LEGAL LAUNDERING

A Report Examing the Link Between Special Interests and Legislative Leadership,
A Joint Report of WDC and Common Cause of Wisconsin

November 18, 1999

INTRODUCTION

Legislative Campaign Committees (LCCs) are aggressive fund-raising operations controlled by legislative leaders. The chief goal of the LCCs is to get legislative candidates in key races elected in order to maintain, or gain, a majority for that party in the Assembly and Senate. These committees are the Assembly Democratic Campaign Committee (ADCC), the Republican Assembly Campaign Committee (RACC), the State Senate Democratic Committee (SSDC) and the Committee to Elect a Republican Senate (CERS).

These committees have existed in some form for several decades. However, the contemporary LCCs evolved from revisions in the state election laws in 1979. These revisions were forged by a compromise between partisan lawmakers, with generous input from ever-present, powerful lobbyists and special interests who wanted to maintain their influence on state policy making. One of the key changes that magnified the influence that special interests have on state government was to give legislative leaders direct control over the committees. This diverted PAC contributions from the state parties, which had acted as a buffer between special interests and the legislative process, to the leadership-controlled committees and thus, closer to the policy-making process. In an atmosphere where influence and money are inextricably linked, the change resulted in a geometric increase in campaign contributions, and a coziness between special interests and legislative leaders that often generates proposals that cater to one another’s policy and political objectives rather than the public good. Total contributions to LCCs increased from about $50,000 in the 1977-78 campaign period, to more than $1.1 million in 1997-98.

In addition to the influence of special interests on public policy, the operation of LCCs depend heavily on the staffs of four partisan legislative caucuses, which cost taxpayers millions of dollars in other ways. The four caucus staffs, whose salaries and benefits total more than $2 million a year, were originally created to research issues, write newsletters and speeches, and monitor legislation, among other things.

However, the "informal" duties of the caucus staffs have become purely political -- formulating strategy, doing political work and recruiting and training candidates, according to former veteran lawmakers, staff and caucus workers. "The biggest waste of taxpayer dollars is in staffing the committees. They devote most of their time to raising money and doing political work, but they're state employees," said one former veteran state senator.

The purpose of this report, "Legal Laundering: A Report Examining the Link Between Special Interest Money and Legislative Leadership," is to show how special interest money flows to legislative leaders and policy makers through LCCs to draw legislative leaders and special interests closer together. The report examines the sources, amounts and use of contributions to these committees; shows how LCCs reinforce the power of legislative leaders and weaken the independence of legislative members to listen to the voices of their constituents; supplants a fund raising role more properly filled by state political parties; and weakens the campaign finance system.

KEY FINDINGS

The report’s key findings are:

  • LCCs undermine the current campaign finance system, and they would reduce the effectiveness of future reform if allowed to continue. These committees propel campaign spending, heighten PAC influence on the public policymaking process and perpetuate a dependence on special interest contributions that make a candidate more beholden to legislative leaders and special interests than to their constituents.
  • PACs associated with labor unions made the highest total contributions to the LCCs -- at least $421,900 from 1995-98. The banking and finance industry was a distant second at $206,928, followed by the insurance industry, which contributed $81,975 to the four committees.
  • Several powerful special interests with PACs, such as the Wisconsin Education Association Council, the Wisconsin Realtors, Wisconsin credit unions and Banc One, gave several thousand dollars to all the LCCs. Unlike typical voters who have ideological and policy allegiances to a particular party, special interests often contribute across the board to Democrats and Republicans. Their strategy of contributing to both sides, including all four legislative campaign committees, ensures they will have the needed votes on their issues no matter who is in power now or in the future.
  • Top individual contributors to the LCCs read like a "Who’s Who" of top Capitol lobbyists, long-time party loyalists and leaders and wealthy business owners. At the top of the list were State Capitol lobbyists William and Cynthia Broydrick, who contributed at least $12,950 to the four committees. As an interest category, lawyers and lobbyists who represent special interest groups at the State Capitol were the largest contributors to the four committees. Following this group, the Democratic LCCs tended to get most of their $100-plus individual support from business, education and health professionals while the Republican committees received most of their large individual contributions from banking and finance, manufacturing and distributing, and business interests.
  • The four LCCs made $362,166 in direct contributions to candidates, many of whom were challengers who raise less money than incumbents. These contributions were reportable by the candidates and tallied as part of their committee contribution limits. However, much of the $2.2 million in "Expenses" generated by the legislative campaign committees directly benefited candidate campaigns, but were not reported as contributions. More than $1.6 million of the committees’ expenses paid for consulting, fund raising, polling, caucus staff travel and other resources that benefited individual campaigns. The LCCs are not required to specify how much of these expenses are for their operations and how much is actually soft money aid to legislative campaigns.
  • Campaign finance records show that the four LCCs spent more than $250,000 on some of the more visible and negative aspects of today’s political campaigns -- telemarketing and television advertising, some of which was reimbursed by candidates.
  • LCCs depend heavily upon state employees, who draw more than $2 million a year in salaries paid by tax dollars. They have effectively become state-paid campaign workers because they spend much of their time raising money, recruiting candidates and discussing campaign strategy with legislative leaders.
  • LCCs contribute to a large increase in uncontested races. Legislative leaders are only interested in fielding candidates in races where they can win in order to gain or maintain a majority in the Legislature, unlike state parties which favor more races that broadly spread the party message and keep office holders accountable for their actions.

LEGISLATIVE CAMPAIGN COMMITTEES AND CAMPAIGN FINANCE REFORM IN THE LEGISLATURE

The sway that legislative leaders exert over their party caucuses, bolstered by the money raised and disbursed by legislative campaign committees, made reform difficult to advance in the 1999 legislative session, particularly for Democrats. Senate Majority Leader Charles Chvala and other Democrats initially claimed that restricting or eliminating LCCs would give Republicans an unfair advantage over the Democrats because the GOP has a stronger party organization and more large donors to rely on for individual contributions. A legislative proposal introduced by Senate Democrats in October 1999 included a provision to disband the LCCs. However, similar suggestions in the past have been so controversial that there’s no guarantee that this provision, or the bill, will be approved by the Legislature. Even so, any measure that contains a prohibition on LCCs must also ban PAC to PAC transfers or else legislative campaign committees will be resurrected as "super PACs" with just as much clout as they have now.

Meanwhile, Republican Assembly Speaker Scott Jensen of Waukesha and other Republican lawmakers opposed campaign finance reforms that would increase public financing. They objected to the use of taxpayer dollars to pay for campaigns that have become expensive and largely negative, and preferred putting the money toward other public expenditures, including tax cuts.

Reversing past policy and philosophical opposition, Gov. Tommy Thompson broke new ground by proposing in his 1999-2001 budget that $750,000 in public funds be set aside to fund future campaign finance reform. The Joint Finance Committee basically agreed in its revisions of Thompson’s budget. After some tinkering by the majority Senate Democrats and Assembly

Republicans, the budget stalemate went to a conference committee of legislative leaders who decidedto increase the set aside money to $870,000. No campaign finance reform policy was included in the budget when it was passed by the Legislature and signed by the governor in fall 1999, although at least 13 individuals bills were introduced by Democrats and Republicans.

FUND RAISING

Legislative campaign committees primarily exist to raise money and to provide other resources to Democratic and Republican candidates to win elections so that their respective parties may retain or gain majority control of the state Assembly or Senate. The four legislative campaign committees received $2.3 million from individuals, PACs and political party and candidate committees from 1995-98. Collectively, the committees received more than $1.2 million in PAC money; $983,910 in individual contributions; and $116,728 in political party and candidate committee transfers or reimbursements from 1995-98.

During the first half of 1999 when the Legislature was considering the budget under the watchful eyes of special interests and their lobbyists, the four legislative campaign committees received $222,762 from PACs, committees and individual contributions.

"This is distressing. It’s fund raising that is directly linked to state policy and, specifically, directly linked to the state budget. It’s a shakedown, and legislative campaign committees are the vehicles for that shakedown," a former Democratic representative said.

LCC TOTALS AND BREAKDOWNS

The Assembly and Senate Democratic LCCs raised the most money from 1995 to 1998. The Assembly Democratic Campaign Committee received $741,466 in individual, PAC and political party and candidate committee contributions. The State Senate Democratic Committee raised $606,977; the Committee to Elect a Republican Senate took in $492,517; and the Republican Assembly Campaign Committee received $477,598 (Chart 1).

Chart 1
Total Contributions to Legislative Campaign Committees
1995-1998

Chart 1: Top Contributions to LCCs 1995-1998

A closer analysis reveals that the ADCC was the only one to receive the bulk of its contributions from individuals. The committee received $436,383 in individual contributions, compared to $305,083 in PAC, party and candidate committee contributions (Chart 2).

Chart 2
Total Contributions and Other Income
to Legislative Campaign Committees
1995-1998

Chart 2: Total Contributions and Other Income to LCCs 1995-1998

Meanwhile, the State Senate Democratic Committee received $337,738 in PAC, party and candidate committee contributions, compared to $269,239 in individual contributions. The Committee to Elect a Republican Senate received $333,702 in PAC, party and committee contributions, compared to $158,815 from individuals. And the Republican Assembly Campaign Committee received three times more in PAC, party and committee contributions than individual donations -- $358,125 compared to $119,473.

PAC CONTRIBUTIONS

An analysis of PAC contributions by industry shows that PACs representing labor unions and banking and financial institutions were the largest contributors to all four LCCs. Labor unions contributed $421,900 to the committees from 1995-98, while banking and financial interests donated $206,928 (Table 1). PACs representing insurance and real estate and natural resources interests generally rounded out the top five special interests.

Table 1
PAC Contributions by Special Interests
to Legislative Campaign Committees
1998-1998

SPECIAL INTEREST ADCC RACC SSDC CERS TOTAL
Labor Unions $187,500 $33,900 $161,650 $$38,850 $421,900
Banking & Finance $34,228 $66,250 $36,550 $69,900 $206,928
Insurance $13,650 $21,300 $17,150 $29,875 $81,975
Real Estate $7,000 $23,475 $14,500 $24,250 $69,225
Natural Resources $9,700 $26,400 $8,750 $19,150 $64,000
Agriculture $8,400 $20,000 $11,450 $18,100 $57,950
Telecommunications & Computers $5,625 $16,400 $6,600 $14,200 $42,825
Transportation $4,500 $16,850 $9,100 $12,000 $42,450
Health Professionals $5,250 $10,000 $10,800 $11,750 $37,800
Energy $4,050 $10,540 $3,000 $12,375 $29,965
Construction $2,650 $8,450 $3,500 $13,950 $28,550
Health Services/Institutions $2,050 $11,900 $2,500 $11,500 $27,950
Business $1,050 $10,600 $1,100 $11,925 $24,675
Manufacturing & Distributing $4,750 $3,300 $5,300 $9,375 $22,725
Tourism/Leisure/Entertainment $1,800 $7,600 $2,550 $8,200 $20,150
Lawyers/Law Firms/Lobbyists $7,500 $4,500 $2,000 $2,000 $16,000
Road Construction $2,000 $3,000 $0 $3,200 $8,200
Education $550 $350 $700 $400 $2,000
Non-profit/Social $0 $0 $500 $0 $500
TOTAL $302,253 $294,815 $297,700 $311,000 $1,205,768

At first glance, the top special interest contributors to the Democratic committees -- labor unions -- and to the Republican committees -- banking and finance -- follow giving patterns to the parties that are consistent with their ideological leanings. However, the top five special interest contributors to each of the LCCs are nearly the same. This shows a politically savvy contribution pattern followed by other influential contributors over the past several years. A special interest’s motive for "playing both sides" of the political fence generally satisfies both short-term and long-term strategies to manipulate policy making to achieve their goals. They understand that classic giving patterns created long-term political foes who undermine their causes when those "enemies" assumed control of one or both houses of the Legislature. Substantial contributions to both Republicans and Democrats are an insurance policy for future access to either side when they need support and action on their issues.

Observed one former Democratic lawmaker: "This really sends a negative message that if you don’t pay, you don’t play."

A former Republican senator called the close relationship between special interests and the committees "alarming" because "there is a definite connection between the legislative agenda and the folks that bankroll the campaign committees."

For instance, 54 of the 185 PACs that contributed to the LCCs contributed to all four committees. Another 16 PACs contributed to three of the four LCCs (Table 2). These tended to be PACs that represented wealthy corporate or professional special interests. Smaller, single issue PACs often contributed to only one or two LCCs. In those cases, the recipient LCC often represented the party whose beliefs and support were traditionally in line with that special interest. For example, most of the 43 PACs that contributed to only two LCCs were small union PACs. In most cases, their contributions were made to the ADCC or the SSDC. The remainder were small business or PACs representing other professionals. Their contributions generally went to the RACC or CERS.

Table 2
TOP PAC CONTRIBUTORS
TO LEGISLATIVE CAMPAIGN COMMITTEES
($8,000 or more)
1995-98

PAC NAME ADCC RACC SSDC CERS TOTAL
Wisconsin Education Association Council PAC $24,000 $6,000 $24,000 $18,000 $72,000
Realtors PAC $7,000 $23,075 $13,000 $24,000 $67,075
Wisconsin Credit Union Legislative Action $14,028 $15,750 $10,250 $15,100 $60,000
Banc One PAC $7,500 $14,000 $8,500 $14,500 $44,500
Wisconsin Bankers Association PAC $3,500 $7,000 $8,500 $20,500 $39,500
Volunteers for Agriculture $6,500 $13,000 $7,500 $12,200 $39,200
Wisconsin People Conference $9,200 $7,700 $12,000 $9,000 $37,900
Wisconsin Laborers District Council $24,000 $0 $12,100 $0 $36,100
Northwestern Mutual Life Insurance $8,000 $8,000 $8,250 $8,500 $32,750
Plumbers and Gasfitters  $14,200 $3,000 $15,500 $0 $32,700
Transportation Political Education  $4,000 $9,000 $8,000 $7,000 $28,000
Waste Management Employee PAC $6,000 $8,000 $5,000 $8,000 $27,000
Wisconsin Dental PAC $3,000 $6,900 $7,600 $8,250 $25,750
Professional Firefighters of Wisconsin $10,900 $3,900 $7,500 $1,000 $23,300
Ameritech Wisconsin PAC $4,475 $6,850 $4,100 $7,200 $22,625
Wisconsin Builders PAC $2,500 $6,750 $3,500 $9,500 $22,250
Wisconsin Institute of CPA’s PAC $3,300 $6,500 $3,500 $7,400 $20,700
Wisconsin AFL-CIO PAC $10,000 $0 $10,500 $0 $20,500
Wisconsin Truck Operators $1,450 $9,000 $2,200 $6,500 $19,150
Coastal Employees Action Fund $2,500 $7,500 $3,250 $5,500 $18,750
Friends of Health & Hospitals $1,950 $7,250 $1,500 $7,500 $18,200
Council of Auto & Truck Retail $2,500 $5,750 $3,500 $5,000 $16,750
Lawyers Active in Wisconsin $7,500 $4,500 $2,000 $2,000 $16,000
UAW Wisconsin PAC $4,000 $0 $11,500 $0 $15,500
American Family PAC $2,000 $4,250 $4,000 $4,500 $14,750
Operating Engineers Local 139 $6,100 $0 $7,000 $0 $13,100
United Northeast Educators $7,500 $0 $5,500 $0 $13,000
Philip Morris Wisconsin PAC $1,900 $2,750  $3,200 $5,150 $13,000
Wisconsin Electric Power $1,500 $3,740 $0 $7,000 $12,240
Council 10 PAC $12,000 $0 $0 $0 $12,000
Wisconsin Teamsters Joint Council $3,000 $0 $8,000 $0 $11,000
Concerned Business and Industry PAC (WMC) $0 $5,000 $0 $5,700 $10,700
Wisconsin Better Government Action (Miller Brewing) $3,200 $1,000 $1,700 $4,000 $9,900
Tavern Industry PAC $650 $4,000 $2,000 $3,000 $9,650
Wisconsin Savings Association $1,000 $6,500 $1,050 $1,000 $9,550
Wisconsin Insurance Alliance PAC $2,000 $2,100 $2,450 $3,000 $9,550
Volunteer Con/ Better Government (Fort Howard Paper)  $0 $7,000 $0 $2,500 $9,500
Wisconsin Physicians PAC $2,000 $2,500 $1,700 $3,000 $9,200
Wisconsin Restaurant Association PAC $1,050 $3,000 $300 $4,700 $9,050
Wisconsin Life Underwriters PAC $0 $500 $1,000 $7,500 $9,000
Wisconsin Bankers Association State PAC $2,500 $6,500 $0 $0 $9,000
Blue Cross & Blue Shield $750 $4,250 $0 $3,600 $8,600
WPL Holdings PAC $1,500 $3,100 $1,600 $2,300 $8,500
Wisconsin Road Builders PAC $2,000 $3,000 $0 $3,200 $8,200
Northwest United Educators $6,000 $0 $2,000 $0 $8,000

Recent reports that cover the first half of 1999, show the same pattern of giving among special interest PACs to the committees. Labor unions led the list with $38,550 in donations to the four LCCs, followed by banking and finance, $21,000; natural resources, $11,000; and agriculture and real estate, both $7,000.

PACs contributed more than half -- $113,983 -- of the $222,762 in total contributions to the committees during the first half of 1999. This is due in part to the preoccupation of legislative leaders and powerful special interests with passage of the 1999-2001 state budget. In addition, the committees do not aggressively tap individual contributors in a non-election year. But the flow of PAC money shows a shrewd knowledge of how to gain political access. More than 70 percent of the PAC money went to RACC and the SSDC, which represent the policy-making majority in each house.

INDIVIDUAL CONTRIBUTIONS

In general, the most significant differences between the Democratic and Republican legislative campaign committees lie in the amount they raise from individual contributors, and the size of the contributions. The Democratic LCCs received substantially more individual donations than the Republican LCCs. Within those totals, a further analysis shows that the Democratic committees rely heavily on small contributions ($99 or less) and their Republican counterparts receive more large individual contributions ($100 or more). More individual contributions flow to the Democratic legislative campaign committees because they do direct mail fund raising aimed at individuals and because individual Republican contributors tend to send their money to the state GOP.

Despite those differences, the committees have one thing in common that shows the dangerously close relationship between legislative leadership and special interests. Lawyers and lobbyists, as a special interest category, are the top individual contributors to all four LCCs (see table below). William and Cynthia Broydrick, two of the most influential lobbyists at the State Capitol, are the top individual contributors to the committees (Table 3). The most successful Capitol lobbyists are former legislators and veteran government administrators who understand the influence game and how to play to win. Lobbyists are employed by special interests to maneuver their issues and pet projects through the legislative waters.

Table 3
TOP INDIVIDUAL CONTRIBUTORS
TO LEGISLATIVE CAMPAIGN COMMITTEES
($1,500 or more)
1995-98

CONTRIBUTOR ADCC RACC SSDC CERS TOTAL
William & Cynthia Broydrick,
Delafieled, WI
Broydrick & Associates (Lobbyists)
$2,700 $5,350 $2,000 $2,900 $12,950
Monte Friedkin
Boca Raton, FL
Friedkin Investment Management
$5,600 $0 $0 $0 $5,600
Roy May
Chicago, IL
Capitol News
$0 $0 $4,000 $0 $4,000
Mathy Family
La Crosse, WI
Mathy Construction
$2,000 $1,000 $100 $100 $3,400
William Gerrard
Madison, WI
Gerrard Ventures (Lobbyist)
$1,300 $1,550 $100 $100 $3,050
Cornellier Family
Beloit, WI
Cornellier Fireworks
$250 $2,100 $85 $300 $2,735
Roger Hoffman
Madison, WI
Shareholder Services Inc .
$0 $0 $0 $2,500 $2,500
Jeff Slater
Racine, WI
N/A
$2,400 $0 $0 $0 $2,400
Fred & Mary Mohs
Madison, WI
Mohs, McDonald, Widder & Paradise
$0 $2,050 $0 $0 $2,050
Michael Grebe
Milwaukee, WI
Foley & Lardner
$0 $350 $0 $1,400 $1,750
Allen & Herbert Meisler
Birmingham, AL
Rime Companies
$0 $1,675 $0 $0 $1,675
James & Elizabeth Buchen
Madison, WI
WMC/Lobbyist
$0 $700 $0 $925 $1,625
Tom & Nancy Dohm
Madison, WI
Wisconsin Independent Business Inc. (Lobbyist)
$225 $700 $350 $300 $1,575
Brian L. & Nancy Mitchell
Elm Grove, WI
Cook & Franke (Lobbyist)
$200 $700 $0 $675 $1,575
Mitchell Bent
Shawano, WI
Self-employed writer
$1,250 $0 $250 $0 $1,500
Helen Boley
Madison, WI
Retired
$1,500 $0 $0 $0 $1,500
Jane Pettit
Milwaukee, WI
PBC Productions
$0 $500 $0 $1,000 $1,500

The Assembly Democratic Campaign Committee, the recipient of the highest amount of individual contributions among the four LCCs, was the only committee to attract more donations from individuals than PACs. The ADCC received $436,383 in individual contributions from 1995-98. The vast majority of those contributions -- $359,098 -- came in amounts of $100 or less. In recent years, the Democratic campaign committees have used aggressive direct-mail fund raising that has, arguably, diverted resources away from the state Democratic Party. An analysis of the remaining $77,285 show that lawyers, lobbyists and law firms contributed $12,365; banking and financial interests, $9,825; and retirees and homemakers, $8,145. Four of the committee’s top 10 contributors are veteran Capitol lobbyists -- Cynthia and Bill Broydrick, William Gerrard and Evan Zeppos.

Table 4
Top Interest Categories for
Individual Contributors of $100 or More
to Legislative Campaign Committees
1995-98

Interest Category ADCC RACC SSDC CERS TOTAL
Lawyers/Law Firms/Lobbyists $12,365 $19,675 $7,205 $16,100 $55,345
Banking & Finance $9,825 $7,650 $850 $12,960 $31,285
Manufacturing & Distributing $775 $7,500 $550 $15,163 $23,988
Retired/Homemakers/Non-Income Earners $8,145 $1,050 $6,945 $6,085 $22,225
Tourism/Leisure/Entertainment $1,670 $13,575 $1,070 $5,975 $22,190
Business $2,400 $5,900 $6,245 $7,175 $21,720
Health Professionals $7,210 $5,650 $2,170 $4,350 $19,380
Construction $825 $8,850 $240 $7,125 $17,040

The State Senate Democratic Committee raised $269,239 in individual contributions from 1995-98. Like their counterparts in the Assembly, the SSDC relied heavily on contributors of $99 or less. This group of supporters contributed $227,723 to the committee while $100-plus donors gave $41,516. Again, lawyers, lobbyists and law firms were the top contributors to the committee - $7,205. They were followed by retirees and homemakers who donated $6,945, and business executives who contributed $6,245. The Broydricks and fellow lobbyist Tom Hanson were among the top contributors to the SSDC.

In contrast to the Democratic LCCs, the Republican Assembly Campaign Committee and the Committee to Elect a Republican Senate raised substantially less in individual contributions from 1995-98 than they did from PACs. CERS raised $158,815 in individual contributions, and most of the money -- $118,136 -- came from contributions of $100 or more. The committee received its remaining $40,679 in small contributions. Lawyers, law firms and lobbyists were the largest special interest individual contributors to CERS. They donated $16,100, followed by $15,163 from manufacturing interests and $12,960 from banking and finance interests. Among their top contributors were the Broydricks and Milwaukee lawyer Michael Grebe, a state Republican Party leader.

RACC raised the least of the four LCCs -- $119,473. The bulk of its individual contributions came in $100-plus donations to the tune of $103,595 during the four-year period. It raised only $15,878 in smaller contributions. Like the others, lawyers, law firms and lobbyists contributed $19,975 to RACC, followed by $13,575 from tourism and entertainment interests and $8,850 from construction industry executives. The Broydricks, Gerrard and Republican Party activists Fred and Mary Mohs were among the top contributors to RACC.

More than $69,000 in $100-plus individual contributions flowed to the LCCs from conduits, which bundle individual contributions together from employees within an organization or a business and contribute it to candidates in a lump sum. Unlike PACs, however, conduits are subject to no contribution limits and to looser contribution and reporting requirements. An analysis of contributions to LCCs reveals that the Republican LCCs received substantially more conduit contributions than Democratic LCCs. RACC and CERS received $37,400 and $19,351, respectively, in conduit contributions. That compares with $7,250 in conduit contributions to the ADCC and $5,471 in contributions to the SSDC. Conduits representing builders, chiropractors and the Dairyland Greyhound Park made the most contributions to the committees.

DIRECT CONTRIBUTIONS AND OTHER INCOME

LCCs made $362,166 in direct contributions to candidate campaigns from 1995-98. In general, the committees gave more direct contributions to challengers and candidates in open seat races than incumbents, who tended to received more "loans" and goods and services for which they had to pay.

The four committees also reported contributions totaling $351,398 to the state Democratic and Republican parties from 1995-1998. However, discrepancies exist between the total amounts that the committees reported contributing to the parties and the amounts that the parties reported receiving from the committees. These discrepancies ranged from $30 to $10,000 in a year.

"Other Income" transactions netted the committees $510,749 during the four-year period. An analysis of those reimbursements from the candidates to the committees suggests that the LCCs provided significant aid and resources - at least $378,248 in loans, goods and services. These committees launder hard money contributions they receive from special interests into what can best be described as soft money assistance to candidates.

DIRECT CONTRIBUTIONS TO CANDIDATES

The LCCs contributed $362,166 to legislative campaigns from 1995-98. The two caucuses that have been in the legislative minority in the Assembly and the Senate for all or most of the time since 1995 led in direct contributions to candidates. The Assembly Democratic Campaign Committee gave $106,148 to candidates during the four-year period, followed by $96,290 from the Committee to Elect a Republican Senate. The figures for the majority committees are: $95,294 from the State Senate Democratic Committee; and $64,434 from the Republican Assembly Campaign Committee. The figures also show that the committees contributed most of their money to challengers, $143,946, followed by $95,808 in contributions to candidates who vied for open seats. Incumbents collected $83,681. The remaining $38,731 was contributed to candidates for special elections.

The committees gave candidates $156,459 in the 1995-96 election cycle, versus $205,707 in the 1997-98 cycle. The chief reason for the large bump in the latter cycle was open seat spending, which increased from $3,598 in 1996 to $92,210 in 1998. Otherwise, contributions to incumbents, challengers and special election candidates in the 1996 cycle were actually slightly higher than in the 1998 cycle. LCC contributions, totaled by political party, show that Democratic LCCs contributed $201,442 to their candidates and Republican LCCs donated $160,724 to their candidates. Republican candidates, particularly those who ran for Senate seats, comprised nine of the top 10 who received LCCs contributions.

The chief reason that challengers, as a whole, get more money than incumbents is that challengers traditionally have a tougher time raising money than incumbents, who have name recognition and a track record. Challengers need money to pay for publicity and other expensive campaign costs in order to gain the name recognition necessary in order to viably challenge an incumbent.

Chart 3

Chart: Distribution of LCC Candidate Contributions

CONTRIBUTIONS TO PARTIES

The four legislative campaign committees reported contributing a total of $351,398 to the state Republican and Democratic parties from 1995-98. However, there were discrepancies between what the committees reported giving and what the parties reported receiving from the LCCs.

The largest discrepancy, of $10,000, involved the ADCC and the state Democratic Party. The committee reported giving the party $41,195 in 1998, but the party reported receiving $51,195 from the committee. There were reporting discrepancies in 1997 and 1998 between the SSDC and the party. The committee reported giving the party $2,459 more than the party reported receiving from the SSDC. RACC reported giving the state Republican Party $5,190 more in 1995 and 1996 than the party reported receiving. Meanwhile, CERS and the state GOP had reporting discrepancies in 1996 and 1997 that totaled $70.

Citing figures reported by the committees, RACC led in state party contributions with $126,065 from 1995-98, followed by CERS which gave $101,510. The ADCC contributed $73,497 and the SSDC gave $50,326 to the state Democratic Party.

The contributions from the SSDC and the ADCC are funneled through the Democratic Party’s state account into the federal account. As a result, there is no way to track how this money was spent to affect state legislative elections.

Meanwhile, the use of RACC and CERS contributions to the state Republican Party were more traceable because the party differentiates between what it spends on its state and federal activities.

OTHER INCOME

For most groups, other income is made up of monies received that are not directly connected with a business’ or an organization’s primary product or mission. For instance, "Other Income" is commonly thought of as refunds, interest income or other types of unanticipated revenue.

However, LCCs use "Other Income" as a catchall account to record monies they receive other than individual or PAC contributions. This includes the sale of goods or services to candidate committees, repaid loans, returns and reimbursements.

The four committees received $510,749 in "Other Income." Again, the Democratic LCCs far outpaced the Republican LCCs. The Assembly Democratic Campaign Committee received $272,491 and the State Senate Democratic Committee received $158,276. That compares to $69,945 collected by the Republican Assembly Campaign Committee and $10,037 received by the Committee to Elect a Republican Senate.

The largest amount of other income received by an LCC from one source was a $50,000 loan received by the ADCC in October 1996, apparently to cover a cash flow shortage. The loan was repaid by December 1997. Other non-candidate committee income included a $35,000 payment to the ADCC from the Wisconsin Education Association Council, the state’s largest teachers union and a major backer of Democratic candidates, for a "purchase of data."

Collectively, candidate committees paid the four LCCs $378,248, which includes $339,706 for political goods and services and $38,542 in payments on loans that RACC made to candidates. Payments from Democratic candidate committees to the legislative campaign committees comprised 15 of the top 19 transactions of $4,000 or more. Leading the list was Democrat David Rice, a challenger for the 92nd Assembly seat in 1996, who repaid the ADCC for $43,000 worth of advertising and other campaign resources. After Rice, much of the LCC money recorded as "Other Income" came from Senate and Assembly incumbents, who paid handsomely for goods and services from the committees. For instance, Democratic Senate Majority Leader Charles Chvala of Madison, who controls the SSDC, paid the committee $35,972 for telemarketing services during his 1996 reelection campaign, and veteran Assembly Democrat Dave Travis of Madison paid the ADCC $33,072 for aiding his 1996 campaign.

Categorically, records filed by the committees show that reimbursements for television advertisements, telemarketing and mass mailings accounted for most of the "Other Income" -- $260,413 -- that the LCCs received from candidate campaigns. Several of the transactions reveal that many of the candidate committees are very dependent on the LCCs for staff, expertise and money, particulary in tight voting districts, open seats and special elections. For instance, many of the LCC goods and services to challengers and candidates in open seats, who often raise less money than incumbents, paid for high-ticket items such as television advertising.

EXPENSES

The LCCs spent six times more money on "expenses" than they did on direct contributions to candidates. An analysis of their $2.2 million in expenses from 1995-98 shows that the LCCs spent $105,429 on returned contributions and on loan and debt payments. In addition, the committees were reimbursed by candidates for $339,706 worth of political goods and services discussed in the previous section of this report, and the candidates received an additional $42,624 worth of in-kind political goods and services. After deducting the identifiable administrative expenses, reimbursements and in-kind contributions, the transactions indicate that many of their remaining expenses -- $1.6 million -- were also spent for political purposes that included fund raising, telemarketing, consultants, telephone support and polling. However, it is unknown how much of these expenses benefited individual candidates and how much of it was used for the committees’ own fund raising goals and other activities because the Elections Board does not require the LCCs to account for the division. This tack allows LCCs to provide resources to the campaigns that are not counted toward candidate contribution limits. The committees are not held accountable to provide specific documentation about their operations, so it raises even more questions when one of them - RACC - actually spent about $127 in March 1999 on "shredding."

A review of the four committees’ campaign expenses shows that the Democratic LCCs spent substantially more on campaign aid and other expenses than the Republican committees. The Assembly Democratic Campaign Committee spent $831,035 on expenses from 1995-1998, followed by the State Senate Democratic Committee, which spent $640,440. Meanwhile, the Republican Assembly Campaign Committee spent $357,250 and the Committee to Elect a Republican Senate spent $327,253 during the four-year period.

Chart 4

Chart: Legislative Campaign Committee Expenses, 1995-1998

BIG-TICKET EXPENSES

Collectively, the chief expenditure for the LCCs during the four-year period was for telephone services -- $332,741. It is unknown how much of this total was devoted to the committees’ own administrative or fund raising use, and how much went to benefit candidates because the committees are not required to make such distinctions in reports submitted to the state Elections Board.

The committees’ second largest expenses was for consultants -- $288,415. They often consult or hire professional consultants to advise candidates on campaign issues and fund raising. Creative Media of Alexandria, Va. was the highest paid consultant among the four LCCs. The company received $117,702 from 1996-98 from RACC. The committee’s latest report, which covers January through June 1999, showed that RACC paid Creative Media about $8,450 as a "98 win bonus and expenses." All told, RACC spent the most of the four committees on consulting - $153,135 from 1995-1998. The other committees and their consulting expenses during the four-year period were SSDC, $53,176; CERS, $49,250; and ADCC, $32,854. Staff salaries ranked as the committees’ third largest expense, at $259,869, and fund raising costs tallied $205,036 among the four committees.

As previously mentioned, it is impossible to determine how much of the committees’ telephone, consulting, staff time and fund raising costs were devoted to their own operations, versus aid to the candidates. Even after deducting payments made to the LCCs by candidate committees for identifiable goods and services, there remains a large amount of telephone, consulting, fund raising and other expenses that raises questions as to whether all of these expenses were for the committees’ operations.

CAUCUS STAFF AS CAMPAIGN HELPERS?

The four partisan caucus staffs, whose salaries are paid for with taxpayer dollars, were originally created to provide legislators with research support. However, the activities of caucus staff have taken on quite a different role with the growth of LCCs. They often provide campaign resources and workers. The increase in legislative staff, the expertises of the Legislative Fiscal, Reference and Audit bureaus and the Legislative Council, and the evolution of the information superhighway should have effectively rendered the caucuses obsolete.

"When you're a member of a partisan caucus staff, you automatically become part of a legislative campaign committee. You're expected to work on campaigns whether you want to or not, or they'll find somebody who will," according to a former Democratic caucus staff member.

"Back in the 80s, a lot of these people (legislative staff) worked on campaigns because they wanted to be involved. It was exciting. Now, people are being forced to do it," according to a former Republican legislative staff member.

In addition, legislative staff are often actively recruited and even pressured to work on legislative campaigns that are sometimes hundreds of miles from where they live. Legislative leaders use caucus staff in this way to influence their colleagues’ behavior and policy positions. Legislative leaders provide resources or contributions to the campaigns of their colleagues and challengers at election time. Then, during the legislative session, the legislators are pressured to pay the debt with the votes desired by leadership.

Caucus staff members help organize LCC fund raisers and assume the duties of a second wave of campaign workers. They travel extensively, organize events to recruit and train candidates and plan fund raising activities, among other duties. For example, the LCCs directly spent or reimbursed $71,782 for travel expenses, $24,985 for event and meeting costs and $21,678 for staff expenses, among other costs. The following table is evidence of the dual roles that state-paid caucus employees have with legislative campaign committees. It shows caucus employees who have received $2,000 or more in reimbursements from the committees from 1995-98.

Table 5
Top LCC Reimbursements to Caucus Staff

NAME AMOUNT COMMITTEE
David Payne $10,405 CERS
Brian Hayes  $5,585 CERS
Mark Horner $5,109 ADCC
Greg Dimicelli $5,010 CERS
Julia Sherman $4,005 ADCC
Bill Skewes $3,784 CERS
Scott Kelly $3,626 CERS
Matt Phillips $3,450 RACC
Andy Gussert $2,485 ADCC
Dan Rossmiller $2,395 ADCC
John Murray $2,301 CERS
Rob Richard $2,131 RACC
Lorre Kolb  $2,065 ADCC
Todd Rongstad $2,042 RACC

The ability to move people quickly and easily between the state payroll as caucus staff and the political payroll of an LCC is one of the major advantages for leadership of legislative campaign committees and the one area potentially open to the greatest abuse. The state picks up the costs of the ready supply of campaign workers in slow times. And the people who are in charge of insuring that state work and political activities are kept separate are the very people who benefit from the ready supply of political workers. It is like putting the fox in charge of the hen house.

Legislative staff are repeatedly asked to "volunteer" on campaigns, usually on evenings or weekends to put up yard signs, help candidates campaign from door-to-door and perform other duties. Evidence of the use of caucus staff and legislative staff for campaign work can be seen in several 1998 memos by a group known SWARM - Staff Working for an Assembly Republican Majority. Caucus staff and SWARM issued weekly memos last fall seeking volunteers to work on campaigns. In a Sept. 15, 1998 memo, SWARM coordinator Rob Richard announced that "RACC has decided to reimburse Assembly staff at a flat rate for travel expenses incurred when any staff goes to help a candidate. In order to collect reimbursement, at least two Assembly staff must ride in a vehicle together... Your total expenses will be kept on record until after the election, at which time a reimbursement check will be made out to you."

"They (legislative leaders) recruit candidates and they don’t encourage grassroots activity. They seem to want people to be dependent on legislative staff to work for them and for money from the campaign committees so that when they're told to do something, they're fearful not to do it," observed a former long-time legislative staff member.

Even veteran legislators have become dependent on caucus and legislative staff who are sometimes hundreds of miles away in Madison. Weekly SWARM memos sent to legislators’ offices in the fall of 1998 had dozens of pleas for volunteer help, including:

"Rep. (Carol) Kelso is looking for a couple of people to help her put up yard signs October 10 in Green Bay."

"Rep. Handrick will be doing a lit drop October 10-11 and October 24-25. Overnight accommodations can be provided - includes a six bed cottage on scenic, lakefront property. It doesn’t get any better than this folks!"

Rep. Hahn is looking for people who own a truck to help him put up 4 x 8 signs in the 47th AD (Assembly District). If you have a truck and some free time in the next couple of weeks please contact Heather or Kent"

"....Rep. Skindrud and Rep. Hahn will be needing your assistance throughout this campaign season with lit drops, parades, mailings and phones. If you want to volunteer in these races, please call the office of Rep. Skindrud or Rep. Hahn. Their staff will set everything up as far as departing times and/or rides."

WHOSE INTERESTS ARE BEING SERVED?

Legislative campaign committees help discourage participation in today’s political process by damaging the link between local voters and an elected representative’s responsibility to his constituents. These committees funnel special interest dollars to candidates from well outside their district. In doing so, the LCCs tighten the special interest grip on politicians by making legislators dependent on caucus staff and legislative campaign committee money.

In luring and spending the millions of dollars that they do, these committees drain the resources that could be used by the state parties. Unlike the state parties, these committees do not work to further the basic philosophy and the general goals of the state Democratic or Republican parties. A large percentage of money contributed to LCCs flows from special interests in Madison to legislative leaders who are directly in control of the fate of state policy that affects those interests. The system allows legislative leaders to lure special interest contributions from political action committees, lobbyists and other large contributors who want a friendly, influential ear to forward their agendas.

Legislative leaders provide resources or contributions to the cash-hungry campaigns of colleagues and challengers to encourage dependence on legislative campaign committees and "loyalty" to legislative leaders. In a tight race or a district in which the voting trend is closely divided between Democrats and Republicans, caucus staff and LCC money can be the difference between winning or losing.

"All states have some equivalent of these committees, but the problem in Wisconsin is the parties are not as strong, and the legislative campaign committees have become much more important players to a person getting elected. They sap the party and act as the party," according to a former caucus employee.

Wisconsin’s political agenda is too often dominated by legislative leaders who are more interested in controlling the Senate and Assembly majority and advancing their own political careers rather than running candidates in as many races as possible in order to broadcast the party’s message to the widest possible audience. For instance, figures from a study done by University of Wisconsin political science professor Ken Mayer show that the percentage of Assembly incumbents in uncontested races reached an all-time high of 51.9 percent in 1998. There were no unopposed incumbents in 1970. The increase in uncontested races can be traced to the strategy of legislative leadership and the use of LCC and other special interest resources. Legislative leaders are not interested in running candidates in as many races as possible. They are interested in picking a few key races or vulnerable opponents and pumping those races full of as many special interest dollars as their LCCs can raise in order to win elections, maintain or increase their majority in the Senate or the Assembly and remain in power.

"If you know the majority leader has the option of giving you $7,000 to $8,000 from the campaign fund when you need it, you’re going to think twice before you go out of your way or cross the majority leader or the speaker on an issue that’s important to them," a former democratic caucus employee said. "This is a heavy club."

Press ReleaseLegal Laundering Part II