Audit Ugliness

State Comptroller Carole Keeton Strayhorn would have no trouble turning down political contributions from donors with tax cases pending before her agency, but she would expect all statewide elected officials – from the governor to state railroad commissioners – to hold to similar ethical standards, her campaign spokesman, Mark Sanders, said this week.

Gov. Rick Perry, meanwhile, continues to cash in on the findings of the state auditor's critical examination of the comptroller's office, which two weeks ago turned up direct links between Strayhorn's campaign donors and taxpayers who got $461 million in tax credits and refunds from her office. The study reviewed the comptroller's actions on tax cases from 1999-2004. Strayhorn, who took office in 1999, is challenging Perry for the 2006 Republican nomination for governor.

The auditor's report recommended a number of changes in the comptroller's office, including a legislative ban on campaign contributions to the comptroller from consulting firms or others who represent taxpayers before the agency, and the transfer of tax dispute cases from the comptroller's office to the State Office of Administrative Hearings.

The auditor also stressed that neither Strayhorn nor "any individual or group" is accused of wrongdoing, but Perry isn't letting that stand in the way of his finger pointing. At a press briefing last week on the state's response to Hurricane Katrina, Perry reiterated his concerns about the "very troubling" findings of the audit, which he and the Legislature ordered two years ago in an attempt to muzzle the comptroller and eviscerate her powers.

Addressing a reporter's question, Perry held himself up as an example of accountability by drawing attention to the very thing for which he is criticized – appointing his campaign donors to state boards and commissions. "The campaign contributions that I receive … [are] very transparent of the appointments that we make." But he continued that, in the comptroller's office, "there is no transparency there, and that's what the auditor very clearly, and I think appropriately, exposed." The "clear connection between campaign contributions and tax decisions" is "very troubling," he said.

Campaign finance watchdogs warn, however, that Perry could just as easily find himself on the receiving end of what he's dishing out. "A similar audit of the governor's office would shatter his glass house," said Craig McDonald, executive director of Texans for Public Justice, whose new report on money in politics sheds light on the enormous influence big business wields over state government – from the governor's office to the Lege. "Conflicts of interest aren't limited to the comptroller's office, they're endemic in Texas politics," McDonald said. "What distinguishes Gov. Perry from Strayhorn is that he delivers for his big campaign donors on an unlimited range of issues, not just their tax bills."

Strayhorn has accused Perry of orchestrating a political witch hunt through the auditor's office, and says the findings essentially refute his attempts to discredit her job performance. "What the comptroller has said is that the auditor gave her a clean bill of health and found no evidence of wrongdoing," Sanders said.

The audit cites Strayhorn's biggest campaign contributor – Brint Ryan, managing partner of the tax consulting firm Ryan & Co. – as among 19 companies that have represented clients with tax disputes before the comptroller's office. The company has contributed more than $350,000 to Strayhorn's campaign this year.

Meanwhile, two other candidates for statewide office – GOP comptroller hopeful Susan Combs and Democratic gubernatorial candidate Chris Bell – have each issued statements endorsing the auditor's recommendations. Bell said an entire slate of reforms should be implemented across the board, starting with a "Mike Toomey Revolving Door Ban" – a reference to Perry's former chief of staff who now wields considerable influence as a lobbyist. "Whether it's Tom DeLay and insurance companies buying off our state elections, or Rick Perry's former chief of staff running things from the lobby, or a state audit that accuses the comptroller of a pattern of conflicts of interest, these examples of cash-and-carry corruption are just symptoms of a larger syndrome," Bell said.

The need for ethics reform in state government is further illuminated with last week's release of the TPJ study. It shouldn't surprise anyone that business-related political action committees accounted for 67% of all PAC money spent during 2003 and 2004, while labor and Democratic PACs saw their bank accounts and political sway diminish in the same time period. And it goes without saying that the more generous the PAC, the greater the rewards. Texans for Lawsuit Reform, for example, spent $3.1 million on political contributions and went on to secure major restrictions on civil lawsuits and damages in 2003, and this year won passage of a bill that places tighter controls on asbestos lawsuits. For obvious reasons, GOP lawmakers were less interested in passing campaign finance reforms that would have tempered the business lobby's stranglehold on the Lege. The full report is available at www.tpj.org.