Thursday, February 21, 2008

Making an Ethical Stand: Ethical operations deals among ethical players.

Part 2 on my series on Campaign Finance Reform

by Mark Rauterkus

Conducting a business presents choices as to who to deal with and who to avoid. The suppliers and providers of the the goods and services you buy matters greatly and impact the end product, the economy and one's sense of satisfaction.

The same holds true for the business dealings of our government entities.

The city of Pittsburgh buys supplies, obtains materials and lets contracts. Municipal, county and state government, as well as the authorities, have massive budgets. Some businesses cater to government sales and contracts, no doubt.

It makes great sense to be particular as to who you do business with and who to avoid.

If we want to live in a more ethical city and region, we need to tell our city leaders that we don't want them to spend any money with unethical suppliers. For instance, the City of Pittsburgh will NOT sell property it owns to anyone who already owes back taxes to the City of Pittsburgh on other property. If you want to obtain new property, from the public holdings, you had better not be a tax cheat. That makes sense.

This same line of thought can be applied to other aspects of city government. Felons need not apply for jobs in the courts. Background checks are needed for those who work in the schools and at parks. Campaign finance issues can come under the same type of scrutiny.

New laws on campaign finance reform are being discussed in city hall this week.
A public hearing is slated for 2 pm on Tuesday, February 26, 2008. Check out the ordinance to supplement administrative code, by adding "Campaign Finance Regulations," sponsored by Council member Bill Peduto at his blog: And, visit and search for "Finance."

Holding better campaigns and elections is important to the health of the region. But massive weakness with enforcement and penalties may cripple the good intentions of better elections and cleaner candidates.

If everyone plays above board and follows the (new, proposed) rules, we'd have wonderful new day. Dream on. This is politics. We're in Pittsburgh, a one-party town. Some have been known to cheat in the past.

When cheating occurs, the fair-minded folks get screwed while the cheaters trump the system. Those that are more clever at money laundering shouldn't have an upper hand in getting government jobs. Candidates who can money launder well and win elections would then get put into positions where they'd further refine their skills with tax-payer funds.

Keeping participants more faithful to the rules and spirit of campaign finance reform needs drastic, yet simple, measures.
I suggest a "Scarlet Letter Penalty."

If you want a city contract, you can't break our campaign finance rules. If you are at odds with the campaign finance measures, you're out. Let's live in a city that chooses to only make payments to those who honor our campaign finance laws.

If a culprit breaks any campaign finance reform law, that person, as well as his company, becomes ineligible for any contract from city government. All payments from the city to the offending person and firm, including pay checks, are terminated. These individuals and firms would wearing a 'scarlet letter" so as to be "black listed at the time of cutting city checks."

This "scarlet letter penalty" would apply to both, the candidate and the donor. A candidate that wins an election could keep his post, as the people voted and the election was won. But, the candidate won't get paid.

If a mythical great uncle wants to give a large sum of money to his favorite nephew to run a campaign in Pittsburgh, fine. The money from the great uncle can be taken by the candidate, reported and spent. Meanwhile, the generous great uncle won't be eligible to get any city contract. He won't worry about city contracts and won't try to benefit from them. This great uncle donor has no worries about getting special influences, and in turn, the taxpayers have few fears about corruption from that source.

The length of punishment is another factor to consider.
Some say that a four-year punishment is long enough. In their point of view, if someone gets caught and screws up in the 2009 election and buys a candidate a seat, in part by breaking a campaign finance law, the guilty donor would be eligible for city contracts four-years later, in 2013.

I don't like the timing of a four-year penalty phase. Four years could be too short. Or, it could be too long.

Consider, for example, Don Barden or some other slots parlor operator seeking to buy city council members. Barden holds a contract with the state for the exclusive operation of a slots operations in the city. The state sold license to Don Barden never expires. His was a one-time payment that lasts forever. Four years is NO TIME AT ALL in that type of deal.

A contractor that builds bridges, tunnels and other mega projects -- such as light rail extensions to Oakland and the East End -- would gladly suffer a few years of penalties to have votes on city council and contracts awarded in year five and beyond.

Punishment to the ones that make the infraction to the campaign finance regulations should be in effect for as long as the candidate that benefited is an elected official in any public position. The "scarlet letter penalty" should end when the candidate exits all public positions.

For the sake of example, if a guilty employee at a developer such as Forrest City gets caught giving $50,000 to a council candidate, (the limit is $2,500), then that firm is OUT for all city contracts. However, if the candidate who took the money resigns his or her post, then the firm could get back into the game for city contracts. The candidate who took the money and the company that gave the money are in bed together. They both should be linked while that candidate stays in any government post.

A big payment that exceeds the limits could go to a candidate can not be spent for years. The funds could sit and gather interest for future campaign cycles, decades into the future. The city does not have term limits.

I'm not fine with specific dollar amounts of the proposed fines.
Another suggestion was to set penalty amounts for fines for the rule breakers. They wanted to attach the dollars of the sin in the campaign finance deed to the penalty. The thinking of the rule makers was to charge the villains a three-fold putative damage. Make the guilty pay a fine that is three times what was spent on the candidate.

I think it is impossible to set uniform dollar amount penalties in this realm. In recent times, $50,000 could easily buy a seat on city council. If the risk of getting caught means a pay-back of three times that amount, say $150,000, that's nothing when contrasted with the totals being spent in public building projects. A public financed parking garage, for example, can cost $10-Million. That penalty of three times the amount of damages as tied to the sins that flowed into the election coffers is chump change.

A Sister and Rabbi and a vacant seat huddle and an Ethics Hearing Board meeting breaks out.

The new bills sponsor has the proposed campaign finance regulations being upheld by the Pittsburgh's Ethics Hearing Board. I've seen glaciers move faster than the Ethics Hearing Board. That body is a total failure. The mayor's golf outing with UPMC executives in the summer of 2007 won't be resolved until the spring or summer fo 2008. They want to change the employee handbook to redefine perks from nonprofits. Sad to say, the Ethics Hearing Board in Pittsburgh, as appointed, can't navigate its way out of a wet paper bag. It would be more effective to administer Boy Scout Oaths to candidates, or do nothing.

Employees, companies, and citizens, it is time to ponder these proposals. Those who make and receive political donations are doing so with good intentions, but we need to think them through. I want the new rules to benefit challengers, competition, taxpayers and freedom.

Postings in this series:

Part 1: Local Campaign Finance Reform

Part 2: Making an ethical stand.

Part 3: Proposal to Bankers for a Campaign Marriage, with drive-through guests

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