On government lobbying government: An overview of ongoing TN debate

Plans for a new Walmart Supercenter in Claiborne County this year put legislators into action and a pair of neighboring small towns into the legislative lobbyist market, where they spent a few thousand taxpayer dollars that may have affected spending of millions of taxpayer dollars.

Tazewell and New Tazewell, located just a couple of miles apart, were newcomers to the hiring of Nashville contract lobbyists, each town motivated by a desire to have the new Walmart located inside its city limits after learning that state law could influence the outcome of the competition.

Many Tennessee cities, counties and other branches of local government are longtime employers of contract lobbyists — East Tennessee examples include Knoxville, Gatlinburg, Sevierville, Maryville and Alcoa.

But others, including Cleveland and Dandridge in East Tennessee are terminating lobbying contracts because officials say they’ve decided the continued spending is not justified.

A survey of local governments statewide indicates that they collectively spent at least $700,000 this year hiring private lobbyists — payments that are not disclosed at the state level because of a quirk in the state’s lobbying law, even though they are public records at the local level.

At the same time, associations of local government officials and others that get paychecks from government, which do file reports of lobbyist compensation under state law, collectively spent far more — as much as $4.5 million per year, a review of disclosure documents indicates. These groups range from broad-based organizations such at the Tennessee Municipal League, representing more than 300 city governments, and the Tennessee County Services Association, representing all 95 county governments, to smaller groups representing school boards, tax assessors, county highway superintendents and the like.

The state’s public higher-education system spends more than $1.1 million per year through the University of Tennessee and Board of Regents systems on “government relations.” Gov. Bill Haslam’s administration has a staff of 40 legislative liaisons with a total payroll of more than $3 million annually. The state court system has just one liaison with an annual salary of about $65,000 per year.

For comparison, the top spender among employers of lobbyists that file reports with the Tennessee Ethics Commission was BlueCross BlueShield of Tennessee, reporting $450,000 paid in lobbyist compensation fees this year. Reports for spending in the second six months of 2013 have not been filed, but last year total lobbying expenditures reported to the commission totaled between $25.6 million and $67.1 million. Unless expenditures reach the $400,000 mark, lobbyist employers report a “range” rather than a specific figure.

Thus, lobbyists reliant on taxpayer funding often pointed out in interviews that they are a minority in the overall lobbying scheme of things and face competition from corporations and other special-interest groups, often national in scope, with huge financial resources and without real concern to taxpayers.

Still, the notion of government lobbying government inspires controversy.

Those lobbying for any arm of state or local government are not required to register as lobbyists with the Tennessee Ethics Commission or file any reports if they are government employees, even if that is their sole function. Contract lobbyists for government entities must register, but do not report compensation.

Elected officials at all levels regularly communicate with one another on issues as part of their job. And that, some contend, brings into question the whole concept of government lobbying government through hired lobbyists — whether through contract lobbyist or taxpayer-paid staff.

“The rules for private citizens and private companies that lobby are more stringent than for government lobbying. I think that’s unfair,” said Justin Owen, president of the Beacon Center of Tennessee and a registered lobbyist in the organization billing itself as promoting “free market policy solutions to public policy issues.”

“At the end of the day, we should get rid of this completely,” said Owen. “If a mayor or a school board member or a public utility executive is effective, there should be no need to hire an outside lobbyist with taxpayer dollars.”

Similar sentiments exist among some government officials while others say there’s a need for professional help from lobbyists who know the lay of state government’s landscape


“I am the lobbyist for Claiborne County,” declared Claiborne County Mayor Jack Daniels in an interview about the legislation affecting the location of a new Walmart at one of two towns within the county borders. “We don’t need to be paying another one.”

The town that becomes home to the proposed new Walmart within rural Claiborne County — an existing Walmart is within New Tazewell’s city limits — will reap substantial revenue from local sales taxes. According to those involved, a state law as it stood at the beginning of this year would have allowed New Tazewell to divert county funds through its industrial development board into site preparation and other endeavors to make a new site within New Tazewell city limits a more attractive location.

Daniels says the diversion of county funds could have reached $2 million. The entire Claiborne County operating budget is about $12 million, he said.

“That just didn’t sound right,” said state Rep. Mike Harrison, R-Rogersville, who joined state Sen. Becky Duncan Massey, R-Knoxville, in filing legislation that would have stopped any diversion of county money to New Tazewell dead in its tracks. Both were apparently alerted by a developer who favored a Tazewell site.

As filed, the bill declared that cities not imposing a property tax — New Tazewell does not — cannot take advantage of the very complicated statute at issue, which involves “payments in lieu of taxes” and industrial development authorities.

“It’s kind of tough to think that a city that doesn’t even have a property tax can decide what happens to the property tax of a county,” Harrison said, depicting the situation as an “unintended consequence” of the statute when enacted.

Filing of the bill (SB661) brought lobbyists into the picture. Tazewell hired lobbyist Steve Buttry, a former Republican legislator from Knoxville, for $1,000 — the lowest lobbyist fee encountered in a statewide survey. Tazewell Mayor Wayne Jessie says the town just wanted “someone to use as an adviser to help us understand what was going on over there (at the Legislature).”

New Tazewell, meanwhile, hired lobbyist Joe May, also a former Republican legislator from Knoxville, for $16,000 with the more complicated task of blocking passage of the bill as introduced, according to Paul Harrison, a Knoxville attorney also retained by the town and no relation to the legislator.

Lobbyists for the Tennessee County Services Association and the Tennessee County Commissioners Association also got involved. The upshot was an amended bill that, as enacted by unanimous vote of both the House and Senate, allows New Tazewell — and dozens of other small towns with no property tax — to tap into county funds only with the county’s permission or after making provisions to ensure the county funds are replaced with money out of its own coffers.

Paul Harrison says the town “never intended to short the county on taxes” and town officials — who declined to be interviewed and referred questions to their lawyer — are content with the outcome and with May’s efforts as a lobbyist. The location of the new Walmart Supercenter is still unresolved. If New Tazewell does become the store’s home, it would be able to repay any diverted county funds with money from local sales tax receipts — likely to increase substantially from those collected at the existing Walmart since the new store will be about twice as big.

“We got the parties to agree. That’s what I like to do best — try to get folks to come to some kind of common ground,” said Massey of the outcome.

David Seivers, executive director of the Tennessee County Services Association, says the bill is a “perfect example” of the arcane, complex situations that local government lobbyists deal with — sometimes competing with lobbyists for “commercial interests” that have different goals. TSCA files a disclosure report, which reported lobbying expenditures of $100,000 to $200,000 over a year’s time. Seivers says that includes a portion of his own $160,000 annual salary as well as fees to contract lobbyists. TSCA’s total annual budget is about $500,000.

Margaret Mahery, executive director of the Tennessee Municipal League, said TML did not get involved in the New Tazewell-versus-Tazewell dispute because of a policy of “not getting in the middle” when two city members of the organization have different interests.

It is understandable, she said, that TML member cities sometimes feel a need to have someone in Nashville watching out for special local interests. Indeed, TML sets aside $123,000 annually to pay the salary of Jane Alvis, who since 2005 has been designated to look out for the interests of the state’s “big four” cities: Chattanooga, Nashville, Knoxville and Memphis.

Small towns, in contrast, often have mayors who serve on a part-time basis with little salary and thus are unable to leave their full-time jobs for a journey to Nashville for lobbying of legislators.

The overall TML budget is about $2 million per year with Mahery’s salary set at $200,000. In its last two six-month disclosure reports filed with the Ethics Commission, TML has reported lobbying compensation totaling between $225,000 and $300,000.

Counties and cities sometime share common interests in squabbles at the Legislature, as with bills that would affect local government revenues or spending, and sometimes are at odds, as with an ongoing dispute over the rules for cities annexing parts of a county.

And municipalities sometimes have interests that differ from those of other cities. Alvis notes that the sizes of Knoxville, Nashville, Chattanooga and Memphis create different dynamics than exist for small, rural communities.

Gatlinburg City Manager Cindy Ogle said the city’s status as a “premier resort” under state law, granting it special treatment in tax and revenue distribution laws because of the tourist-oriented economy, makes it essential to have someone on hand to watch out for what is happening in Nashville.

Gatlinburg wound up having two lobbyists this year — David McMahan, who resigned after acknowledging a conflict of interest over legislation regulating distilleries within the city and refunded most of the $19,000 fee paid in advance, then May, who was paid $10,000, Ogle said.

“TML does a great job,” she said. “They keep up with hundreds of bills (affecting cities generally) … but we have issues that others aren’t interested in.”

Critics, however, say the overall picture of government lobbying government is offensive to taxpayers at both ends.

Owen, the Beacon Center of Tennessee president, said the limiting disclosure of government lobbying at the state level is the result of the “you-scratch-my-back-and-I’ll scratch your back” collaboration in setting the rules. Government groups, he said, “don’t want taxpayers to know” what is spent because it would arouse anger among citizens.

“The interests of citizens are being replaced by the self-interest of ambitious bureaucrats who use taxpayer money to hire consultants who tell the bureaucrats how important they are and why they are justified in asking for ever-greater funding,” said Ben Cunningham, a founder of the Nashville Tea Party and active in statewide tea party organizing. “Then the bureaucrats, marching forward with glorious taxpayer-funded mission statements, hire taxpayer-funded lobbyists to fulfill their ambitious dreams of mission creep.”

“Government at all levels is increasingly becoming a closed loop,” he said in an email, declaring that federal and state governments communicate while local and state governments do the same as “fewer and fewer bureaucrats are concerned with talking to the citizens.”

Dick Williams, chairman of Common Cause Tennessee and a registered “volunteer” lobbyist for the organization, said government entities have a reasonable right to present their interests to legislators, but that the public is being shortchanged by laws that indirectly dodge disclosure.

“I’m sure that they (legislators and local government officials) would just as soon citizens didn’t know what they’re doing, but it ought to at least be disclosed,” he said, referring to provisions of law that declare that government officials given lobbyist duties need not register as lobbyists and that local governments do not have to file reports on their lobbyist spending when hiring contract lobbyists.

They should at least have to file a report, available without specific Freedom of Information Act inquiry, on “who is representing who” in lobbying, Williams said.

House Speaker Beth Harwell and Senate Speaker Ron Ramsey expressed mixed feelings on the matter in interviews. Both said they appreciate Haslam’s legislative liaisons, who provide a contact point on dealing with many issues, but questioned the need for contract lobbyists representing local governments.

“The mayor (of Nashville, Karl Dean) has my cellphone number. He can call me anytime,” said Harwell.

For similar reasons, Ramsey said he advised Kingsport officials to terminate a long-standing contract for lobbying by former state Sen. Carl Moore — “though I have nothing but respect for Carl Moore” — and they did.

Cleveland Mayor Tom Rowland said the city is terminating its long-running contract with “my friend,” lobbyist Steve Bivens, because “we have a great legislative delegation” representing the city — along with TML — and the $8,000 expenditure is thus an unnecessary expense.

Dandridge Mayor George Gantte said the town employed lobbyists — at a fee of $25,000 this year — with the goal of winning state approval for funding of local bridge and road improvements. The result was a partial success, he said, but with more still on the town’s wish list. He would like to renew the contract, Gantte said, but the town’s fiscal situation makes it a lower priority.

“We just can’t afford it,” he said.

Here’s a sample of some fees paid to contract lobbyists by Tennessee local governments and names of the lobbyists registered to represent them in 2013:

Alcoa – $25,000; Bill R. Phillips and Anna Durham Windrow
Cleveland – $8,000, Steve Bivens.
Dandridge – $25,000; J.A. Bucy and James Farrar.
Gatlinburg – $10,000 to Joe May; previously paid $19,000 to David McMahan, who stepped down and retained $5,444 of that payment, reimbursing the rest.
Hamilton County – $20,000, Will Denami
Knoxville – $55,000, Tony Thompson
Knoxville Utilities Board – $18,000, Steve Buttry and Kim Adkins
Oak Ridge – $45,000, Bill Nolan
Maryville – $25,000; Bill R. Phillips and Anna Durham Windrow
Nashville – $60,000, Bill R. Phillips and Anna Durham Windrow
New Tazewell – $16,000, Joe May.
Oak Ridge – $45,000, Bill Nolan
Shelby County – $96,000 paid through mayor’s office, Wendell Moore and Jeremy Nagoshiner; also $76.500 paid by Board of Commissioners, M.S. “Susie” Alcorn through county commission.
Sevierville – $13,650, Nelson Biddle and John New.
Tazewell – $1,000, Steve Buttry.

A sample of some government-related associations and the “range” of lobbyist compensation and related expenditures they reported to the Tennessee Ethics commission for the last six months of 2012 and the first six months of 2013:
Tennessee Association of Utility Districts, $50,000 to $100,000
Tennessee Association of Housing and Redevelopment Authorities, $10,000 to $25,000, plus a $4,969 legislative reception.
Tennessee County Commissioners Association, $50,000 to $100,000
Tennessee County Highway Officials Association, $50,000 to $100,000
Tennessee County Services Association, $100,000 to $200,000
Tennessee Electric Cooperative Association, $150,000 to $250,000
Tennessee General Sessions Judges Conference, $35,000 to $75,000
Tennessee Development District Association, $20,000 to $50,000
Tennessee Municipal Electric Power Association, $200,000 to $300,000
Tennessee Municipal League, $225,000 to $300,000.
Tennessee Organization of School Superintendents, “less than $10,000” in lobbyist compensation on both reports; separately reported $9,118 spent on legislative reception.
Tennessee Public and Teaching Hospital Association, $50,000 to $100,000
Tennessee School Boards Association, $35,000 to $75,000, plus $20,062 on legislative reception.
Tennessee Secondary Schools Athletic Association, $50,000 to $150,000
Tennessee State Employees Association, $50,000 to $100,000
Tennessee State Troopers Association, $25,000 to $50,000