Monday, June 17, 2024

Ethics Commission Opens Probes Into Both LR Sales Tax Groups

In the previous post, I detailed all of the errors in the financial-disclosure filings from both Rebuild the Rock and Responsible Taxation for Little Rock, the legislative question committees that supported and opposed the recent proposed sales-tax increase in Little Rock. Regarding just how poorly those filings were done, I wrote:

It was some of the worst attempts at financial-disclosure filings that I’ve seen in quite some time. Worse still, the overwhelming majority of these were errors that anyone who has even passing familiarity with the reporting requirements should never make. They are certainly not the kind of errors that should be made by a paid campaign consultant. Not by a long shot.

Rather than just leave the matter there, however, I went ahead and filed complaints against both groups with the Arkansas Ethics Commission. This morning, I received letters from the Commission, informing me that investigations had been opened with respect to both complaints.

It is worth noting perhaps that, shortly after the previous post went live and the ethics complaints were filed, Rebuild the Rock submitted amended financial disclosures that included addresses and other information for donors. Their amended reports did not, however, address the issue with not disclosing the actual recipient of money that was paid to vendors through McLarty Consulting. As I wrote earlier:

An LQC cannot just say that they paid X dollars to a consultant for “radio” or whatever. If the consultant was making expenditures on behalf of the LQC, such as by paying for radio or social media or other advertising out of the money paid to the consultant by the LQC–then the LQC is required to disclose the person or company that ultimately received those radio/social media/advertising dollars.

So…yeah. Amending the financial disclosures without including this information was an odd choice, but here we are.

It is probably also worth noting that amending those filings to include previously omitted information does not mean that the earlier omissions are now immune from review or sanction by the Ethics Commission. The do-over provision in Ark. Code Ann. 7-6-229 only applies to “a person required to file a report under this subchapter.” LQCs are not required to file a report under chapter 6, subchapter 2; they are required to file under chapter 9, subchapter 4. If the legislature had wanted to include LQCs and other groups within the scope of the affirmative defense for amended complaints, they could and would have done so.1 Meaning, I suppose, that filing the amended disclosures just serves to highlight that the prior reports were woefully incorrect.

After the Ethics Commission completes its investigation, it will schedule probable-cause hearings for each group, at which the Commission’s staff will present evidence and argument to the commissioners regarding whether they believe probable cause exists to find that one or both groups violated the relevant statutes when they filed incorrect/incomplete financial disclosures. The commissioners will then vote on whether there is probable cause of a violation.

If they determine that there is probable cause, the Commission will then offer the group(s) the option of either accepting a settlement offer or requesting a hearing on the merits to determine if they really did violate the law.2 The settlement offer could be a letter of reprimand, an order to file corrected financial disclosures, a referral to law enforcement,3 and/or fines of $50 to $2,000 per violation.

On a broader note, I’m trying to think about what it says that both sides of a tax proposal that had its own special election could have bungled their financial disclosures so badly. Both groups had consultants that they paid, and neither group had so many contributions that it would have been difficult to provide all of the necessary information. Yet both groups seem to have been so focused on mailers and other propaganda that they simply didn’t worry about complying with the laws about disclosing their financial doings. That’s not a great look for either side, but especially for the group that wanted Little Rockians4 to trust the city leadership with millions of dollars.

My hope, as far as these two ethics investigations go, is that both groups will be required to disclose the actual recipient of money paid to the consultants for mailers and radio and whatnot and that the Commission will impose a big enough fine that future LQCs will want to avoid a similar fate. That is how we can get transparency at the local level.

  1. The statutes even draw a distinction between “a person covered by this subchapter” and people/groups covered by other statutes. Ark. Code Ann. 7-6-218.

  2. Such hearings are closed to the public by default, unless one of the groups requests a public hearing.

  3. I have never seen this happen.

  4. Little Rockers? Little Rockettes? I honestly don’t know the right demonym.

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