Ethics Reforms an Ongoing Struggle

HomeEthicsEthics Reforms an Ongoing Struggle

Win some, lose some in the sausage making of the Texas Legislature

The TV cameras and press coverage of presentations at the annual conference hosted by the Freedom of Information Foundation of Texas September 17 focused heavily on a session featuring Wallace L. Hall Jr., the embattled regent of the University of Texas System, who was interviewed by Ross Ramsey, executive editor of the Texas Tribune.

Hall is big news, after all. His open-records crusade to investigate the flagship UT Austin campus triggered Travis County grand jury proceedings against him as well as attempts to impeach, neither of which were successful.

The other important discussions at the conference drew no coverage, as they involved no flashy controversial issues that dominate headlines. Instead they centered on more mundane but vital ongoing struggles to improve ethics and financial disclosures by public officials—meat and potatoes issues fundamental to open government.

Emily Ramshaw
Emily Ramshaw

An important panel discussion among two members of the Texas Ethics Commission board and a state representative who pushed the Commission’s legislative agenda in the last session was moderated by Texas Tribune editor Emily Ramshaw. The discussion covered the Commission’s weak enforcement powers, improved registration and reporting by state lobbyists paid to influence legislation and regulations, and the unhappy influence of so-called “dark money” spent to tilt election outcomes without reporting who contributed the funding.

Jim Clancy
Jim Clancy

Attorney Jim Clancy, president of the Corpus Christi-based law firm Branscomb PC, is a former chairman and still a board member of the Commission. He was appointed by then Governor Rick Perry.

Clancy said lawmakers considering proposed ethics legislation “are not looking at what the public needs but what your next opponent will do.”

He advocates overhauling the state-mandated Personal Financial Statements required of state and local officeholders (and the Austin city manager and city attorney) by Local Government Code Chapter 145. “The reason why we disclose personal assets is to identify conflicts of interest.”

“If you make money and report it to the federal government, you should report it on the Personal Financial Statement,” Clancy said. “I think every elected official in the state should be required.”

But Clancy does not like the fact that current reporting includes the quantity of assets, which he said, “crosses the line into privacy.”

“We need to come up with a Personal Financial Statement that would demonstrate conflict of interest and would be much simpler.”

The challenge, he said, is getting to the issue of conflict of interest without getting into personal privacy. “It would indicate the sources of income reported on IRS returns, the property you have.

“A conflict of interest is a conflict of interest. The amount is a matter of degree,” he said.

Paul Hobby
Paul Hobby

Commission Chairman Paul W. Hobby responded, “I don’t agree.” Hobby is also a former chairman of the Houston Branch of the Federal Reserve Bank of Dallas, former chairman of the Greater Houston Partnership, and is a founding partner of Genesis Park LP, a Houston-based private equity business.

“There is a material threshold,” he said.

Sarah Davis
Sarah Davis

State Representative Sarah Davis wanted to split the difference, saying reporting amounts that meet a threshold would be appropriate for income derived from the state or an entity deriving income from the state, “but my income as being an attorney, that’s my personal information.” She said to require reporting of “money in every account would have a chilling effect on running for office.”

Davis, a Republican, represents Houston’s District 134 in the Texas House, a two-term lawmaker who serves on legislative committees involving appropriations, calendars, general investigating and ethics. She is a lawyer and partner in the national firm Lewis Brisbois Bisgaard & Smith LLP.

Commission hamstrung by courts

Clancy argues the Commission should stop enforcement actions because they may be overturned by courts, as was the Commission’s ruling and $10,000 fine against conservative activist Michael Quinn Sullivan for failing to register as a lobbyist in 2010 and 2011. The Commission has appealed the lower court’s decision.

“An enforcement agency cannot do its job if compliance is wholly voluntary,” Clancy said in a Texas Tribune article of March 24, 2015.

In a letter to Chairman Hobby, Clancy wrote, “Ultimately, we cannot require compliance from tens of thousands of Texans when those with extraordinary resources can spend hundreds of thousands of dollars to challenge a $10,000 fine.”

At the Conference, Clancy said that of the 4,000 complaints resolved by the Commission over the last 10 years, most defendants are “humble” but the “99.5 percent who comply are being abused by those who do not comply.”

Hobby added, “I have no criminal enforcement function and there is no will to put it in the Texas Ethics Commission, where it should be.” As chairman and a former federal prosecutor, Hobby said he is certainly willing for the Commission to take on that function.

The underlying issue, Hobby said, is that the Commission is weak. Although it has originated 22 complaints and made four criminal referrals to prosecutors in the last 18 months, he said, “We are without a lot of power. We’re gumming people to death.”

Lobbyist registration updated

Davis asked the governor to veto two of her own bills to which amendments were made that would undermine their purpose. But one bill she did get passed was HB 3512, which sets a threshold for who is required to register as a lobbyist. (The City of Austin is currently considering a laundry list of reforms for its own controls over lobby registration and reporting.)

The bill amended Government Code Section 305.003 by revising the requirements to register. People are now required to register if they are compensated for and spend more than 26 hours during a calendar quarter communicating directly with a member of the legislative or executive branch to influence legislation or administrative action.

Clancy said, “If you don’t want to register as a lobbyist, don’t get paid to tell a lawmaker to vote for or against a bill.”

But Clancy warned of the lobby exception for members of the media, which to qualify, Hobby said, is reserved for those who are full-time journalists.

Davis said she was hounded during the session by a group who claimed to be media but would not give their names or the name of the group they represented. “Three big men following me—that’s not media, that’s not lobbying, it was harassment. Anyone with a blog wants to be credentialed media.”

“It’s a challenge,” added Clancy. “The days of Walter Cronkite are gone. … What is different is all these other outlets, candidates funding opposition media that’s hidden from public view.”

While lobby registration has now been tightened, reporting of lobbying expenses is still a problem, Clancy said, as “95 percent of lobby expenditures are not reporting to a specific legislator.”

Davis said, “It’s no sweat off my back if every lunch and dinner is reported,” but she resents the implication that a deli platter sent to her office or a steak dinner will influence her vote.

Clancy said that “Bribery is still against the law. Because politics involves so much money, we have to have some disclosure.”

Dark money seen as threat

“The need to disclose dark money is real,” Chairman Hobby said, referring to money that 501(c)(4) organizations use for political purposes without disclosing donors. “It blows holes in disclosure by funneling money through the back door.”

“Dark money groups in Texas do so solely to hide donors,” Clancy said. Otherwise they would instead form political action committees and disclose who contributed their funding. He predicts Texas will see “more and more outside groups coming in and pushing, separate and apart from the parties.”

Davis said that legislation to regulate dark money has passed in the House but was “dead on arrival” in the Senate. She said the fear is that such funding will affect Republicans the most and that groups are trying to control the Republican majority in the legislature.

About the Texas Ethics Commission

The Texas Ethics Commission has eight commissioners. The agency’s website states that four of the commissioners are appointed by the Governor, two are appointed by the Lieutenant Governor, and two are appointed by the Speaker of the Texas House of Representatives.  Members of the Texas Senate and the Texas House of Representatives who represent each political party submit lists of nominees to the appropriate state official for appointment. The commissioners serve for four-year terms.

Related Bulldog coverage: For more than five years The Austin Bulldog through public information requests has been obtaining copies of financial disclosures filed by City of Austin candidates and officeholders, and analyzing, reporting on, and publishing these statements so that a better informed public may monitor their elected officials for possible conflicts of interest. Related articles are as follows, to include links to source documents:

Mayor Moves to Downtown Austin: Mid-year reports must show changes in ‘substantial interests’ for the first half 2015, August 7, 2015

Want More Open Government? Key lawmaker and nonprofit advocacy group pitch for public support on pending legislation, March 19, 2015

Candidates Rich and Poor Competing, Sept. 30, 2014

Monitoring City Staff Conflicts of Interest, June 4, 2014

Austin Governed by the Well-To-Do, May 17, 2013

Some Council Members’ Finances Change Significantly, August 22, 2012

How Rich Are Austin’s Mayor and Council Members? June 27, 2012

Council Member Martinez Reports Big Gains in Financial Assets, August 17, 2011

Council Members Riley and Shade May Have Violated City Code, June 2, 2011

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