Weak Disclosure Laws Keep Public in the Dark

This is one in a series of occasional stories about ethics and transparency in the part-time Texas Legislature.

Texas voters finally got a real peek at the personal finances of their governor and lieutenant governor — after the two men decided to run for high federal office.

It was during his presidential campaign in 2011 that Gov. Rick Perry broke up a blind trust and revealed that he was double-dipping — collecting both his salary and a state pension. And Lt. Gov. David Dewhurst had to expose the details of his vast wealth, estimated at around $200 million, when he was striving to become a U.S. senator.

The disclosures by the state’s top two Republican elected officials went far beyond previous ones because the federal forms they filled out demand much more information than what’s called for on Texas' personal financial statement. (You can see examples from both sets of forms embedded below; click on them for greater detail.) 

The experience highlights a serious flaw in Texas ethics disclosure law: It doesn’t ask for a lot of detail, hasn’t been updated in years and has often led to confusion and varying interpretations about what must be revealed.

“The lack of disclosure is pretty gross,” said Austin lawyer Randall “Buck” Wood, who fought to get the first Texas disclosure law on the books as the chief lobbyist for Common Cause during the state's reform session of 1973. “It doesn’t tell you hardly anything. Probably what we need to do is at least adopt what the feds have. Then we’d get a better idea.”

Ways to beef up disclosure are already being kicked around in the Texas Legislature, which has traditionally been reluctant to shine more light on the private affairs of its members.

Two Democratic lawmakers, Reps. Donna Howard of Austin and Chris Turner of Grand Prairie, are proposing legislation that would incorporate some of the elements of the federal requirements into the state’s disclosure law. And Republican Rep. Giovanni Capriglione, R-Southlake, wants more robust disclosure of business relationships with government entities, which can lead to conflicts of interest.

Both Howard and Turner want lawmakers to disclose more information about how they make their money, specifically by requiring that both earned and unearned income be revealed. That would ensure double-dippers reveal any state pension benefit they’re receiving at the same time they're receiving a state salary.

Perry brought the controversial practice into the spotlight when he began taking advantage of a generous perk that allows longtime elected officials to begin collecting a state retirement without ever leaving their jobs. The provision has been on the books at least since 1991, when Lt. Gov. Bob Bullock, a Democrat, availed himself of it.

Perry didn’t have to tell the Texas Ethics Commission about his pension, but in December 2011 he was required to disclose it to the Federal Election Commission in Washington, D.C., as part of his run for president.  

“That’s a great illustration of the fact that our disclosure reports have a lot of loopholes in them,” Turner said. “It’s obviously of interest to the public, but was not required to have been disclosed.” Turner has filed separate legislation that would ban double-dipping by elected officials.

The state disclosure forms make it almost impossible to affix meaningful values to the assets and income of state officials, information that could help the public determine their relative importance when considering possible conflicts. Legislators have to identify their “sources of occupational income” and give the number of shares of various stocks they own; they just don’t have to put dollar values on it.

Texas law does require filers to report values associated with unearned income — such as bank interest, stock dividends and the sale of property or business investments.

But it’s a multiple choice question that tops out at $25,000, a value that hasn’t been changed in years. In Dewhurst’s state filings, for example, voters had no way to determine the value of his main assets, such as the David Dewhurst Trust and Falcon Seaboard Diversified. Nor could they ascertain anything meaningful about the income range, except that they provided him with “more than $25,000” a year.

After he ran for the Senate, the mystery was largely solved. On his federal forms, the public learned that the trust and Falcon Seaboard Diversified are worth “more than $50 million” apiece.

On both forms, Dewhurst gave income ranges for unearned income. But on the federal forms, the range tops out at $5 million, which is 200 times higher than the state’s maximum value. Dewhurst did not have to tell the state how much money he made for being lieutenant governor, including all the fill-in pay he received while Perry was out of the country running for president. But he gave the exact amount of money he got from the state on the federal form he submitted in October 2011: $61,119.

The modern version of the law requiring annual disclosure statements first got on the books in 1973, after the Sharpstown scandal provoked widespread outrage about politicians who were accused of using their power to enrich themselves.

But Capriglione, the Southlake Republican, said that under current law it’s often hard to figure out if lawmakers have any relationships that could present conflicts. He’s filed legislation, House Bill 524, that would force lawmakers to report all contracts they, their spouses or their close relatives have with any government entities, from state agencies all the way down to municipal offices, public universities and taxing districts. 

The disclosure would also require lawmakers to report if they or any close family members have more than 50 percent ownership in a business that has a contract with such a government entity.

Like Howard and Turner, Capriglione favors requiring the personal financial statements to be posted on the internet — just like bills, press releases and member bios are now. The staff of the Texas Sunset Commission recommended internet posting of the statements, as watchdog groups have been advocating for years, but the lawmakers on the commission voted down the suggestion over privacy concerns.

The vote is an indication of the uphill battle ethics reformers will have in the Texas Legislature.

Howard said she has purposely “stopped short of going full throttle” on her soon-to-be-filed bill toughening the disclosure statements because she needs time to build support for increased transparency.

She said her main goals are requiring lawmakers to reveal pension income and other non-occupational revenue, introducing stricter disclosure about the finances of spouses and dependent children and putting the forms on the internet. She wants to punt on more controversial items, such as requiring lawyers to reveal major clients, by creating a blue-ribbon panel that would make suggestions ahead of the 2015 session.

“It’s probably going to be an incremental thing,” she said.