Let me stipulate right up front that Washington is a fetid swamp of scandal. During the past two decades, whatever respect Americans might have had for their national political leaders has steadily sunk into the soft muck of Watergate, Abscam, Iran-Contra, Whitewater, Filegate, Chinagate, Fornigate, etc.
I'll make a bold statement, however. Government corruption is less rampant in Washington than in Albany, Sacramento, or (especially) Little Rock. It is striking that many of the Clintons' most egregious ethical lapses--involving state pension funds, kickbacks, shady land deals, illegal federal loans, and cattle futures--occurred while Bill was governor of Arkansas. Presidents and congressmen make headlines with giggling interns and intricate campaign finance irregularities. State politicians still do it the old-fashioned way: lobbyists with sacks of money, all-powerful committee chairmen who give themselves state contracts, business executives who pay cash for government appointments or regulatory nods.
State officials do this sort of thing a lot--mostly because they keep getting away with it. They typically face less scrutiny than national politicians do, and they have many opportunities to enrich or impoverish individual firms. By contrast, Congress does things that affect whole industries, making it simultaneously more powerful and less amenable to garden-variety graft.
While political observers can count on a couple of hands the federal legislators who've resigned in disgrace during the last decade--Dan Rostenkowski and Bob Packwood come to mind--recent scandals in state legislatures have embroiled dozens, if not hundreds, of lawmakers in tawdry investigations and costly prosecutions. In the last few years, newspapers have been rife with stories of corruption in states such as Arizona, South Carolina, Rhode Island, Kentucky, New York, New Jersey, New Mexico, and Massachusetts. And no one knows what the final body count will be in poor Arkansas, where the Whitewater investigation has turned into a broader scandal of bid rigging, insider deals, and thievery throughout state government.
Let me illustrate my point about state corruption with a few examples. Beginning in the late 1980s, the Kentucky state legislature underwent two major scandals, both involving regulatory oversight.
In the first case, lawmakers enacted measures in 1988 and 1990 that hurt a small harness racing operation on the Ohio River. Its owner sought relief in the state capital, only to be told by a prominent lobbyist that it would probably cost around $100,000--in campaign cash to various lawmakers--to make his problems go away. The racetrack owner, to his credit, didn't pay up. Instead, he went to the FBI, which began an elaborate sting to catch lobbyists and lawmakers in the act of buying and selling votes for cash. The feds eventually netted 11 bribery convictions, including one involving the speaker of the state House.
The second Kentucky scandal involved health care regulation. Humana Inc., based in Louisville, got a special exemption from state licensing rules for some of its health care facilities. Later, an investigation found that a Humana vice president had paid $10,000 for the necessary legislative votes. Kentucky's penal system swelled again.
Rhode Island politicians were also buffeted by corruption charges in the early 1990s. The wide-ranging scandal involved a mayor taking kickbacks from city vendors, a former governor fined for steering state contracts to his political supporters, and judges tripped up on bribery and fraud charges. In perhaps the most colorful incident, state police put a North Providence clothing store under surveillance based on a suspicion that mobsters regularly met there. The suspicion proved correct but incomplete: One regular attendee at the meetings was the chief justice of the state Supreme Court, who later resigned.
This case may sound like a DeNiro movie treatment, but it's hardly unique. Many state scandals feature dramatic scenes. In "AzScam," the Grand Canyon State's brush with slime, a state representative in line to chair the House Judiciary Committee was caught on camera bringing a nylon gym bag to the office of a lobbyist and stuffing $55,000 into it. Another Arizona lawmaker was actually caught on tape saying, "I don't give a [expletive] about issues....My favorite line is, `What's in it for me?'" If that bit of dialogue were used in a screenplay, it would be ridiculed as unrealistically blunt.
I used to think my home state of North Carolina--where I run a think tank, the John Locke Foundation--was different. During the past two years, I've discovered how wrong I was. It all started the day after Christmas in 1996. Entering a crowded supermarket, I picked up a copy of a local black-owned newspaper to read in the checkout line. I was greeted with a glowing story about two local politicians, elected to the state Senate the previous month, who had given out $100,000 in "discretionary funds" to several nonprofits in minority neighborhoods. "That's my Merry Christmas present," said one of the senators-elect. "[We] are already having a positive effect."
The notion of passing out taxpayer money like Christmas candy was bad enough. But then I started to wonder how someone who had not yet taken office, much less served long enough to slip some pork into the state budget, could get his hands on "discretionary funds." After some digging, reporters for the Locke Foundation's Carolina Journal discovered that the money had come from a secret $21 million slush fund, known to only a few legislative leaders. The money had been "reappropriated" from surplus funds in a reserve account for the repair and renovation of state buildings. As is typical of such shenanigans, negotiators had inserted the reappropriation with four cryptic lines in the middle of the night during the previous year's state budget deliberations.
Legislative insiders and their political consultants doled out this money with abandon. Several grants were timed to help embattled incumbents cut ribbons a few weeks before an election. In other cases, the money appeared to be payback for favors done by rank-and-file lawmakers or wealthy contributors.
The grants were hard to justify on policy grounds. Wealthy Pinehurst, home to some of the world's ritziest and most famous golf resorts, got money for a new fire truck. Several senators and representatives steered money to local nonprofits which they served as board members. The Andrew Jackson Memorial and Museum, located along the South Carolina line near a "birthplace" most historians view as mythical, got a $200,000 check--twice its annual operating budget. The same state senator who obtained that grant (and who serves on the museum's board), gave government money to another nonprofit (for which he is also a board member) in a revealing manner. According to a local newspaper, The Enquirer-Journal, he attached the check to a football and threw it across the room to the group's founder during a benefit roast. It seems that dispensing taxpayer money had become a game to him and many of his colleagues.
Some lawmakers used the money to entice private groups onto the public dole. In one case, Playspace, a nonprofit museum and entertainment facility for children in Raleigh, had been on the verge of establishing itself as a self-sufficient organization. After years of receiving state and local grants, Playspace had ended its grant requests, planning to rely on admissions and membership fees as well as private donations. But in December 1996, at the urging of Sen. Eric Reeves (D-Raleigh), Playspace accepted a $5,000 check from the state.
Legal action on some of the improprieties we uncovered is pending. But to our dismay, the slush fund scandal was only the beginning. The Locke Foundation began receiving a steady stream of anonymous tips about wasteful spending and political influence. In 1996, a former employee of the state's Division of Motor Vehicles named Algie Toomer received a controversial $100,000 settlement from the state for employment discrimination. As lawmakers convened hearings in 1997 to investigate the matter, we obtained an exclusive interview with Toomer and his attorneys. He told us about illegal campaign fund raising among rank-and-file DMV employees.
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