Lobbying bill stalls in Senate

Raleigh News & Observer
Commerce Department objects to legislation to toughen lobbying rules

By DAN KANE, Staff Writer

Late last week, state lawmakers were a roll-call vote away from toughening up one of the nation’s weakest sets of lobbying regulations.

The bill would have required lobbyists and their clients to disclose the steak dinners, ACC basketball tickets, out-of-state golf trips and other perks provided to lawmakers, the governor and other top state officials. Reports on legislative spending would have to be filed monthly during sessions — giving the public the opportunity to see whether spending coincided with legislative action.

But the vote never happened. On Friday, aides to Gov. Mike Easley told Senate Majority Leader Tony Rand that the bill might force companies seeking tax breaks, road improvements and other incentives from the Commerce Department to disclose those efforts in lobbying reports.

So Rand told his colleagues to send the bill, which had overwhelmingly passed the House the previous night, to a conference committee to work out Commerce’s concerns.

The coalition of groups that support lobbying reform are scrambling to get the bill on track, but their window of opportunity is growing short. Lawmakers are taking this week off, and legislative leaders want to finish all business by the middle of next week.

"No one should be afraid of more sunshine — that’s what this bill is about," said Bob Phillips, executive director of Common Cause North Carolina, one of roughly 50 groups across the political spectrum supporting lobbying reform. "That is something the majority of legislators have voted for and something a very broad coalition has backed, and we believe the Commerce Department does not want to stand in the way of that."

Commerce officials say they are not trying to kill the legislation. But Tuesday, they offered another reason for why it should not be approved. They said it could force small businesses to pay a lobbying registration fee and file lobbying expense reports to file an application for hurricane relief.

"The unintended consequences of this legislation with regard to the executive branch, as it is currently drafted, need to be examined and understood before it is enacted," a Commerce spokeswoman, Alice Garland, said in a written response to The News & Observer.

She declined to explain how the bill would create the scenario she presented. Don Hobart, the department’s legal counsel and legislative liaison, did not return phone messages seeking comment.

The department began raising objections three weeks ago, months after the legislation had been filed and had cleared the Senate in April by a 48-0 vote. The bill returned to the Senate because the House made changes to the legislation.

Commerce Department correspondence shows Hobart had written two documents to Easley’s top aides expressing opposition to the legislation. One was a one-page list of concerns; the other a more detailed, two-page analysis. Hobart said in e-mail dated Aug. 3, "We may not want to release it publicly."

Registration and fees

Hobart said in the documents that virtually any nonprofit group or business seeking grants, loans or other state assistance would have to pay a fee and register employees as lobbyists or hire lobbyists. The registration is a public record, so the public could find out about a company’s interest in moving to the state before a deal is struck, Hobart wrote.

The legislation does not allow lobbyists to base their fees on how successfully they assisted their clients. But that’s how fees are calculated for some consultants who win tax breaks and other incentives from states for businesses looking to move or expand, Hobart said.

Finally, Hobart objected to businesses having to report meals, gifts and other perks of more than $10 given to Commerce Secretary Jim Fain. Hobart said it would "likely place the Secretary in a very awkward position with respect to the state’s business community with which he is expected to interact, not as a regulator, but as a partner in economic development."

Easley spokeswoman Jill Lucas said Thursday that the governor supports extending lobbying regulations to the executive branch but not if they tip off the public to business recruitment negotiations.

She said that language in the bill "will have to be fixed."

Phillips said most businesses and nonprofit groups would not come under the lobbying regulations. The bill allows any business or nonprofit group to lobby an executive branch official for up to six hours over a six-month period without having to register as a lobbyist or file a report, so long as no spending is involved.

A change made last week on the House floor also allows those nonprofits and businesses that earn $300,000 or less annually to pay reduced or no lobbying fees.

Phillips said the department’s concerns about business recruitment negotiations could be remedied by delaying the release of lobbying reports — as other states have done — until a deal is struck or scuttled.

Fain has recommended tens of millions of dollars in tax breaks to bring businesses to the state. Lawmakers have passed legislation offering those tax breaks with little more than a day’s notice.

"We want the public to know if money is spent to influence executive action," Phillips said.

Staff writer Dan Kane can be reached at 829-4861 or [email protected].