Special Interests Average 33,000% Gain On Campaign Contributions

January 17, 2001

Madison - A $10,000 investment a year ago in one of the most profitable stocks on the market - Genstar Therapeutics - would be worth $162,500 today, a 1,525% gain. That’s a lucrative return, but it’s not nearly the bang for the buck that special interests received from investing in state policymaking.

A Wisconsin Democracy Campaign report titled "Playing the Policy Market" shows that more than a dozen special interests with a stake in items considered during the 1999-2000 legislative session realized an economic benefit that amounted to an average 33,043% gain from the campaign contributions they invested during the session.

Individual gains by the special interests that benefited from the policies driven by their contributions ranged from 396% to 103,221% (Table 1). The biggest industry winners and the policy return on their contributions included payday lenders who fought a cap on interest rates, 103,221%; the road builders who sought more money for highway construction, 92,582%; the vending machine industry which got a sales tax break, 20,605%; and waste disposal, paper and business interests which fought higher garbage disposal fees, 19,751%.

Individual companies also got lucrative returns on their investments in the system (Table 2), particularly if they were generous, long-term contributors or from industries whose collective campaign contributions have made them influential. Some of these companies and their returns were Maximus, 99,900%, and C.D. Smith Construction Co., 69,722%.

The total contributions cited in the tables and in the report represent large individual and political action committee contributions to the governor from Jan. 1, 1999 through June 30, 2000, and to members of the 1999-2000 legislature from Jan. 1, 1999 through Oct. 23, 2000.

The WDC reviewed more than four dozen proposals that affected special interests, both big and small. A conservative estimate of their return on investment was calculated in cases where a monetary gain or loss could be determined from information provided by the state or the "investor."

Many other special interests - including utilities, builders, cranberry growers and the tavern industry - made substantial contributions and reaped sought-after policy changes or financial benefits for which there are no fixed monetary estimates.

Some of those interests and items included:

  • The state’s tourism industry finally succeeded in getting a law on the books that requires public schools to begin after the Labor Day holiday unless the local school board officially decides not to do so. The industry, which made $273,638 in campaign contributions to the governor and legislators from 1999 through Oct. 23, 2000, is likely to attempt to make the law mandatory in the 2001-02 legislative session. The Department of Tourism estimates that a statewide post-Labor Day school start could mean an additional $66 million for the tourism industry, putting the return on their campaign contributions at 24,019%.
  • The Peoples Lottery Foundation, a New York-based company, can do business in Wisconsin after a change in lottery laws. The change allows the company to pay the winner most of his or her total winnings up front. The unpaid portion is the company’s fee, which it collects when the winner signs over the annual prize payments to the company. Company employees made their first campaign contributions in Wisconsin - $5,000 to former Democratic Sen. Alice Clausing - around the time the legislature inserted the proposal in the state budget.
  • The banking industry also successfully opposed a bill that would have prevented them from charging certain ATM user fees. The bill failed in the Senate 17-16 last spring with one Democrat joining minority Republicans to kill it. The Democrat, Sen. Kevin Shibilski of Stevens Point, received $11,747 in banking industry contributions in 1999 and 2000, a 382% increase in large, individual bank employee contributions over the $2,435 he received in the previous four years combined.
  • Ashley Furniture Industries, whose owners and employees have contributed $52,550 to the governor and legislators since 1993, received exemptions from environmental regulations in the state budget that would have allowed them to fill in wetlands to expand their business.

Several hot-button issues are expected in the upcoming session that are likely to draw the attention and big money of special interests including energy deregulation, prescription drug assistance and single factor sales taxation.

Playing the Policy Market