ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Sunday, January 5, 1997 TAG: 9701060108
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: DAVID POOLE and ROBERT LITTLE STAFF WRITERS
Virginia's financial disclosure laws for legislators remain among the weakest in the nation, but don't expect big strides in the next General Assembly session
Despite 20 years of reform requiring General Assembly members to divulge more and more about their financial interests, state disclosure laws still contain gaps that can make it difficult to separate the saints from the scoundrels.
You don't know, for instance, if your representatives pocket a $9,000-a-year allowance for office expenses.
You don't always know when legislation they vote on benefits a client.
You don't know if they are wined and dined by lobbyists.
You don't know where they get some campaign contributions.
You don't know if they receive huge legal fees from state-regulated companies.
The adequacy of Virginia's disclosure laws promises to be a focus of debate in the General Assembly, which opens its annual winter session Wednesday.
In his State of the Commonwealth address, Gov. George Allen will challenge lawmakers to tighten reporting requirements to bolster public trust in elected representatives.
Lawmakers appear open to a few changes, such as closing the loophole that allows them to escape scrutiny for accepting meals and entertainment from lobbyists.
But many lawmakers see no need for sweeping reform, pointing to the General Assembly's scandal-free history.
Requiring additional paperwork, they say, would create a bookkeeping morass without any clear benefit.
"Where does this stuff end?" asked Sen. Malfourd "Bo" Trumbo, R-Fincastle. "If a lobbyist buys me a 50-cent cup of coffee, should I have to report it?"
Disclosure is important because it tells voters how lawmakers' financial interests could influence their votes or if they are using public office for private gain.
Disclosure already has come a long way in Virginia. At one time, lawmakers did not have to divulge when they represented clients before state agencies. They did not have to report when lobbyists treated them to golf weekends or other junkets. They did not have to disclose whether they leased real estate to state agencies.
Despite these improvements, Virginia's disclosure laws contain loopholes that create the potential for lawmakers to make mischief without the public catching on.
Commingling funds
Republican State Sen. Steve Newman runs three ventures - Senate office, campaign headquarters and personal business - out of a single office in Lynchburg.
The arrangement simplifies Newman's daily commute. But consolidated offices that he and other lawmakers operate can weave a tangled financial web.
Because of limited disclosure, there is no way to know how lawmakers spend the $750 monthly office allowance they receive from taxpayers. And there is no way of knowing whether lawmakers use campaign contributions to subsidize their private businesses.
"The press talks about where the campaign money comes from, but where the hell does the money go?" said one lobbyist, who spoke on condition of anonymity.
State law forbids candidates to divert campaign funds for personal use. But the distinctions can blur when incumbents house their campaign headquarters in their private offices.
In Suffolk, Republican Del. Robert Nelms uses campaign funds to help pay the mortgage on a building he owns. Nelms has declined requests for interviews about the arrangement.
In Lynchburg, Newman transferred $11,485 in campaign contributions last year to what his campaign finance report described as the "Steve Newman Office Fund."
He said the money will be used strictly to keep in touch with his constituents in Lynchburg and the counties of Amherst and Bedford.
But he acknowledged the public will never know how the money is spent.
"They won't know the details of it," he said. "What they will know is that we took the money left from the end of the [1995] campaign and created a constituent office account."
A few states have passed laws in recent years aimed at prohibiting state lawmakers from commingling campaign contributions with other funds. California, for instance, bans legislators from using campaign money for most constituent services.
"It's a growing problem," said Robert Stern, co-director of the Center for Governmental Studies, a California group that studies governmental ethics. "What we've found is many of the campaign expenditures don't go toward election purposes."
In Virginia, one solution could be to empower the State Elections Board to examine campaign accounts.
Four years ago, an ethics commission appointed by then-Gov. Douglas Wilder said audits of campaign accounts would help ensure compliance with election laws.
The General Assembly ignored the recommendation.
But some lawmakers say the General Assembly should revisit the issue.
"If there are questions about where the money is being spent, we should take a look at it," said House Democratic Leader Richard Cranwell of Vinton.
More and more Virginia lawmakers are tapping campaign contributors to underwrite their constituent offices back home.
But critics question the practice of using special-interest money for services already subsidized by state taxpayers.
Besides the $750 a month for office expenses, the state pays the salary for each legislator to have an aide and for the office's long-distance phone calls.
Some legislators say $9,000 a year hardly covers the cost of rent, office supplies and utilities.
"I don't even have plumbing," said Sen. Charles Waddell, D-Loudoun County. "I have to go next door to the post office to use the bathroom."
Not all lawmakers maintain elaborate constituent service operations. Many legislators keep in touch with voters from home or their business office.
For those who scrimp, the office reimbursement has become a way to supplement their salaries without having to take the heat for voting for a raise. The official salaries are $17,640 for delegates and $18,000 for senators.
The state budget describes the $9,000 office stipend as a "reimbursement." But the term is misleading; legislators get the money no matter how much - or little - they spend to maintain a constituent office back home. In fact, the IRS considers it taxable income because lawmakers do not have to document how it is spent.
Many lawmakers say it would require too much paperwork to document how they spend the office allowance.
Sen. Kenneth Stolle, R-Virginia Beach, said lawmakers should be able to spend the office allowance any way they see fit - even to buy a vacation home.
"If they pay taxes, it's their money to spend," Stolle said.
Mooching in the dark
In April, BellAtlantic Corp. treated one state senator and a guest to a performance of "Les Miserables."
The telephone utility was less generous when asked to divulge which senator received the $150 gift.
A BellAtlantic spokesman, citing the state's lobbyist disclosure law, said the company had no obligation to reveal the name.
Critics say lawmakers crafted the law to keep the public from knowing how often they are entertained by lobbyists.
Stern, who surveys state ethics statutes, said Virginia's lobbyist disclosure is "one of the weakest laws in the country."
Allen said he will introduce legislation tightening the law, even if it means being the killjoy for lawmakers who discretely pass dinner and bar tabs to lobbyists.
The governor will not recommend banning or limiting the value of food and gifts lawmakers can receive, as states such as Kentucky and Wisconsin have done.
Rather, Allen wants to require lobbyists to disclose the names of lawmakers who receive food, drink or other gifts valued at more than $25. The law also would apply to Cabinet members and agency heads.
"You have to name names," Allen said.
The proposal would not affect the nightly round of lobbyist-sponsored receptions, where all lawmakers are invited to nibble on boiled shrimp and imbibe at an open bar.
But it could discourage more intimate dinners where lobbyists treat lawmakers to a night on the town.
Untraceable cash
The Democrat-dominated General Assembly sealed one of the more conspicuous campaign finance loopholes after it stung one of their own, then-Virginia Beach Sen. Moody "Sonny" Stallings.
Stallings lost his 1991 re-election bid after the 2nd District Republican Party spent $57,000 in last-minute TV ads for Stolle, who won.
State law did not require the GOP committee to disclose the source of the money. Democrats suspected - correctly - that one of Stolle's last-minute benefactors was the Christian Coalition.
The Stolle victory led the General Assembly in the early 1990s to require political organizations in cities and counties with more than 100,000 people to reveal the names of their contributors. The law also applies to committees in smaller jurisdictions if they raise more than $10,000 in a year.
But that leaves at least 80 political committees around the state free as potential havens for untraceable campaign cash. Many of these groups support only one candidate, acting like a second campaign fund that operates beyond the reach of disclosure laws.
These groups gave nearly $120,000 to General Assembly candidates during the 1995 election cycle.
Three of the biggest chunks went to three Senate challengers who defeated incumbents:
* The 24th Senate District Republican Committee gave $3,800 to Sen. Emmett Hanger of Augusta County.
* The Albemarle County Democratic Committee funneled $3,000 to Sen. Emily Couric of Charlottesville.
* The Hanover County Republican Committee gave $3,000 to Sen. Bill Bolling of Hanover County.
The contributions don't necessarily mean the candidates are trying to conceal contributors who want to keep their names out of the newspaper. Hanger said the 24th District committee raised all its money from small fees paid by hundreds of participants at its nominating convention.
Without disclosure, however, there is no way to trace money from party organizations that raise less than $10,000.
The General Assembly set the $10,000 threshold for party organizations because smaller amounts would not justify the added bookkeeping.
But Sarah Terry, former chairman of the Prince Edward Republican Party, which raised about $7,000 two years ago for legislative candidates, said the requirement would not have been a bother.
"I don't think having to disclose would be prohibitive to raising money," Terry said.
Cranwell case
Cranwell followed the letter of the law last year when he disclosed the legal work he had done in 1995 for Trigon Blue Cross Blue Shield.
The Vinton Democrat noted that he had appeared before the State Corporation Commission on behalf of Trigon's efforts to convert to a for-profit stock company.
He checked the appropriate box, indicating Trigon had paid him legal fees in excess of $10,000.
Cranwell first said his legal work would not bar him from voting on legislation making it easier for Trigon to win SCC approval. The resulting media firestorm forced Cranwell to reverse himself and announce he would excuse himself from voting on the Trigon bill.
The controversy swelled a few months later when Trigon provided the exact amount it had paid Cranwell's firm: $385,560.
The episode exposed a weakness in the disclosure laws, which make it impossible to know the magnitude of fees lawmakers receive from state-regulated industries.
"It is important to know if someone received a $300,000 fee from a company," said House Republican Leader Vance Wilkins of Amherst County.
Allen said he will recommend changing the law to require lawmakers to disclose the exact amount they are paid to represent companies before state agencies.
Cranwell said he would support the change, though he predicted Republicans would try to make him out to be a scofflaw. Cranwell, Allen's chief legislative nemesis, said Republicans tend to forget that he disclosed his relationship to Trigon in accordance with the law.
He said the GOP lawmakers should be taking out their frustrations not on him, but on the inadequacy of the law.
"But I understand the Republicans will try to do anything they can to put me on the hot seat," he said.
Vague as you want
In 1995, then-Sen. Brandon Bell, R-Roanoke, identified campaign contributor D.J. Cooper as a "self-employed" man from Roanoke County.
Bell's description provided no clue that Cooper owned a Bedford County trailer park cited by state regulators for contaminated well water.
Too often candidates get away with describing their benefactors with vague terms such as "business owner," "entrepreneur," "executive" or "retired."
In doing so, candidates ignore a state law requiring the "name of employer or principal business" of every person who gives more than $100.
As a result, the press and public get an incomplete picture of the financial interests behind candidates.
The problem begins with the State Board of Elections, which distributes a disclosure form that is poorly worded and does not reflect state law.
One column - entitled "Occupation and Principal Place of Business of Contributor" - invites creative interpretation.
Some candidates fill in the blanks with all the information needed to assess the contributor's economic interests. Many others simply jot down vague references to "business woman" or "retired."
Del. Lionell Spruill, D-Portsmouth, in a 1995 disclosure form, went as far as describing the occupation of some contributors as "private."
Bruce Meadows, executive director of the State Elections Board, said his staff might revise the forms to make it clear that candidates must disclose the employer of each contributor.
"If we could come up with a better way to comply with the law, then we'll word the forms that way for the 1997 elections," he said.
Candidates know they can get away with incomplete descriptions because the State Elections Board does not have enough staff to review the tens of thousands of pages of reports filed.
Heilig case
Last winter, a small band of delegates staged a near revolt over the deal proposed by Trigon, the state's largest insurance company.
As part of its bid to become a stock company, Trigon offered the state $175 million as repayment for decades of tax breaks.
A few lawmakers balked, saying Trigon should pay more.
To quell the revolt, Del. George Heilig, D-Norfolk, rose to his feet and assured the House that a subcommittee he chaired had pushed Trigon as far as it could.
Demanding more money, Heilig said, could prompt Trigon to withdraw its offer, blowing a hole in the 1996-98 state budget. The House then voted overwhelmingly for the Trigon deal.
Lawmakers didn't know, however, that Trigon had paid Heilig's former law firm $9,581 for legal work in 1995.
Later, some of his colleagues were furious that Heilig had not disclosed his ties to Trigon.
"This was the delegate who told us this was the best we could do! We ought to have known there was a relationship between Heilig and Trigon," said Del. Morgan Griffith, R-Salem.
Heilig said he saw no conflict because he had resigned from his law firm three months earlier because of failing eyesight.
"If I had still been a lawyer, I probably would have abstained," he said.
Critics say the Heilig episode underscores the need for lawmakers to provide a more detailed description of how they make a living.
Under current law, legislators have to disclose the names of clients only if they represent the clients before state agencies.
Heilig was not obligated to name Trigon on his 1996 Statement of Economic Interests because his former firm had done routine collection work for the insurer in state courts. The law required that Heilig simply check a box indicating his firm had done work for unnamed insurance companies.
Lawmakers say additional disclosure could force lawyer/legislators to shirk their duty of confidentiality to clients.
Republican Sen. Mark Earley, a lawyer from Chesapeake, said he could be put in a difficult situation if he had a client came to him on a confidential basis.
"By requiring more disclosure, you could be opening up another set of problems," he said.
But Stern said no state can claim to have adequate disclosure if lawmakers do not reveal the source of their income.
"Income is even more influential on a person's outlook than campaign contributions," he said.
Prospects for reform
There is no scandal compelling state lawmakers to take a serious look at ethics laws.
But Allen will seek a few measured reforms as he begins his final year in office.
He will ask that lobbyists name names when disclosing entertainment expenses and that lawmakers provide the exact amount of fees received for representing clients before state agencies.
Allen said he has not considered more sweeping reforms, such as independent audits of campaign accounts or disclosure of lawyer-legislators' clients.
Lawmakers appear hesitant to tighten disclosure beyond a few minor steps. Some say additional measures are unnecessary, that problems are only figments of reporters' cynical imaginations. Others say more detailed disclosure ensnares them in too much bookkeeping.
"I think we're going down the wrong pike because the more we regulate, the more loopholes we create," said Trumbo, the senator from Fincastle.
Betsy Beamer, Allen's secretary of the commonwealth, said the General Assembly should close a few loopholes, even if it means more paperwork.
"Why wait until something happens?" she said. "I would like to think Virginia would do it before any scandal."
LENGTH: Long : 320 lines ILLUSTRATION: GRAPHIC: Chart by staff: Virginia's disclosure laws. color. KEYWORDS: GENERAL ASSEMBLY 1997 POLITICS MGRby CNB