In Through the Out Door
And Vice Versa: Politicians Hit the Revolving Door
All three are still admired for their abilities, but none are working for the voters any more. Over the past 13 months, all three have left government jobs and begun selling their knowledge of the process to the highest bidder. Seidlits, now a registered lobbyist, works for the Association of Electric Companies of Texas (AECT), whose members are the state's biggest utilities. Hall's new company, The John Hall Group, serves clients like trash-hauling giant Waste Management Inc. Shelley, a registered lobbyist, has six clients, two of whom are bidding on a lucrative state contract.
The trio are just a few of the dozens of former government officials who have used their taxpayer-funded positions as way stations on their way to lucrative jobs in the private sector. The revolving door between government and the corporate world now spins at the speed of light.
Call it the bureau-industrial complex. Our politicians aspire to be consultants. Our democracy has been replaced by a consultocracy, where lobbyists and political consultants hold keys to the Legislature and the Governor's Mansion. Public office has become a stepping stone to the private sector where, says one prominent local consultant, "You can make substantial money and you can make it in a hurry."
A list of all the people who have followed the well-worn path to lucrative positions as consultants and/or lobbyists would fill this entire page. Seidlits, Hall, and Shelley are only a few of the most recent examples of government officials who have gone into the "government business."
Last fall, Seidlits quit his law practice in Sherman, and his seat in the House, and became president and CEO of AECT. Last session, Seidlits, who chaired the State Affairs Committee, worked extensively on the bill which allowed limited deregulation of the Texas electric utility industry. He also authored the bill which re-wrote Texas' telephone laws. Today he represents companies that want to retain control of the electric market by preventing independent power producers from selling electricity at the retail level.
Seidlits wouldn't say how much he is earning in his new job. But sources say Seidlits asked for -- and got -- a five-year no-cut contract with a salary of $250,000 per year, certainly more than the $7,200 per year paid to Texas legislators.
Seidlits clearly understands his value to AECT. "The reason I'm in the position I'm in is my exposure to this industry and the legislative process," he says. "I am sure my experience in the Legislature will help me." Billions of dollars are riding on Seidlits' know-how. The combined assets of the seven members of AECT are valued at over $70 billion, and their combined sales last year exceeded $20 billion.
Rep. Sherri Greenberg, the Austin Democrat who shared a desk with Seidlits in the House chamber, would not question Seidlits' reasons for quitting before his term was finished. But she says, "All sides would have wanted to have him. He is a tremendous intellect, but has a great manner with people and with speaking. Anybody would see him as an asset, quite frankly."
Like Seidlits, John Hall decided last year that he'd spent enough time in government. "I'd worked in public service all my life, since 1974," he said during a phone interview last month. "I was concerned that the whole political process was becoming too political, and that it was time for me to do something different, and chose to leave on that basis." Hall says his firm, which includes himself and one other employee, a geologist named Chris Macomb, works on water, energy, environmental, and governmental affairs. They don't do lobbying, nor does Hall expect to do any in the near future. Hall refused to provide names of his clients. "I work for heavy industrial clients who have significant environmental challenges."
As for his relationship with Waste Management, he says, "I provide high-level strategic assistance," and he adds that he is not "providing assistance on permitting matters."
Hall says he would support laws restricting the activities of former government officials, but he does not apologize for his decision to sell his knowledge of the process. "The opportunities that I have relate to the expertise that I have developed over the years," he explains. "And that expertise is largely in the public sector."
A former state representative from Crosby and later a state senator, Shelley
served as Gov. Bush's legislative liaison -- making $95,000 per year -- until
January of 1996. However, he may have taken a pay cut when he became a
lobbyist. According to his filing with the Texas Ethics Commission, he now has
six clients who pay him between $1 and $10,000 apiece. Two of those clients,
Lockheed and IBM, want a contract to administer benefits under the Texas
Workforce Commission. The contract could be worth
$2 billion over five years.
Shelley's dealings have been front page news in the local daily over the past several weeks. But he doesn't mind. When the Chronicle called him about this story, he sounded happy. "I love the publicity," he said.
Shelley will butt heads with Seidlits when it comes to electric issues. Among his clients are Southern Electric International, an independent power producer that wants to sell electricity directly to Texas customers, and the Texas Coalition for Competitive Electricity, which will push for deregulation of the retail power business.
Although their numbers have declined --1,356 lobbyists registered this year, compared to 1,618 in 1992 -- the importance and the profile of lobbyists has risen. "The trend is accelerating, and there are several reasons for it," says Tom "Smitty" Smith, the Texas Director of Public Citizen. Smith says lobbying is "much more lucrative than it has been in years past." He points out that many programs formerly managed at the federal level are being shifted to the states.
That shift puts a premium on working knowledge of the Texas Legislature, where there's always a fresh installment of "As the Revolving Door Turns." In April of last year, Dave McNeely, state reporter for the Austin American-Statesman, wrote that the Texas House has simply become a "school for lobbyists." In 1992, Mike Ward, the local daily's ace reporter on the Vita Pro scandal at the Texas Department of Criminal Justice, reported that, "At least 55 of the nearly 1,600 registered lobbyists are former legislators... another 70 are former legislative aides." There is no comparative analysis of 1996 records, but Smith of Public Citizen says his group has a study underway and will publish the results soon. Last year's Chronicle list of the ten most influential lobbyists in Texas included four former legislators, two former assistants to the Speaker of the House, and one chief deputy comptroller.
Lt. Gov. Bob Bullock is a former lobbyist. Now the most feared curmudgeon in Texas government, Bullock himself has become something of a farm club for the lobby. Jack Roberts, the aforementioned chief deputy comptroller, is acknowledged as one of the most effective lobbyists (tobacco, beer and the Texas Rangers baseball team) at the Capitol. Lobbyists Robert Spellings and Ralph Wayne also worked as chief deputy comptrollers under Bullock.
Leaving the politics arena under an ethical cloud does not prevent a career in the lobby. Stan Schlueter, a former representative from Killeen who quit the House in 1989 -- 11 days after the Internal Revenue Service began investigating the contributions lobbyists were making to legislators -- has found a lucrative career in the lobby. According to the August 31, 1990 Statesman, Schlueter was "spending more than $9,000 a month in donations from lobbyists and other supporters" on a home and other items. According to his filing with the Texas Ethics Commission, Schlueter currently has 22 clients (including Philip Morris and FM Properties) who will pay him a minimum of $460,000 this year.
Former speaker Gib Lewis pleaded no contest while in office to two ethics charges and paid an $800 fine for failing to disclose holdings in dozens of firms that could have been affected by his job with the state. Lewis, who served a record five terms as Speaker of the House, gave up the gavel in January, 1993. By the end of that same year, Lewis was representing the National Rifle Association, Dell Computer, and the Tandy Corporation. According to his filing with the Texas Ethics Commission, Lewis currently has 28 clients who will pay him a minimum of $230,000 this year.
Two other former Speakers of the House, Ben Barnes (high speed rail, sewage sludge and the lottery contractor, earning a minimum $225,000) and Billy Clayton (long distance services and paint makers, at a minimum of $550,000), are among the best paid lobbyists in the state.
The City of Austin understands the importance of good lobbyists, and has at least three firms under contract. During the last session of the Lege, the city had the Austin firm of Adams & Zotarelli on retainer; last February, the firm billed the city $43,333.33 for one month's work. Last May, the city council agreed to hire two more Washington, D.C. lobbying firms at a total cost of $290,000 this year. That amount will be split between Spiegel & McDiarmid, and Verner, Liipfert, Bernhard, McPherson & Hand. Last year, Verner Liipfert hired two familiar players, former Gov. Ann Richards and her former aide Jane Hickie. According to documents obtained by the Chronicle under the Open Records Act, the firm has billed the city a total of $68,284.99 since January 1 of this year for lobbying and expenses. Documents also show that Hickie is charging the city at a rate of $295 per hour. Richards' rates were not disclosed, and the firm did not return calls.
Charles Gates, the head of the city's Aviation Department, defended the city's lobby contract with Verner Liipfert. Gates said that while the city is building an expensive new airport, it needs people in Washington to "look out for our interests." Gates said that Richards, in particular, was "very influential in getting a commitment from the FAA for the $30 million grant to buy the Del Valle school system." The city needs the federal money to buy the schools which will be affected by noise from the new airport. Gates said the firm "more than earned their fee for helping secure that $30 million grant, because we didn't think it was going to happen."
While lobbyists/consultants are often credited or faulted when an issue succeeds or fails, few seem to believe they wield power. In an interview four years ago, Barnes told the Chronicle, "I don't think I have any power. I have some friends." Hall said, "I don't feel I have any power. The only thing I am able to do is offer suggestions on how best to articulate a position consistent with the laws that exist."
A few legislators have tried to slow the revolving door. In 1991, a provision was placed in the ethics reform bill that would have prevented legislators from becoming lobbyists for two years after they leave office, but that section was later cut from the bill. Last session, Rep. Mike Krusee, a Republican from Round Rock, introduced two bills that would have limited lobbying activities by former legislators, but neither got far. His proposal for a two-year ban on lobbying by former legislators was never heard by the State Affairs Committee. Krusee said he asked the chairman of that committee -- Seidlits -- for a hearing on the bill, but it was never brought up. "I talked to him [Seidlits] about it on the floor," recalls Krusee. "But he said he didn't remember me requesting a hearing."
Krusee says that when citizens vote for someone, they "need to be confident that that person is not just making contacts so they can enrich themselves after they leave." But as more and more former elected officials and their aides jump back and forth between business and government, Krusee said, he is "worried about the integrity of the process."
The recent stories printed by the local daily on the activities of lobbyists like Shelley may give the Legislature the momentum needed to pass more stringent revolving-door rules. Any new rule, however, must walk a fine line between protecting the process and preserving the rights of individuals to gain employment.
Gene Watkins (see sidebar), who quit his job as head of the city's Neighborhood Housing and Conservation office in October 1993, has been criticized for his role as a consultant in a publicly-funded East Austin housing project known as Scattered Cooperative Infill Program (SCIP) III. But Watkins asks, "When do I ever shed the burden of having worked for the city? At some point in time, I think you have to graduate."
Seidlits, Hall, Shelley, Watkins and hundreds of others have certainly graduated from government service. But our system would be healthier if fewer graduates depended on their alma mater to make a living. n
Lobbyists on the Web: The Texas Ethics Commission has a nifty new web page which lists registered lobbyists for 1996: www.ethics.state.tx.us. Past listings should be available on the web later this year; for now, they are on the agency BBS. Dial 478-9424.