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House Joint Resolution 1009 – The Arkansas Elected Officials Ethics, Transparency, and Financial Reform Amendment of 2014 HJR 1009 was one of three proposed constitutional amendments referred to the ballot by the th 89 General Assembly of Arkansas. It will be considered on the November 2014 ballot by the voters of Arkansas. This ballot item will add additional sections to Article 19 of the Arkansas Constitution.

The amendment deals with four main items:  Campaign contributions  Salaries for elected officials  Prohibitions of gifts from lobbyists and legislators becoming lobbyists  An extension of term limits for the General Assembly Section 2.

28. Contributions Prohibits campaign contributions from anyone other than: 1. An individual 2. A political party as defined by Arkansas Code 7-1-101 or 7-7-205 3. A county political party committee 4. A legislative caucus committee 5. An approved political action committee (PAC) It also prohibits contributions in excess of the maximum amount allowed by law. That amount is $2,000 per election. Primary, runoff and general elections qualify as separate elections so it possible that a candidate may accept a total of $6,000 each election cycle from any of the five listed above. Contributions may be accepted regardless if a candidate is opposed or unopposed in an election.

A person who knowingly violates this section is guilty of a Class A misdemeanor. Penalty for a Class A misdemeanor shall not exceed one year of imprisonment and/or a fine of $2,500. The General Assembly (GA) shall provide by law that this section is to be under the jurisdiction of the Arkansas Ethics Commission, allowing the Commission to create rules to implement, issue advisory opinions and investigate complaints. The amendment allows the GA to amend this section in the same manner as laws initiated by the people (which is a 2/3 vote in each chamber) and as long as the amendment is germane. The GA can amend the penalty provision with a simple majority vote.

Presumably this section is to eliminate corporate campaign contributions however corporations will still be allowed to form PACs or make donations to PACs which can in turn make campaign contributions. This is no fee to register a PAC in Arkansas. Small businesses and incorporated farms would be also be prohibited from making donations directly from their business accounts. Businesses and corporations would still be allowed to make PAC contributions. An interesting item on reporting is that candidates have to report donations of $50 or more but PACs don’t have to report donations unless they are more than $500. In theory this amendment could create less transparency not more.

For Example, since Smith LLC can no longer make a donation directly to Candidate A. Smith LLC makes a $450 donation to ABC PAC. ABC PAC has no duty to report that donation because it is less than $500. Then ABC PAC makes a $450 donation to Candidate A. Candidate A will now report

that donation as coming from ABC PAC not Smith LLC. Where Candidate A received that money is not traceable back to the original source. It is important to note that the PAC reporting law is probably written this way to reduce burdens on those administering PACs. Many PACs benefit from this, because they collect very small donations ($2-10) which are below the reporting threshold.

29. Registration as a lobbyist by a former member of the GA Prohibits a former member of the GA from registering as a lobbyist until two years after the expiration of the term of office for which they were elected. This applies to anyone elected or reelected to GA on or after November 4, 2014. Knowingly violating this section is a class D felony. Penalties for a Class D felony shall not exceed six years imprisonment and/or a fine of $10,000. Similar to Section 28 above, the Arkansas Ethics Commission will be given authority by the GA to create and implement rules, issue advisory opinions and investigate complaints.

Amendments to this provision are identical to the process laid out in Section 28.

Under current law, legislators have a one year “cooling off” period before registering as lobbyist.

30. Gifts from lobbyists Members of the GA, the state’s constitutional officers and members of the independent salary commission are prohibited from accepting or soliciting most “gifts” from lobbyists or a person employing or contracting with a lobbyist.

The definition of “gift” does not include:  Informational material  Gifts that are not used and are returned within 30 days  Gifts from specifically listed family members but not if that family member is acting on behalf of a lobbyist  Anything of value that is readily available to the general public at no cost  Food or drink available at a planned activity to which a “specific governmental body” is invited. A “governmental body or bodies” is defined as an office, department, commission, council, board, committee, legislative body, agency, or other establishment of the executive, judicial or legislative branch of the state, municipality, county, school district, improvement district, or any political district or subdivision thereof  Payments by a regional or national organization for travel to regional or national conferences at which the State of Arkansas is requested to be represented by a member of the GA, the state’s constitutional officers or members of the independent salary commission  Campaign contributions  Inheritances A lobbyist is anyone who receives or expends more than $400 annually lobbying governmental bodies or soliciting others to lobby. That $400 includes communications with others in which the recipient is asked communicate with a legislator on an issue. So mailings to memberships asking them to take action on an issue is lobbying. If the communication with others to lobby is filed with the Secretary of state then that appears not to count as lobbying.

A person who knowingly violates this section is guilty of a Class B misdemeanor. Penalties for Class B misdemeanor shall not exceed 90 days imprisonment or $1,000 fine. Similar to Section 28 above, the Arkansas Ethics Commission will be given authority by the GA to create and implement rules, issue advisory opinions and investigate complaints. Amendments to this provision are identical to the process laid out in Section 28.

Under section 30, the definition of “person” includes individuals, businesses, organizations, unions and other “groups of persons,” so this would include membership organizations. An ethics opinion might be needed to determine if it included sub-groups of membership organizations. They are a part of the parent organization which does employ lobbyists but does mean that they employ lobbyists? The food and drink rule is vague. It appears that committees, caucuses, the House or the Senate, etc. can be invited to a planned activity but does the inclusion of the term “office” mean that an individual legislator can be invited? There is no definition of “planned activity” or of “invited.” The law would still allow for paid travel to conferences. The final version of this section is an improvement for organizations, the initial version prohibited any food or drink so for example a legislator eating at Farmers’ Day would have been in violation. It seems counter-productive to public service and alien to Arkansas’ culture to not allow politicians to eat with constituents. While this gift prohibition prevents certain interactions, it does not prohibit campaign contributions. Lobbyists would still be allowed to make up to $6,000 in contributions but presumably could not take an individual legislator to dinner although that could be debatable. It is proper for lobbyists to make campaign contributions as citizens and participants in the Democratic process but knowing that fact makes the gift prohibition seem less impactful. It might improve public perception of legislators to have a gift prohibition but if it is meaningful is another matter. Under the current law, legislators may receive gifts valued up to $100 per day per entity. There is no effective way to police this measure. Currently all meals, gifts and travel are self-reported. Lobbyist’s reports, where all these items are supposed to be reported, are public record. Lobbyists are not required to report unless the item/meal is over $40.

Section 31.

Removes the authority of the GA to set their own salaries and those of the constitutional officers, justices and judges. This authority then will rest with an appointed seven member citizens’ commission. The members of the commission will serve terms of four years. No commissioner may serve more than two terms. The commission will have seven members and be appointed as follows: the Governor (2), the President Pro Tempore of the Senate (2), the Speaker of the House (2) and the Chief Justice of the Supreme Court (1). A member of the commission must be a U.S. citizen, an Arkansas resident for at least 2 years preceding appointment, a qualified elector, and at least 25 years old. A commissioner cannot be an office holder, an employee of the state, a lobbyist or an immediate family member of any the previously listed people. The commission has the duty of reviewing and adjusting the salaries of the state’s constitutional officers, the GA, the Supreme Court, Court of Appeals, circuit court judges and district court judges. Salaries will not be subject to appropriation of the GA and will be paid by the Constitutional Officers’ fund or its successor.

If the commission decides to adjust the salaries of any office they then follow these steps:  Provide public notice (no defined method of public notice)  Make publically available research materials used to determine the change  Allow public comment (no defined method or timeline for comment) When the proposed salary adjustment has satisfied the prescribed process, the change shall be filed with the State Auditor and become effective within ten days. Salary adjustments would not be considered a rule under the Arkansas Administrative Procedure Act. When considering salary adjustments the commission shall include the economic condition of the state in its deliberations.

The commission can grant themselves a stipend of up to $85 a day for each meeting attended or for any day while performing any proper business of the independent citizens’ commission.

The commission can increase or diminish the salaries of any under their review except the justices and judges. Those salaries can only be increased.

Salary considerations:  A salary cannot be adjusted more than 15 percent at any one time, except for the initial adjustment, which can be more.

If the ballot measure succeeds, the commission shall be appointed within 30 days of the election and meet within 45 days. The commission must complete an initial review of salaries within 90 days of the ballot measure passing. The commission also shall make recommendations on per diem, reimbursements for expenses and mileage for the GA. The GA will continue to control those items of their compensation and the recommendations will be just that, recommendations. This review of the per diem, etc. will take place before every regular session. The commission is subject to Freedom of Information Act and the GA may amend this section with a 2/3 vote of both chambers.

Currently the authority to change the salary of these elected officials lies with the GA. The salaries of the members of the GA are between $15,000-20,000 depending on the legislative chamber and leadership. Additionally, legislators are also allowed to collect per diem, office expenses and mileage.

Those reimbursements depend on the individual legislator but the higher collections have been around the $60,000 mark. Salaries of the constitutional officers and judges are higher but they don’t collect per diem, etc. It is worth noting that in other states, many legislatures set their own salaries.

A recent article on the National Conference of State Legislatures website stated that the only states with significant pay increases for their General Assemblies were those with independent salary commissions. http://ncsl.typepad.com/the_thicket/ Few get significant raises but some are well-paid.

Some state legislatures with commissions (California which has one of the nation’s highest paid GA for example) have seen reduced pay in recent years.

Section 3. Term Limit Extension This section will change Arkansas term limit laws regarding the terms of the GA. Members of the General Assembly would be allowed to serve a total of 16 years (consecutive or nonconsecutive). Partial terms served because of a special election or two year terms drawn in the Senate after reapportionment do not count toward the 16 years. Also if an individual has two years left in their 16 but is elected to a four-year Senate term, then they can serve the whole four years. The current law allows three two-year terms in the House and two four-year terms in the Senate. This amendment would make no changes to the term limits imposed on the state’s constitutional officers.

This section does NOT appear in the bill subtitle. There is some question as to if it will appear on the ballot title. The amendment would undoubtedly result in a more senior legislature. The gains would be felt more in the House where currently term limits are strictly three two-year terms. Now, Senators th frequently serve combined 16 years or more because many are former House members. In the 89 General Assembly, 26 of the 35 Senators are former House members. Under this amendment you are likely to see less transfer between the chambers. For a few Senators there is the slim possibility that this could negatively impact their current term limit count. That would have to be calculated legislator by legislator. Because of the way the current law is written, excluding partial and two year terms from their term limit count, many Senators serve beyond two four-year terms. For example in the current Senate, if there were no retirements/resignations, deaths, or defeats (unlikely) and the

law did not change then 11 could serve 8 years, 17 could serve 10 years, , and 7 could serve 12 years. That is Senate service only and does not include their House service. So you have several current Senators that will serve between 14 and 18 years without a law change when you include their House terms. Let’s take the 16 year proposal, there is a potential to serve 20 years or more in the Senate with the right draw because their service can stretch over two reapportionments and two year terms around reapportionment are not counted. Most Senators would probably serve 18-20 years but many serve near that amount now when you add their House terms. Members would double and possibly triple the amount of time they could serve but the impact would be felt more in the House, at least at first.

The fact that this section may or may not appear on the ballot title could help or hurt HJR 1009. If the voters are simply unaware that this item includes a term limit extension it is likely to have tremendous public support even though the bill might not accomplish the tasks the public hopes.

However when we did the term limit focus group during the 2013 session, the participants were turned off by the idea of pairing ethics “reform� with term limit extensions. They viewed it as disingenuous. How much more will they be turned off if it is left out of the ballot title but they are made aware through media and opposition campaigns that it is included? One has to assume if that scenario occurs it will seem like deception to the voting public.