After releasing our report on Monday covering the accounting issues of the PAC and campaign finance reports of the Texas Legislature, the Texas Ethics Commission (TEC) issued a response defending its “important work”. In the two page letter, TEC chairman Paul W. Hobby, a Joe Straus appointee, admitted that we were correct about the TEC’s limited enforcement powers (thanks to the Legislature) and bemoaned the appeals process that hindered prosecution. He defended the commissioners’ diligence, claiming they have “met much more than is required by law.” Unfortunately, the figures the TEC provides only tell half the story.
One of the TEC’s claims was that “259 complaints were filed with the Commission and 22 complaints were independently initiated by the Commission” and “approximately 250 sworn complaints” were disposed of in 2014. What they do not include is that only 58 open orders were issued in 2014 against 47 individuals/groups. The vast majority of the 58 orders from the TEC were concerning complaints made in prior years, 15 from 2013, 27 from 2012, 3 from 2011, and 3 from 2010. Only 10 open orders were in response to complaints made in 2014, or less than 4% of all 281 complaints. It seems most of the time spent in those meetings is used to dispose of complaints rather than investigate them.
Another fact the TEC excludes relating to these complaints is nearly all of them were concerning PACs and officials/candidates for local offices. Only three complaints against sitting state officials received an open order (Reps. J.D. Sheffield, Jim Keffer, & Linda Harper-Brown) in 2014, but those complaints had been sitting on the TEC’s desk for years. The complaint against outgoing Rep. Harper-Brown, who we showed to have failed to report hundreds of thousands in loan payments, was made FOUR years ago in 2010. The complaints against Rep. Keffer and Rep. Sheffield were made in 2012. Our report also presented accounting issues with their reports, especially Keffer’s with $220,000 in unitemized loans. No open orders were issued against any state official in 2013. Instead of keeping a close eye on elected state officials during those two years, the TEC targeted the opponents of state officials and activists. Examples include the Debra Medina campaign PAC “Texans for Medina”, Greg Parker (Railroad Commissioner candidate), Ben Bius (State Senate candidate), and Michael Quinn Sullivan (President of Empower Texans).
The TEC offered a defense for the Legislators listed in our report by suggesting some of the loans may not be accounted for if they were incurred while those officials were running for local offices. While this is a possibility (we updated our report to show Rep. Matt Shaheen’s local campaign reports), it’s impractical to review them all and would only affect a few of the Legislators. The Texas Ethics Commission does not file or display campaign reports from local elections. Those are filed with the appropriate county governments, and only some county governments provide those reports online. The TEC did not advocate maintaining records of all local candidate reports relating to state officials, which would make it much easier for citizen’s to track campaign finances.
The TEC’s explanation of campaign loans versus personal reimbursements had little applicability, as we made it clear in our report that we DID NOT include reimbursements for political expenditures made from personal funds. Those are related to Schedule G, not Schedule E, which is strictly for loans. The TEC excuses the lack of use of generally accepted accounting principles (GAAP) by state officials, saying it isn’t required by law, yet the TEC does not advocate for any changes to how campaign money is accounted. The TEC says a new filing system software is being worked on; in fact, the Texas Legislature gave the TEC $3,500,000 for fiscal year 2014 to do so (no money was appropriated for the project for fiscal year 2015). But, the Texas Annual Cash Flow Report for 2014 shows the TEC has only spent $153,854.66 (4.4%) of that money, and it wasn’t for software. It was for computer equipment purchased from SHI Government Solutions, which happens to have a lobbying office in Austin. A contract for developing a filing system was awarded to RFD & Associates in August of 2013. The web applications for filing candidate and lobbyist reports and personal financial statements were scheduled to be completed and launched in the summer and fall of 2014 according to the contract, but, considering tomorrow is 2015, it appears this government vendor is not fulfilling its obligations and/or the TEC is not pressing for completion.
Finally, the TEC makes no call for an audit of any of these campaign reports, despite our report showing clearly 100 campaigns and PACs have accounting issues. Under Chapter 571 of the Government Code, the TEC “by a vote of at least six commission members” can perform a complete audit of a report. The power is in their hands if they so choose.
What TEC’s response proves is that they answer to a higher power called the Texas Legislature. The true numbers show the TEC sits on legitimate complaints for years, especially when it affects powerful officials and disposes well over 90% of the rest. It is very suspect that the TEC is interested in transparency or fulfilling its mission of “promoting public confidence in government”.