May 28, 1997

LEGISLATORS RELY ON SPECIAL-INTEREST MONEY, BUT SOURCE OF DONATIONS IS OFTEN HIDDEN

Two-thirds of the $9.7 million raised by state legislators to get elected came from lobbyists, special-interest groups, and donors giving over $500 each, according to a new analysis of campaign data by Democracy South of Chapel Hill.

So which well-heeled interest pumped the most money into the election of North Carolina state legislators? Bankers or insurance agents? Drug makers or eye doctors?

Six months after November's election, no one really knows.

At least 27 states require campaign contributors to give their employer's name or other information that helps pinpoint their economic interest. North Carolina has no such requirement.
A bill to require disclosure of a donor's occupation and employer passed the state Senate in February, but was weakened and is now stalled in the House.

Advocates as diverse as the League of Women Voters, John Locke Foundation, and N.C. Fair Share say faster, more detailed disclosure is needed to detect bundling of contributions by a special interest.

Without full disclosure, for example, it is hard to understand why 10 donors from all over the state sent campaign checks on the same day to Senator Betsy Cochran (R-Davie), or why 11 contributors from as far away as New York gave a total of $40,000 on one day to Senate leader Marc Basnight (D-Dare).

According to Democracy South, a nonpartisan research organization, the 11 Basnight donors all work for Greensboro-based Guilford Mills or are kin to its chairman, Charles A. Hayes. Their checks arrived on October 21, 1996, two weeks after Sen. Basnight ordered payment of $1 million from a secret state fund to a drug rehabilitation center sponsored by Hayes.

The 10 donors to Sen. Cochran are all in the rest home business, which wants more public money from the General Assembly and changes in state regulations. Cochran, who co-chairs the Commission on Aging, got a total of $20,000 from donors related to the long-term care industry, more than half of what she raised from all individuals for her 1996 reelection.

"Because of our weak laws, it's very hard to say how common -- or unusual -- these examples of special-interest giving are in North Carolina," said Bob Hall, research director of Democracy South. "But we know enough to know we need more information -- and need it sooner, before Election Day."

Democracy South's analysis of donations to winning legislators reveals:

** As much money was raised from large individual donors, whose interests remain undisclosed, as from political action committees (PACs), whose sponsor must be identified: $3.17 million from $500+ donors vs. $3.15 million from PACs.

** The #1 individual donor is Zeb Alley, the man consistently rated by his peers as the most effective lobbyist. Alley gave 55 legislators a total of $22,535 during the 1996 campaign. He represents RJR Nabisco, First Union, the big utilities, hog producers, and gambling interests, among others.

** Three other lobbyists gave more than $10,000 each: John Bode ($15,000), Marsha Jones ($11,225), and Don Beason ($10,145).

** Besides lobbyists, the top non-candidate donating families are headed by Charles Hayes of Guilford Mills ($25,500); Raleigh's John W. Pope of Maxway and father of Art Pope ($24,000); Charles & Ed Shelton, the developer-contractor brothers of Charlotte and Winston-Salem ($23,200); UNC-CH Board Chair William J. Armfield IV, former head of Texfi Industries ($18,320); rest-home chain owner A. Steve Pierce of Kernersville ($16,750); and hog house builder William T. Herring ($14,800), head of Hog Slat Inc.

While some families make substantial donations, Democracy South said disclosing a donor's occupation and employer would present a truer picture of the impact of individual gifts. For example, adding donations from Guilford Mills executives to those of chairman Hayes' family brings the group's total to $61,000. Gifts from Steve Pierce's associates, plus his family, yields $55,750.

By comparison, the PAC for First Union gave legislators $47,000; Blue Cross/Blue Shield gave $47,300; and the N.C. Textile Manufacturers gave $34,500.

Democracy South pointed to the fight of optometrists vs. opthalmologists as an example of the role of special interest money and the need for full dis- closure. Last week, optometrists won legislative approval to prescribe a broad range of medicines without consulting an opthalmologist or other physician.

The optometrists' bill passed the state Senate in 1995, but to the delight of the N.C. Medical Society, House Rules Committee chair Richart T. Morgan (R- Moore) kept it from getting a floor vote. On two days in December 1995 and January 1996, 16 opthalmologists showed their support for Morgan by sending checks to his reelection campaign.

House Speaker Harold Brubaker also received checks from 14 of the same opthalmologists in the same months; then, on April 4, a month before the 1996 session began, Brubaker got $25,550 from seven physician-related PACs and 70 physicians, mostly opthalmologists and anesthesiologists. The bill remained lodged in the Rules Committee through 1996.

Not to be outdone, dozens of optometrists and the N.C. Optometric Society PAC funneled $22,000 to former House Majority Leader Jim Black, a Charlotte optometrist, who then sent checks to 19 other Democrats. The optometrists also supported many key Republicans and lined them up as sponsors for their new bill.

Overall, optometrists and their PAC gave 111 of the 170 winning legislators $122,905 during the 1996 campaign, compared to $46,351 given 76 legislators by opthalmologists and their PAC. In 1997, the optometry bill gained bipartisan support, with 77 sponsors in the House alone, and easily passed both chambers.

Detailed tables of bundled contributions are available for browsing.

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Democracy South is supported by foundation grants and is a member of the N.C. Alliance for Democracy, a coalition favoring comprehensive campaign reform.