“Hey Bidder, Bidder . . . ”
A Review of Campaign Contributions and Special Interest Items
in the 2001-03 State Budget
September 24, 2001
State and national budgets traditionally have been used by elected representatives to “bring home the bacon” to their constituents. That brand of pork included money for recreational and civic facilities, new roads and social, educational and economic development programs.
The goal was to lessen the local tax burden and make a visible mark that would endear elected officials to their constituents at election time. Although public money was being used to benefit a narrow segment of the population, it was being used to benefit at least a portion of the general public.
But lately a new cut of pork has been showing up at an alarming rate in Wisconsin state budgets, which determine the spending of billions in tax dollars every two years. This new pork is being served up to benefit cash constituents rather than voting constituents.
It is this new way of doing business at the State Capitol that turned the 2001-03 state budget process into an auction where many policies and spending decisions were determined by special interest campaign contributions rather than general public need. Since last December when it became clear Gov. Scott McCallum would take over the East Wing, he has collected $1.85 million in large individual and political action committee contributions. Legislators accepted a record $1.6 million in campaign contributions from well-heeled special interests as they worked on the state budget, an 83 percent increase over the $875,715 raised by legislators in the first half of 1999 when they crafted the previous state budget.
This report, “Hey Bidder, Bidder . . .,” reviews 37 “new pork” budget proposals sought by the governor or affected by his veto, Joint Finance Committee, Senate Democrats, Assembly Republicans or legislative conference committee. The report shows how much in large individual and political action committee campaign contributions that legislators or the governor accepted from the special interest affected by the budget item between January and June 2001 when it was being considered, and how much was accepted since 1993.
New-pork budget items affected dozens of special interests - some big, some small - and they cost state taxpayers anywhere from a few thousand dollars to tens of millions of dollars. In addition, the budget was packed with non-spending items that provided undetermined benefits to narrow interests. The total value of the tax breaks, exemptions and other items that benefited special interests that were approved by legislators and for which the Legislative Fiscal Bureau could determine a dollar value was about $819 million - the equivalent of $211 for each of Wisconsin’s 3.9 million income tax filers. The total value of such items that were proposed or given final approval by the governor was about $573 million - the equivalent of $148 for each state income tax filer.
As you will see in the “new pork” examples that follow, many of the special interests that contributed substantially to a legislator’s campaign were not voting constituents, or did not even have business or other ties to that legislator’s district.
Many of the special interests that supported an item that would help them or opposed one that would cost them actively contributed during the budget session. In most cases the special interests targeted their contributions to legislative leaders, the governor, the caucus or the committee that helped them the most during the budget process.
In most cases, the campaign contributions from these special interests followed one of two patterns - a surge during the first six months of 2001 during budget debate, or that of a long, generous history of money flowing to key legislative decision-makers or the caucus that controls each house.
Many lawmakers have chosen to use the budget as a fund-raising tool, but these public officials are some of the most ardent practitioners:
Democratic Senate Majority Leader Charles Chvala
A veteran lawmaker who holds his caucus in lockstep, Chvala loaded the Senate Democrats’ version of the budget full of non-fiscal proposals to help special interests who generously contributed to Senate Democrats during budget deliberations. A memo by a Madison lobbyist made public in May accused Chvala of pressuring special interests during budget deliberations for more campaign contributions to his caucus. His caucus raised more than any of the four caucuses during the first six months of 2001 - $722,068. Chvala raised 95.5 percent of his large individual contributions from outside of his district and used his State Senate Democratic Committee to shear special interests for an additional $83,803. During last fall’s campaign, Chvala signed a pledge in support of campaign finance reform that would limit contributions, ban fund raising during the budget process and cap campaign spending. But nine months into the current legislative session, Chvala has paid the issue little more than lip service and he has done nothing to bring any of several measures to a vote in his house.
Republican Assembly Speaker Scott Jensen
Like Chvala, Jensen is a veteran lawmaker and prolific fund-raiser who developed the Assembly Republican caucus budget to provide dozens of breaks and benefits for special interests. Jensen and his caucus held no less than 30 fund raisers between February and July when the budget was being considered. Jensen and most of his caucus oppose campaign finance reforms that limit contributions and spending in order to curb the influence of big-spending special interests. And their opposition is no mystery. Money flows to power and Assembly Republicans raked in more than $458,000 during budget deliberations. During budget negotiations, Jensen’s campaign committee accepted $107,362 - or 97.5 percent - of his large individual contributions from interests outside of his suburban Milwaukee district. In addition, his Republican Assembly Campaign Committee raked in $55,090 from special interests. In previous six-month campaign finance reports, Jensen initially failed to properly identify the business interest of dozens of well-heeled contributors. At the time, a Jensen spokesman defended the violation of law as an effort by the campaign to protect the privacy rights of rich donors.
Democratic Sen. Brian Burke, Joint Finance Committee co-chair
As a key budget architect, Burke used his position to vigorously seek large special interest contributions to fuel his run for attorney general in November 2002. To this end, Burke raised substantially more - $222,513 - than any other member of the entire legislature during the half of 2001 when the budget was being considered. More than $102,000 - or 96 percent - of the large individual contributions he accepted were from outside of his district. Burke also had the highest campaign cash balance of any member of the legislature - $358,637 - as of June 30. In addition to his influence on Joint Finance, Burke also had a direct impact on the final budget sent to the governor as one of the conference committee members. Burke sponsored a comprehensive campaign finance reform bill that bans fund raising during the budget process, but subsequently did nothing to move the measure through the legislative process. In addition, Burke broke a public pledge to seek funding for campaign finance reform in the budget.
Republican Gov. Scott McCallum
McCallum is actively seeking more large contributions from new, wealthy special interests as he prepares to run for his own term as governor in November 2002. He proposed a budget that was warmly received by the business community for its tens of millions of dollars in tax breaks despite a structural budget deficit, discouraging economic forecasts and his mantra to tighten spending. McCallum touted cutting $62 million in spending with 315 vetoes in the final budget, however, the governor originally proposed or gave final approval to at least $573 million worth of special interest items, equivalent to $148 for each state income tax filer. McCallum accepted nearly $230,000 in large individual and political action committee contributions during the last half of 2000, much of it in December when it became obvious he would take over as governor, and while he was working on the 2001-03 state budget. He even scheduled two fund raisers designed to draw movers and shakers. Last Dec. 18, he scheduled an event in Pewaukee that sought contributions of $250 to $1,000 for an early peak at his proposed budget. It was later canceled due to a snowstorm. On March 6, McCallum held a $1,000-per-plate inaugural ball in Milwaukee that reportedly raised more than $900,000.
ITEMS UP FOR BID
Combined Reporting Tax
A proposal by McCallum to tax Wisconsin companies based on income from their out-of-state operations would have increased state business taxes by an estimated $98 million a year. But it was rejected in the Joint Finance Committee, Assembly GOP and conference committee versions of the budget after strong opposition by business, manufacturing, banking and insurance interests. These interests contributed $104,433 to Joint Finance Committee members, $113,326 to the Assembly GOP and $106,024 to conference committee members amid budget negotiations in the first six months of 2001, and $2.6 million to members of those committees and Assembly Republicans since 1993. Jensen received the most money from these interests from January through June 2001 - $40,631 - and since 1993 - $231,213.
An item originally proposed by the governor that would apply the sales tax to custom computer software and collect $51.5 million in 2001-03 was later dropped in the Assembly Republicans’ budget and by the conference committee. It was strongly opposed by business interests, which contributed $65,546 to Assembly Republicans and $55,431 to conference committee members during budget deliberations. Since 1993, business interests have contributed $951,773 to the Assembly GOP and conference committee members. The top recipient of money from these business interests was Jensen, who received $19,456 during budget negotiations.
An item to provide up to $3 million in 2002-03 to subsidize ethanol producers was approved in the final budget after being proposed by McCallum, and later supported by the Assembly Republican caucus and the conference committee. It was backed by the agriculture industry, which contributed $38,979 to McCallum, $12,350 to Assembly Republicans and $2,000 to conference committee members during budget negotiations. Since 1993, agricultural interests have contributed $94,293 to McCallum and $224,666 to the Assembly GOP and conference committee members.
School Start Date
Worth an estimated $66 million, the tourism industry sought from the governor and the legislature a budget item that makes it nearly mandatory for public schools to start classes after the travel-heavy Labor Day weekend. The industry contributed $49,728 to Gov. Scott McCallum and $66,597 to legislators during budget negotiations. Since 1993, tourism interests have contributed $102,387 to McCallum and $725,265 to current legislators. The measure was approved in the final budget.
A proposal to pay Dominion Venture Group about $75 million to buy a northern Wisconsin prison built by the Edmund-Okla. developer without the state’s permission was approved in the final version of the state budget. Dominion employees contributed $4,001 to McCallum and $2,900 to the legislature during budget negotiations. Since 1999, company employees have contributed $15,001 to McCallum and legislators.
In a move small specialty brewers say is aimed at squeezing them out of taverns and limiting consumer choice, Miller Brewing got McCallum and the legislature to include in the budget a series of revisions in state law that allow brewers to provide to taverns substantially more promotional and advertising material for their brand. Large individual and PAC contributions from Miller Brewing and Miller Brands totaled $31,900 to the governor and $20,575 to legislators during budget deliberations, and $191,721 since 1993.
This measure would have exempted Wisconsin’s rent-to-own industry from state consumer protection laws. They also would not have had to disclose the interest rates they charge customers. The measure was initially put in the budget by the Assembly Republicans and then retained by the legislative conference committee before it was vetoed by McCallum. Rent-to-own company owners and employees, many of whom hail from Texas, contributed $1,000 to Jensen and $1,000 to conference committee members Burke and Chvala during budget negotiations, and $9,650 to the Assembly GOP and conference committee members since 1998 when they started contributing to Wisconsin candidates.
The state’s fireworks industry popped an item into the budget that critics say would have made it easier for them to sell dangerous, illegal fireworks to state residents. It allows wholesalers to sell fireworks to any non-resident who signs a statement saying that the explosives will not be used in Wisconsin. The measure was sponsored by the Senate Democrats and retained by the conference committee. Industry owners and employees contributed $3,200 to Senate Democrats and $2,650 to conference committee members during budget negotiations. Since 1993, the industry has contributed $20,660 to Senate Democrats and conference committee members. McCallum vetoed the item.
The outdoor advertising industry plastered an item in the budget that would have allowed billboard owners to cut vegetation that obstructs their signs. Senate Democrats and Assembly Republicans crafted similar versions of the proposal which were included in the conference committee’s budget. The billboard industry contributed $4,800 to Senate Democrats and Assembly Republicans during budget deliberations, and $16,920 since 1993. McCallum vetoed the measure.
American Family Bridge
A $1.5 million bridge in the town of Burke was included in the Senate Democrats’ budget and then later in the conference committee budget even though town officials and others haven’t signed off on it. Reports indicate the bridge proposal was sought by American Family Insurance, which contributed $4,850 to Senate Democrats during budget deliberations and $22,450 since 1993. Sen. Burke received the most contributions from American Family during budget negotiations - $2,500. McCallum vetoed the budget effort to move up the project’s construction schedule, but said that he would try to expedite the project.
The commercial broadcasting and cable industries sought sales and property tax exemptions on digital equipment worth a tidy $3.6 million. Senate Democrats backed the sales tax exemption and rebate on such equipment for radio and television interests, but it failed to make the budget cut. The industry has contributed $7,685 to Senate Democrats since 1993. Meanwhile Senate Democrats, the Assembly GOP, the conference committee and McCallum all supported the cable industry’s bid for a property tax exemption on their digital equipment. These legislators accepted $8,147 in cable industry contributions during budget negotiations, and $66,422 since 1993. Democratic Sen. Kimberly Plache of Racine collected the lion’s share of the contributions - $7,050 in the first six months of 2001. McCallum accepted $2,500 from the industry during budget negotiations, and $5,266 since 1993.
A budget break for certified public accountants lowers the amount of required accounting experience from two years to one year to get a Wisconsin license. It also allows businesses to organize as accounting services corporations if more than 50 percent of its shareholders are CPAs. Currently, all shareholders must be CPAs for businesses to organize these corporations. The measure was backed by the Assembly Republicans and the conference committee. These lawmakers received $10,033 in campaign contributions from accountants while they worked on the budget, and $86,917 since 1993. The top recipients of campaign cash during budget negotiations were Burke, who got $1,833, and Jensen, who received $1,550. McCallum, who kept the item in the final budget, accepted $14,175 in campaign contributions from them during budget deliberations and $30,325 since 1993.
Senate Democrats and the legislative conference committee slid into the budget an item that exempts the purchase of water-park slides from the 5 percent sales tax, saving them an estimated $120,000 a year. Owners and employees of water parks contributed $900 to Senate Democrats and conference committee members during deliberations, and $5,400 since 1993. The tourism industry as a whole contributed $49,600 to Senate Democrats and conference committee members during budget negotiations, and $281,576 since 1993. The top three Assembly GOP recipients during the first six months of 2001 were all conference committee members - Jensen, $5,525; Rep. John Gard, $1,300 and Assembly Majority Leader Steve Foti, $1,125. Burke was among the top three Senate Democratic recipients of industry money during budget negotiations at $5,276.
Building Trades Licensing
Senate Democrats sponsored non-fiscal measures sought by unions representing metal workers and crane operators that would have required workers in those trades to be state certified. The legislative conference committee retained the crane operators requirement in their budget. Unions representing the ironworkers and crane operators contributed $8,000 in PAC contributions to Senate Democrats during budget deliberations, and $23,000 in individual and PAC contributions since 1993. McCallum vetoed the crane operators licensing proposal after it was opposed by the construction and road building industries, which contributed $443,111 to McCallum during budget deliberations, and $609,315 since 1993.
Wisconsin restaurants and taverns sought a $4.7 million a year property tax exemption on kitchen equipment through the Assembly Republicans. Restaurant and tavern owners are enthusiastic contributors who gave the Assembly GOP $6,894 during budget deliberations, including $1,800 to Jensen. Since 1993, they have contributed $139,137 to Assembly Republicans - the most to any of the four caucuses.
Single Sales Factor
The governor and Assembly Republicans sought to change the way businesses are taxed in Wisconsin by basing taxes on business sales alone, rather than sales, property and payroll combined. The change eventually would have reduced business taxes $80 million a year. McCallum and the Assembly GOP received $422,858 during budget consideration from business, banking and insurance interests - those chiefly affected by the new taxing method. Since 1993, they have contributed $2 million to McCallum and Assembly Republicans.
Assembly Republicans sought a budget item that would let landlords deduct the cost of carpet cleaning due to normal wear and tear from a renter’s security deposit. Currently, security deposits generally are used to cover property damage. Real estate interests contributed $19,755 to Assembly Republicans during negotiations on the budget, and $353,216 since 1993.
Bank And Credit Union Rules
Banks and credit unions sought extensive changes in state regulations that would expand their investment, merger and other business opportunities. The measures were included in McCallum’s budget, dropped by the Joint Finance Committee and then resurrected by the Assembly GOP. Assembly Republican legislators accepted $21,500 during the budget session. Since 1993, they have accepted $422,411 in large individual and PAC contributions. McCallum received $46,976 during the first six months of 2001 and $83,329 since 1993.
McCallum approved a budget item backed by Assembly Republicans and the conference committee to relax restrictions on breweries that own restaurants and serve their own beer. Under the budget item, the maximum number of restaurants a brewery could own and serve beer in would expand from four to 20. Brewers contributed $7,325 to the Assembly GOP and conference committee members during their deliberations on the budget. Leading recipients were Chvala’s State Senate Democratic Committee, which received $3,000, and Jensen, who received $1,900. Since 1993, breweries have contributed $57,625 to the Assembly Republicans and conference committee members.
An item that would benefit insurance companies, financial institutions and other computer-intensive businesses was sponsored by Assembly Republicans. The budget measure shortened the depreciation schedule for valuing tax-exempt computers from eight years to two years. This would have lowered the statewide value of exempt computers from $3.2 billion to $1.7 billion, and cut $37 million a year in state aid to communities to hold down property tax increases caused by the exemption. These industries contributed $68,780 to the Assembly GOP during their budget deliberations, and $1.1 million since 1993.
Assembly Republicans sponsored a budget item that would have translated into big-dollar savings for developers. The two-part provision would have prohibited counties from charging developers impact fees for transportation and recycling facilities, libraries, parks and playgrounds in new developments. It also would have prohibited municipalities from requiring developers to pay impact fees before building permits are issued for projects. Developers contributed $25,944 to the Assembly GOP during the first six months of the year, and $467,934 since 1993. The top recipients during budget negotiations were Jensen, who accepted $8,950, and Rep. John Gard, the Joint Finance Committee co-chair who accepted $7,174.
Waste haulers would have gotten an estimated $260,000 a year sales tax break on when they buy trucks and parts under a budget proposal sponsored by Assembly Republicans. The item would have exempted companies who specialize in hauling garbage, snow and other materials that lack economic value. Waste haulers and trucking interests contributed $5,015 to Assembly Republicans during budget negotiations. Since 1993, these special interests have contributed $116,050 to the Assembly GOP.
The agricultural industry sought a sales tax exemption and a property tax break that would have given farmers an $18.2 million break. Both items were inserted in the budget by Assembly Republicans. The $4.7 million sales tax exemption would have eliminated the sales tax on dozens of farm tools, equipment and supplies. The $13.5 million property tax break sought to lower the assessment on swamp, waste and forest lands owned by farmers and shift the cost of the cut to other property owners. Agricultural interests contributed $12,350 to Assembly Republicans during budget deliberations, and $207,660 since 1993 - the most to any of the four caucuses.
Cash Register Break
The conference committee created and McCallum approved a property tax exemption for fax machines and cash registers worth an estimated $4.2 million a year when it becomes effective in 2003. The decision benefits a wide range of business interests - big and small - who contributed $23,581 to conference committee members during budget deliberations, and $149,020 to them since 1993.
This economic development program approved in the final budget allows the state to designate areas where new or existing high-technology businesses will get state tax credits equal to their total property, income and sales taxes. Initially, McCallum proposed 20 zones that could offer up to $100 million in total credits. The Joint Finance Committee and the Assembly GOP tinkered with the size and cost of the program, while the Senate Democrats voted to drop it from the budget. The conference committee ultimately rewrote the plan to create nine zones and provide up to $45 million in credits. The proposal got solid backing from business and industry, which contributed $334,000 to McCallum and $102,346 to Assembly Republicans, Joint Finance and conference committee members during budget deliberations, and $622,197 to McCallum and $1.1 million to those legislators since 1993. Among the top legislative recipients were Jensen, who accepted $19,456, and Burke, who accepted $19,325.
Dog Track Winnings
Senate Democrats put a $693,000 proposal in the budget that would have allowed dog track owners to keep unclaimed winnings. Ultimately, the conference committee crafted a plan to let them keep an estimated $173,300 in unclaimed winnings beginning in 2002, and it was approved by McCallum in the final budget. The industry contributed $1,026 to Burke, finance committee co-chair and a conference committee member, during budget negotiations. Since 1993 dog track owners have contributed $21,416 to Senate Democrats, including $1,576 to Burke.
The road builders gained handsomely from the state transportation budget where McCallum and the legislature approved three more major highway construction projects that will cost between $292 million and $319 million. These projects add to a $1 billion-plus list of major road projects approved in previous legislative sessions that are paid for by state gas taxes and vehicle registration fees. Road builders contributed $113,016 to McCallum and legislators during budget negotiations, and $544,951 since 1993. Top legislative recipients were Burke, who took in $5,050, and Jensen, who accepted $4,700.
Assembly Republicans tried to drive home a proposal that would allow the state to contract with private companies to maintain and rehabilitate state highway trunks. That would have given the road builders an inroad into some of the more than $700 million in state transportation aid to local governments. Road builders contributed $8,200 to the Assembly GOP during budget deliberations, and $190,882 to them since 1993.
The banking industry opposed a budget plan by Senate Democrats to change a state law that gives them first dibs at getting money owed to them by a bankrupt business. Prior to 1998 when the industry successfully sought the change, wage claims by workers got first priority when a business went bankrupt. The legislative conference committee decided to drop the plan in their compromise budget. The industry, which is a major contributor to statewide and legislative candidates, gave conference committee members $31,368 during budget negotiations and $200,782 since 1993. Among the top three recipients of industry money during budget negotiations were Jensen, who received $11,800, and Burke, who received $10,718.
Efforts to let local governments impose a 2 percent gross revenues tax on telephone companies got a busy signal at the end of the budget process. The Senate Democrats sponsored the item, which would have allowed cities, towns and villages to raise an estimated $60 million a year. However, the conference committee dumped the measure after pressure from the telecommunications industry and the business community’s general opposition to new or increased taxes. Conference committee members received $32,221 in contributions from business and telecommunications interests during budget negotiations, and $205,690 from them since 1993.
Drug Makers Windfall
Assembly Republicans sponsored a prescription drug plan that provided what critics describe as a $16 million a year windfall for pharmaceutical manufacturers. The measure would have exempted new drugs that the companies introduce between June 2002 and July 2004 from rebate agreements in the plan that save taxpayers money by lowering the cost of the drugs. Pharmaceutical manufacturers contributed $550 to the Assembly GOP during budget negotiations, and $20,150 to them since 1993.
Senate Democrats sponsored a budget item to repeal the state’s minimum markup law at the behest of a variety of big business, agriculture and transportation interests. The coalition billed their pitch as a pro-consumer means to lower gasoline prices, while small business and other opponents argued that the repeal would ultimately cost consumers more by letting big business control prices, force competition out of business and eventually rule the market place. Interests identified through a coalition that advocated the minimum markup repeal contributed at least $200 to Senate Democrats during budget negotiations, and at least $14,360 since 1993. However, the considerable influence and campaign contributions from the business community and its trade organizations could not be applied to this issue because various business sectors had conflicting views on it. The business community contributed $77,116 to legislators during budget negotiations, and $878,208 since 1993.
After granting banks a $1.1 million a year property tax exemption on their automated teller machines in the last budget, Senate Democrats and the conference committee voted to take it away from them in this budget. However, McCallum, who accepted $151,001 from banking interests during budget negotiations, decided to let them keep their exemption. The governor has received $242,530 from banking interests since 1993.
Boston Store Renovation
McCallum’s budget successfully sought $6 million in state aid to help Saks Fifth Avenue renovate its Boston Store and headquarters at downtown Milwaukee’s Grand Avenue Mall. Critics called it a sweetheart deal that could draw similar requests from retailers for aid that is supposed to be used to create higher-paying manufacturing jobs. The funding package was approved in subsequent versions of the budget. Employees of one of the players in the deal - Wisconsin Energy Corp. - contributed $8,525 to McCallum and $5,350 to legislators during budget negotiations. Since 1993, McCallum and legislators have accepted $149,296 in individual and PAC contributions from Wisconsin Energy and its subsidiaries. Among the top legislative recipients were Republican Sen. Alberta Darling of River Hills, $8,050; Jensen, $7,175; and Republican Sen. Peggy Rosenzweig of Wauwatosa, $5,410.
A budget item that restricts sales and increases paperwork for wineries that ship to and from Wisconsin was backed by Senate Democrats and the conference committee. It was later approved by McCallum. Small wineries argue it will hurt mail-order sales and limit consumer choices. Liquor distributors, taverns and restaurants, which supported the measure, claim it was needed because the state was losing tax dollars and Wisconsin retailers were losing sales. Senate Democrats, conference committee members and McCallum accepted $78,437 in campaign contributions from those industries during budget deliberations, and $256,202 since 1993. Meanwhile, wine interests contributed nothing to legislators and $1,000 to McCallum during budget negotiations, and only $1,882 to McCallum and legislators since 1993.
Business Health Plan
A proposed budget plan to make insurance more affordable for small business owners and their employees was vetoed by McCallum after strong opposition by the insurance industry. A hybrid of plans sponsored by both Senate Democrats and Assembly Republicans and adopted by the conference committee sought to control how much the industry could raise its rates under the new Private Employer Health Care Coverage Program. The measure also had the support of at least one trade group that represents small business, but McCallum said in his veto that premium rate controls could increase insurance costs for some businesses. McCallum accepted $47,676 in insurance industry campaign contributions during budget deliberations, and $77,195 since 1993.
Senate Democrats and the conference committee agreed to make it easier and faster for one of their most generous special interest groups to get paid for some of their bills. They sponsored a non-fiscal item that requires insurers to pay claims for covered chiropractic services within 30 days. Senate Democrats accepted $4,870 and conference committee members accepted $4,720 in contributions from chiropractors during budget talks. Burke took in most of the cash - $4,420. Since 1993, these lawmakers have received $155,457 from chiropractors. McCallum, who approved the measure in the final budget, accepted $45,691 from chiropractors during budget deliberations, and $58,781 since 1993.