Common Cause Minnesota’s complaint against the Republican Governors Association (RGA), Minnesota’s Future and Minnesota’s Future LLC has entered the full investigation phase, according to Mike Dean, executive director of Common Cause Minnesota. The Campaign Finance and Public Disclosure Board cannot legally comment on any complaint until an investigation is complete and the board has made its ruling.

Common Cause Minnesota filed the complaint last week alleging that the three groups coordinated to funnel money from the RGA to Minnesota’s Future without disclosing all of the required donor information. The RGA has provided essentially all of the funding for Minnesota’s Future, which has used that money to run ads attacking Democratic gubernatorial candidate Mark Dayton.

“By the board moving forward it shows how serious [the complaint is],” Dean said. “I think that it is clear…that this is not a joke, and that they [the RGA and Minnesota's Future] need to take this seriously.”

If the Finance Board rules in Common Cause’s favor, each of the groups could be fined up to $1.7 million. Dean said that he expects to have the board’s decision after its next regularly scheduled monthly meeting on Monday, Nov. 1, the day before the general election.

Executive Director Gary Goldsmith said that the board generally tries to complete an investigation of a complaint before their next scheduled meeting. Because of the laws regulating what can be disclosed before the board rules, Goldsmith could not even confirm or deny having received a complaint from Common Cause, but offered an explanation for how the board investigates a typical complaint.

“Depending on the complaint, it may involve obtaining documents, reviewing reports that have been filed, getting documents from other sources,” Goldsmith said. “It may also involve discussions with parties or even testimonies from parties taken under oath. The parties are always given an opportunity to respond. Sometimes they’re asked specific questions, and sometimes they’re asked for a more general response.”

The investigation is handled by the board’s permanent staff, who then present their findings to the board itself at the monthly meetings.

“That investigation is prepared in written form then for board consideration,” Goldsmith said. “Typically what happens is staff will prepare a document that outlines the investigation, outlines the claims made by the complainant and the response that are received from the respondents.”

Patrick Caldwell is the American Independent’s Minnesota correspondent.

Critics blame the precedent set for public officials by the Pawlenty administration’s own ethical lapses, as well as the outdated disclosure requirements that are rife with loopholes.

Minnesota was one of the first states to create an agency to oversee the ethics of public officials in the wake of the Watergate scandal. A major component of ethics reform was a requirement that elected and appointed officials who faced potential conflicts of interest file a written statement with the ethics agency, now called the Campaign Finance and Public Disclosure Board. These disclosure filings were designed to keep the public aware of situations where officials might benefit from decisions they made as part of their routine duties.

Dozens of disclosures were filed in Minnesota between 1975 and 2002, according to the board’s annual reports. Prior to 2003, there were only a handful of years that no disclosures were filed. But since Pawlenty took office — and appointed many of the state’s officials, including the six governing members of the disclosure board — not one form disclosing a potential conflict of interest has been filed.

Pawlenty and some of his high-profile appointees have faced criticism over repeated ethical stumbles, including a hefty 2002 fine against Pawlenty for illegally coordinating his campaign ads with the Republican party.

Last year, Lt. Gov. Carol Molnau, who formerly served as a legislator, also faced allegations of conflict of interest when a Star Tribune investigation revealed she’d sold her farm in 2000 for many times its assessed value only eight days after pushing through legislation funding a nearby highway.

Pawlenty also riled critics with his 2002 appointment of former 3M employee Sheryl Corrigan as commissioner of the Minnesota Pollution Control Agency at a time when the state was dealing with contamination of water supplies by Corrigan’s company. Corrigan only recused herself from 3M-related business in a letter to the governor a year and a half after her appointment.

Neither alleged conflict of interest was investigated by the Campaign Finance and Public Disclosure Board, which relies mainly on citizen complaints to spur investigations. But in interviews with the Minnesota Independent, multiple lawmakers expressed concern about the lack of prompt disclosure or enforcement in Corrigan’s alleged conflict and the precedent set by the then-young administration.

Hamline University professor David Schultz, a specialist in professional ethics and the legislative process, said Pawlenty institutionalized a “lower standard of ethics” as a result of these incidents and his overall approach to governmental ethics.

“Part of the issue here is that this is an administration that doesn’t take seriously the administrations before it in terms of ethical practices and conflicts of interest,” Schultz said. “That translates down into the unwillingness of people across the board in government to file these kind of forms.”

Pawlenty spokesman Brian McClung said the statute clearly places responsibility for the disclosure filings with individual officials, not the governing administration.

“It is up to each public official to either abstain from voting or taking action that presents a conflict or file the form as required by statute,” McClung said. “To claim that the governor or any other person is responsible for someone else’s failure to file the form, if necessary, is ludicrous.”

But Sen. John Marty, DFL-Roseville, who spearheaded earlier ethics reforms and is running for governor, said it’s expected that some conflicts might arise for public officials, but that the precedent needs to be set at the top of the administration.

“If the commissioners don’t disclose, then their employees aren’t going to feel the need to disclose,” Marty told MnIndy. “[Pawlenty] and his departments have a responsibility to disclose, and if they don’t think the laws are tight enough, to tighten them up.”

McClung said the Pawlenty administration is open to ethics reforms.

Ethics requirements loopholes

The decline in conflict-of-interest disclosures is partly due to the broad wording of the 1974 statute that requires such a disclosure only when an official “would be required to take an action or make a decision that would substantially affect the official’s financial interests or those of an associated business.”

The broad language allows public officials to slip through informal loopholes well before they’re required to file a public disclosure with the state board, Schultz said.

“The laws so loosely define conflict of interest for public officials and require them to disclose so little,” he said, “that you can probably engage in a lot of practices without ever violating the law.”

In the legislature, for instance, both the House and Senate excuse members from voting if they declare a conflict of interest, although the reason for the legislator’s abstention isn’t recorded. The statute also allows that there won’t always be time to write out the disclosure forms, and in that case permits the official to notify their superiors, who are required to reassign or excuse the official.

Citing the details of the statute, Campaign Finance and Public Disclosure Executive Director Gary Goldsmith said the board “only gets the notice [of disclosure] if the person has a conflict and is unable to resolve it under the other provisions of the statute.”

“I’m not sure there would be a situation where a public official or a local official with a metropolitan government unit would not be able to either abstain from voting or [pursue] some of the other possibilities, [like] the superior finding somebody else to participate in that action,” Goldsmith said.

David Schultz

These statutes for declaring a potential conflict are so weak, Schultz said, that they are currently only “symbolic.”

The situation is further complicated by the limited statements of economic interest required of public officials. Although officials are required to submit the forms listing their jobs, investments and some property, it’s up to the individual officials to fill the forms out completely, said Goldsmith.

“Because the board has no idea what the holdings are of any public official, we don’t look at them to see if there’s something because we have no way of knowing if something is missing.” Goldsmith said.  “The only things we would see are cases of over-disclosure, not under-disclosure.”

The outdated language of the economic disclosure has failed to keep pace with modern business practices, said Marty.

“The biggest loophole is, if I do independent contracting, it doesn’t show up anywhere,” Marty said. “Any group that wants to buy influence with me, they can’t give me a gift, but they can hire me as a consultant, pay me thousands of bucks a year and frankly ask me to do nothing.”

In addition to the loopholes provided by the broad language of the statutes, the ethics agency, the Campaign Finance and Public Disclosure Board, is “exceedingly weak” in investigatory and enforcement powers, Schultz said.

“Disclosure actually requires somebody that’s in the position of enforcing the law and monitoring the conflicts of interests,” Schultz said. “Our public officials practically break their arms patting themselves on the back, saying that we’ve got all these fine laws, but in fact the laws really are quite weak compared to contemporary standards.”

The potential for reform

Despite the fact that Minnesota has fallen to 40th in the nation in terms of rigorous disclosure laws, according to a recent ranking by the Center for Public Integrity, there’s been little appetite from state lawmakers to engage in ethics reform.

As early as 1975 and 1979, the disclosure board asked in its annual reports that the legislature clarify and strengthen the conflict of interest statute and outline the potential sanctions of failing to file a disclosure, although the conflict of interest portion of the statute has only been broadened.

Ethics reform often evokes anger from legislators who think any reforms allude to their corruption, Marty said.

“Conflicts of interest corrupt the process,” Marty said. “It doesn’t require corrupt people; it’s a corrupt process.”

Efforts to reform disclosure laws also face the wrath of powerful private interests that are the laws’ targets, as well as some lawmakers.

“[Reforms are opposed] by people who get things like that and don’t want to stop getting them; and people who give things, because they get influence, don’t want to lose their influence,” Marty said. “Our laws could be a lot stronger and unfortunately people who either don’t get it it or are taking advantage of the weak laws don’t want to change them.”

The danger of weak conflicts-of-interest laws, especially in a citizen legislature where legislators are often dependent on outside employment, is that the public’s interest won’t be represented, Marty said.

“The whole point of these laws is not that people have to go through a bunch of paperwork,” Marty said. ”If I’m taking money from somebody, I think the public has the right to know whether I’m serving the public or serving some other interest.”

MN Publius’ Zach Stephenson asks whether the video is evidence that Day is already acting as a lobbyist.

Not until he earns $3,000 for his lobbying services, says Gary Goldsmith, executive director at the Minnesota Campaign Finance and Public Disclosure Board. Goldsmith tells the Minnesota Independent that’s the threshold to meet the definition of a lobbyist under state law.

That definition specifically says that the term “‘lobbyist’ does not include a public official,” but Goldsmith tells MnIndy the law doesn’t actually prohibit a legislator from also lobbying.

But there’s a lot of overlap between activities included in the two job descriptions — persuading elected officials, for one. And in Day’s case, with the Legislature out of session, it’s an especially foggy area. Legislators are allowed to engage in outside employment, hobbies and advocacy.

Here is the video in question:

Margaret Anderson Kelliher

Just when Margaret Anderson Kelliher appeared to be pulling away from the pack running for governor with a series of endorsements, charges that she violated campaign-finance rules are setting her apart in ways she didn’t need.

Her Democratic rivals for governor raised the alarm over the purchase of a voter database by donors to her campaign rather than by the campaign itself.

Kelliher and the DFL said she asked and was given a green light to have a third party pay for the database. But the DFL decided it wasn’t kosher after all, and while her campaign has undone the financial arrangement, Republicans have now joined the outcry, with state Rep. Tom Emmer calling for  Kelliher’s resignation as House Speaker and the Minnesota GOP filing an official complaint.

Minnesota Public Radio has audio of Kelliher admitting her campaign’s lapse:

We have since corrected the mistake. And I take responsibility for not having gone to, you know, directly to an attorney from the beginning of this. That process has changed on our campaign from here on out.

Here is the Republican Party of Minnesota’s letter to Gary Goldsmith, executive director of the state Campaign Finance & Public Disclosure Board:

We are writing to file a formal complaint regarding DFL gubernatorial candidate and Speaker of the House Margaret Anderson Kelliher.

News accounts from the St. Paul Pioneer Press and Minnesota Public Radio raise deeply troubling questions about Speaker Kelliher’s campaign finance activities and potentially illegal campaign coordination.

Minnesotans deserve a full and complete accounting of the following outstanding questions:

· When were the donations referenced by the Pioneer Press and Minnesota Public Radio made to Speaker Kelliher?
· By whom were the donations made?
· What were the amounts of said donations?

According to the Pioneer Press, “At issue are donations made on behalf of Kelliher, apparently after her campaign reached its limit for nonelection-year donations. Money was given to the DFL, bypassing Kelliher to help buy a pricey database — called a Voter Activation Network, or VAN — of Democratic voters for her campaign’s use.”

“Under state campaign finance rules, candidates in non-election years can raise $500 each from lobbyists, political action committees and individuals. Once they reach $95,800, however — and Kelliher and several other DFL candidates appear to have hit that mark — they can no longer accept donations from lobbyists and PACs. However, candidates may still raise donations from individuals of up to $250 apiece. The Kelliher campaign asked individuals to help buy the VAN, which one source said costs $13,000. [DFL Chair Brian] Melendez wouldn’t confirm that figure but said it was ‘in the ballpark.’ Such coordinated donations should count against a candidate’s fundraising cap,” the Pioneer Press further reported.

You were also quoted telling the Pioneer Press: “If there’s a coordination like that, it would still be considered a contribution to a candidate.”

“The donations also may run afoul of state rules against ‘earmarked’ donations, or donations made to a campaign committee with the express or implied purpose of being redirected to a specific candidate,” the Pioneer Press added.

Speaker Kelliher’s fellow DFL gubernatorial candidates have raised concerns regarding potential illegality. “I think there’s some questions to be asked. Number one, I don’t think it’s legal. But also it seems like one candidate is getting preferential treatment,” state Senator Tom Bakk told the Pioneer Press.

“If the allegations are true it’s really upsetting. The issue would be the party playing favorites, but also it’s apparently a campaign violation. … Why in the heck would somebody think that that’s OK to do?” state Senator John Marty told the paper.

Senator Marty further told Minnesota Public Radio: “I can’t think of any reason you would say ‘If you want to help me give it to somebody else.’ The only reason I can think one wants to do that is if they’re approaching the limits on how much we can accept from that source of money. In other words, to circumvent the contribution limits and that’s what I’d be extremely concerned about.”

“It’s the responsibility of both Speaker Kelliher and the party to play by the rules. I hope going forward that we have a fair process because that’s what the people deserve,” State Representative State Rep. Paul Thissen told MPR.

Thank you for your attention to this very serious matter.

Sincerely,

Tony Sutton, Chairman of the Republican Party of Minnesota
Michael Brodkorb, Deputy Chairman of the Republican Party of Minnesota

Minneapolis City Hall. Photo: Hennepin Co. Library

Although Minneapolis held no primary election this year, candidates for city office still had to file “pre-primary” campaign-finance reports under a new ordinance passed this summer. Yet for two weeks after the Sept. 8 deadline, confusion and other delays kept dozens of candidate and political committee reports from reaching the public.

The city’s adoption of instant-runoff voting (IRV) did away with the separate primary election in early September, long the traditional time for pre-primary finance reports that provide the public with its first peek into candidates’ campaign coffers.

So after the state Legislature took no action to resolve the matter, the Minneapolis City Council set a primary date of Sept. 15 for the sole purpose of triggering the pre-primary financial-report requirement.

The problem: In the meantime, candidates had been told there would be no financial filings until just before the Nov. 3 general election. Notices went out from both the city and Hennepin County election offices to alert candidates to the change.

Of the nearly 100 candidates who had filed for office, about a third are not registered with the county — a requirement only once a candidate raises or spends $100 — and don’t need to file financials. Most of the rest filed pre-primary reports more or less on time.

But as of Tuesday, two weeks after the deadline, the Minnesota Independent found that the county’s online records were missing pre-primary reports for at least a dozen Minneapolis campaign committees and a dozen more political-action committees (PACs). The financial wherewithal of incumbents like City Council Vice President Robert Lillegren and Park Board President Tom Nordyke remained a mystery.

Snafus and confusion

It turned out that a technical snafu had kept some reports out of the public eye. Filings by park board commissioners Bob Fine, Carol Kummer and Annie Young had been received, just not posted.

But the pre-primary deadline without an actual primary election proved a source of confusion for others.

Nordyke’s treasurer told MnIndy she’d mistakenly thought the deadline was Sept. 15, the date of the sham primary, and then tried to email her report. Veteran candidate Marcus Harcus, one of 10 three challengers to Mayor R.T. Rybak Council President Barb Johnson, also tried the not-yet-accepted method of filing electronically.

Others filed early and potentially incomplete reports. The Becker Volunteer Committee, working to re-elect Board of Estimate and Taxation Vice President Carol Becker, promptly completed and returned a report form that the county sent as a reminder in mid-August — well before Sept. 1, the final day of the reporting period.

“The notice was somewhat confusing to me,” treasurer Ted Becker wrote in an email to MnIndy. “I did not expect any [financial] activity between August 20 and September 1. However, I was mistaken.” The report from Ward 6 council candidate Michael Tupper’s campaign also appears to have been filed prematurely.

As of Wednesday, pre-primary financial reports remained missing online for at least four city candidates: Dick Franson, who is running for mayor; Charley Underwood, a Ward 12 council candidate; David Wheeler, a Board of Estimate and Taxation candidate; and Don Samuels, the Ward 5 council incumbent. County officials were double-checking records to ensure that all documents they have received are uploaded to the Web.

Late filers can face fines of $50 per day, up to $500, beginning four days after the deadline, according to Deb Bohler of the Hennepin County. Unexpected personal emergencies usually lead to waivers, whereas chronic tardiness increases the likelihood of a fine.

Of 26 PACs registered with the county as current in Minneapolis, pre-primary reports for only 14 are posted online. All are required to file, even if their bank accounts are empty or they’ve been inactive this year.

Unlike candidates’ campaigns, PACs aren’t sent information about filing rules in the first place, so they didn’t receive notice about the newly imposed pre-primary requirement. But they can keep up to date via the county website, Bohler said.

Not interested in making that kind of statement

State law also requires candidates for office in a “metropolitan governmental unit” to reveal financial details of a more personal nature, including occupation, employer, compensation, securities held, property owned, and money owed. But two people running for election in Minneapolis have so far refused to file a “Statement of Economic Interest,” according to the city clerk’s office.

James R. Everett, a Social Entrepreneurship mayoral candidate, tells MnIndy he doesn’t trust the police and other city powers-that-be with that information. “For my safety, I’m not playing by the rules,” Everett said.

Michael Cavlan, who is running as an Open Progressive candidate for city council in Ward 8, didn’t return a call from MnIndy told MnIndy he’d received an email threatening a $1,000 fine and was planning to visit City Hall on Friday, where he’d either settle up or take a principled stand against completing the form.

Gary Goldsmith, executive director of the Minnesota Campaign Finance and Public Disclosure Board, said cities or counties can report local candidates who don’t fill out an economic-interest statement to the board, which may impose a fine of as much as $1,000. Once elected, officeholders who don’t comply risk removal from office, he said.

Image: Minnesota Independent

Gov. Tim Pawlenty’s recently announced plans to axe state refunds for political contributions of $50 or less has set off an email stampede, as candidates urge donors to give before the program dies July 1.

In the $2.7 billion of unallotments he unveiled on Tuesday, Pawlenty included a complete cutoff of $10 million in state funding for the cash-back campaign donation program. The program has no official name in state law, but the state Department of Revenue calls it the Political Contribution Refund Program.

Republicans get more money through the program than their rivals, but Pawlenty still dissed it as welfare for politicians. On his WCCO-AM radio program this morning Pawlenty allowed, “It’s a nice program,” but he said it was a lower priority than schools and health care.

A growing number of candidates and both other major parties have jumped on the short-notice deadline to make pitches via the Internet for refundable donations. (UPDATE: Republicans, remarkably, have joined them.)

In a Web solicitation, Independence Party Chair Jack Uldrich characterized the cut as hacking off the IP’s arm.

Democrats have used less vivid imagery but are communicating urgency all the same, with email subject lines like “Time is running out,” “Just 14 days to  get your refund” and “Campaign Alert!”

In particular, those aiming to replace Pawlenty made sure to whack him as they made their appeals for fast cash. Here’s former State Sen. Steve Kelley:

By cutting off the Political Contribution Refund Program, Tim Pawlenty is impacting your voice in the governor’s race.  Over 90,000 Minnesotans use the PCR program annually to make a refundable contribution to the candidate of their choice. … Before the program expires, make a refundable $50 contribution (or $100 for couples) to a Governor who will put education first!

Ramsey County Attorney Susan Gaertner was even more pointed in her email plea:

In addition to making cuts that will disproportionately affect the poor, children and the elderly, the Governor also proposed eliminating a program that helps ordinary Minnesotans participate financially in the campaigns of their choice. … While Tim Pawlenty and other Republicans can afford to run their campaigns with large donations from PACs and wealthy individuals, we would prefer to run ours with money donated from all levels of givers.

Gaertner had a ready metaphor for donors unfamiliar with the soon-to-be-eliminated program:  ”Think of your contribution as a temporary loan to the campaign.”

State Auditor Rebecca Otto, also a DFLer, curiously made a pitch for donations of as little as $5 rather than the maximum refundable amount of $50: “Can you afford to support my work with a monthly donation of $5, $10 or $15?” her email asked.

Gary Goldsmith, executive director of the state Campaign Finance and Public Disclosure Board, told the Minnesota Independent that his department doesn’t recognize pledges or plans as “contributions” under the refund program. He said donors or candidates with questions about the program’s phase-out should consult online memos from the campaign-finance board (pdf) and the Department of Revenue (pdf).

Pawlenty told his radio audience today that he’s heard more guff from legislators on the donation-refund program than any other unallotment item. Maybe that’s because it’s the one they can still do something about.

Here are some samples of appeals from candidates and parties, including those mentioned above plus state Rep. Paul Thissen and state Sen. John Marty (both gubernatorial candidates), and Secretary of State Mark Ritchie. Click on an image to enlarge. If you have seen or received other similar communications from candidates, please forward them to MnIndy.

Susan Gaertner

Steve Kelley

John Marty

Rebecca Otto

Mark Ritchie

Paul Thissen

Independence Party

DFL Party