Inside Alabama Politics – February 23, 2018
Rumors, subpoenas, and Form 6
Official sources are tight lipped, but rumors abound as to who may have received subpoenas related to possible campaign finance violations. Some estimates put the number of past and present elected officials currently under scrutiny at Attorney General Steve Marshall’s office between 40 – 100+.
One only needs to visit the Secretary of State’s Alabama Votes website (alabamavotes.gov) to see a potential cast of characters. Dozens of names representing hundreds of transactions and many thousands of dollars appear when an “expenditure payee” is queried for: Visa, MasterCard, American Express (or AMEX) and Discover. Most are elected officials (current and former) but a few PACs appear prominently as well.
Secretary of State John Merrill said that when he took office there was “no review, no evaluation, and no investigation” of irregular expenditures, particularly for credit cards, unless an outside person or group brought the irregularity to the attention of the SOS office. Even when irregularities were pointed out there was often little or nothing done about it. It seems the confluence of election year politics and repeated sacking of public officials for using their offices for personal gain (Mike Hubbard, Robert Bentley, Micky Hammond, Oliver Robinson, et al) are encouraging the AG’s office to take action.
Merrill said that the SOS office lacked authority and resources to check every report, something he says changed when he took office in January 2015.
“We established a protocol to review each and every report, every receipt and every expenditure,” Merrill said. But, Merrill added, they were mostly checking for math errors and making sure the totals matched up, not necessarily looking for violations of the Alabama’s Fair Campaign Practices Act. Merrill said his office went back to June of 2013 when candidates were allowed to begin soliciting contributions for the 2014 cycle and started from there.
“The first thing we do when we find something that we have questions about is to contact the candidate,” Merrill said. However he added that if there are questions beyond that, his office will make a judgment call as to referring the case to the Alabama Ethics Commission or the AG’s office. In fact Merrill told IAP that the AG’s office has contacted him about a number of reports filed by candidates between June 2013 – June 2017. Effective June 2017, when candidates began raising money for the current election cycle, Merrill’s office added an extra form to the FCPA disclosures (Form 6) specifically for detailing expenditures to lines of credit.
IAP learned last week that at least two gubernatorial candidates, Kay Ivey and Sue Bell Cobb, were believed to have received subpoenas regarding this issue. Cobb’s campaign manager, Landon Nichols told IAP that Cobb did receive a subpoena from the AG’s office. Nichols said after a review, the AG’s office told the campaign that they were not in violation and that they were released from further obligation. IAP reached out to the Governor’s office, which referred us to her campaign manager who would not confirm or deny that Ivey had received a subpoena, only stating that “the campaign” has not received a subpoena.
Ivey seems to only have one Visa charge this cycle and it was only for $33.44. She has at least a handful of non-itemized credit card purchases from her previously held office of Lt. Governor totaling more than $3,000. These charges were made before the Secretary of State’s office created a specific form (Form 6) for recording expenditures for lines of credit. Cobb has roughly $30,000 in credit card expenditures from her current run for Governor and they appear to be properly itemized on the accompanying Form 6.
The FCPA requires candidates to report any contribution or expenditure to or from any person or firm that aggregates to $100+ in a calendar year. The problem is many, many candidates were paying their campaign expenses on their credit cards and rather than listing the true recipient of and nature of the charges were simply reporting payments made to Visa, MasterCard, etc. Since the rumors of subpoenas have surfaced, several candidates have either gone back and amended previous reports or made attempts to be more specific about what they were buying with their credit cards, but this may not be enough. Old habits die hard.
There is just as serious an issue on the contribution side. Ever been to a political fundraiser and seen a large container where people could drop in cash? Technically there should be someone there recording those contributions. If someone drops a $20 donation it might be no big deal. Contributions under $100 don’t technically have to be reported. But if that same person gave any number of other contributions to that same candidate of $81 or more that passes the $100 limit and it must be reported. Furthermore candidates are allowed to loan their campaigns money anytime, even outside the normal 16-month window for raising money and retiring campaign debt. So if someone wanted to give money to a candidate and keep it secret, then having the candidate record the contribution as a loan to themselves would be an almost foolproof way to hide it.
“I don’t know how you would ever be able to catch someone who did that. It could be very hard to prove,” Merrill said.
Tuggle’s struggle to tax a tax exempt entity
Take note Alabama Legislators, for various reasons many of you have decided not to seek re-election. One of your colleagues who has decided not to run again is setting up a big problem for those who remain. Rep. Mark Tuggle (R- Alexander City) is once again trying to kill the Forever Wild Program, one of the few State programs that consistently polls well Statewide. Forever Wild passed by constitutional amendment in 1992 with support from 83% of the state’s voters. It was reauthorized for another twenty years in 2012, with 75% of the vote.
The program is so popular, since it was first threatened last year, over 15,000 emails have been sent to legislators from constituents demanding that it remain in tact. Now, Tuggle, by introducing HB362, is not only repeating his previous attempt to end the acquisition of new land by the program, he is also threatening the fund that pays for maintenance of existing property.
Forever Wild has purchased more than 255,000 acres of land. These lands make Alabama’s beautiful outdoor spaces open and accessible to everyone for hunting, fishing, hiking, biking and other outdoor recreation. Tuggle and his co-sponsors are proposing that land owned by the Forever Wild Trust, unlike all other land owned by the State, should be subject to ad valorem taxes. A bill introduced earlier this session proposed doing this in Coosa County, and when that failed Tuggle proposed taxing Forever Wild land Statewide.
The Forever Wild Trust fund can receive up to $15 million annually from the Alabama Trust Fund. Both are tax exempt entities. As you may know, the money ultimately comes not through legislative appropriation but from oil and gas royalties and interest from investment income.
State Treasurer Young Boozer, for one, is not supportive of Tuggle’s bill. “You don’t tax ‘tax exempt’ entities. The reason for that is obvious. Where does it end? If Coosa County, for example, were to start doing it then you open the floodgates for all the other counties to ask for or demand the same thing,” Boozer said. “The Coosa County bill is not going to move. So Tuggle’s next move is to do it for all counties. That way you get more people interested in it. Even though the bill says counties can opt out, let me assure you, the ones who want to get money will get it and the ones who have no interest at all will wait until they do.”
Boozer said he is sympathetic to the fact that some rural counties with small tax bases are hurting financially, not just because they “lose” ad valorem revenue when they State purchases land. But he says, this is not the way to replenish these losses. By the way, ad valorem taxes are “lost” in this way every year when homeowners reach age 65 and are exempted from property taxes on their homes. One wonders what kind of riot it would cause if Tuggle proposed those homeowners must reimburse their counties for that lost revenue.
Patti Powell, Director of the State Lands Division of the Alabama Department of Conservation and Natural Resources says the most significant change in Tuggle’s current bill compared to last year seems to relate to the new proposal to utilize funds from the program’s Stewardship Account as the source of the payments potentially beginning in 2032.
“Under current law, each time the Forever Wild Board acquires a tract, the program is required to deposit 15% of that tract’s appraised value into a separate “Stewardship Account”. The Alabama Trust Fund then handles the investment of those Account funds. The (Forever Wild) Board is authorized to use the interest income generated by the Account investments to fund maintenance and support needs of program acreage. In other words, if Forever Wild does not have enough money to make the required 15% deposit, the Board cannot acquire additional tracts until it has saved enough money to do so. So, in addition to ensuring funding for ongoing land management needs, the law currently ensures that the program will not grow beyond what the Stewardship Account could perpetually support. This Stewardship Account requirement – coupled with the use of interest income for land management – has been considered a model for creating a self-sustaining program.”
Tammy Herrington, Executive Director – Conservation Alabama, says flatly, “This is an anti-Forever Wild bill.”
“House Bill 362 goes even further than ending Forever Wild’s ability to acquire new land by specifying that money will be taken from the stewardship fund to pay property taxes in the event the program is not reauthorized in 2032. This threatens the program’s ability to maintain the lands purchased long-term. Forever Wild was designed to be able to care for its properties in perpetuity, and this bill would make that impossible. Alabamians have made it clear that we support public lands for hunting, fishing and recreation. Any legislation that would threaten Forever Wild’s ability to purchase future lands for hunting and recreation is unacceptable,” Herrington said.
Far from being a drain on the local tax base, some lands managed by the Forever Wild program actually attract taxpayer dollars. Much of the land in the program is adjacent to State parks and recreational areas. Counties and local municipalities often tout these recreational areas and promote them for tourists, hence their popularity, but don’t have to pay for the maintenance or management of the land.
“If you talk to most of the (Cities and Counties) that benefit from these lands, these lands bring in a lot of tax revenue because these counties are taking advantage of the tourism value of these lands. For example, Anniston has used its Forever Wild lands to create a popular mountain biking area, and it has brought in a huge amount of revenue. The city does not have to pay to maintain these lands, but they benefit from them economically,” Herrington said.
Though Tuggle’s bill failed to even pass committee last year, this session it passed the house committee recently and is now on its way to a vote in the House. A change of this type would require a Constitutional Amendment, so it still has a long way to go for passage. On the other hand, this year’s bill has already moved further down the line than last year’s attempt. Co-sponsoring with Tuggle this year are: Reps. Ron Johnson, Mike Holmes, K.L. Brown, Elaine Beech, Rich Wingo and Chris Sells.
House Bill 362, is on the House special order calendar Tuesday and the vote is expected to be close. A recording of 63 affirmative votes is needed to pass a constitutional amendment in the 105-member House.
- Occasionally we get it wrong and yesterday was one of those times, when we inferred that the Governor sleeps at the Blount Mansion. According to her office, Governor Ivey resides full-time at the Governor’s Mansion on South Perry Street and has never spent a night at The Blount Mansion. However, it still remains our opinion the current Mansion should be converted to a museum and The Blount “Wynfield” Mansion located off Vaughn Road be used as the Governor’s residence.
- Rep. Ed Henry (R-Hartselle), a rabble-rouser, who opted not to run for a third term, has obviously decided it wasn’t worth his while to bother showing up this legislative session. Insiders tell IAP Henry has not been seen in the statehouse more than once or twice since the legislative session began back in early January. But, we are betting that while he has stopped showing up to represent his legislative district he hasn’t stopped receiving his legislative pay. Another no show this session has been Rep. Alvin Holmes (D-Montgomery). Holmes, the longest serving member of the House, has qualified to run again, but due to health issues and his absence this session, it is expected he will eventually drop his bid for a 12th term.
- ALFA recently announced their endorsements for statewide races and there were some surprises. It had to come with some disappointment to Twinkle Cavanaugh, not only losing the endorsement for Lt. Governor, but also losing it by what we’re told a wide margin to freshman legislator Will Ainsworth (R-Guntersville). Cavanaugh had worked tirelessly for the endorsement for months, spending countless evenings visiting local county Farmers Federations. All might not be lost for the current President of the PSC. She received the endorsement from Manufacture Alabama earlier this week and still remains a heavy favorite in the June 5th primary because of her strong name id. Many were shocked with the endorsement of Rick Pate over retiring State Senator Gerald Dial (R-Linesville) for Agriculture and Industries Commissioner. Dial has long carried ALFA’s water as a state senator, but Pate, an agri-businessman, farmer, and long-time Mayor of Lowndesboro has long been associated with the powerful Farmer’s Federation. The last surprise was the endorsement of former U.S. Attorney Alice Martin, who won the coveted endorsement over appointed incumbent Attorney General Steve Marshall. IAP sources tell us that the voting for Ainsworth and Martin by a committee of about 90 ALFA members only required one round of voting and was not close.
Copyright 2018, by Inside AL Politics LLC. All rights reserved. Reproduction in whole or part without written permission prohibited.