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May 1997 – Disclosure – the Importance of Employer Identification

May 28, 1997


Candidates who won election to the N.C. General Assembly in 1996 raised a total of $9.7 million, or about $57,000 each.

Where does the money that pays for North Carolina politics come from?

Who pays the piper, who wants what they pay for, who expects their money’s worth?

Most states appreciate the public’s right to know who finances elections. At least 27 states require full disclosure of the contributor’s name, address, and employer and/or occupation. Most of these states — including Arkansas, Mississippi, Virginia, and Kentucky — specifically require a listing of the contributor’s occupation and employer or principal place of business.
North Carolina law gives citizens no economic information about individual contributors — even though individuals, especially wealthy individuals, provide the majority of money that finances candidates.

We require political action committees (PACs) to reveal their sponsor, so beer wholesalers can’t hide behind names like “Coastal Committee Promoting Recycling” or “Piedmont Citizens for Conservation,” as they did in this state in the 1980s. But we require no information that might help identify a group of employees who bundle and give thousands of dollars to targeted legislators.

Eyes on the Prize

One of the prime examples of individuals from special interests bundling contributions involves the ongoing turf struggle between opthalmologists and optometrists. “Optometrists, who fix vision for a living, intentionally blur the extent of their contributions to legislators,” wrote Jim Morrill of the Charlotte Observer in a May 5, 1991 article describing how “key optometrists collect money from colleagues . . . and channel it to lawmakers.”

The practice continues today — and played a role in the passage of a bill through the General Assembly on May 20, 1997. The bill, now awaiting Governor Hunt’s signature, will allow optometrists to prescribe a broad array of drugs to their patients without collaborating with an opthalmologist or other physician, as previously required.

The bill overcame a shaky start. When it was first introduced in 1995, Republicans had taken control of the House, and were ready to flex their muscles against the likes of Rep. Jim Black, a Charlotte optometrist and previous Majority Leader for the Democrats.

With the support of House Speaker Harold Brubaker (R-Randolph), House Rules Committee Chair Richard Morgan held the bill, preventing a floor vote in 1995. Opthalmologists showed their support, sending 16 checks to Richard Morgan’s 1996 reelection campaign and $1,500 from their PAC. Brubaker got checks from 14 of the same opthalmologists, plus the PAC’s largest gift, $4,800.

Having passed the Senate in 1995, the bill was eligible for consideration in the 1996 spring “short” session. On April 4, 1996, in a display of bundling that rivaled the optometrists, Brubaker collected 70 checks from physicians across the state, mostly opthalmologists and anesthesiologists, plus checks from 7 physician-related PACs, for a total take of $25,500. The bill remained in the Rules Chair’s pocket throughout the short session.

With their own bundling, optometrists pumped $22,000 to Rep. Jim Black’s 1996 campaign, much of which he distributed to other Democratic legislators — and, most important, optometrists also gave key Republicans financial aid. By the time their bill was introduced in the House in March 1997, they had lined up 77 sponsors, led by Republicans Larry Justus, William Hiatt, and Don Davis.

Overall, our analysis, based on comparing contributors’ names with listings in professional directories, shows that optometrists and their PAC gave a total of $122,905 to 111 of the 170 winning legislative candidates, compared to $46,351 given 76 legislators by opthalmologists and their PAC.

The final House vote was 91 to 22, with Jim Black abstaining. The Senate passed the bill by a margin of 44 to 4. The vote followed the money.


Getting Focus

The current disclosure proposal before the House (modified Senate Bill 1) only proposes to provide the public with a yet-to-be-determined occupational classification for contributors. The eye-care battle reveals the weakness of such a proposal, since most schemes would lump optometrists and opthalmologists together as one group.

Many other examples of bundling dramatize the need for full disclosure — listing the contributor’s full name, mailing address, occupation and employer (or name of business for self-employed persons). Here are a few examples:

•  11 contributors from as far away as New York donated $40,000 on October 21, 1996 to Senate President Pro Tem Marc Basnight (D-Dare). The 11 work for Greensboro-based Guilford Mills or are kin to its chairman, Charles A. Hayes. Their checks arrived two weeks after Sen. Basnight ordered payment of $1 million from a secret state fund to a drug rehabilitation center sponsored by Hayes. Altogether, Basnight got at least $53,000 from Guilford/Hayes family donors.

•  Sen. Betsy Cochran (R-Davie) received a total of 15 checks from donors across the state on two days. All 15 donors are involved in the rest home business, which is now seeking more money from the General Assembly and more changes in state regulations. Cochran, who co-chairs the Commission on Aging, got a total of $20,000 from donors related to the long-term care industry, more than half of what she raised from all individuals for her 1996 reelection.

•  15 anesthesiologists — all physicians with Wake Medical Center — bundled contributions to Rep. Jerry Dockham (R-Davidson) in October 1996. Dockham chairs the House Insurance Committee, which oversees issues related to ongoing turf fights between anesthesiologists and nurse anesthetists.

•  In the final days of the 1996 election, House Speaker Harold Brubaker collected $5,000 from 10 executives of the Koury Corporation in Greensboro and relatives of Joseph S. Koury, its chairman. Koury, who heads the real estate management and development company, “is a man who knows how to pull political strings in Raleigh,” wrote Rob Christensen (News & Observer 5/31/92). “He does it with money.” Christensen’s article revealed how Koury sponsored a fundraiser for then Gov. Jim Martin — which brought in $60,000 — and three months later, the state Department of Transportation agreed to pay for most of a $9.1 million “flyover” exit to Koury’s massive new convention center. Koury is now developing a gigantic mini-city project, and again needs friends in Raleigh.

•  Sen. Charlie Albertson (D-Duplin) got $12,427 from intensive livestock farmers, processors, and their associates — one-third of the money he raised from named individuals in his 1996 campaign. As Agriculture Committee chair, Albertson has a strong hand in deciding the fate of hog industry regulation.

•  Sen. Beverly Perdue (D-Craven) received $34,400 from individuals related to rest homes and nursing homes, including a bundle of 17 checks on March 12, 1996 and $15,000 in 4 checks from Steve Pierce associates on Oct. 28, 1996. The total is 25% of what she received from individuals giving over $100. As a gerontology expert and co-chair of the Appropriations Committee, Perdue play a major role in deciding funding levels for the long-term care industry.

Through A Glass Darkly

How can we analyze who’s giving political money now?

Given North Carolina’s disclosure law, political observers and ordinary citizens are prone to focus on PACs when they assess the influence of private money on politics. PACs are visible collections of special-interest money. But, in truth, they supply a smaller amount of the cash than wealthy individuals, especially when the numbers include statewide races (Governor, Lt. Gov., etc.)

Given current disclosure, it’s also easier to focus on individuals giving large amounts, or those listed in directories (such as the registry of lobbyists), or those in high-dollar families. Tables on the following pages provide the results of such an analysis. But they tell only part of the story.

Until we know the employer and occupation of donors, we can’t really say which interest is most active in funding North Carolina politics. To give some idea of the scale of money that could be grouped by employer rather than by family, consider these two examples:

Family of Charles A. Hayes (CEO of Guilford Mills) — total: $25,500
Guilford Mills executives, plus Hayes family — total: $61,000

Family of Steve Pierce, head of Pierce Management — total: $16,750
Pierce rest home associates, employees, and family — total: $55,750

The public wants serious campaign finance reform. It would be tragic to close the window and shut out their cry for change. We need a clear view into the campaign finance system, with full and prompt disclosure of the sources and flow of political money; and we need reforms that offer alternative ways to communicate with voters, pay for elections, and elect our representatives.