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Watchdogs: Ethics Law Loopholes Leave Public in Dark About Lobby Perks

Whether it’s lobbyists’ spending on legislators or lawmakers who don't disclose their spouses' interests on personal financial statements, Texas ethics laws are full of holes.

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Bidness as Usual

This is one in a series of occasional stories about ethics and transparency in the part-time Texas Legislature.

There was nothing unusual about the $1,355.80 dinner José Camacho bought for Sen. Bob Deuell, R-Greenville, and his staff at the end of the last legislative session. Lobbyists do that sort of thing all the time. 

What's rare is that Camacho, who advocates for nonprofit federally qualified health centers, disclosed it.

There’s a measure of disclosure for lobbyists' legislative lavishing. But usually there are no names attached — just the dollar amounts — making it impossible to know which lawmakers the hundreds of Texas lobbyists are entertaining at any given time. As long as the expenditure is less than a certain amount per person, the only thing lobbyists must disclose is the spending categories and the type of government official being lobbied. 

In 2011 about 1,000 Texas lobbyists (out of roughly 1,800 registered lobbyists) spent a record $4.9 million on government officials and their family members, according to figures from the Texas Ethics Commission. In 2001, the figure was $2.8 million. Very little of that spending gets itemized, making it next to impossible for the public to connect the dots between lobby clients and the bills and contracts they are seeking from state government.

And watchdog groups say that Texas lobbyists aren't the only ones who have become particularly adroit at maneuvering through loopholes in state ethics laws. Legislators often use a quirk in the law to leave their spouses off of their personal financial statements.

Ethics lawyer Buck Wood, who helped craft 1973 disclosure reforms in the wake of the influence-peddling scandal known as Sharpstown, said that over time people have figured out how to get around the spirit of the law — and in the process they’ve left the public in the dark.

“It’s like any other regulatory statute. Initially, nobody was playing games. Everybody was trying to comply,” Wood said. “The information you’re getting has eroded to the point in some instances where you’re not getting any disclosures.”

When it comes to reporting on food and beverages, the most basic and common perks that lobbyists shower on lawmakers and their staffers, any expense under $90 does not have to be itemized. Lobbyists easily avoid triggering the itemization threshold by sharing expenses with other lobbyists. Mixing in people who don’t have to be reported to the Ethics Commission, such as a lobbyist's client or a political consultant, can also reduce the per-head expenses below the amount that’s required to be reported in detail.

Lobbyists say they use every legal tool available to avoid disclosing names, because politicians generally find it embarrassing when they turn up in ethics reports about wining and dining.

But government watchdogs say the result is that lobbyist spending disclosures on file at the Texas Ethics Commission are all but worthless.

“It’s kind of ludicrous that you have these largely meaningless reports,” said Andrew Wheat, research director of the watchdog group Texans for Public Justice. “All you know is that a lobbyist was wining and dining somebody somewhere.”

In the first seven months of 2011, for example, only three of the 20 lobbyists who spent the most on food and beverages had any expenditures that met the itemization threshold, according to Texas Ethics Commission records.

The top spender for that category during that period was Mary Tipps, a lobbyist for Texans for Lawsuit Reform. She spent $66,812 on food and beverage over those seven months on various government officials. None of them are named.

Sherry Sylvester, a spokeswoman for Texans for Lawsuit Reform, said the spending includes events to which all legislators were invited — a category for which itemization is not required regardless of the amount. Otherwise, she said, the spending was disclosed as the law mandates.

“TLR is meticulous in our compliance with all Texas lobbying regulations, including expense reporting and registration,” Sylvester said. “Support for lawsuit reform in Texas is broad and bipartisan, and we hold many events to which all legislators are invited, including a reception on the opening day of session and our annual legislative day luncheon and dinner.”

According to a Texas Tribune analysis, only 3.6 percent of the lobbyist disclosures for categories that can be itemized if thresholds are met — including food, booze, gifts and entertainment — had any detailed disclosures in 2011. That was down from 5.18 percent in 2005. 

That’s what makes Camacho’s disclosure about his dinner with Deuell and his staff in May 2011 so unusual: He didn’t have to do it.

The report for the final month of the regular legislative session says he spent $1,355.80 at Southern's Fine Dining on the Republican senator from Greenville. Camacho said there were more than 20 people at the dinner, meaning the amount per person was far below the threshold that triggers disclosure.

But Camacho says in his corporate culture he keeps every receipt and faces regular audits of all of his expenditures. He has imported that culture to his ethics filings.

“We over-disclosed it,” he said. “When you disclose, you disclose. We’ve got nothing to hide. It’s just the way we’ve trained our staff to do it.”

Deuell, a family physician who was a friend of Camacho and an advocate for federally qualified health centers long before he was elected to the Legislature, said the dinner didn’t sway him one way or the other.

While Camacho is over-reporting, other lobbyists have been accused of under-reporting. Lobbyists Andrea and Dean McWilliams, for example, threw birthday bashes in 2007 and 2012 that several lawmakers attended. Their thin reporting of the events, described in breathless detail in society magazines, later prompted criticism from government watchdogs.

Andrea McWilliams has said the couple adhered to ethics laws for both events.

For elected officials, the personal financial statement is a place where minor exceptions have turned into major loopholes.

For example, the form requires lawmakers to disclose when they have “business in common with a lobbyist,” but the law doesn’t define what constitutes a reportable relationship — and it doesn’t even force the official to name the lobbyist. Some members have volunteered the names to reporters who have asked, but others, including a former House speaker, state Rep. Tom Craddick, R-Midland, have not.

The personal financial statement also allows officials to keep secret any pensions they might be collecting. Gov. Rick Perry began drawing a state pension in early 2011 under a controversial provision that allows long-serving elected officials to legally double-dip from both their salary and state retirement.

The reason Perry's double-dipping came to light is that he had to reveal it on federal disclosure reforms when he ran for president.

Another provision obscuring full disclosure is the so-called “spousal loophole.” As long as members assert they have no “actual control” over their husband's or wife’s financial activity — a term that is not defined in law — they can leave it off.

The issue became newsworthy in 2010, when state Rep. Linda Harper Brown, R-Irving, reported no activity for her husband when she filed forms on her 2009 finances. A few months after the forms were turned in at the Texas Ethics Commission, The Dallas Morning News reported on her family's ties to a state contractor, who owned the Mercedes she was driving.

At the time, her husband, William Brown, told the newspaper his wife didn’t have to report anything about the car because it was provided to him as part of his compensation for work he did for the state contractor.

Earlier this year, Harper Brown said she supported efforts to require that a spouse's finances be included on the ethics filings. 

“It’s the appropriate thing to do,” she said.

But Harper Brown said the idea hasn’t been popular among her colleagues, who, like Sen. Glenn Hegar, R-Katy, argue they aren't always aware of their spouse's affairs.

Hegar said he does not keep track of the work that his wife, trial lawyer Dara Hegar, does at the Lanier Law Firm. Nor does he necessarily know about all the property she owns. The line where filers can list their spouse's name is left blank on his ethics disclosure form.

"Listing your wife, spouse, their occupation, that's one thing," Hegar said. "But listing everything, you know, other types of stuff, how, how do you even know if they have it or not?  You can ask, but you, you don't know what those things are and you don't have any control over it."

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Politics Glenn Hegar Rick Perry Texas Ethics Commission