i L i n d . n e t

Another review of expenditure reports filed by lobbyists and the businesses and organizations that employ them confirmed what I initially noted two weeks ago–money spent on the gifts given to public officials by lobbyists are rarely publicly disclosed, despite the requirements of state law.

This time I looked at reports filed by individual lobbyists, as well as those by the businesses and organizations that they represented.

The result was the same. With a handful of exceptions, expenses for gifts go largely unreported.

Most gifts reported by legislators are relatively small, but with 76 lawmakers and their staff, the numbers can add up. There are many gifts delivered to legislative offices on opening day, others spread throughout the legislature. There are routine “good will” gifts, boxes of pastries or manapua delivered to offices of legislators who sit on key committees. Small tokens–coffee mugs, flowers, books, calendars, pens, and so on. There are plate lunches delivered to committee staff during the busy periods towards the end of the session, lunches with key legislators.

During the January-February 2010 period, Capitol Consultants reported $1,691 spent on gifts to legislators, with another $857.51 on food and beverages.

Legislative Information Services of Hawaii, and veteran lobbyist Dick Botti, reported $25 spent on gifts on their own behalf and another $25 by the Food Industry Association.

Blue Planet Foundation spent $1,775.84 on gifts. Sierra Club reported $200, and Common Cause added $40.

Retail Merchants of Hawaii reported spending $6,848 on food and beverages for lobbying. Hawaiian Airlines reported $7,192 for food/beverages. Both groups said no legislator received a value of more than $25, but with just 76 legislators, the math gets tricky. Likely both groups paid for large receptions where legislators mixed with larger numbers of association members and corporate representatives, but it isn’t at all clear from the reports.

But check out the lists of gifts disclosed by House Speaker Calvin Say, Senate President Colleen Hanabusa, and House Education Chair Roy Takumi, who have filed the most detailed reports year after year.

Going through those lists, most gifts are not disclosed by the lobbyists or organizations involved.

Unfortunately, the lobbyist law (Chapter 97 HRS) is written to make enforcement and penalties almost impossible to impose.

§ 97-7 Penalties; administrative fines. (a) Any person who:

(1) Wilfully fails to file any statement or report required by this chapter;

(2) Wilfully files a statement or report containing false information or material omission of any
fact;

(3) Engages in activities prohibited by section 97-5; or

(4) Fails to provide information required by section 97-2 or 97-3; shall be subject to an administrative fine imposed by the commission that shall not exceed $500 for each violation of this chapter. All fines collected under this section shall be deposited into the general fund.

(b) No fine shall be assessed unless:

(1) The commission convenes a hearing in accordance with section 97-6(c) and chapter 91; and

(2) A decision has been rendered by the commission.

The requirement that the commission complete a full contested case hearing with all the protections of Hawaii’s Administrative Procedures Act (Chapter 91) virtually guarantees that no fines can ever be imposed for failure to report lobbyist expenditures.

I suppose lobbyists worked hard to keep any meaningful penalties out of this statute.

But there are other systemic problems as well. Attempting an informal audit of the reported expenses using Ethics Commission records is both tedious and frustrating.

The commission staff does a good job of receiving required reports, pursuing those that are late or missing, and filing the documents so that they can be made available to the public for inspection and copying. But beyond that basic level, the commission hasn’t had the staff to seriously did into the complex mix of reports.

Start with the legislators. Current state law only requires reporting of individual gifts valued at over $25, or a combination of gifts from the same source during the year worth a total of $200. There are no guidelines for putting a value on the gifts, and no requirement for the donor to note when a gift exceeds the $25 threshold. And, to make things more confusing, gifts are sometimes attributed to the organization and sometimes reported in the name of the individual lobbyist, without any indication of the identity of the client they are representing in presenting the gift.

Campaign advertisements require disclosure of the underlying sponsor. It would make sense to require gifts by lobbyists to include a similar reporting standard.

Senate President Hanabusa reports gifts received in chronological order, by date. House Speaker Say lists gifts alphabetically by donor, and then in reverse chronological order, with the most recent gift from a single donor at top, followed by their earlier gifts.

Then there’s the issue of timing of reports. Lobbying expenses are currently reported in three annual periods: January-February, March-April, May-December. Documents filed for each period are filed separately in binders at the commission. Reports filed by organizations are available online, while those of individual lobbyists are not.

Gift disclosures by legislators and other public officials are only reported annually and including all gifts during the period beginning June 1 of the prior year through June 1 of the year in which the report is filed. Attempting to link reported gifts received by legislators with the matching report of the expenditure made by the lobbyist, if any, necessarily becomes a multi-step process.

There’s also confusion over when an expenditure is to be reported. The commission guidelines say expenditures should be reported on an “accrual” rather than a cash basis. This means that meaning that costs are reported during the period they are incurred, rather than when the bills are actually paid. However, it seems clear that compliance with this is inconsistent, at best.

And what about those categories? If a lobbyist brings plate lunches for a legislator’s staff, should those be reported as a gift to the legislator or buried in the category of “food and beverages”? There are no clear guidelines.

There’s an additional layer of complexity. At some point in the past, the Ethics Commission added that instruction that lobbyists should not report expenses of gifts if they are reimbursed by their clients. This removes a possible audit point and makes tracking any particular gift much more difficult.

But the exemption from disclosure for reimbursed expenses doesn’t appear in the statute, and does not appear to have been adopted by rule. It is contained in the commission’s instructions for completing by lobbyist expenditure reports, with no authority referenced. Although it eliminates duplicate reporting, this is not always desirable.

The Campaign Spending Commission once toyed with a similar exemption on the theory that if campaign contributions received by candidates were disclosed, there would be no reason to have the contributors also report. However, the pairing of reports by contributors (corporations, pacs, unions, etc) and by recipients has proven its worth as an audit tool. The same should be true in the case of expenditure reports by lobbyists.

Short answer: It’s a mess. And the situation is unlikely to change unless a scandal generates public pressure and forces overall review and reform. Piecemeal changes, with lobbyists finding their own personal interests at stake, are unlikely to yield results in the public’s favor.