Ethics Commission Leaks Over $1.2 Million a Year

by Joe Lynn on March 23, 2009

The Ethics Commission has submitted a budget asking San Francisco taxpayers to affirm over $650,000 in revenues lost largely in a series of deals which it struck with lobbyists, major donors, and moneyed campaigns. In addition, Ethics is asking the City for $550,000 to fund its much-criticized enforcement division now projected to collect only $1,000 in fines for the year. In its history, this division has never levied a fine to which the respondent objected. The combined cost to the City is over $1.2 million a year.

What’s behind the thinking of these moves which have left the Commission’s budget $526,000 over the target cuts for FY 2009-2010? We don’t know because the Commission (unlike almost all the other City departments) has not had a single hearing on the budget its staff submitted.

In January, Ethics Executive Director John St. Croix reported to the Commissioners that the Mayor had requested Ethics to plan for a $401,000 cut in FY 09-10. The Commission authorized no cuts, and instructed Mr. St. Croix to submit a budget at this year’s levels. They left the details to him.

In February, without any oversight from the Commission, he submitted a budget to the Mayor that asks the General Fund for an additional $125,000 over this year’s levels to make up for a collapse in revenue collection. (Ethics projects that in FY 09-10 it will generate only 23% of last year’s revenues.) His submission is therefore $526,000 over the target.

The Commission agreed this January to ignore the Mayor’s budget instructions because of the notion of its independence from the Mayor’s budget authority. The voters rejected this idea in the 2005 Prop C vote, leaving intact the Charter’s present system of vesting budget authority in the Mayor. Even if the Commission did have independent budget authority, it would still owe the public the duty to go over its budget with a fine-toothed comb. Particularly this year. Nothing has been done, however.

Ethics’ budget is so out of whack because of its fear of confronting the regulated industry, and a lack of oversight by the Commission of failing programs. Consider these items:

1. $600,000 Loss in Campaign Fines: The Ethics budget itself concedes there will be an $83,000 decline next year, falling from this year’s target of $105,000 to $22,000. What the budget does not explain is why this revenue source has declined to $22,000 from its annual average of $135,000 in prior years, and a high of $200,000 in FY 05-06.

For the answer, you need to understand that Ethics has adopted a waiver policy as a result of demands from professional treasurers who were hostile to the fines laws. Staff’s unwillingness to confront these folks is reflected in its waiving over $1,000,000 in fines from FY 04-05 and 05-06 alone.

Further revenue losses can be anticipated as the result of staff’s decisions not to pursue major donors. There are good policy reasons why Ethics should not have folded from the pressures of the regulated industry. In a budget crisis, Ethics needs to justify those decisions fiscally as well.

2. $32,000 Loss in Lobbyist Registration Fees. These are scheduled to fall from $40,000 to $8,000, representing the lower fee rates staff wants set for next year. There has been no discussion as to whether this is the appropriate year to provide financial stimulus to this industry. If ever this were proof of staff’s accommodation to the needs of its regulated industry, one need look no further.

3. $550,000 for Enforcement. Other Ethics Fines are those produced by the beleaguered enforcement division. Its fines are to drop to $1,000 from last year’s target of $20,000. This is an admission of the failure of a program costing the City $550,000 a year. Not once in Ethics’ 15-year history has enforcement levied a fine to which the respondent objected. Instead, it has gotten mired in accusations involving manufacturing evidence or launching attacks against personal enemies.

Real Ethics enforcement doesn’t come from Ethics. It comes from the District Attorney (the Community College bond scandal) or the City Attorney. In the Ed Jew case, no one would entrust its prosecution to Ethics enforcement staff. San Francisco deserves competent Ethics enforcement, and there is no other way to get it than to suspend funding the division until Ethics gets its act together.

The common thread in these items is the failure of the Commissioners to scrutinize staff. The out-of-whack budget reflects the Commission’s lack of attention to the state of Ethics in San Francisco. The public should expect more from its government, particularly its Ethics Commission.

Joe Lynn was a budget officer for the SF Ethics Commission from 1998-2003, and an Ethics Commissioner from 2003-2006.

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