Tightening (?) Income Disclosure Laws

LEGISLATION WOULD TIGHTEN SOME REQUIREMENTS FOR STATEMENTS OF ECONOMIC INTEREST — AND LOOSEN OTHERS

Late in March, House Republicans, including Speaker Jay Lucas, sponsored a bill requiring increased disclosure on elected officials’ statements of economic interest. On its face, the legislation seems to tighten disclosure laws pretty significantly. The main items:

(1) Officials would be required to disclose direct payments from any governmental sources, including federal, state, or local, but this is already required under current law. The bill does require disclosure of direct payments from any governmental sources to public officials’ businesses, which is not currently required, and expands the definition of “business” to include businesses owned by public officials’ businesses.

(2) In an apparent response to recent indictments in the legislature, the language regarding relationships and transactions with lobbyists is expanded and tightened. Under this bill, officials would be required to disclose not just the name but the nature of their relationship with any lobbyist who is an immediate family member or a business associate, the latter item including partnerships, LLCs, lease agreements, joint ownership of real estate, or any other investment or business relationship.

And (3) officials would also be required to disclose the source, type, and amount of any lobbyist income received by the official, a member of his immediate family, or a business with which he is associated. This includes contractual or employment relationships with lobbyists, including lobbying, independent contracting, or any other arrangement which results in the official being paid by a lobbyist principal. It also requires disclosure of any income from a source that received campaign contributions.

In two areas, however, lawmakers have actually loosened disclosure laws in pretty significant ways.

(1) Public or elected officials would no longer be required to disclose all the connections related to income they receive from a business contracting with the governmental entity with which they serve. So if Senator John Doe sits on the board of a government entity (a common though often unconstitutional practice in South Carolina), and Senator Doe’s company receives income from a company that contracts with that same agency, he would no longer have to disclose anything.

And (2) public or elected officials’ immediate family members (with the exception of spouses) would no longer be required to disclose their private income sources – a clear incentive to put business interests in one’s son’s or daughter’s name.

Too often, faced with a simple reform, state lawmakers treat legislation as if it were a complicated recipe: some ingredients stay in, some go out, some of the proportions change, etc., etc. – to the point at which lawmakers themselves don’t know what’s in or not in the bill, and the bill gets passed for the sake of passing it.

So far, a simple reform is getting complicated.

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