The Wisconsin Manufacturers & Commerce (WMC) has released a new report on taxpayer-funded lobbying, saying reform is needed in the use of taxpayer dollars — or misuse, as the case may be — to fund third-party advocacy organizations and private contract lobbyists.
While businesses and homeowners are faced with some of the highest property taxes in the nation, WMC argues in the report Local (Out Of) Control by Corydon Fish, local governments are funding private groups to lobby state government for even more taxing and regulatory power.
“Even though Wisconsin has the fifth-highest property taxes in the country, Wisconsin businesses and homeowners are still facing an ever-increasing tax burden from local governments,” said Fish, the WMC general counsel and director of tax, transportation and legal affairs. “It is especially unsettling that local governments fund private advocacy organizations and contract lobbyists that are not accountable to voters to push unpopular policies — like more taxing authority — at the state level.”
According to the report, taxpayer-funded lobbying by local governments has become big business in Wisconsin. In fact, the report found, during the 2017-18 legislative session, local government groups funded by tax dollars spent more than $5 million lobbying state government, in many of those cases for policies to raise taxes.
“This spending includes millions of taxpayer dollars spent to join third-party associations and hire contract lobbyists,” the report states. “One such third-party association — the Wisconsin Counties Association (WCA) — spent more time lobbying state government in the first half of 2019 than any other lobbying entity, according to the Wisconsin Ethics Commission.”
Indeed, according to Wisconsin Ethics Commission lobbying records, the WCA spent $755,815 on lobbying efforts in 2017-18, and spent another $249,342 in the first half of 2019. The Wisconsin Towns Association spent $386,346 in 2017-18 and another $70,820 in the first half of 2019.
Depending on your point of view, those dollars are not always spent in the taxpayers’ or the public’s interest.
For example, the WCA has lobbied against legislation that would make it harder for municipalities to impose wheel taxes by requiring the municipality to pass the measure in a referendum at a regularly scheduled election. Right now, the governing body of the municipality can simply enact such a tax, and WCA wants to keep it that way.
Sometimes, tax dollars help support the organization’s policy positions even if direct lobbying dollars aren’t spent. The WCA is on record on an array of such issues.
It supported legislation to allow municipalities, school districts, counties, and technical colleges to satisfy the legal requirements of publishing meeting minutes by posting them on a website and one public place rather than in a newspaper, and it is also on record as opposing an anti-sanctuary city bill that would prohibit a municipality from enacting or enforcing an ordinance, resolution, or policy that prohibits the enforcement of a federal or state law relating to illegal aliens or ascertaining whether an individual has satisfactory immigration status.
That bill would also require a political subdivision to comply with a lawful detainer that is issued by U.S. Immigration and Customs Enforcement.
In addition to direct lobbying, the report stated, local governments also attempt to influence state lawmakers via non-binding referenda and issue-based ad campaigns, all financed with local taxpayer dollars.
For example, the WCA supports the state’s Just Fix It campaign, which advocates for higher gas taxes and/or user fees.
“This type of activity raises many questions about how taxpayer funds are used, the openness of local government and if the local citizenry are actually being appropriately represented,” the report states. “The millions of dollars spent by local governments each year on lobbying could be put to better use to improve roads, provide additional funding to schools, or better support law enforcement.”
And, while many voters undoubtedly support policies the WCA lobbies for or supports in other ways, many others don’t. However, in the latter case, taxpayers must pay to support those policies anyway, the WMC report states.
“No matter your personal beliefs, no citizen can refuse to pay his or her taxes because they disagree with where the money is going,” Fish wrote. “Essentially, local governments can freely take money from residents under the guise of taxation, and then use it to lobby for policies at the state level that could negatively impact the residents who picked up the tab.”
How it differs from private lobbying
For most lobbying organizations, the WMC explained, funding is provided by private entities that make a choice to support a specific group or hire a certain contract-based lobbyist.
“If the organization or individual believes they are not receiving the advocacy service they want, they can remove their funding,” the report states. “The key point is that the individuals or groups that support many lobbyists can freely choose whether or not to provide funding, and can help direct the policies that are being lobbied for.”
But with taxpayer-funded lobbyists, that’s not the case, WMC contends. Those taxpayers have no recourse for local governments acting against their best interests because they are required to pay taxes, unlike private businesses who freely choose to join or leave a membership organization that works on their behalf.
And while proponents of taxpayer-funded local-government lobbying claim they are representing their electorate and, if they are not truly representing the views of the people, the people will elect someone else, Fish says that’s not what happens because most local governments fund private associations and lobbyists with taxpayer funds and avoid common — and needed — open government protections.
“Local government-funded third-party associations are private entities not accountable to voters,” the report states. “By shifting their advocacy efforts to these private groups, local officials can indirectly advocate for unpopular public policies like tax increases that harm their constituents, while protecting themselves from voter backlash.”
While local governments are using taxpayer funding to lobby for interests contrary to taxpayers, the democratic process is also being subverted, the WMC contends. Besides not being subject to the open meetings and open records laws, local governments funding third-party advocacy campaigns are using taxpayer dollars to lobby for tax increases on businesses and residents.
“Tax increases lead to higher prices for consumer goods, fewer jobs and more expensive homes,” the report states. “In other words, policy outcomes that are contrary to the well-being of their taxpaying constituents.”
In any event, Fish continued, local governments do not need to rely on private entities to do their bidding in secret because local elected officials already have more than ample access to state legislators and other policymakers.
“Local governments have thousands of advocates in their elected officials,” he wrote. “Taxpayers elect and compensate local officials with the expectation that they will represent their constituents’ interests. When they fund third-party associations, local governments outsource to private groups their duty to represent their constituents.”
That outsourcing not only drives up costs but is unnecessary and inefficient, as local officials already have significant access to their state-level representatives, Fish contends.
“Instead of undermining the democratic process by funding private entities that are not accountable to voters or taxpayers, local officials should use the unprecedented access they already have to lobby truly on behalf of their residents,” he wrote.
How it happened
Fish says local government spending of taxpayer dollars for private lobbyists and issue advocacy is permissible under a broad reading of the state’s “public purpose doctrine” that says public funds may be used only for public purposes.
“This doctrine, originally meant to be a constraint on local governments, has become a blank check,” he wrote. “The Wisconsin constitution does not expressly establish the public purpose doctrine.”
The use of the doctrine in Wisconsin courts can be traced back to at least 1860 in a case that found that, while government funded improvements might benefit private interests, courts could still determine they were for a public purpose.
And an 1865 case established a presumption in the public purpose doctrine that courts can only overturn state and local expenditures if it is “clear and palpable” that the public will not benefit.
“Wisconsin courts have continued to broaden the interpretation of the public purpose doctrine to allow local and state governments to use public funds almost indiscriminately,” Fish wrote. “Courts have repeatedly given municipalities extra broad interpretations of the public purpose doctrine because of their proximity to constituents.”
Indeed, Fish wrote, application of the public purpose doctrine has expanded so broadly in Wisconsin and across the country that the Harvard Law Review concluded in 2016 that it was no longer an effective constraint on municipalities.
“Out of the 200 cases Harvard examined over the past 20 years in all states that use the public purpose doctrine, no spending measure had been overturned on public purpose grounds,” the report states.
Under these precedents, a court would likely find local governments’ millions in lobbying expenditures and issue advocacy permissible simply because they claim to benefit the public, Fish concluded.
“In reality, this spending is unnecessary and can be directly contrary to public interests,” he wrote. “Clearly, Wisconsin needs a new check on this spending authority to rein in the abuse of taxpayer dollars.”
Fish offered several recommendations for the Legislature to consider.
First, he wrote, the state should prohibit local governments from using taxpayer dollars to pay for third-party advocacy associations and private lobbyists.
“Local governments already have thousands of elected and appointed officials with significant access to legislators,” he wrote. “Prohibiting spending taxpayer dollars on private lobbyists would not reduce local governments’ ability to address state-level issues. Instead, it would prevent local officials from outsourcing the work they are elected or appointed to do and would increase efficiency and transparency in the use of taxpayer dollars.”
Second, the state should prohibit the use of taxpayer dollars for issue advocacy.
“This would prevent local governments from spending taxpayer dollars for paid communications on a policy issue in an election or advocating for issues that could be contrary to their constituents’ interests,” the report states.
Finally, Fish urged, the state should prohibit private third-party lobbying groups from receiving state benefits.
“This would stop taxpayers from being forced to subsidize the benefits of private sector lobbyists,” he wrote. “Taxpayers should not have to pay for lobbyists’ healthcare and retirement in addition to the irresponsible spending they push.”
Even with reforms, Fish concluded, local elected officials and public employees would still be able to represent their constituents before other governments, and the recommendations do not eliminate local governments’ ability to use third-party advocates, he wrote, they only prohibit the use of tax dollars to do so.
“Local governments would still be able to provide personal donations directly from elected officials, use grant funding, or draw from other pools of non-tax/fee dollars,” the report states.
The bottom line is, Fish concluded, reforms to the process are desperately needed to protect local taxpayers.
“Taxpayers should know their local governments are working on their behalf, not working against them to implement higher taxes or increased regulations,” he wrote. “A more open and transparent system is needed.”
Tie their hands
But Matthew Rothschild, the executive director of the Wisconsin Democracy Campaign, has a different take, saying WMC, the state’s biggest lobbyist, simply wants to tie the hands of lobbyists for the public.
“Essentially, in a duel with local governments, WMC wants to disarm its opponents,” Rothschild wrote in a commentary on the WDC website.
Not that it’s being outgunned, Rothschild observed.
“In the 2017-18 legislative session, WMC was the biggest lobbyist in the state, spend
ing $1.4 million,” he wrote. “The Wisconsin Counties Association, which it singles out for criticism, spent $800,000. In the first six months of 2019, WMC spent $414,000 on lobbying, and the Wisconsin Counties Association spent $249,000.”
While WMC alleges that associations and private lobbyists hired by local governments often advocate against the best interest of taxpayers, Rothschild says the WMC report fails to say that those associations and private lobbyists also advocate against the special interests of big corporations.
“A glance at the Wisconsin Counties Association’s 2019-2020 legislative agenda offers clues about the animosity of WMC,” Rothschild wrote. “Items on that agenda include: ‘protect groundwater from contamination and overuse,’ ‘close the dark store property assessment loophole,’ and ‘increase funding for mass transit’— all of which WMC opposes.”
Richard Moore is the author of the forthcoming “Storyfinding: From the Journey to the Story” and can be reached at richardmoorebooks.com.