The Outer Office: Lobbyists Will be Back at the Rail. And Likely in Greater Numbers
What do electric utilities, cable television and gambling casinos have in common? They're all good for business — the lobbying business, that is.
As Illinois' spring legislative session dragged into summer, lawmakers deliberated on some of the key issues that always attract the attention of professional advocates who are paid to represent special interests. They work toward one of three objectives, or some combination: get something for the client; prevent the client from losing something; or get something back that the client has already lost.
Lobbyists for cable giant Comcast swarmed the Capitol last spring in an unsuccessful attempt to fend off AT&T, whose own battalion of hired guns worked to wedge the telecom into the Illinois cable business by pre-empting agreements between incumbent cable providers and local governments. Meanwhile, Commonwealth Edison's lobbyists worked to block — or at least dilute — a plan to roll back rate hikes the company implemented this year.
When the Illinois House approved a deal requiring ComEd and Ameren, the electric utility serving much of central and southern Illinois, to offer $1 billion in rate relief to their customers, ComEd's team rejoiced that they kept the damage to a minimum. The following day, the Springfield State Journal-Register published a photo of a ComEd lobbyist, Courtney Nottage, smiling from ear to ear. The image said it all: ComEd had won.
Throughout the spring and into the summer, lobbyists jammed the railing on the second floor of the state Capitol. Nottage had plenty of company in a business that, at least on paper, is booming in Illinois. According to data from Illinois Secretary of State Jesse White's office, annual registrations of lobbying firms have grown steadily since 2000. The self-styled Third House grew the most during the first and last years of Gov. Rod Blagojevich's first term. Registrations of lobbyist clients grew, as well. In other words, more businesses, associations and individuals are paying for professional representation before state government.
Meanwhile, the class of organizations that register to lobby for themselves, rather than retain contract lobbyists or lobby for other groups, has plummeted.
Observers say a number of factors fuel this trend. High-profile debates, such as those over the right to provide cable service, draw droves of lobbyists on each side of the fight. And while some of these debates play out over one or two sessions, others, such as whether and how to expand gambling, play out endlessly — keeping dozens of lobbyists fully employed.
The secretary of state's decision last year to require lobbyists to register electronically, rather than on paper, also may have motivated additional registrations. Recent ethics laws tightening disclosure requirements and putting more sunshine on the practice may have played a role, too.
The Blagojevich Administration also has ushered in a new class of lobbyists — chief among them, the governor's friends. In 2003, the year Blagojevich took office after promising to reform government, the number of lobbying firms registered in Illinois jumped 24 percent, from 263 to 327. In 2006, the last year of Blagojevich's first term, the number of firms registered to lobby jumped a whopping 53 percent, from 323 to 494, after staying roughly flat over the second and third years of his first term.
The number dropped 10 percent this year, but stands at 444 — 69 percent higher than in 2002, the year before Blagojevich took office.
Also during Blagojevich's first year in office, lobbyist client registrations jumped 16 percent, from 1,316 to 1,530. The number climbed through his first term, reaching 1,754 this year.
Pharmaceutical firms, including Johnson & Johnson, Baxter Healthcare Corp., Bristol-Myers Squibb, GlaxoSmithKline, Pfizer Inc. and Procter & Gamble, also retained lobbyists as Blagojevich increasingly focused his administration on expanding the state's role in providing or facilitating health care, either through government-subsidized programs such as Medicaid or through illegal imports from Canada.
While the ranks of contractual lobbyists and their client rosters grew, the number of entities lobbying for themselves declined. This class dropped 44 percent, from 564 in 2000 to 313 this year. In 2004 alone, it dropped 23 percent, from 555 to 425. It dropped another 20 percent, from 397 to 318, last year. Many of these organizations — concerns as diverse as Constellation Energy Group, Hawthorne Race Course and the Illinois Soybean Association — enlisted the services of contract lobbyists.
"These trends show me that there is a perception, which is reality, that you have to pay to play in the Blagojevich era," says Sen. Kirk Dillard, a Hinsdale Republican. "It is very concerning that we have an uptick of a couple hundred contractual registrations because it leads one to believe that you must be represented by a lobbyist to have any input into the new Blagojevich Administration."
Dillard argues the increase in contractual lobbyists would have been even greater had the state not raised the annual lobbyist registration fee from $50 up to $350 in 2004. He argues that some organizations, which were zealous in registering every employee that could possibly advocate in Springfield, cut their registrations to avoid the higher fees.
Sen. Brad Burzynski, a Clare Republican, echoes Dillard's concern. He says the trend shows that special interests believe they must penetrate the governor's office — with the help of high-powered lobbyists — to accomplish their goals in Springfield, even though they typically deal directly with state agencies rather than the governor's office.
"It speaks volumes relative to people who were trying to have access to the administration, that in the past might have been able to get something done without having to go through the second floor," he says.
To buttress his image as a populist leader, Blagojevich has consistently criticized the practice of lobbying. Last spring, while promoting his plan for universal health care, he railed against lobbyists on the day the House rejected his proposed business gross receipts tax to pay for it, accusing lawmakers of forgetting their constituents and bowing to the influence of lobbyists eating "fancy steaks" and wearing "Gucci loafers."
But as Blagojevich grew into the role of governor, a series of his pals — individuals with little or no prior experience lobbying the Statehouse — grew from his inner circle into lobbying practices, attracting business from some of the state's most exclusive clients.
These lobbyists, including John Wyma and Milan Petrovic, specialize in gaining access to the governor. Wyma was Blagojevich's chief of staff when Blagojevich served in Congress. Petrovic worked for Blagojevich's 2002 gubernatorial campaign and has since been a fundraiser for the campaign. Others include Lon Monk, a former chief of staff to the governor who managed his campaign last year, and Doug Scofield, who was a spokesman for both of Blagojevich's campaigns for governor and was deputy governor early in Blagojevich's first term.
Sen. Carol Ronen, a Chicago Democrat and close ally of the governor, rejects the notion that Blagojevich fueled the perception that clout rules in Springfield.
"You think that perception was not here before '03? That's ridiculous. That's always been the case in Springfield," she says. "The lobbyists didn't become more influential. They always have been in this process."
She notes that Democrats took control of the Senate in 2003, the same year Blagojevich became governor, and says the sweep intensified interest in connecting with Democrats generally. Democrats already controlled the House.
"What you're seeing is the changing of the guard," she says. "People hire lobbyists that are closer to the Democrats versus the Republicans. That's just kind of a normal thing that happens. It's a natural phenomenon."
There's also a growing sense at the Capitol that it's prudent to retain professional advocates when traversing the increasingly complicated maze of state government. Nothing's a sure bet, though. Cavel International, for instance, lobbied on its own in 2003 and 2004 but hired professionals in 2005 when the General Assembly weighed whether to shutter its horse slaughter facility in DeKalb. Yet Cavel ultimately lost the battle when lawmakers — bolstered by appearances in Springfield of anti-slaughter activist Bo Derek — voted last spring to shut it down. Cavel is fighting the state law in federal court.
"Government continues to grow," says David Vite, executive director of the Illinois Retail Merchants Association. "Just look at the number of bills that were introduced in the last two, three or four years. It's grown exponentially from when there were a third more members in the Illinois House [before a state constitutional amendment trimming the size of that chamber]. We had fewer bills introduced then than we do today."
Rep. Lou Lang, a Skokie Democrat, agrees. He is one of the governor's harshest critics, yet he cautions against interpreting the lobbying trend as an indication the governor has overpoliticized matters in Springfield.
"There are many business entities out there in the world and not-for-profits who have just started to figure out over the last several years, 'If we want to get something done in Springfield, we have to engage somebody to get it done for us,'" he says. He says special interest groups, down to tiny nonprofits, are growing more sophisticated.
"Some would probably like to conclude that when the Blagojevich people came in, they made a whole bunch of people lobbyists so they could trade off of their relationships with the governor," he says. "That may or may not be true.
It is true that we had gone though 30 years of Republican governors, and Blagojevich was the first Democratic governor. So I think there might have been a rush by some people to hire Democratic lobbyists — people that have relationships with Democrats."
It is true of certain businesses that hired professionals after lobbying for themselves. Successful politics rests on relationships. A lobbyist's value depends as much, if not more, on the lobbyist's ability to open doors as on his or her knowledge of issues or government process.
Consulting firm Accenture is a classic example. It lobbied on its own behalf through 2003, then retained the former lobbying firm of David Wilhelm, a Blagojevich friend, in 2004. Accenture had another link to Blagojevich through Michael Rumman, who, after working for Accenture, served as his director of the Illinois Department of Central Management Services.
State payments to Accenture increased from $2.9 million in 2004 to $19.8 million in 2005. The level of state payments to that company decreased in 2006 to $9 million, though they remained higher than in 2004.
Mesirow Financial did its own lobbying through 2003, then hired an outside firm. In 2004, state payments to Mesirow grew to $1.39 million, from $661,707 in 2003. The state paid the firm $1.4 million in 2005 and $1.12 million in 2006. One of its lobbyists, William Filan, is a cousin of Blagojevich's former budget director.
But retaining a lobbyist doesn't always result in huge increases in state business. Another consulting firm, KPMG, hired a contract lobbying firm in 2004, though its share of state funds did not escalate dramatically. The state paid KPMG $1.8 million in 2004, $1.7 million in 2005, $2 million in 2006 and at least $1.6 million in fiscal 2007.
Bear Stearns & Co., an investment banking firm, represented itself through 2002. But in 2003 and 2004, when it won the job of helping the state underwrite a $10 billion bond issue to bolster public pension systems, it retained Bob Kjellander, who also is the state's GOP national committeeman, to help broker the deal.
The deal won Kjellander an $809,000 fee — as well as notoriety in Illinois political circles, particularly among fellow Republicans who argued that he shouldn't benefit financially from lobbying the Democratic governor's administration. Several, from dairy mogul and perennial candidate Jim Oberweis to House Minority Leader Tom Cross of Oswego, called on Kjellander to resign from his committeeman post, saying the controversy impeded the party's effort to rebuild.
Kjellander also earned more than $3 million for helping Carlyle Group win the job of investing funds from the Illinois Teachers' Retirement System. In October 2006, Kjellander was identified as "Individual K" in the plea agreement of Stuart Levine, who pleaded guilty to participating in a scheme to get kickbacks from firms doing business with two state boards. Kjellander was not charged with a crime.
"There's really nothing there," Kjellander said in the spring. "It's two sentences in a 58-page plea agreement or whatever that is. I don't even know what that is; I'm not a lawyer. But all it says is that I was doing my job as a lobbyist for the Carlyle Group, period. I didn't share any fees with anybody. There is nothing, nothing wrong there whatsoever. Because it's me, it's a headline."
Dave Weisbaum, chief deputy director of the secretary of state's index department, says a number of factors may drive the lobbying registration trend and that it should not be tagged strictly as "increased registrations."
"The dramatic increase in that number could be due to the type of legislative challenges that were apparent or occurring in the General Assembly," he says. "There could have been a lot of temporary contractual relationships because of a major issue. There could have been errors made when registering where a firm could have listed itself as a client since the firms had been used to a moniker in previous registration years of 'lobbying on their own behalf.' We would have to open and review every file to determine how these factors and possibly others may contribute to the jump of 2006."
The ranks of lobbyists aren't likely to thin as government continues to grow both in heft and complexity. They'll surely benefit from ongoing political complications, too. Some controversial policy matters such as gambling and electric utility deregulation may never be fully resolved.
The spotlight on ethics at the Capitol won't soon be dimming, and that means continued pressure on lobbyists and their clients to fully disclose their presence and relationships. The federal probe that led to former GOP Gov. George Ryan's conviction on corruption charges rolled into the federal probe of Blagojevich's fundraising, hiring and contracting practices.
"Since the end of the Ryan Administration and the beginning of the Blagojevich Administration, there has been a sense under the dome that there is greater scrutiny. There are investigations going on," says Cindi Canary, director of the Illinois Campaign for Political Reform. "I think some of that fever has spread out into the lobbying community. There is a lot more concern about crossing the t's and dotting the i's, and that means registering when you're supposed to."
The ranks of lobbyists aren't likely to thin as government continues to grow both in heft and complexity. They'll surely benefit from ongoing political complications, too
Aaron Chambers is Statehouse bureau chief for the Rockford Register Star.
Illinois Issues, September 2007