One of the matters considered by the State Ethics Commission at its meeting this past week was a recap of their interpretations of the provision for lobbyist registration and reporting (“State Ethics Commission Staff Recommendation Regarding Registration And Reporting Requirements For Lobbyists And Organizations That Engage In Lobbying Activities“).
Hawaii law requires lobbyists to register with the commission and report on their expenditures if they meet a combination of conditions: (a) they are paid to lobby; and either (b) spend more than five hours in any month lobbying, or (c) spend more than $750 in a reporting period. Whether a person is paid as a professional lobbyist, or lobbies as part of their regular paid employment, doesn’t matter. If you’re paid, you meet the first condition.
Volunteer lobbyists, such as those who represent community groups or nonprofit organizations at the legislature, are not required to lobby.
However, organizations that rely on volunteer lobbyists, or engage in grassroots lobbying (urging members of the public to communicate with legislators about legislation), would be required to register and report their lobbying costs if the organization hits either the 5-hours or $750 threshold.
The commission presented an example:
A grassroots organization does not employ a lobbyist, but the organization spends $1,000 for newspaper and television ads urging the public to contact their legislators about a bill. The organization pays for the ads using contributions received from its members for its lobbying activities. The organization must file a lobbying report. The report must include the organization’s advertising expenditures and contributions received by the organization for the purpose of lobbying.
The state lobbyist law exempts anyone who has special knowledge about an issue and is “occasionally” requested to appear at the legislature by a member, and administrative agency, or even a lobbyist.
The ethics staff are recommending that this exemption be narrowly construed.
The Commission has determined that it construes this exemption narrowly and believes that it applies to persons who provide expert information to the legislature, but does not apply to lobbyists or other persons who attempt to advocate for a position, encourage a particular result, or otherwise influence legislative action. Persons who provide information to the legislature or attempt to “educate” the legislature for the purpose of advocating for a position are not exempt from the requirements of the Lobbyists Law.
Another staff interpretation helps to close a reporting loophole. Lobbyists are required to publicly disclose their expenditures, but the statute exempts “the expenses of preparing written testimony and exhibits for a hearing before the legislature or an administrative agency.”
This has been used by some lobbyists or organizations to avoid reporting substantial costs. The commission notes, for example, “it appears that some lobbyists or organizations that employ lobbyists do not report lobbying expenses relating to the research, drafting, and submission of written testimony and exhibits for a hearing.”
This is not the intent of the law, according to the staff recommendation. Instead, the exemption is only for “administrative expenses incurred to prepare and submit written testimony.” Essentially, clerical services to prepare copies and actual copying costs are what they’re talking about.
On the other hand, according to the staff recommendation, “compensation paid to a lobbyist for researching or drafting testimony or exhibits for a hearing must be reported as a lobbying expenditure.”
The staff recommendation also clarifies that in-kind or non monetary contributions received by an organization engaged in grassroots lobbying must be reported if they meet the other reporting conditions.
The commission gave this example:
A grassroots organization organizes its members to rally the public to urge legislators to vote against a bill. One of the members owns a sign company and donates 50 signs for members to use at the rally. The signs are considered a contribution and the organization must report the name of the person who contributed the signs and the fair market value of the signs on the organization’s lobbying report.
Under current state law, responsibility for reporting of lobbying expenditures is split between the organization that employs a lobbyist, and the lobbyist. Money spent by a lobbyist but reimbursed by the client should be reported by the client organization, while lobbyists are required to disclose their out of pocket expenditures which are not reimbursed.
The commission staff have now proposed closing another loophole in this disclosure provision.
In some cases, organizations provide lump sum payments to lobbyists to cover the lobbyists’ fees and all lobbying expenses. The lobbyists uses some of this amount to pay for lobbying expenses and retain the rest as fees for their lobbying services. Where these payments are not itemized or attributed as payments by the organizations for specific expenses, staff believes the lobbyists must report the lobbying expenses on their individual lobbying reports. Staff recommends the Commission adopt this interpretation of the Lobbyists Law’s reporting requirement.
Another loophole involves travel costs. When calculating whether an organization or a lobbyist expend more than $750 in a reporting period, travel costs do not have to be counted.
But the commission staff note that once a person or organization hits the threshold for registering or reporting expenses, those reports must include all expenditures, including any travel costs. This is a sea change and, if approved, will result in more complete disclosure.
Now I’ve got to backtrack and determine what action, if any, the commission itself took on these recommendations.
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