LITTLE ROCK — The state Ethics Commission said Friday it may ask legislators to close a loophole in state political reporting laws that allowed a ballot question committee to hire a firm last year to promote a tax increase without disclosing the firm’s expenditures.
The commission also dismissed a complaint that the vice mayor of Fort Smith bullied a former member of that city’s Animal Services Advisory Board.
The Committee for Little Rock’s Future, which was formed to promote increasing the city’s sales tax from one-half percent to 1.5 percent, reported to the state Ethics Commission that it spent $196,253 to hire the Markham Group to run its successful 2011 campaign for the tax. No report was filed detailing how the Markham Group spent the money.
In December, the Ethics Commission ruled that no law was violated, dismissing a complaint by Arkansas Times senior editor Max Brantley, who claimed the Markham Group’s spending should have been reported.
The Ethics Commission voted Friday to authorize Executive Director Graham Sloan to begin working on proposed legislation on a number of issues in advance of the legislative session that starts in January, including a proposal to close the reporting loophole for ballot question and legislative question committees that hire agents or independent contractors.
"Other states have crossed that bridge, and they have in place reporting requirements on the books with respect to, ‘Hey, where did that $100,000 actually go?’" Sloan told the commission.
"I just feel very strongly that that’s something that we should pursue," Commission Chairman Paul Dumas of Morrilton said.
Commissioner William Bird of Little Rock asked Sloan who would do the reporting if the loophole was closed. Sloan said that in California, the committee hiring the agency reports how the agency spends the money.
Dumas asked Sloan to see if other states have taken different approaches and to offer the commission additional options.
Dumas also asked if spending by everyone receiving money from the agent would have to be reported as well.
Sloan said a likely argument against closing the loophole would be that following the money through the entire chain of vendors and sub-vendors would be too complex, but he said California has addressed that issue by requiring disclosure only of spending on express advocacy.
As an example, he said that spending on a TV ad would have to be reported, but if the TV station uses payment for the ad to replace a broadcast tower, that would not have to be reported.
The commission also authorized Sloan to begin working on a proposal to fix what he described as a "glitch" in state reporting laws that requires a public servant or governmental body to report any expenditure of $500 or more to expressly advocate passage or defeat of a ballot question or legislative question.
Sloan said the law is inconsistent with a series of attorney general’s opinions stating that a governmental entity may not expend funds that expressly support passage or defeat of a ballot measure. He suggested asking the Legislature to eliminate the reporting requirement on express advocacy, in light of the opinions that such spending is illegal.
Sloan also proposed asking legislators to require that a candidate in a special election file a final report on campaign finances. Candidates in special elections are required to file pre-election reports, but the law omits any requirement of a final report, he said.
He also suggested proposing a requirement that when a new political party files its first financial report, it report all previous financial activity, not just the financial activity for the quarter in which it became certified as a party, which is how the law reads now.
The commission voted to dismiss a complaint by Cheryl Gilmore, a former member of the Fort Smith Animal Services Advisory Board, who alleged that she was bullied at a July board meeting by board member and Fort Smith Vice Mayor Kevin Settle.
Sloan said that even if the allegation were proved, no law that the Ethics Commission is charged with enforcing requires public servants to conduct themselves in a civil manner.