severance, executive director of United Senior Action, and other advocates believe money could have made the difference. If they gave thousands of dollars in campaign contributions like the Millers and other industry backers, the allowance bill would be on its way to becoming law, they contend.

"Do I think all the money they have spent buys them favorable outcomes on key issues? Sure," Severance said.

Money made the difference for the tobacco industry and its allies, too.

Consider what happened on Feb. 11 when the Senate, after weeks of delays, voted narrowly to override Bayh's veto of Senate Enrolled Act 106.

The new law bans local communities from regulating the sale and promotion of tobacco products -- which runs counter to Democratic and Republican arguments that government should be closer to citizens.

SEA 106 pitted anti-smoking groups such as the American Cancer Society against organizations that include the Tobacco Institute, Philip Morris, R.J. Reynolds, the Retail Council, Indiana Grocery and Convenience Store Owners and the Indiana Oil Marketers Association.

Those groups that lobbied for SEA 106 contributed about $254,000 to legislative campaigns in 1996. In contrast, the American Cancer Society and the other anti-smoking advocates contributed no money.

The tobacco-related money is as difficult to identify as nursing home donations, unless citizens are aware of the alliances of the tobacco and business groups. l

The business groups took the lead in the debate, allowing the tobacco interests to stay in the shadows.

State Sen. Michael Gery said tobacco groups use this strategy throughout the country to wipe out local tobacco-control laws.

"Clearly this is the tobacco industry's program," said the West Lafayette Democrat. "It doesn't mean other groups don't legitimately support it, because small stores and gas stations make a lot of money off cigarettes."

Tough force to fight

On the floor of the Senate the evening of the vote, Gery tried in vain to persuade his colleagues to vote against SEA 106.

He said the tobacco companies backed the bill because they didn't want to be in the position of fighting anti-smoking laws in hundreds of small towns throughout the state.

Supporters of the measure say it makes the tobacco laws uniform statewide, much like the laws governing the sale of alcohol. But getting local lobbyists for tobacco interests to talk about this or other legislative issues is difficult. The tobacco companies' local lobbyists declined to discuss their proposals and tactics.

The vote on SEA 106 confirmed for anti-smoking advocates how tough it is to win at the state level, particularly if they are new to politics at the Statehouse.

That's what Anita Wood Gaillard learned when she testified against the bill before a Senate committee in January 1996. She runs a stop-smoking program at St. Francis Hospital & Health Centers in Beech Grove.

Gaillard found the atmosphere at the committee hearing intimidating. "They talked to one another and not to us. We had to kind of lean up and listen," she said.

If she had been unable to attend that hearing, she would have had a hard time finding out what happened, because most committees don't keep written records of their meetings.

Quietly switching sides

A year later, Gaillard was among the dozens of people outside the Senate chamber when lawmakers voted on the override. The group included several dozen children whose teachers wanted them to see democracy in action.

But the children and most of the volunteers saw little.

In the middle of the afternoon, when the vote was expected to be taken, senators recessed for nearly two hours so Republicans could caucus -- or privately discuss the override vote.

When they returned to the floor, they handled some other matters as the crowd in the hall slowly thinned. By the time the vote was taken at nearly 6 p.m., the children and the volunteers had left.

Only a few people remained -- lobbyists such as Tim Filler of the American Cancer Society and about a dozen people from the other side. They watched as the bill narrowly passed 26-24.

Afterward, Sen. Robert Hellmann went across the street to the Indianapolis Press Club, where he had drinks with lobbyists who campaigned for the bill. Hellmann's vote turned out to be crucial to the tobacco interests. Last year he voted against them, but this year he quietly switched sides. When asked about the switch, he said he didn't remember how he had voted last year.

Joining the Terre Haute Democrat at the Press Club were James Poinsett and Grant Monahan of the Retail Council and Marianne Kiely of Baker & Daniels, who represents Philip Morris.

"I didn't go there to meet them. They just happened to be there," Hellmann said, adding that he didn't remember who shared the table with him that night.

Kiely referred questions to the headquarters of Philip Morris in New York City. Saying no one from the company will comment on the matter, spokesman Greg Prager added, "We don't discuss the lobbying activities of our company as policy."

These cozy relationships between lawmakers and lobbyists don't benefit the public, said Charles Lewis, executive director of the Center for Public Integrity, a nonpartisan watchdog group in Washington, D.C.

Laws should be passed because they're good public policy, not because lawmakers and lobbyists are friends or because certain groups and individuals contributed to a lawmaker's campaign, he said.

Lewis expressed dismay that after a year of scrutiny, lawmakers and lobbyists haven't changed their behavior.

What's going on in Indiana "doesn't really give the image of an independent, public-spirited legislature," he said. "It gives the appearance of a legislature that is in the pockets of certain economic interests.

"That's not the way it's supposed to be. It's not what we were taught in civics class."