Naomi Schalit stories from The Center for Public Integrity

Ethics bill would slam Maine's 'revolving door'

Maine,United States — 2013-01-30T06:12:01-05:00

Legislation to make it unlawful for state officials to leave their jobs and immediately go to work for industries they regulated – the so-called “revolving door” – is one of several ethics bills expected to be debated in the Maine legislature this session.

Rep. Adam Goode, D-Bangor, has sponsored legislation requiring executive employees “in a major policy-influencing position” to wait one year before accepting a job with “a business activity that is regulated by the state or quasi-state agency by which the former executive employee was employed.”

Goode said he decided to sponsor the legislation after reading the State Integrity Investigation last spring, which gave Maine an “F” for its weak anti-corruption measures. Among the problems described in the report: Maine had no laws regulating revolving door employment for executive branch officials.

The project’s Maine story cited a case in 2007-2008, when the state’s chief utilities regulator, Kurt Adams, negotiated for and ultimately accepted a job offer and “equity units,” or shares, from a prominent wind power developer while still head of his agency – and when the developer had business before the agency.

Adams left his job as the head of the state’s Public Utilities Commission in May, 2008 to work for First Wind. Later, Adams and company officials said that despite statements First Wind had made in federal filings about when it had granted him the shares, the company had made a mistake and had granted the securities only after Adams had left the PUC in mid-May.

A subsequent investigation by the state’s attorney general found that Adams had violated no state laws.

The prospects are fading for comprehensive ethics legislation during the first half of the two-year legislative session — a promise held out by leading lawmakers after publication of the ethics report.

“The budget’s going to take a lot of the air out of the room,” said Michael Cianchette, Gov. Paul LePage’s legal counsel. “I think obviously there’s a lot of challenges facing the state right now and while this is certainly important, the nature of the fiscal reality of the state has taken most people’s attention. It’s much more of a crisis.”

The State Integrity Investigation, was based on research into 14 categories, from procurement to campaign disclosure to lobbying. No state got an A, leading the report’s sponsors to conclude that “statehouses remain ripe for self dealing and corruption.”

Maine got an F in nine of the 14 categories, including executive accountability, public access to information, civil service management, pension fund management, insurance commission operations, legislative accountability, lobbying disclosure, ethics enforcement and redistricting.

Goode said stories about the report led him to introduce his bill.

“I’m not a big person for putting in a lot of bills,” said Goode. “But I felt reading that story, I wouldn’t want the legislature to project that image.”

In response to the report, both LePage and then-Rep. Emily Cain, D-Orono, vowed to pursue omnibus ethics reform.

Now, said Cain, who was elected to the Senate last November, “I think it would be a mistake to try to do everything at once, because I believe we would end up settling for less and have a less in-depth conversation.”

Cain wants, instead, to focus during this part of the session on legislative and executive branch financial disclosure, conflicts of interest and “transparency” —public access to the workings of government.

“To me, the best approach is to pick a handful of very clear opportunities to make improvements,” said Cain. “Over the next year, I hope to raise the level of conversation … so that we’re not just having a conversation about fixing a problem, but how can we do this better?”

LePage has scaled back his reform ambitions to “something manageable,” according to Cianchette.

The focus will be on expanding financial disclosure for legislators and executive branch employees so that ownership interests are disclosed as well as specific ranges of income.

Rep. Goode’s bill also expands requirements for reporting of legislators’ and executive branch employees’ finances.

The purpose of that kind of expanded disclosure, said Cianchette, is to allow citizens to scrutinize the finances of officials and “make informed decisions about the way their personal holdings influence political votes.”

Cianchette said that the limited approach makes sense because, despite the “F” in the national survey, Maine’s not plagued by corruption.

“For the most part, Maine’s still Maine and people know what’s going on and there haven’t been massive scandals like in other states when it comes to this type of disclosure,” said Cianchette.

The groups that sponsored the study explained why states like Maine, not known for corruption, got bad grades.

The study “does not rely on a simple tally of scandals. Rather, it measures the strength of laws and practices that encourage openness and deter corruption… States with well-known scandals often have the tough laws and enforcement that bring them to light. ‘Quiet’ states may be at a higher risk, with few means to surface corrupt practices.”

Goode said, “We either don’t have strong laws because we don’t have problems to merit them, or we don’t know what the problems are because we don’t have strong enough laws,” he said.

LePage’s legislation will also change filing procedures for executive branch and legislative financial disclosure.

"Our bill will require electronic filing of disclosure statements,” said Cianchette. “Not a chicken scratch.”

Electronic filing would allow the public to digitally search the forms.

Both Cianchette and Cain said they wanted to work together to ensure bipartisan support for the ethics reform bills. Cianchette said he expected that Cain would sponsor the governor’s bill.

Gun manufacturers got more than $19 million in state subsidies

2013-01-31T16:23:00-05:00

Taxpayers across the country are subsidizing the manufacturers of assault rifles used in multiple mass killings, including the massacre of 20 children and six adults at an elementary school in Newtown, Conn. last month.

A Maine Center for Public Interest Reporting examination of tax records shows that five companies that make semi-automatic rifles have received more than $19 million in tax breaks, most within with the past five years.

“I feel horrified at the power of the gun industry over our political system, that it could exert such influence,” said Newtown resident

Barbara Richardson, who lives between the homes of one of the 6-year-old victims and the shooter.

Saying she respects hunters who are ethical and good neighbors, she “absolutely [does] not” support taxpayer subsidies to help manufacture assault rifles: “They’re weapons of mass destruction.”

Any new jobs due to tax subsidies are “not worth it,” said Richardson, a nurse whose first patient ever was a 19-year-old accidentally shot by his 13-year-old brother with their father’s gun.

The states providing the subsidies since 2003: Arizona, Arkansas, Florida, Kentucky, Maine, Massachusetts, New Hampshire, New York and Oklahoma.

Officials point out that such tax breaks are generally given to a range of businesses, not only to gun manufacturers, in the belief by state legislators and governors that they will attract industry or create orretain jobs.

One of the tax breaks that went to a Smith & Wesson plant in Maine was based on a program initiated by then-Gov. Angus King, now the senator-elect from that state.

King, in an e-mail to the Center, said, “Various tax incentive programs have been enacted over the years in Maine and virtually every other state to encourage and support job creation, particularly in the manufacturing sector. No one suggested at the time these programs were created—or since, as far as I know—that the government should decide which particular businesses within broad categories would be more or less desirable.”

Yet many economists have thrown cold water on the idea that these programs create any net new jobs.

Kim Rueben, an economist with the Tax Policy Center in Washington, said, in most cases there is no increase in the numbers of jobs; instead, she said, such programs encourage businesses to move to the state with the best subsidies.

Sen.-elect King pointed out that the Maine Smith & Wesson plant doesn’t make semi-automatic rifles (it does make semi-automatic handguns).

But Rueben, the economist, countered that any savings, such as tax reductions, “go to the bottom line” of a publically-held company such as Smith & Wesson, regardless of the origin of the subsidy.

The vast majority of the subsidies went to two of the largest and most recognized arms makers in the country’s history: Remington, which got $11.9 million from four states, and Smith & Wesson, which got more than $6.7 million from two states.

How many assault-style rifles the two manufacturers make is unknown because they do not break out statistics for assault rifles from other rifles, according to a declaration in a 2009 civil case by a research coordinator for the National Rifle Association.

However, Mark Overstreet characterized Remington’s and Smith & Wesson’s assault rifle production as “prolific.” Overstreet testified that the dozen manufacturers that did break out their numbers had made 1.6 million assault rifles between 1986 and 2007.

The other assault rifle makers that got state tax subsidies were Sturm, Ruger; Kel-TecCNC Industries; and Bushmaster, which police say was the make used in the Newtown shootings.

The types of subsidies include tax credits, grants, rebates, reimbursements for training and property tax abatements.

‘Disturbing’

“I think it would be disturbing to people to know that they are essentially subsidizing the manufacture of these guns,” said Cathie

Whittenburg, the Maine-based spokesperson of States United to Prevent Gun Violence, a national non-profit organization. “It’s certainly not something I want to be doing.”

Ladd Everitt of the Coalition to Stop Gun Violence predicted that the public will “react very angrily to” taxpayers subsidizing assault

weapons.

“Finally, after decades, we are having a serious conversation, and with this conversation is coming invaluable education about what politicians are actually doing,” said Everitt.

The Center’s findings are based on a comparison of the known makes of semi-automatic rifles with state records and the “Subsidy Tracker” data base compiled by the Washington-based organization Good Jobs First. A Good Jobs First spokesman said while its data base is the most extensive available, it is not comprehensive.

Semi-automatic rifles, often also referred to as AR-15s, were used not only by Adam Lanza at the Sandy Hook Elementary School on Dec. 14, but also in the Christmas Eve shooting in Webster, N.Y. by William Spengler, a 62-year-old ex-con who killed two firefighters and wounded two others. Both Lanza and Spengler also killed themselves.

Excluding the recent New York shooting, Mother Jones magazine has reported that since 1982, there have been at least 62 mass murders using firearms in the country, in 30 states. Assault weapons like the AR- 15s were involved in more than half of those shootings.

Smith & Wesson, one of the two largest recipients of state tax subsidies, did not respond to repeated requests for comment about the subsidies granted to the company.

Remington Arms, the other large recipient of subsidies, responded through a spokesman for its owner, the Freedom Group, by e-mailing a link to a publication, “Firearms and Ammunition Industry Economic Impact Report 2012.” The publication was produced by the gun industry’s trade association, the National Shooting Sports Foundation.

“For your story, you may want to include the following firearms industry economic impact data,” wrote Teddy Novin, Freedom Group’s

director of public affairs.

The study details the industry’s jobs numbers for 2011: 98,752 employed by gun manufacturers, with an additional 110,998 jobs in

“supplier and ancillary industries.”

“In fact, in 2012 the firearms and ammunition industry was responsible for as much as $31.84 billion in total economic activity in the country,” write the study’s authors.

Maine senator: no red flag

In Maine, Smith & Wesson has received two types of tax subsidies. From 2008-2010, it received $107,120 from the Employment Tax Increment Financing (ETIF) a program the state says encourages businesses to hire new employees by refunding from 30-80 percent of the state withholding taxes paid by the business for up to ten years.

Smith & Wesson’s plant in Houlton also received $51,671 in abatements for property tax on its equipment under the Business Equipment Tax Reimbursement program, initiated by King.

The Bangor Daily News recently reported that Smith & Wesson officials say it has invested $3.3 million in the past three years in its Houlton plant and the payroll has grown to $4.2 million.

Bushmaster, maker of one of the most well-known assault rifles, was located in Windham. The plant closed in March 2011, when its owner, Freedom Group, moved the operation to New York. Freedom also owns Remington. In 2010, Bushmaster was exempted from paying $2,405 in taxes on its business equipment under BETR.

State Rep. Adam Goode, D-Bangor, co-chair of the legislature’s taxation committee, said, “There are lots of different tax breaks and credits that … lots that people may be outraged about. My goal … would be for the legislature to have a conversation about tax breaks and how we evaluate them and how effective they are.”

The Senate co-chair of the committee, Anne Haskell, D-Portland, said the state police purchased Bushmaster rifles from the company when it was based in Maine.

“The fact that we’re providing a tax break to a company that’s providing jobs and high quality firearms to our state police doesn’t raise a red flag for me,” Haskell said.

Massachusetts’ $6m deal

In 2010, Massachusetts approved $6 million in tax breaks to Smith & Wesson, which announced it would move its Thompson/Center hunting rifle division from New Hampshire to Springfield. The move meant an expansion of the firm’s Springfield headquarters and the addition of 225 jobs there.

James Debney, president of Smith & Wesson, said the company chose the Bay State over several other states because local and state officials, including Gov. Deval Patrick, “collaborated … to make our choice clear.”

Locally, the company got a $600,000 tax break from Springfield on top of the state’s $6 million.

“It’s a big win for the city - 225 jobs and $14 million (in investments) this year alone,” John D. Judge, the city’s chief development officer, told the Springfield Republican.

New York: public good?

Remington Arms received $5.5 million in New York subsidies and grants since 2007. The company was founded in Ilion, NY in the early 1800s and its purchase by Cerberus Capital Management, which owns the Freedom Group, was announced in April 2007. Almost $4.5 million of the subsidies were targeted at luring 200 jobs to Ilion from Remington and Cerberus-affiliated manufacturing plants in Massachusetts and Connecticut.

The subsidies became an issue in 2012 when Remington and another subsidized New York gun manufacturer, Kimber Manufacturing, fought against proposed state legislation that mandated microstamping for bullet casings, which gun control advocates and police said would help solve gun crimes.

The gun-control advocacy group New Yorkers Against Gun Violence (NYAGV), said that the gun companies’ opposition to the legislation meant they weren’t serving the public interest.

Jackie Hilly, executive director of NYAGV, said, "I do have a problem with people who are taking money from the state … and then flatly refusing to serve some sort of public good. That’s public money that’s being used, and I think there should be some kind of public good that comes out of it."

Kentucky: 100 new jobs

Kentucky granted Smith & Wesson $6.1 million in subsidies since 1998, including, $4.5 million to subsidize the expansion of the company’s Graves County facility, where it planned to add 100 jobs.

Gov. Steve Beshear’s office did not return phone calls asking for comment on the subsidies. But at the time the grant was made, Beshear said, “The creation of 100 new jobs and a $5 million investment in the Commonwealth will have a tremendous impact and is a testament to our ongoing commitment to support our existing industries.”

Newtown: shift in thinking

A college student having coffee at Starbucks in Newtown last week said that while she doesn’t like subsidizing assault-rifle makers, she knows there are other Americans who don’t like funding programs she and her friends care about.

“I don’t understand someone’s need to own an assault weapon,” said Mary Hamula, 18, of Newtown. “If this hadn’t happened, I wouldn’t have a huge problem with tax subsidies. I’m a big proponent of government- subsidized healthcare.”

But she felt that public opinion might shift support away from tax subsidies for assault weapons.

“I think with everything that happened in Newtown, I think the culture around guns is going to change. If something positive comes out of it, that’s all we can ask for,” she said. “It did break us. Nobody here wants that to happen to another community.”

IMPACT: New ethics effort in Maine

Maine,United States — 2012-09-21T12:38:48-04:00

AUGUSTA, Maine — Two of the state’s top political leaders are vowing a bipartisan effort to make government ethics, accountability and transparency key issues in the upcoming legislative session.

Republican Gov. Paul LePage and House Democratic leader Emily Cain are responding to a national report that gave Maine government an “F” for its potential for corruption.

Maine ranked 46th in the “State Integrity Investigation” by three nonpartisan groups that was released in mid-March.

Cain, the Democratic House leader who is running for a Senate seat from Orono, has proposed two linked initiatives that she hopes will lead to government ethics reform.

Cain said Tuesday she will ask her fellow lawmakers to form a bipartisan, joint select committee to consider ethics reform and report out a bill in the legislative session that begins in January, 2013.

“While the report didn’t reveal that Maine is corrupt, we have a lot of things to look at to do better,” Cain said, adding that she believes key areas of concern include nepotism, cronyism, legislative financial disclosure, government transparency and citizen access to information.

Cain on Tuesday submitted a “concept draft” bill, “An Act to Strengthen Maine's Ethics Laws and Improve Public Access to Information,” that she hopes will provide a vehicle for bipartisan reform proposals.

Cain said her reform effort could succeed where others have failed in the past in part because the public is more aware now of the potential for corruption.

“I think the fact that Maine had a public blemish in that report changes a mindset for the public and for legislators,” Cain said.

“And we can say to ourselves: why did we get scored that way and can we take a look at ourselves in the mirror and say what do we want to be known for?”

Both Cain and Gov. Paul LePage vowed after the integrity report’s release last spring to spearhead comprehensive government ethics reform proposals.

The report was based on research into 330 indicators in 14 categories, from procurement to campaign disclosure to lobbying. No state got an A, leading the report’s sponsors to conclude, “statehouses remain ripe for self dealing and corruption.”

Global Integrity collaborated with the Center for Public Integrity and Public Radio International on the investigation. In Maine, the research was done by the Maine Center for Public Interest Reporting, based in Augusta. The Center’s research was then analyzed by the three sponsoring groups, which came up with the scores.

Maine got an F in nine of the 14 categories, including executive accountability, public access to information, civil service management, pension fund management, the insurance commission, legislative accountability, lobbying disclosure, ethics enforcement and redistricting.

The state got a D+ in judicial accountability and political financing and a C- in the budget process and procurement. It got one A: in internal auditing.

This week, LePage’s acting chief legal counsel, Michael Cianchette, said that the governor’s office is working with a University of Maine student to research and write omnibus ethics reform legislation.

That student, Shelbe Lane of Patten, will make the legislation the subject of her Honors College thesis. That, in turn, said Cianchette, will be turned into a bill from the governor’s office.

“Rewriting ethics laws and finding best practices is a big objective,” Cianchette said. And he said that while it may be unusual to hand the job over to a college student, Lane is up to the challenge.

“She’s an intelligent young Mainer who wants to undertake this public service and it will of course go through process in the governor’s office and the legislature to find the best way forward,” Cianchette said.

While the goal is to address a range of problems identified in the report, Cianchette said he believes the legislation will ultimately “focus in on a few red flag areas.”

Lane, 20, worked as an intern in LePage’s office in the fall of 2011. She said the work she’s undertaking now is daunting.

“I would say that at times, yes, it makes me a little nervous to think about what I will be doing,” Lane said. “But I am getting ready to go to law school next year, so I’m also looking at it as a good step to working on my skills to help me through my career.”

And Lane said her interest in ethics reform went beyond the personal. Pride in her state motivates her.

“I am a student and I am always going after straight A’s,” she said. “This report card is not my own, but what I hope to accomplish is a better report card and ranking for the State of Maine in the form of straight A’s!”

Both Cain and Cianchette said the reform efforts will not be politicized.

“Anything I’m doing I want to do in collaboration with the governor’s office, Republicans in the legislature, everyone,” Cain said.

“What I’d like to see happen is not only an end result that increases trust in state government, but a process that reflects and leads to an increased trust as well.”

“It’s not a Republican or Democrat issue,” said Cianchette. “It’s a transparency issue.”

The bipartisan theme extends to Lane: Her thesis advisor is Cianchette, a Republican, while Democrat Cain sits on her thesis review committee.

The Maine Center for Public Interest Reporting is a nonpartisan, non-profit news service based in Hallowell. Email: mainecenter@gmail.com. Web: pinetreewatchdog.org.

Maine lawmakers, governor close ethics disclosure loopholes

2012-04-13T10:43:21-04:00

AUGUSTA — Maine has paid hundreds of millions of dollars to organizations run by legislative leaders or the spouses of high-level state officials since 2003. But because of a loophole in ethics law, the public didn’t know about it.

That won’t happen again.

A bill to require disclosure of state contracts with legislators and executive branch officials has sailed to approval through the House and the Senate.

The bill, L.D. 1806, now awaits the signature of Gov. Paul LePage, who said Thursday he will sign it.

“It is reasonable to ask our elected leaders to disclose who is paying them. It is good for the health of our democracy and the people of Maine,” said LePage.

“This will increase trust in the system and ensure that people have the opportunity to take appropriate action and make decisions accordingly.”

LePage proposed the bill after a January investigation by the Maine Center for Public Interest Reporting revealed that organizations run by top legislators or the family members of executive branch officials had received $235 million in state contracts between 2003 and 2010.

In some cases, lawmakers served on the committees that controlled the spending that went to their organizations.

But the spending was never disclosed to the public in state ethics filings.

Sen. Kevin Raye (R-Perry) the senate president, was the lead sponsor of LePage’s bill. He said Thursday that the bill’s passage “means a greater degree of transparency” for citizens, who will be able to spot potential legislative conflicts of interests.

“They can be more confident that they’re aware of the circumstances surrounding individual legislators and their votes in the legislature,” said Raye.

Nathaniel Heller, head of Global Integrity, which co-sponsored a 50-state ethics-in-government study that recently gave Maine an “F," said, the bill’s passage “is an important step in the right direction when it comes to advancing transparency and accountability in Maine's government. It's encouraging to see the governor and other political leaders respond to reporting about governance challenges in the state by adopting specific, evidence-based reforms.

“In an era of limited budgets, it's especially crucial for Maine's citizens to know that every dollar spent by their government is being spent wisely," Heller said.

Current law requires that legislators or high-level state employees report state purchases of goods or services worth more than $1,000 only if they were purchased directly from the individual legislator or family member, not from a corporation or entity for which the legislator or family member works.

For example, $98 million in state contracts went to Portland’s Shalom House between 2003 and 2010. At that time, Sen. Joseph Brannigan (D-Portland) was executive director of Shalom House. He was also chair of the Appropriations and Health and Human Services committees. He was not required to disclose those payments from the state because they went to the organization he ran, not to him directly.

The new law will require legislators, executive branch officials and constitutional officers, such as the attorney general and secretary of state, to report if organizations they or family members were affiliated with — as owners or management-level employees — were paid more than $10,000 annually by the state. LePage’s original bill had proposed a $1,000 reporting trigger, but lawmakers amended that to the higher number.

Rep. Michael Carey (D-Lewiston) proposed an additional amendment, which was adopted, requiring that lawmakers and executive branch officials report income above $2,000 to a corporation of which they are majority owner, even if the lawmaker or official isn’t paid by the corporation.

“If that entity is making money, just the fact that you’re choosing not to pay yourself doesn’t mean that you don’t have to report where that money comes from,” said Carey.

Carey said he proposed the amendment after state Treasurer Bruce Poliquin failed to report almost $10,000 in dues paid to the Popham Beach Club, which he owns. Poliquin later amended his disclosure form to reflect the payments.

The legislation closes another loophole that has allowed lawmakers and high-level executive branch officials to avoid disclosing their income during their last year working in state government. If the disclosure form filing deadline fell after they left office or state employment, they could simply ignore the requirement.

“The public will now have access to the officials’ financial information for their last year in office,” said Jonathan Wayne, executive director of the Maine Commission on Governmental Ethics and Election Practices.

Naomi Schalit and John Christie are senior reporters at the Maine Center for Public Interest Reporting, a nonprofit, nonpartisan news service based in Hallowell. You can contact the Maine Center here.