Bill to stop legislative consulting hits hurdle
NASHVILLE — Tennessee Republican House Speaker Cameron Sexton’s bill to ban legislators from handling colleagues’ government-funded constituent mail services ran into complications this past week.
The bill faces criticism over provisions involving current lawmakers’ contracts with the executive branch, which some Democrats say favor those representatives over new lawmakers who assume office in 2022 and after.
The questions forced a second delay on the bill, which had been up for final House consideration on Thursday, as Sexton, R-Crossville, and others seek to address the concerns.
Sexton brought House Bill 1040 following FBI agents’ January raids on the legislative offices and homes of Rep. Robin Smith, R-Hixson; former House speaker Rep. Glen Casada, R-Franklin, and freshman Rep. Todd Warner, R-Chapel Hill.
Federal officials haven’t specified the nature of their probe, but Smith and Casada are political consultants with records showing both handled taxpayer-funded constituent mail for their colleagues, dealing with the General Assembly’s Office of Legislative Services.
“In my opinion it’s money laundering and it’s something that should not occur. I would be in full support of what Speaker Sexton is doing.”
– LT. GOV. RANDY MCNALLY
Smith said Thursday she planned to vote for the bill although she has advocated for prohibitions barring lawmakers’ own political consultants from seeking the constituent mail business.
Lt. Gov. Randy McNally, the Republican Senate speaker from Oak Ridge, is handing the Senate version.
Senate rules have long prohibited senators from entering into any contract with any department, agency, board or commission of state government. But a senator who has entered into such a contract prior to election as a Senator may fulfill a thenexisting obligation under said contract.
Sexton’s legislation piggybacks on a 1950s-era law that makes it a felony punishable by up to six years in prison for lawmakers and state employees to sell physical goods to the state. It extends that to services provided to state general government.
It has a provision for new members elected in 2022 and afterwards that allows them to bid on, sell or offer for sale any service to the state so long as they do not have a “controlling interest” in the firm. That’s defined as having more than a 50% interest.
But current legislators who have a controlling interest in a business selling services to the state would be able to continue and renew their contracts for as long as they serve in the General Assembly.
That drew questions from Rep. Antonio Parkinson, D-Memphis, who asked Republican Caucus Chair Jeremy Faison, R-Cosby, who is handling Sexton’s bill, why the new general government contract restrictions wouldn’t apply to sitting lawmakers.
“Don’t you think that is a little weighted towards members here … so they can contract in perpetuity? But others, according to your bill, would never ever be able to contract,” Parkinson said, alluding to the ban on new members having a more than 50% stake in a firm.
Faison said people running for office would know on the front end what the standards are. Moreover, he suggested the Tennessee Constitution would prohibit the General Assembly from stepping in to “mess up” an existing contract. “So I feel like there’s no discrepancy because this is moving forward for anybody else coming in, not the [current] 112th General Assembly.”
Parkinson said he realized that but he noted he saw nothing in the legislation regarding when those contracts end and wanted to know if they could be extended.
Replied Faison: “That is correct.”
“Yeah, you lost me on that one, Mr. Sponsor,” Parkinson said.
Rep. Larry Miller, D-Memphis, said the bill “seems to be picking winners and losers,” noting that if he was a minority partner in a business, “I can do business.”
During the debate, several legislators who do business with the state had questions of their own.
For example, Rep. Bill Beck, D-Nashville, asked whether a legislator and property owner’s participation in the Tennessee Housing Development Authority’s program for low-income home rentals and receiving rent payments would be impacted.
Faison said because the payment would be through a federal check there would be no prohibition. Informed by Beck that the checks are from Tennessee government, Faison said, “I’m going to have to check on that.”
Rep. Clay Doggett, R-Pulaski, praised the legislation as “sort of a start.” He noted the Senate has long had rules governing its members’ service contracts with the state.
Following a half-hour of explanation, confusion, questions and continued debate, Faison delayed final action to next week as leaders seek to provide further clarification to lawmakers about what the would-be law does and doesn’t do.
In response to reporters’ later questions, Sexton said of the bill, “I don’t think you can say it’s not on course. I think what you can say is members have a lot of questions. I think there was a lot of confusion. It appeared there’s a lot of members that this could affect.”
Noting “we have worked with [members] who have notified us,” Sexton said leaders “will have another conversation, make sure everybody understands completely what the bill does and what it completely does not do.”
Calling the measure a
“good government bill that the public wants,” Sexton said the bill is “good public policy,” noting the Senate’s rules have long restricted personal service contracts.
The bill has some exceptions. It does not apply to members’ employment contracts, including indigent defense contracts or medical service contracts, unless otherwise prohibited by the Tennessee Constitution.
Sexton said one of the complications of the legislation is its application to current legislators whose businesses “have already been established before they were elected and they were bidding on state contracts.” Addressing that required taking additional steps to “ensure we don’t change the rules on them mid-game, but that we’re able to provide some transparency in the process and also address concerns,” Sexton added.
Smith heads Rivers Edge Alliance. In 2020, she and her business legally billed the General Assembly $10,969 from legislative postage accounts for work on constituent surveys and mailers she did for three colleagues. Casada, meanwhile, through his business Right Way Consulting, billed $12,439 to six legislators’ postage accounts.
A former Tennessee Republican Party chair, Smith also used a new vendor, New Mexico-based Phoenix Solutions LLC, for both her personal campaign account as well as a political action committee she created in which she made independent expenditures to various GOP incumbents and candidates in 2020 elections.
Phoenix Solutions also did work did a number of government-paid constituent mail surveys and updates for some sitting legislators in 2020. In some cases, Smith forwarded Phoenix’s communications to the state. Smith has not said what her relationship with Phoenix is.
McNally said “what I think the House bill is trying to prevent is the actual individual setting up a business and then collecting money from other people in the House and Senate, then subcontracting money out to like a mailing organization and keeping some of the profits from that.
“In my opinion it’s money laundering and it’s something that should not occur,” McNally added. “I would be in full support of what Speaker Sexton is doing.”