Las Vegas Sun

October 31, 2014

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Politics:

Law’s vague wording on expenses leaves room for interpretation in how campaign money is spent

Let’s say you especially like a particular candidate for an elective office in Nevada — maybe it’s a neighbor, a fellow churchgoer, a co-worker or even a relative — and you decide to kick in $250 for the campaign.

You might figure your donation will go toward office supplies, a college intern answering the phones, polling or a newspaper ad.

So you may be surprised to learn that Nevada legislators spent tens of thousands of dollars from campaign funds last year dining at restaurants, buying booze for receptions, and racking up bills at retail stores and on credit cards that don’t disclose the purchases.

Although annual campaign contribution and expenditure documents filed last month show that legislators spent most of their money on consultants, paid staffers, advertising and office expenses, legislators also collectively listed about $149,000 in bills that could raise eyebrows — from dry cleaners, grocers, electronics stores, clothing stores and restaurants, according to a Sun analysis of campaign reports.

For instance, a legislator spent $647.52 at an Apple computer store, another legislator spent $699.35 at Total Wine in Summerlin, and a third spent $350 on dry cleaning.

Several legislators said expenses for flowers, custom engraving, glass etching services, dining and other items in Carson City relate directly to their legislative offices and are therefore legitimate.

Although state law prohibits candidates from spending money for “personal use,” the law does not define personal use and does not explicitly grant legislators authority to use campaign money for living expenses.

•••

State law requires elected officials to disclose when they spend more than $100 in campaign money and where they spend it, but candidates need only categorize expenses in one of a dozen categories.

The result is an expense report like the one Sen. Pete Goicoechea, R-Eureka, filed earlier this year. It lists various dates and expenses on a credit card totaling $18,000. He categorized these expenses as “office,” “travel,” “miscellaneous,” “advertising,” “special events” and “polling,” making it virtually impossible to know what the money specifically bought.

Goicoechea said he has one credit card for Senate expenses and most of the money goes to gasoline as he travels around his massive Senate district, which is the size of several small states and stretches more than 500 miles from the Idaho border to the outskirts of Las Vegas.

He acknowledged that the expenses can seem obscure on the reports and said he wished he could show people what it costs to drive around his district.

“I think there’s got to be a better way to break that down, and for us rural guys, I would love to have it itemized,” he said, noting that most of his individual gasoline expenses would fall below $100 and would therefore not appear on expense reports. Critics say the current practice provides the public a false sense of transparency.

The reliance on broad categories of expenses that allow details to go unreported “tells the public nothing,” said Martin Dean Dupalo, president of the Nevada Center For Public Ethics. “There’s no way that meets the spirit or intent of the (campaign reporting) legislation at any point. It does not benefit the Nevada public at any point.”

Ambiguity in the law creates a loophole for legislators to spend campaign money on anything that candidates can stretch into one of a dozen categories of legal campaign expenses.

While it’s impossible to know the extent to which candidates exploit the loophole, candidates can act with near impunity because almost nobody checks to see whether elected officials’ campaign expenses are actually legitimate.

The Nevada Secretary of State’s office, which governs elections and collects these reports, has neither the lawful authority nor the staff to audit them.

As a result of this lack of clarity, representatives for major donors to Nevada candidates say they must take a hope-and-pray approach to donations.

“We hope that they’re spending money on things that will help them get re-elected,” said a lobbyist who represents companies that are major donors to Nevada legislators and who asked not be identified so as to speak more freely. “The problem with this whole thing is understanding what is campaign (related) and what’s not. The statute is kind of its own worst enemy.”

When asked by a reporter, legislators had numerous explanations for seemingly questionable expenses.

Last year, Sen. Tick Segerblom, D-Las Vegas, spent $297.55 at Nozomi sushi restaurant in Las Vegas.

He said that he took to dinner several Japanese exchange students, including the brother of a Japanese exchange student who had lived with his family. The students were on a cross-country road trip and had not had a good meal in days, Segerblom said.

“My perception is if I am not personally benefiting from things, if I am doing something to help out international relations or help out a poor person, that’s a legitimate use of campaign funds,” he said. “In the old days, we’d call up the hotel and ask them to comp the meal. That’s the way we used to do things, and now we use the campaign money. It’s probably better this way now that it’s more transparent.”

Segerblom also spent $416.36 at Adele’s, a restaurant in Carson City where legislators, lobbyists and others involved with the Legislature often dine.

“There were a bunch of people who were sitting around the table, and I picked up the tab,” he said.

The May 23, 2013, expense is classified as “miscellaneous” but includes food and drink for a crowd in the Adele’s lounge that included legislators, legislative staffers, lobbyists and members of the press, including this reporter.

“From my perspective, it’s better for me to pick it up than for some lobbyist to pick up,” Segerblom said.

•••

The Sun’s analysis shows that about $149,000 out of the $2.1 million legislators spent last year went to items or services that could have personally benefited them.

That figure excludes out-of-state travel to national conventions or legislative conferences, donations to charitable causes, and other expenses that are legal but not directly related to elections.

• Assemblyman Tom Grady, R-Yerington, gave $4,367.01 to himself for expenses related to “special events” and “travel.”

• Sen. Barbara Cegavske, R-Las Vegas, spent $350 and Assemblyman Jason Frierson, D-Las Vegas, spent $585.70 on dry cleaning in Carson City.

• Senate Majority Leader Mo Denis, D-Las Vegas, used his campaign fund to pay Susan Denis $251.43 for travel and Dustin Denis $982.98 for travel and expenses related to paid staff. Mo Denis did not return requests for comment about these expenses, and it could not be confirmed whether these individuals are his wife and son, who are also named Susan and Dustin Denis.

• Senate Minority Leader Michael Roberson spent $382.50 at the Northwest Territorial Mint, an expense he classified as “miscellaneous.”

He said the expense paid for legislative pins for other legislators and staffers. “It’s a tradition, and I was asked to pay for it this past session,” he said via text message. “The Northwest Territorial Mint produces the legislative pins.”

• Sen. Mark Manendo, D-Las Vegas, spent $2,224.43 on an American Express card and listed the expenses as “office,” “volunteers,” “travel” and “special events,” without elaborating.

• Sen. James Settelmeyer, R-Minden, spent $12,000 on “miscellaneous” expenses on a Bank of America card.

Settelmeyer said he could itemize the expenses but worried that a political opponent would steal a campaign vendor he uses.

“I don’t want to take an extra hour or two hours doing that because legally I don’t have to,” he said. “It’s not that they don’t want transparency to the general public, but it’s a question of not wanting your opponent to pick it (the campaign report) apart.”

• Assemblyman Ira Hansen, R-Sparks, spent $1,348.18 at Dillard’s department store and listed the expense as office-related.

• Sen. Don Gustavson, R-Sparks, spent $353.65 at the Legislature’s gift shop, which he classified as a “miscellaneous” expense and a “contribution” to another group.

Gustavson said he bought gifts for legislative staffers and a county Republican Party, which are “justifiable” expenses.

All the legislators mentioned in this story were asked to justify their expenses. Only Segerblom, Roberson, Settelmeyer, Goicoechea and Gustavson returned requests for comment.

Michelle White, executive director of the Nevada Senate Democratic Caucus, said the expenses paid from campaign accounts were legitimate “not only because it’s appropriate under the law but because Nevada’s taxpayers should not bear such costs.”

•••

As legislators campaign for re-election, they implore donors to donate for many reasons, but paying for dinners and living expenses in Carson City are hardly ever cited.

So some small donors in Nevada were surprised to hear how legislators were spending their donations.

Donors such as Las Vegas lawyer Maggie McLetchie said she thought “it was things like signs” that candidates would be buying with her small donations.

But while she said it would seem “a little weird” if a legislator bought every meal with campaign money, she said she can see how the living expenses could be legitimate.

“When I have to go up to Reno or Carson for work, I certainly charge my meals to my law firm because it is a business expense,” McLetchie said.

UNR political science professor Eric Herzik said legislators charging dining, traveling and shopping to campaign accounts is similar to private sector employees charging business credit cards to business expenses.

“You would use it to offset expenses that you would normally not incur,” Herzik said of the campaign accounts.

For instance, he said it could be OK to buy a mattress in Carson City because a legislator from Las Vegas had no other reason to be in Carson City last year but for the 120-day legislative session.

Other expenses could be illegitimate, but it’s a subjective measure, he said.

“Just as you have people who are stretching their bounds with their tax deductions, you probably have people who are stretching the bounds on their campaign and political-related expenses,” he said.

The difference, though, is that the Internal Revenue Service can audit a tax filing; nobody audits campaign expense reports.

•••

The state pays legislators a salary of $8,777.40 for the legislative session and also pays legislators a “per diem” based on federal reimbursement rates for Carson City meals and housing, which was $152 a day or $18,240 for the 120-day legislative session last year.

Many legislators, however, say they effectively take a pay cut when they take a leave of absence from a more lucrative job to spend four months in Carson City.

Nevada’s Legislature meets during odd-numbered years for 120 days, and the state’s 63 legislators are generally considered “citizen legislators,” meaning the Legislature is a part-time job and not their primary source of income.

Other states with such citizen legislatures and low or no pay for legislators have also struggled with allowing campaign accounts to become supplemental incomes.

In New Mexico, which has an “unpaid volunteer citizen’s legislature,” candidates are explicitly barred from using campaign funds to pay for “personal and legislative session living expenses.”

In Utah, legislators are paid $5,265 for a 45-day legislative session, and candidates are prohibited from spending money for personal use or gain. But as is the case in Nevada, legislators blur the line between spending for personal use and spending to fulfill the duties of the legislative office.

In Nevada, the practice generally goes unreported.

“Most of the voters don’t know and don’t care,” said Mark Peplowski, a political science professor at the College of Southern Nevada. “They don’t know who their legislator is or how much they work, and they don’t donate to the campaigns. The donors are mostly friends, family and interest groups. Unless it’s extreme and egregious, everyone kind of says, ‘yeah that’s OK.’”

Campaign reporting practices will not likely change unless the Nevada Legislature changes campaign laws.

Segerblom said it’s “unfortunate” that the reports don’t offer any written explanations for campaign expenses.

He hopes someday the Legislature can change campaign reporting laws to give the public more meaningful information about how candidates are spending money.

But until then, donors are left hoping that candidates use their money for the right reasons.

“Folks don’t give money if nobody asks, and when somebody asks, there’s supposedly a need and you have to assume it’s being used for the intended purposes,” said a Nevada lobbyist with clients who give tens of thousands of dollars in donations every election cycle.

If the system is reformed, Settelmeyer worries that candidates will just find a new way to thwart disclosure.

“Those individuals who are going to hide it are going to continue to figure out a way,” he said.

For example, he said legislators could just list tens of thousands of dollars in expenses to a consultant who provided services classified as “X, Y, Z, P, D or Q.”

“Was that a mail piece? What were those funds on?” he said. “We can change the law, and then you’ll see people shift the way they do it.”

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