Koelemay's Kosmos

Doug Koelemay

Open and Shut

The files on Virginia campaign contributions are open, but the tax records should stay shut.

Two developments this May illustrate the continuing and often contradictory challenges of managing information and facilitating proper disclosure, and simultaneously ensuring privacy and security of information. The contrast between these objectives is what makes these developments open and shut cases for Virginia .

The Virginia Public Access Project (VPAP), for example, celebrated the fifth anniversary of electronic filing of campaign contributions at a special May 17th Richmond breakfast for its supporters and donors, which include business and association executives, lobbyists, reporters and lawmakers. In partnership with the State Department of Elections, which first released “VAFiling” software in 1999 to enable candidates to e-file disclosure reports, this is open government at its best.

The General Assembly on May 7th, on the other hand, approved a budget with mysterious fine print that would set an entirely new course and give a legislative body, the Joint Legislative Audit and Review Commission (JLARC), and its staff direct access to state tax data files. This idea, broad legislation inserted by budget conferees without public discussion, committee hearings or a dedicated vote, would put tax records smack into the political tug-of-war between governor and legislature that threatens to become a permanent fixture in state government, and represents politics at its worst.

As anyone who participates or is interested in electoral politics knows, the files on Virginia campaign contributions always have been open. That is the policy decision successive generations of Virginians and their elected officials have endorsed – no donation or source limits, but full disclosure of campaign contributions. Most other states and the federal government have chosen much more complicated campaign donation regulatory schemes with limits, off limits, soft money, hard money and money that becomes known only by its section in the code, such as federal 527 money (which refers to money collected by political groups allied with, but organized separately from political party organizations).

Such complicated schemes, noted crack Washington Post political reporter David Broder recently, have failed so thoroughly that for the first time in history, the presidential nominees of both major parties have discarded public financing of their pre-convention campaigns (and the burdensome rules that accompany that money) to allow them to raise, instead, record levels of campaign cash.

For its part, VPAP has taken openness in Virginia to the next level by offering comprehensive data and search capabilities of Virginia state campaign contributions and spending reports at its www.vpap.org website. Since 1997, when Virginia newspapers first looked for a common way to access and better analyze thick, cumbersome paper files, VPAP has strengthened a reporting system that not only is public, but accessible. A growing majority of state candidates for office file electronically, thereby earning VPAP’s recognition as members of the “Sunshine Caucus.” The top supporter of VPAP’s approximately $100,000 operating budget is the Virginia Press Association. And Speaker of the House William J. Howell lauded VPAP, its executive director, former Roanoke Times reporter David Poole, and its board in his breakfast keynote as representative of the openness he sees as essential to good government.

Files on taxes and taxpayers, on the other hand, always have been closed to any entity or person beyond the Department of Taxation itself, and law enforcement agencies with the proper warrants. It is against the law to use tax information from an individual or corporation for anything other than a tax or law enforcement purpose. Aggregate data, of course, is shared and discussed publicly and used by both the Governor and the General Assembly in preparing revenue estimates and evaluating budgets.

But the fine print in budget amendment “Item 21 #1c Legislative Department Joint Legislative Audit And Review Commission” does not say aggregated data. The language inserted on page 14, line 14 of the budget bill after the word “process” is much broader.

JLARC fiscal impact staff shall have direct access to tax data files maintained by the Department of Taxation for the purpose of providing on-going support of tax policy oversight conducted by the House Finance and Senate Finance Committees. Information accessed by JLARC fiscal impact staff under the provisions of this item shall be deemed privileged and confidential and such lawful recipient thereof shall be subject to the penalties imposed by § 58.1-3, Code of Virginia, for any unauthorized use of such information.

The explanation of the amendment that follows in the parentheses, which signals it is not actual bill language, illustrates that the Assembly intends to throw the door open even for individual tax records.

This amendment provides the JLARC fiscal analysis staff with access to tax data files for the purpose of producing tax policy analysis for the House Finance, House Appropriations, and Senate Finance Committees. JLARC staff will be under the same legal prohibitions against disclosing individual tax records that apply to Department of Taxation staff.

Whoa, slow down. Before anyone calls the question, there seems to be a need for a little more Q and A.

Q: Are individual tax records, also corporate tax records, to end up in the hands of legislative staff and legislators?

A: Yes.

Q: And for what purpose?

A: Tax policy analysis.

Q: Do JLARC’s sophisticated econometricians need to build a separate scorekeeping and forecasting capability for the General Assembly?

A: Well, sometimes we don’t like relying on the executive branch and we don’t have any econometricians.

Q: Is it a good idea to sweep away Freedom of Information Act distinctions between private data, tax records and, potentially, governor’s working papers with budget language?

A: We haven’t thought of that, but why not if we can analyze tax policy better.

Q: Does the legislative branch need to have its own set of parallel executive branch functions or would a little more communication with the tax commissioner and the secretary of finance be a less complicated option?

A: This is an attempt to balance the overwhelming power of the governor and come up with our own set of numbers.

Q: And what’s next in the name of “produce better policy analysis?” JLARC direct access to driver’s license records, criminal records, hospital patient records, emails and bank accounts?

A: That’s not a bad idea and maybe movie rentals and the history of seeking parental consent forms for things. We could have some really great policy analysis.

This J-on-a-lark proposal needs a U-turn back toward privacy and security of tax data files. Unlike the VPAP mission to improve public understanding of money in politics, JLARC with direct access to tax department data files implies a mission to improve insider political understanding of individual and corporate tax information.

Both in the way this proposal emerged and in consideration of what a health professional might term its contraindications, there is some pretty simple bottom line advice for the Governor and the General Assembly from businesses and individuals who know VPAP and who’ve learned about Item 21 #1c: Keep the files on Virginia campaign contributions open and keep the tax files shut.

-- June 7, 2004