The state of state government is corrupt. The way the public’s business has been conducted at the Capitol in recent years is criminal – literally criminal. Testimony of the Wisconsin Democracy Campaign on Senate Bill 1

Assembly Campaigns and Elections Committee, January 25, 2006

January 25, 2006

The state of state government is corrupt. The way the public’s business has been conducted at the Capitol in recent years is criminal – literally criminal.

This sorry reality is the ultimate indictment of the enforcement agencies that are supposed to police ethical behavior in Wisconsin government and state election campaigns. Wisconsin is in the midst of the biggest political corruption scandal in our state’s history, and a big part of the problem is that the watchdog agencies charged with enforcing the state ethics code and campaign finance laws are toothless. The Wisconsin Democracy Campaign strongly supports the creation of a new Government Accountability Board as called for under Senate Bill 1 to restore integrity and independence to the enforcement of high ethical standards in state and local government.

Three things need to happen to restore the public’s faith that our state ethics code and campaign finance laws will be faithfully interpreted and rigorously enforced. First, the dysfunctional state Elections Board and Ethics Board need to be replaced by a politically independent agency. Second, this new agency must have teeth – specifically, it should have the authority to not only investigate but also prosecute wrongdoing. Third, it must have the staff and budgetary resources to do its job right.

Senate Bill 1 as it was originally written passed these three tests. The amended version of the bill that emerged from the Joint Finance Committee and was approved by the Senate passed the first two tests but not the third. Both versions put some serious distance between the members appointed to the new Government Accountability Board and the elected officials whose conduct they would be responsible for overseeing. Both versions create an enforcement division within the new agency with full investigative powers and prosecutorial authority. The bill approved by the finance committee and passed by the Senate no longer includes funding for the new agency, however. Funding either needs to be restored in SB 1 or a trailer bill providing the necessary financial resources needs to be developed and approved.

If these three things happen, Wisconsin will have taken a major step forward in addressing the growing problem of government corruption. And the state will have taken a major step toward restoring the public’s faith in the integrity of state government and state officials. As the recent Wisconsin Policy Research Institute poll showed, only 6% of state residents now believe elected officials are representing voters’ interests. The vast majority of citizens believe that their elected representatives are just advancing their own political careers and doing the bidding of wealthy special interests.

This is not a sustainable condition. A government cannot be regarded as legitimate when only 6% of citizens feel they are represented. Dramatic action is needed to address this disconnect between the citizenry and those in charge of the government.

One of many necessary steps is the restoration of public confidence that ethics and elections rules will be taken seriously. The state Elections Board and Ethics Board have provided countless examples in recent years of why they are not up to the task of policing either ethics in government or the way election campaigns are conducted in Wisconsin.

Here are just a few such examples:

The Elections Board has repeatedly chosen to look the other way even when confronted with evidence of flagrant violations of campaign finance laws. In one instance, a major campaign donor was found to have been among numerous contributors who substantially exceeded the $10,000 annual limit on campaign contributions. The contributor appeared before the Elections Board, admitted she had exceeded the limit, and offered to pay a fine to make amends for the illegal campaign contributions. The board refused to take her money and imposed no penalty of any kind on her or any of the other violators.

A “Citizens Right to Know” law was enacted in 1998 requiring the Elections Board to create a system of electronic filing of campaign reports by July 1999. The board squandered several hundred thousand dollars it initially received without successfully implementing an electronic disclosure system. More than two years after the deadline for implementation of the Citizens Right to Know law, the board submitted a request to the Joint Finance Committee for $3.5 million to fund development of the new system, which the committee rejected. After battling years of bureaucratic foot dragging, the Wisconsin Democracy Campaign and another citizen group hired a law firm to pursue a court order. Under threat of a lawsuit, the Elections Board adopted an emergency rule we drafted implementing a system of electronic filing – at no additional cost to the taxpayer. Four years after the Legislature passed it, the Citizens Right to Know law finally took effect.

The Elections Board’s mishandling of Citizens Right to Know implementation and its $3.5 million funding request to do work that we ultimately proved could be done at no extra cost by adoption of a simple rule should have caused taxpayers and elected officials alike to shudder as the board embarked on the state voter registration project.

The Elections Board entered into a contract in November 2004 with the global outsourcing firm Accenture to develop a statewide voter registration list. Under the contract, Accenture is to be paid $13.9 million for computer software development and maintenance. In addition to the $13.9 million for Accenture, millions more are being spent on other aspects of the voter registration project – including $4.1 million to another private firm, Deloitte Consulting, for project management and $10.2 million for state Elections Board staff oversight, hardware and data entry – for a total cost of $28.2 million. In contrast, Minnesota relied on state employees to do its statewide voter list and completed the work at a cost of $5.3 million.

The Accenture voter-list contract is a horribly raw deal for the taxpayer that was cut in a secretive and dangerously unaccountable manner. Now the voter-list project has evolved into another apt illustration of Elections Board bungling, as Wisconsin has missed the January 1, 2006 federal deadline for implementation of a statewide computerized voter registration system and still faces many major obstacles to completion of the project.

Perhaps the best illustration of the Elections Board’s dysfunction is its response to an open invitation from the state Supreme Court to craft new regulations closing a gaping loophole in Wisconsin’s campaign finance laws that special interest groups have exploited to avoid the law’s disclosure requirements and campaign contribution limits. Instead of taking the Court up on its invitation, the board instead opted for a rule that institutionalized the loophole. Then the board significantly widened the loophole when it ruled that state political parties also can avoid campaign contribution limits and disclosure requirements in Wisconsin law by running so-called “issue ads.”

After the U.S. Supreme Court upheld the federal McCain-Feingold campaign reform law in December 2003 and ruled that issue ads could be regulated and unlimited, anonymous donations known as “soft money” could be banned, the Democracy Campaign asked the Elections Board to revisit the issue and drafted for the board’s consideration a proposed truth-in-campaigning rule requiring full disclosure and closing the state soft money loophole.

On three procedural votes, the board voted to move forward with the rulemaking. But when the time came for the vote on final approval of the rule last September, the Elections Board voted down the disclosure rule 5-4. The key vote against the rule was cast by the Democratic Party of Wisconsin’s appointee to the board, who had previously voted three times to move forward with the rulemaking – once in January and two more times in March – before higher ups pressured her to change her position.

If Wisconsin had a politically independent board devoted to campaign finance law enforcement such as the one created by Senate Bill 1, the soft money loophole allowing unlimited, anonymous donations that even Trent Lott has called “sewer money” could be closed in Wisconsin. If not for our dysfunctional Elections Board, the “full and prompt disclosure of all election-related activities” that 90 percent of voters supported in the 2000 referendum would be reality. Phony front groups like All Children Matter, Americans for a Brighter Tomorrow, Citizens for Clean and Responsible Government, Coalition for America’s Families, Coalition to Keep America Working, Independent Citizens for Democracy, Alliance for a Working Wisconsin, Working Families of Wisconsin and so many others would be a thing of the past.

The Elections Board’s failures are due to a fatally flawed structure that has produced a classic example of the fox guarding the chicken coop. On the other hand, the state Ethics Board is equally ineffective but for somewhat different reasons.

In recent years, Wisconsin has seen a half dozen of the most powerful politicians in the state charged with nearly four dozen felonies – including extortion, money laundering, kickbacks, bid rigging, illegal campaign contributions and criminal misconduct in public office. Five have been convicted. Pretty ugly stuff for the state formerly known as squeaky clean Wisconsin. And powerful testimony to the ineffectiveness of the government watchdog agencies.

The Ethics Board should have been the public’s first line of defense against the corrupt behavior that ultimately resulted in these criminal charges and convictions. Instead the Ethics Board was asleep on the job. Not only did the board fail to act preemptively to nip these problems in the bud, we eventually learned that the board conducted no investigation of abuses in the legislative caucuses even after the story of illegal campaigning in these state offices broke in the media.

There was no investigation for good reason. Whenever the Ethics Board wants to conduct an ethics investigation, it has to go hat in hand to the Joint Finance Committee and ask for money to fund the probe. Keep in mind that one of the legislators caught up in the corruption scandal – and eventually charged with 18 felonies and later convicted – was co-chairman of the finance committee at the time. Another former finance committee chairman is now serving time in federal prison.

It is truly mind boggling to think that in Wisconsin we require an enforcement agency to ask a legislative committee for funds to launch an ethics investigation of that committee’s chairman. Such a ridiculous situation makes it painfully obvious why we need the kind of independent ethics agency with expanded enforcement powers that is created by Senate Bill 1.

How ethics investigations are authorized and financed is only one of the barriers to good enforcement, however. An even more fundamental problem speaks volumes about why the Ethics Board and Elections Board should be merged into a single enforcement agency under the direction of a far more politically independent board.

The common thread running through most all of the criminal charges and most all of the ethical lapses in Wisconsin politics today is the chase for campaign money. But the Ethics Board is not responsible for policing campaign finances. This bears repeating: The chief ethics enforcement agency in the state is powerless to respond to the single biggest reason ethical corners are being cut in Wisconsin. When evidence of corruption surfaces – and nowadays it almost inevitably involves the solicitation or offer of campaign contributions – the Ethics Board’s answer to those demanding action is “sorry, we don’t have jurisdiction.”

In fairness, our state ethics code and the Ethics Board itself were created at a time when no one could envision the role campaign contributions would play in state elections in the 21st Century. The profound change in the way election campaigns are conducted demands a profound change in the way ethics enforcement is handled. Senate Bill 1 embodies this needed change.

Without this change, we will continue to have an Elections Board that is a jury of politicians’ pals, not a jury of citizens’ peers devoted to serving in the public interest. We will continue to have an Ethics Board that seemingly has never met a conflict of interest it couldn’t tolerate. State law forbids public officials from accepting gifts because of the office they hold. Yet the Ethics Board sees no problem with the governor accepting free flights on the private plane of a big campaign donor.

State law forbids public officials from accepting anything of value from lobbyists or the organizations that employ them. Yet the plain meaning of those words – “anything of value” – has not prevented the Ethics Board from giving its blessing to dozens of gifts from lobbyists to this governor and the one who preceded him.

The Ethics Board had no problem with the exclusive contract the College Savings Program Board gave Strong Capital Management even as evidence mounted that the mutual fund company was playing fast and loose with investors’ money. New York ’s attorney general blew the whistle and the rumors of illegal trading turned into a criminal investigation, but the Ethics Board remained untroubled – despite the fact two senators serving on the College Savings Program Board that gave Strong the sweetheart deal to run the state’s EdVest program had longstanding political, social and professional ties to Strong.

One of the senators sitting on the board that granted Strong its lucrative contract is a former Strong employee whose political career was launched with the help of large campaign donations from Strong executives. To this day much of his net worth is tied up in Strong funds. The other senator also is a longtime recipient of Strong campaign contributions and her family at one point during her service on the board held more than a half-million dollars worth of Strong funds.

If these relationships do not represent a conflict of interest – as the Ethics Board ruled they do not – then what exactly would amount to a conflict of interest?

We are confident that this question, and so many others that are being deflected or dodged by the Ethics Board and Elections Board, will be addressed – and answered in the public interest – by an independent enforcement agency that is empowered to confront the formidable ethical problems plaguing Wisconsin politics. Senate Bill 1 creates just such an agency. Wisconsin needs this legislation to be enacted in the worst way. And soon.