A final (?!?!) plea for reforming finance reform | Blogh

Wednesday, May 25, 2011

A final (?!?!) plea for reforming finance reform

Posted By on Wed, May 25, 2011 at 6:55 PM

So the election is over, and the campaign-finance reform kerfluffle has abated -- at least for the moment. City councilor Ricky Burgess has proposed legislation to scrap the city's limits on campaign contributions entirely, but his repeal is currently in limbo, pending a public hearing. And based on the discussion in council chambers last week, the debate is shaping up as a stark choice: Leave the ordinance as is, or gut it entirely.

During a May 19 council meeting, Burgess sought a legal opinion from the city Law Department about the ordinance's "legality, workability [and] enforceability." Burgess contended that while his own campaign had followed the rules ("I passed [the legislation], and I followed what I passed. I'm a man of my word") others had not. And while he said he was open to preserving the law, he had concerns that the measure was unworkable. While it "looks good on the outside," he opined, "when you look into it carefully, it's hollow, and has no value."

The other side's position seems just as entrenched. Bruce Kraus, who was the first councilor accused of violating the law, pledged, "I would never vote for the insanity of repealing campaign finance reform." Fellow councilor Doug Shields grumbled, "If I could vote [Burgess' repeal] down today, I would." 

It would be easy for Shields, Kraus, and the other members of council's majority to do just that. But I've argued before that this would be a bad idea, because Pittsburgh's campaign finance law as written is incomplete. It borrows its structure from federal regulations, but lacks the necessary reporting and oversight to make those regulations work. 

I've got another example of the law's shortcomings, which will be the basis of this final (I hope) argument for trying to reform the reform. Because as it turns out, there's a previously undiscussed loophole in the law ... one that allows contributors to potentially triple the amount they are permitted to give a candidate for city office.

Here's the loophole: An executive with, say, an engineering firm could donate the legally permitted maximum ($1,000 for individual donors) to a city candidate. The same executive could then donate money to a separate political committee -- one associated with his engineering firm, for example. And that firm could ALSO donate the legally permitted maximum ($2,000 for committees) to the candidate. That would allow the executive to triple his donation, to $3,000 in all. 

This isn't just hypothetical speculation on my part. I got the idea by looking at this year's campaign-finance reports. Specifically those of Ricky Burgess.

Before I go any further, a couple caveats. As we'll see, Burgess has done nothing wrong here, and neither have his contributors. The pattern I'm about to describe may well crop up in other candidates' reports; I haven't checked. In any case, the loophole is large enough that a city official could be benefiting from it, without even realizing the fact. The only reason I paid special attention to Burgess' report is that he filed it late, and he had a small enough roster of contributors that I could wrap my head around the sums involved.

In any case, here's what happened:

In late April, two of Burgess' individual contributors -- Robert Agbede and George Miles -- gave Burgess $1,000 each. Under the campaign-finance ordinance, that's as big a donation as Burgess could spend this spring. 

Agbede and Miles are both executives with ATS-Chester Engineers, which does water-management work for all kinds of public- and private-sector clients. (Full disclosure: My father was once an employee of Chester.) And like a lot of big firms, ATS-Chester has a political committee of its own. And on the very same date of Burgess recorded Agbede's contribution -- April 28 -- it also recorded receiving another $2,000 from the PAC. 

So where does that committee raise the money it donates? This year, at least, it got a lot of its money from Robert Agbede and George Miles.

According to a report filed earlier this year, ATS-Chester started 2011 with less than $600 in the bank. But in early March, the committee got a cash infusion from Agbede and Miles, who contributed a total of $5,000 between them. (The committee is also carrying a $10,800 debt owed to Agbede, reflecting a loan he made to it.) Weeks later, the committee made its contribution to Burgess.

Am I suggesting that Miles and Agbede are just using the committee to get around city limits? Absolutely not. The committee's been around since at least 2004 -- a lot longer than Burgess has been in politics. And Miles and Agbede weren't the committee's only donors: It also took in $3,100 in contributions of $50 or less. (The law does not require those contributions to be itemized, so we can't say who made them.) Moreover, Burgess isn't ATS-Chester's only beneficiary: The committee also gave $4,000 to county executive candidate Mark Patrick Flaherty, for example. More donors and recipients will likely appear in future reports. 

But here's the point: If you wanted to, you could set up committees that were intended to be mere pass-throughs -- tripling your contribution and your influence. What's more, that extra influence would be harder to track: Some citizens might be geeky enough to check which committees are donating to the candidates. But not many are pathological enough to look into who is donating to the donors.

And all of this would be legal. Pittsburgh's ordinance says nothing at all about creating or using commitees to serve as conduits for additional donations. 

In the world of campaign-finance reform, that is an unusual omission.

Federal law, which has been cited as a model for the city's ordinance, does regulate such "earmarked" contributions. If an individual gives money to a committee, and then instructs that committee to donate the money to a particular candidate ... that money counts toward the individual's contribution limit. An executive could either give the maximum directly to the candidate, or through a committee ... but he or she couldn't do both.

Philadelphia, which has its own campaign-finance law, seems even stricter. Under the Philly law, if you contribute through a campaign and then "direct, suggest, or request" that the money be targeted toward  specific candidate, then the amount contributed counts against both your contribution limit and that of the committee.

I'll be honest: I have my doubts about whether such language could be enforced in Pittsburgh. The FEC regs, for example, say that the "instruction" about where to direct money can be "direct or indirect, express or implied." It's a little hard to imagine local officials here exercising that level or scrutiny -- or subtlety.  There are already doubts about whether even the bill's most straightforward provisions can be policed.

But the point here is this: The city's law, as written, has some holes in it. Maybe not all of them can be closed, but they ought to be discussed. I don't think there's any shame in taking a look at how the law is working, and seeing whether it can be improved. The shame, in fact, would be in not doing that.

Council's majority can simply vote down Burgess' measure and be done with it. But if that's all they do ... then the reform may end up dying anyway. It'll just take a little longer.