MY LAST NERVE: Income Disclosure Shouldn’t Be This Complicated

August 7, 2015

Inside Insight

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A SIMPLE PRINCIPLE TURNED INTO A COLLECTION OF LOOPHOLES

Last week news broke that Attorney General Alan Wilson’s office was recusing itself from investigations stemming from ethics and corruption case of former House Speaker Bobby Harrell. Whatever else that may mean, it does mean that there is an ongoing investigation at the state level.

Predictably, the finger-pointing and calls for “ethics reform” in 2016 have begun. Certainly, reform is needed – just not the kind of reform our lawmakers have proposed during the last several legislative sessions.

Consider the principle of income disclosure. It’s not complicated. South Carolinian’s should know who pays our elected officials so that we can determine whether those officials have a conflict of interest when sponsoring, introducing, voting on, or debating legislation.

Conflicts of interest are technically illegal. Under the current Ethics Act, it’s illegal for an elected official to use his or her office to obtain a personal economic benefit. But it’s incredibly difficult to hold actual politicians accountable for following this law because, for the most part, we can’t see where their private economic benefits are coming from. Currently, public officials are only required to disclose income they earn from government contracts. That’s a good requirement, but income directly from government contracts is only one way to benefit financially from the state. There are other ways: introducing bills that benefit business partners, promoting regulations that benefit your business, promoting a bill because its passage will result in a land purchase that boosts the value of your property, and so on.

After Harrell’s resignation, it seemed there was a genuine appetite for reform. Lawmakers began seriously debating private income disclosure. But it didn’t take long for the debate to go in a different direction.

First, the loopholes. One bill, for instance, would have specifically exempted income received from consulting with lobbyist principles as long as the elected official was paid at fair market value. (I’m not making that up.) This leaves the door wide open for officials to continue being paid to lobby – and without disclosing it. Buried in another bill was a provision that would have loosened – not tightened but loosened – disclosure requirements on government income.

The loopholes kept coming. The 2015 legislation would have changed the reporting requirement on government contracts so that the elected official only needed to report the disclosure of direct payments to the business or individual who holds the contract. So, under this proposed “reform” we would no longer know if a lawmaker earned substantial sums of money by winning cases before the Workers’ Compensation Commission, because the lawmaker would only have to disclose that his firm earns the money, not that he does.

Enough.

The point of income disclosure is not to force politicians to spend some extra time on paperwork while hiding their most lucrative government-related relationships. The point is to force them to disclose exactly how they make their money – that shouldn’t take much time – so that their constituents can decide if their actions in office are related to their income in an unethical way.

The loophole-riddled bills are still alive in the General Assembly. Passing them in their current state won’t solve a thing.

Jamie Murguia is Director of Research at the S.C. Policy Council, The Nerve’s parent organization.