Capitol Mercenaries

Big Special Interest Donors Aren’t Choosy Which Side They’re On,
As Long As They’re Well Compensated

July 15, 2008

Introduction

Most powerful special interests value power over party and their own parochial objectives over broad public policies that benefit the many rather than the few. They accomplish their goals by making thousands of dollars in campaign contributions to influence policymakers who control the state’s purse strings.

And many policymakers who control the legislature are equally to blame. They are the other half of this pay-to-play partnership and use key legislation to bait special interests for campaign cash often while the proposals are being considered.

This report, “Capitol Mercenaries,” shows how special interest campaign contributions flowed during consideration of the most important proposal the legislature must pass every two years – the state budget – as well as other legislation.

For this report, the Wisconsin Democracy Campaign reviewed large individual and political action committee contributions from special interests to legislators during the first six months of 2001, 2003, 2005 and 2007 – the periods when the legislature did much of its work on the past four state budgets.

WDC found:

  • The stream of special interest campaign contributions to the Senate during budget consideration shifted sharply with party control;
  • In the two budget periods when party control was split among the two houses, $1 of every $3 in large individual and political action committee contributions to majority Assembly Republicans and majority Senate Democrats during the first six months of 2001 came from the same donors, and $1 of every $4 in contributions to the two caucuses in the first six months of 2007 came from the same contributors;
  • Republicans who have controlled the Assembly since 1995 accepted substantially more special interest contributions per capita than Democrats during each of the past four six-month budget periods. In addition, total contributions to Assembly Republicans in 2007 continued to be substantially larger than contributions to Assembly Democrats even though the GOP majority narrowed in the 2006 elections to a slim 52-47;
  • Most legislators don’t get a second glance from special interests until they have a title. WDC reviewed campaign contributions to 13 legislators in leadership positions from 2001 through 2007 and found half received substantially more campaign contributions while they were leaders than they did before and after they held those jobs.

In The Majority Means In The Money

Special interests value power regardless of the political party that has it and there is no better proof than the flow of their money during the changes in party control in the Senate in recent years. Democrats controlled the Senate in 2001 by an 18-15 majority before Republicans captured control in 2002 to hold an 18-15 margin. Republicans improved their majority to 19-14 in the 2004 elections, but Democrats recaptured control in the 2006 races with an 18-15 margin.

So Democrats controlled the Senate in 2001 and 2007 and Republicans in 2003 and 2005, and the campaign contributions during the first six months of each of those years when the legislature was considering the state budget shifted with party control.

Seven special interests consistently gave more money to Democrats when they controlled the Senate and then to Republicans when they were in control (see charts 1-7). Those special interests were energy, health professionals, insurers, tourism, transportation, nonprofit groups and the telephone industry.

For instance energy interests, which are mostly utilities, contributed $6,800 to majority Senate Democrats versus $3,300 to Republicans in the first six months of 2001. When the Republicans had control in 2003 and 2005, energy interests contributed $12,032 to Republicans versus $6,060 to Democrats in the first six months of 2003 and $10,400 to Republicans versus $2,600 to Democrats in the first six months of 2005. After Democrats regained control, they received $14,855 and Republicans got $8,125 from the energy industry during the first six months of 2007.

Another 11 special interest groups contributed more to the party that controlled the Senate in three of the four six-month periods. In most cases, those special interests gave more to majority Democrats in the first six months of 2001, and then shifted more dollars to majority Republicans in the first six months of 2003 and 2005, but continued to give more to Republicans in the minority than to majority Democrats in the first six months of 2007. Those special interests were agriculture, banking, business, construction, health facilities, lawyers and lobbyists, manufacturing, natural resources, real estate, education and retirees and homemakers (see charts 8-18).

Three special interests did not substantially reduce or increase their contributions with changes in party control. Those were the partisan Republican and Democratic candidate and party committees who supported candidates in their respective parties, and labor unions and public employees who gave more to Senate Democrats than Senate Republicans in all four six-month periods.

For instance, labor unions contributed $80,640 to majority Senate Democrats compared with $3,500 to Senate Republicans in the first six months of 2001. In 2003 and 2005 when Republicans controlled the Senate, labor contributed $80,409 and $36,750, respectively, to minority Democrats versus $6,350 and $8,250, respectively, to majority Republicans. In 2007, labor gave majority Senate Democrats $46,650 versus $4,600 to Republicans.

Playing The Field

Most powerful special interests play both ends of the political spectrum, making generous and well-timed campaign contributions to Democrats and Republicans at the same time to get what they want.

This is especially evident when there was split control of the legislature in two of the past four budget periods. Democrats controlled the Senate and Republicans the Assembly during the first six months of 2001 and 2007.

During those two periods a significant amount of contributions to both majority Senate Democrats and majority Assembly Republicans came from the same individuals and PACs.

In the first six months of 2001, special interests contributed a total of $864,348 to Assembly Republicans and Senate Democrats. Nearly one third of those contributions – $276,029 – came from wealthy individuals and PACs who gave to both caucuses during the period. The special interests that played both caucuses included:

  • Insurance executives and PACs who gave $55,158 of which $32,175 or 58 percent came from contributors who gave to both majority caucuses;
  • Road builders who gave $22,318 of which $11,058 or 50 percent came from donors to both caucuses;
  • Utility executives and PACs whose contributions totaled $12,155 of which $6,000 or 49 percent came from contributors to both caucuses;
  • Transportation interests who gave $33,754 of which $14,475 or 43 percent came from donors to both caucuses;
  • Real estate interests who gave $45,498 of which $19,253 or 42 percent came from donors to both majority Assembly Republicans and Senate Democrats;
  • Banking and financial interests who contributed $82,368 of which $31,133 or 38 percent came from donors to both caucuses;
  • Tourism, leisure and entertainment interests who gave $59,600 of which $23,519 or 39 percent came from contributors to both caucuses;
  • Manufacturing interests who gave $63,105 of which $23,400 or 37 percent came from donors to both caucuses.

Amid those contributions, here is how the legislature handled some of the 2001-03 budget items sought or opposed by those special interests:

  • Rejected a plan to tax businesses on their out-of-state operations – known as combined reporting – that would have increased state business tax collections by $98 million a year. The plan was opposed by manufacturing, banking and insurance interests, among others;
  • Rejected a plan to apply the sales tax to custom computer software that would have increased state business tax collections by $25 million a year;
  • Approved a plan the tourism industry said was worth an estimated $66 million a year in additional tourism spending by requiring public schools to start classes after the Labor Day weekend, and a plan worth an estimated $120,000 a year that exempts the purchase of water-park slides from the 5 percent sales tax;
  • Approved a $1.5 million bridge in the town of Burke that was opposed by town officials but sought by American Family Insurance;
  • Approved a plan to provide up to $45 million in state sales, income and property tax credits to new and existing high-technology businesses;
  • Approved a plum state transportation budget for road builders that included $2.2 billion for major road building, rehabilitation and maintenance – a $322 million increase over the previous two years. The legislature also approved three new road projects worth about $300 million;
  • Rejected a plan opposed by the banking industry that would have put claims for unpaid wages by employees of bankrupt companies ahead of money those companies owe to banks.

In the first six months of 2007, majority Senate Democrats and Assembly Republicans took in a combined $649,268 of which $174,415 or 27 percent came from donors who contributed to both caucuses during the six-month budget period. The special interests that played both caucuses included:

  • Telecommunications interests who gave $24,175 of which $16,575 or 69 percent came from donors to both;
  • Public employees who gave $12,909 of which $6,100 or 47 percent came from contributors who gave to Senate Democrats and Assembly Republicans;
  • Transportation interests who gave $26,475 of which $12,175 or 46 percent came from contributors who gave to both caucuses;
  • Real estate interests who gave $31,235 of which $12,600 or 40 percent came from contributors to both caucuses;
  • Insurance interests who gave $44,451 of which $16,675 or 38 percent came from contributors to both caucuses;
  • Banking and financial interests who gave $57,131 of which $20,950 or 37 percent came from contributors who gave to majority Senate Democrats and Assembly Republicans;
  • Tourism, leisure and entertainment interests who gave $29,442 of which $7,899 or 27 percent came from contributors to both caucuses. Nearly half of the tourism and leisure industry contributions were made by tavern interests;
  • Labor unions who gave $56,845 of which $15,250 or 27 percent came from PACs that contributed to both majority Assembly Republicans and Senate Democrats;
  • Energy interests who contributed $31,345 of which $8,510 or 27 percent came from contributors who gave to both caucuses;
  • Manufacturing and distributing interests who gave $37,420 of which $9,875 or 26 percent came from contributors to both Assembly Republicans and Senate Democrats. More than half of the total manufacturing contributions made by contributors to both parties were liquor distributors.

Here is how the legislature handled some of the 2007-09 budget items and other legislation sought or opposed by special interests when those contributions were being made or shortly after:

  • Approved Assembly Bill 207 which changed the way cable franchises are regulated in Wisconsin to allow AT&T and other telecommunications interests to more easily break into the cable television market. The measure was supported by telecommunications, business and manufacturing interests, among others;
  • Approved Senate Bills 574 through 588 representing 15 labor contracts supported unions that granted thousands of public employees two-year raises totaling between 8 percent and 11 percent in 2007-09;
  • Increased angel and venture capital seed tax credits, which are designed to attract investment in high-technology businesses, in the state budget from $65 million to $100 million;
  • Dropped budget plans to increase real estate transaction fees and create an oil company profits tax which were opposed by business and real estate interests;
  • Dropped budget plans to require insurance companies to cover treatment of autism which was opposed by business, insurance, banking and transportation interests;
  • Acted on beer and liquor regulatory and tax proposals as well as a ban on smoking in public places that often mirrored the position of taverns and liquor distributors. For instance, legislators approved proposals to regulate brewpubs, change the way wine is distributed and alter regulations for beer and wine taste sampling. The proposals that failed or died without legislative action and that were opposed by one or both of the industries included a ban on smoking in public places, creation of a new type of license to let restaurants sell wine for off-premise consumption and a proposed increase in the beer tax, which has remained unchanged since 1969.

Assembly GOP Attracts Big Bucks

Unlike the frequent majority party changes in the Senate, control of the Assembly has not changed since 1995 when the Republicans took control from the Democrats in the 1994 elections. The Republicans continued to steadily increase their majority to a 61-38 peak in the 2004 elections.

In the 2006 elections, the GOP majority lost most of that breathing room, dropping nine seats to the 52-47 margin they hold today.

But the gap in special interest contributions to Assembly Republicans and Democrats remains excessively wide despite the thinner margin of control.

Republican-leaning special interests protect that majority because it is the only place proposals they support will see the light of day. Special interests also know the GOP-controlled Assembly is the only chance they have to repel or alter policies and spending sought by a Democratic Senate and Democratic governor that they may oppose.

In addition, the Assembly Speaker – often referred to as the second most powerful position in state government behind the governor – carries substantial political clout. Policies and spending that have the backing of the Speaker often become reality in some shape or form which is better than the fate of hundreds of other bills introduced by rank and file legislators.

So the Assembly Republican caucus draws a disproportionately greater amount of special interest contributions than the Assembly Democrats because they have the power to give wealthy special interests what they want.

This is readily seen in the difference in per capita special interest contributions between Assembly Republicans and Democrats in the first six months of 2005 and the first six months of 2007. In between those two periods, the 2006 elections reduced the GOP majority from 61-38 to 52-47 (see Bar Chart below).

Six-Month Per Capita Special Interest Contributions
To Assembly Democrats And Republicans

6 Month Per Capita Special Interest Contributions To Assembly Democrats And Republicans

First, the nine seat swing saw per capita special interest contributions fall from $7,315 to $6,640 per Assembly Republican. However, per capita special interest contributions to Assembly Democrats increased only slightly – from $4,326 to $4,344 – and were still well behind Assembly GOP special interest per capita contributions despite the relatively close margin between the two parties.

Secondly, the $6,640 in per capita special interest contributions drawn by Assembly Republicans in the first six months of 2007 was 20 percent higher than the overall Assembly per capita average of $5,550 in special interest contributions. Meanwhile, the $4,344 in per capita special interest contributions to Assembly Democrats was 22 percent lower than the overall $5,550 Assembly per capita average for the first six months of 2007.

Thirdly, a 53 percent difference in per capita contributions between Assembly Republicans and Democrats – $6,640 versus $4,344 – is too large for such a close margin unless special interest giving is based on control of the legislative agenda rather than party representation.

To help maintain their large money margin, Assembly Republicans also held many more fundraisers than Democrats while they worked on the state budget during the first six months of 2007. Assembly Republicans held 21 fundraisers and Assembly Democrats held eight fundraisers between January and June 2007.

In 2001, Assembly Republicans held a hefty 57-42 majority, but not enough to mathematically justify drawing an average 223 percent more in special interest contributions per member than Assembly Democrats during the first six months of that year. The Assembly GOP’s 57 members collected an average $6,104 in special interest contributions compared with an average $1,887 in special interest contributions per member by the 42 Assembly Democrats.

Money Rises And Falls With Power

Special interests not only contribute substantially more to the caucus that controls the Assembly and Senate, but they also target Democratic and Republican legislative leaders because those individuals control the fate of spending and policy proposals that special interests support and oppose.

Half of the 13 legislators who served as a Senate or Assembly legislative leader since 2001 drew substantially more campaign contributions while they held those jobs than they received before or after they were leaders. This was particularly evident among legislative leaders whose caucus controlled the Senate or Assembly. In numerous instances several legislative leaders accepted large amounts of campaign contributions in non-election years when they worked on the state budget and use it to milk special interests for cash but did not need the money to run for reelection.

Here are some notable examples:

  • Former Republican Assembly Speaker John Gard received $232,913 in special interest individual and PAC contributions in 2003 – the first year he served at that post. During the previous three years, Gard received between $38,944 and $59,599, totaling $139,467;
  • Former Republican Majority Leader Scott Fitzgerald received $78,905 in campaign contributions in 2004 – when he was not up for reelection, but held the post of majority leader for two months before colleagues chose a new leader. In September and October 2004 when Fitzgerald was majority leader, he received more than half – $46,173 – of the $78,905 in special interest contributions he took in for the entire year. In the other two-month periods in 2004, Fitzgerald received substantially less than he did in September and October – between $1,450 and $21,862 in special interest contributions;

Before 2004, Fitzgerald collected between $8,407 and $23,837 from 2000 through 2003, totaling $59,799. From 2005 to 2007, Fitzgerald served two years as co- chair of the budget-writing Joint Finance Committee and then Senate minority leader and received between $42,071 and $76,080 in each year;

  • Republican Assembly Speaker Mike Huebsch accepted $87,210 in 2007, his first year as speaker, after getting $94,507 and $98,415 in 2005 and 2006 when he served as majority leader. In the four preceding years, Huebsch received $68,082 in 2004, $5,763 in 2003, $30,916 in 2002, $9,394 in 2001 and $34,405 in 2000;
  • Former Republican Senate Majority Leader Dale Schultz received $178,701 in special interest contributions in 2005 and $103,486 in 2006 – the two years he held the job. Before he became Senate leader, he received between $6,650 and $17,700 a year from 2001 through 2004. A year after he left, in 2007, he received $10,100 in special interest contributions;
  • Former Republican Assembly Majority Leader Steven Foti received between $40,175 and $78,015 a year when he held the post from 1998 through 2003. In the five years before 1998, Foti received between $3,350 and $21,385 a year in special interest contributions;
  • Former Democratic Senate leader Judy Robson received $35,118 and $53,928 in 2005 and 2006 – the two years she served as minority leader – after receiving $800 in 2004, $600 in 2003 and $14,440 in 2002. Curiously, Robson accepted only $7,900 in special interest contributions in 2007, the first and only year she served as Senate majority leader;
  • Former Democratic Assembly Minority Leader Spencer Black received $9,104 in special interest contributions in 2001, the first year he had the job, after getting $900 in 2000 and $2,000 in 1999. Black, who does not usually raise much money because he has a safe seat and one of the largest campaign war chests in the legislature, received $600 in 2002 – his second year as minority leader, and $2,700 in 2003 and $400 in 2004 after he left the post.

Charts 1-7Charts 8-18Press Release