Testimony by Mike McCabe, Executive Director, Wisconsin Democracy Campaign

Governor’s Task Force on Ethics Reform in Government, June 24, 2002

June 25, 2002

I applaud your willingness to take on the task of considering and ultimately proposing ethics reforms for our state government. You have your work cut out for you. It is a sad commentary on the current ethical climate in Wisconsin that a task force such as yours is deemed necessary. But political corruption has taken root in Wisconsin, and it is poisoning the legislative process and trashing our state’s once-proud reputation for clean, open and accountable government.

My involvement with state government started over 20 years ago as a legislative aide in the State Assembly. If I had pulled a Rip Van Winkle then and slept for 20 years, the legislature I would have seen upon waking would have been unrecognizable to me.

In the span of a single generation, Wisconsin’s legislature has been transformed from one of the nation’s most decentralized legislatures to one of the most centrally controlled. The citizen legislature I once knew is now full of professional politicians. And, of course, there is the money. The money chase at the Capitol is the root cause of the problems that led to the appointment of your task force. A flood of special interest money has washed away a political culture that made Wisconsin a special place - a state once known for squeaky clean politics.

In just the last year or so, over a half-dozen lobbyists have come to us and described in explicit detail the shakedowns they've experienced at the hands of legislative leaders. Some were threatened with a loss of access if their clients didn’t make the campaign donations leaders sought. Others were told in no uncertain terms that they would not get items they desired in the budget or favorable treatment of bills they support unless they made the campaign contributions leaders demanded. They all were told how much they had to give and to whom the donations should be given. Call it what it is - extortion.

Nowhere is the impact of the shakedowns that have become commonplace in Wisconsin more noticeable than in the state budget process. The budget quite literally has been put up for sale to the highest bidder, and the auction is costing ordinary taxpayers a bundle. Our research shows lawmakers from both parties who had a hand in crafting the budget offered an array of tax breaks, pork barrel spending and other budget favors worth $819 million - at a cost of $211 for every Wisconsin taxpayer - to special interests who contributed more than $3 million to legislators and $2.8 million to the governor while budget decisions were being made.

This political graft is a major reason why Wisconsin has a billion dollar budget deficit. Not a single one of the more than three dozen special interest items in the original budget has been removed in the budget repair bill and lawmakers even added an extra $49 million in special interest tax breaks. Lawmakers’ inability to say no to their big donors and consider cutting some of the pork they put in the original budget is a major reason why they have made so little progress toward putting the state’s fiscal house back in order.

Without campaign finance reform, there is no hope for budget reform. Without campaign finance reform, you cannot reform ethics in Wisconsin government. The best campaign finance reform bill under consideration in the legislature is Republican Senator Mike Ellis’ proposal, Senate Bill 104. Your task force should endorse SB 104 and advocate for its immediate enactment.

Along with campaign finance reform, there are other meaningful reforms you can embrace. At your June 14 meeting, Ethics Board director Roth Judd presented 58 ideas for strengthening the state’s ethics code and lobbying law. We have reviewed his suggestions and I can tell you that we can endorse every last one of his recommendations. You should, too.

But if you do nothing else, you should recommend a wholesale restructuring of the state Elections Board.

The Elections Board is routinely failing to act in the public interest by routinely failing to enforce our state’s campaign finance laws. Its persistent inaction has contributed mightily to a culture of permissiveness that now permeates state politics. And the board is failing because its structure is fatally flawed.

The Elections Board is a classic example of the fox guarding the hen house. Members are appointed by the very people they are supposed to regulate, so it is no surprise the board is the captive of the political power brokers. It is not a jury of citizens’ peers, it is a jury of the politicians’ pals.

At its last meeting, the board discussed 19 wealthy donors who exceeded Wisconsin’s $10,000 annual limit on campaign contributions. The board learned of the violations from the Democracy Campaign because its own staff lacks the capability to track the contributions donors make to multiple campaigns.

One of the donors appeared before the board to say she was unaware of the $10,000 limit. She offered to pay a fine to resolve the matter. When informed there was some past precedent for a
fine of $100 plus 10% of the excess contributions (which in her case would have yielded a fine of $200), she said that was acceptable.

But one board member objected, saying the contributor shouldn’t be fined because she was kind enough to make the long trip and appear before the board. The board member also said none of the 19 violations were serious - even though the donors exceeded the $10,000 limit by as much as $4,900 - and said the board should take no action on any of the 19, even if a formal complaint were filed in the future. His colleagues on the board agreed. Another board member noted there has been a significant increase in the number of donors exceeding the limit - the 19 represented more than a threefold increase over the previous reporting period. But instead of suggesting that perhaps enforcement of the law was in order, he said the board should write to the legislature to urge lawmakers to increase the limit.

That’s just one day in the sorry history of the state Elections Board.

The board has compiled a lengthy record of inaction. A "Citizens Right to Know" law requiring electronic filing of campaign reports was enacted in 1998 and was supposed to be implemented by the Elections Board by July 1999. Four years after its enactment, the board finally took a first step toward implementing the law last month by adopting an emergency rule, but only after being threatened with a lawsuit.

The board ignored 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 limits and disclosure requirements by running so-called "issue ads." Instead of taking the court up on its invitation, the board instead opted for a rule institutionalizing the loophole.

Last November, the board significantly widened the loophole when it ruled that state political parties also can avoid campaign finance limits and disclosure requirements in Wisconsin law by running issue ads.

The Elections Board also dropped its investigation into allegations of illegal campaign activity by legislative employees before contacting individuals with evidence of unlawful activity, including former Democratic Party voter file manager Don Fish, who filed a formal complaint with the board and claimed to have 500 pages of documents supporting his allegations. The board also dismissed a complaint alleging illegal collusion between the Assembly Republican Caucus and the independent campaign group Project Vote Informed - before receiving answers to investigators’ questions sent in the mail by one of the central figures in the case and after two other targets of the probe refused to answer questions for fear of incriminating themselves.

The state Elections Board needs to be turned into a citizen board that owes no allegiance to the top political leaders of the state. One model we urge you to consider is to have the members of the board appointed by the nonpartisan members of the state Supreme Court rather than by the governor, legislative leaders and two major political parties. We also believe the members of the Elections Board should be nonpartisan - as Ethics Board members are required to be. Prospective board members should have to meet specific conditions of appointment. For example, members should not belong to any political party, should not have been a candidate for partisan elective office in the last five years or made a campaign contribution to a partisan candidate in the last five years.

An alternative model worthy of consideration would maintain some partisan representation on the board. In addition to the nonpartisan appointees, there could be partisan appointees so members have the benefit of the perspective of active practitioners who have hands-on experience in complying with the laws enforced by the board. If you conclude there is merit to keeping such an element on the board, we strongly believe the public interest would be best served by expanding any partisan representation beyond the two major political parties.

For example, in addition to having members appointed by the Supreme Court justices, each political party with ballot status could be given an appointment.We would define "ballot status" as each political party that qualified for a separate ballot under section 5.62 (1)(b) or (2) of the statutes at the September primary of the even-numbered year preceding the date of the appointment.

A reformed Elections Board also has to be given the resources it needs to be an effective regulatory agency. Specifically, we recommend adding a full-time campaign finance investigator position and a full-time auditor position to the board’s staff.

You have been given very little time to act, but there are many steps that need to be taken in what has to be a very long journey if you are serious about rooting out political corruption in Wisconsin. I wish you success.