PDC unanimously rules that BIAW and Master Builders broke public disclosure laws
Acting on a complaint against the Building Industry Association of Washington (BIAW) and its Master Builder affiliates filed back in July, Washington's campaign finance watchdog agency this morning unanimously ruled the state's meanest, nastiest right wing lobby is guilty of repeatedly breaking public disclosure laws.
The ruling is a big victory for transparency and open government - and it comes during the midst of a heated campaign for the governor's mansion.
Evergreen State progressive activists have long believed that not all of the BIAW's political activity was legal and properly reported. Today, the Public Disclosure Commission confirmed those suspicions in its verdict.
To appreciate the significance of today's ruling and its impact on Evergreen State politics, it's important to understand what the BIAW is and what it wants.
While the name implies trade group, the Building Industry Association of Washington is really more like an insurance broker. State law requires businesses, including homebuilders and contractors, to carry insurance (known as workers' compensation) in the event they are injured while on the job.
In return for providing coverage for their employees, employers usually can't be sued for damages when an employee gets hurt or sick at work.
In other states, insurance is sold by private companies, but in Washington, it is sold by the Department of Labor & Industries, which collects payments from business owners and pays claims.
Because building homes is an inherently dangerous business, premiums for workers' compensation insurance are much higher than they are for other industries. However, homebuilding companies can get some of that money back from the Department of Labor & Industries if they have a relatively safe year.
And that's where the Building Industry of Washington comes in.
Under L&I's "retrospective rating" program, homebuilders can opt to get refunds from the state if their claim costs during a calendar year are lower than anticipated. The program is so named because refunds are issued some time after the conclusion of each twelve month coverage period, following an L&I evaluation.
Employers can participate in the program individually, but it's risky. It is far more advantageous to participate in a pool sponsored by a group. Group plans offer bigger annual refunds and allow individual employers to minimize their risk.
Risk minimization is important because under a group plan, even a company that has a bad year can still get a refund - so long as the larger group does well.
The Building Industry Association of Washington offers the state's biggest group plan... and does a good job aggressively marketing it. The BIAW freely admits that its workers' compensation insurance pool is its number one recruiting tool.
That same pool is also the main source of the BIAW's political war chest. The BIAW keeps a hefty percentage of the refund for itself, returning the rest to its more than one dozen local affiliates and their members.
While membership dues cannot be used for political activity (by law) the BIAW claims there are no rules against using refund money for that purpose.
The money that BIAW keeps is more than enough to pay for basic administrative expenses related to workers' comp.
Everything that is left is available for the BIAW to use in independent expenditures supporting the Republican Party and Republican candidates.
Because the BIAW does a good job managing its insurance pool, its members have little incentive to leave, even if they don't like the BIAW's politics.
The BIAW's political agenda is unequivocally right wing, and is perhaps best explained by Markos Moulitsas and Jerome Armstrong in their 2006 book Crashing the Gate: Netroots, Grassroots, and the Rise of People Powered Politics:
It almost goes without saying that the right wing fanatics who run the BIAW are among Republican gubernatorial candidate Dino Rossi's strongest supporters. Their hatred for Governor Chris Gregoire runs deep; in the BIAW's January 2008 newsletter Building Insight, Gregoire was attacked as "a heartless, power-hungry she-wolf who would eat her own young to get ahead."
Since Dino Rossi lost the gubernatorial election in 2004, the BIAW has been salivating over the thought of a rematch, and has been been raising money with the explicit intent of blasting Gregoire on the airwaves and by direct mail. The BIAW's advertising is filled with lies and distortions that unfairly attack Democrats. The BIAW has also resorted to dirty tricks to aid Dino Rossi's campaign.
During Rossi's election challenge in 2005, BIAW leader Tom McCabe unsuccessfully tried to get U.S. Attorney John McKay involved on Rossi's behalf. When McKay declined, McCabe tried to get McKay removed from his post, and even sought the intervention of 4th District Representative Doc Hastings.
Among the BIAW's unethical practices is trying to avoid complying with campaign transparency rules, which is what today's ruling was about.
Instead of reporting all of its political activity as required by law, the BIAW has historically tried to hide its tracks from public view. Besides failing to report all of its contributions, the BIAW has used shell PACs to mask its expenditures, creating a confusing money trail that reporters and observers must decipher.
For years, the BIAW has avoided being caught, but finally, they've been nailed. It took a complaint signed by several prestigious retired justices and the threat of litigation to compel the Public Disclosure Commission to investigate.
Now the investigation is complete and the BIAW has been found guilty of several of the charges (the rest were dismissed by the PDC).
The PDC found that BIAW's Member Services Corporation subsidiary was illegally concealing over half a million dollars in retrospective rating refunds intended to be used for political expenditures, and that multiple BIAW affiliates (the King and Snohomish Master Builders) spent almost half a million more dollars on electioneering without reporting the contributions.
But whether the BIAW will truly pay for defying the law is uncertain. The most the PDC can do on its own is slap the BIAW with a small fine.
A larger fine would have to be sought by Attorney General Rob McKenna.
The PDC has referred this case to the Attorney General's office, but we believe it is very unlikely that McKenna will opt to prosecute the BIAW, as they are strong supporters of his (and he is a strong supporter of them).
McKenna's office must decide by this Friday whether to prosecute.
McKenna's Democratic opponent, John Ladenburg, ought to make use of the next few days to build public pressure against McKenna and force him to act.
Even if that fails, however, the BIAW isn't necessarily out of the woods.
Attorney Knoll Lowney, who represents both the citizens that filed the PDC complaint and the BIAW trust beneficiaries who are suing the right wing lobby in court, said in a news release today that next week the plaintiffs will ask Thurston County Judge Christine Pomeroy to issue an injunction to stop the BIAW's diversion of retro rebate funds for political spending and unauthorized purposes.
Regardless of what happens next, fleeting justice was finally served today against a corrupt, abusive, and power hungry right wing special interest. The BIAW can scream "Unfair!" until the cows come home, but the ugly footprints they've left on our state's political landscape speak for themselves.
The ruling is a big victory for transparency and open government - and it comes during the midst of a heated campaign for the governor's mansion.
Evergreen State progressive activists have long believed that not all of the BIAW's political activity was legal and properly reported. Today, the Public Disclosure Commission confirmed those suspicions in its verdict.
To appreciate the significance of today's ruling and its impact on Evergreen State politics, it's important to understand what the BIAW is and what it wants.
While the name implies trade group, the Building Industry Association of Washington is really more like an insurance broker. State law requires businesses, including homebuilders and contractors, to carry insurance (known as workers' compensation) in the event they are injured while on the job.
In return for providing coverage for their employees, employers usually can't be sued for damages when an employee gets hurt or sick at work.
In other states, insurance is sold by private companies, but in Washington, it is sold by the Department of Labor & Industries, which collects payments from business owners and pays claims.
Because building homes is an inherently dangerous business, premiums for workers' compensation insurance are much higher than they are for other industries. However, homebuilding companies can get some of that money back from the Department of Labor & Industries if they have a relatively safe year.
And that's where the Building Industry of Washington comes in.
Under L&I's "retrospective rating" program, homebuilders can opt to get refunds from the state if their claim costs during a calendar year are lower than anticipated. The program is so named because refunds are issued some time after the conclusion of each twelve month coverage period, following an L&I evaluation.
Employers can participate in the program individually, but it's risky. It is far more advantageous to participate in a pool sponsored by a group. Group plans offer bigger annual refunds and allow individual employers to minimize their risk.
Risk minimization is important because under a group plan, even a company that has a bad year can still get a refund - so long as the larger group does well.
The Building Industry Association of Washington offers the state's biggest group plan... and does a good job aggressively marketing it. The BIAW freely admits that its workers' compensation insurance pool is its number one recruiting tool.
That same pool is also the main source of the BIAW's political war chest. The BIAW keeps a hefty percentage of the refund for itself, returning the rest to its more than one dozen local affiliates and their members.
While membership dues cannot be used for political activity (by law) the BIAW claims there are no rules against using refund money for that purpose.
The money that BIAW keeps is more than enough to pay for basic administrative expenses related to workers' comp.
Everything that is left is available for the BIAW to use in independent expenditures supporting the Republican Party and Republican candidates.
Because the BIAW does a good job managing its insurance pool, its members have little incentive to leave, even if they don't like the BIAW's politics.
The BIAW's political agenda is unequivocally right wing, and is perhaps best explained by Markos Moulitsas and Jerome Armstrong in their 2006 book Crashing the Gate: Netroots, Grassroots, and the Rise of People Powered Politics:
Corporate cons[ervatives] seek to craft a government friendly to unfettered, unregulated capitalism, not to mention a government that provides generous subsidies and a steady stream of lucrative contracts to further line their pockets - codifying the culture of corruption into the nation's laws.The BIAW is the strongest and most well funded opponent of the Northwest Progressive Institute's top legislative priority - the Homeowner's Bill of Rights, which has died at the hands of House Speaker Frank Chopp two years in a row. (Chopp is one of the few Democrats the BIAW respects).
It almost goes without saying that the right wing fanatics who run the BIAW are among Republican gubernatorial candidate Dino Rossi's strongest supporters. Their hatred for Governor Chris Gregoire runs deep; in the BIAW's January 2008 newsletter Building Insight, Gregoire was attacked as "a heartless, power-hungry she-wolf who would eat her own young to get ahead."
Since Dino Rossi lost the gubernatorial election in 2004, the BIAW has been salivating over the thought of a rematch, and has been been raising money with the explicit intent of blasting Gregoire on the airwaves and by direct mail. The BIAW's advertising is filled with lies and distortions that unfairly attack Democrats. The BIAW has also resorted to dirty tricks to aid Dino Rossi's campaign.
During Rossi's election challenge in 2005, BIAW leader Tom McCabe unsuccessfully tried to get U.S. Attorney John McKay involved on Rossi's behalf. When McKay declined, McCabe tried to get McKay removed from his post, and even sought the intervention of 4th District Representative Doc Hastings.
Among the BIAW's unethical practices is trying to avoid complying with campaign transparency rules, which is what today's ruling was about.
Instead of reporting all of its political activity as required by law, the BIAW has historically tried to hide its tracks from public view. Besides failing to report all of its contributions, the BIAW has used shell PACs to mask its expenditures, creating a confusing money trail that reporters and observers must decipher.
For years, the BIAW has avoided being caught, but finally, they've been nailed. It took a complaint signed by several prestigious retired justices and the threat of litigation to compel the Public Disclosure Commission to investigate.
Now the investigation is complete and the BIAW has been found guilty of several of the charges (the rest were dismissed by the PDC).
The PDC found that BIAW's Member Services Corporation subsidiary was illegally concealing over half a million dollars in retrospective rating refunds intended to be used for political expenditures, and that multiple BIAW affiliates (the King and Snohomish Master Builders) spent almost half a million more dollars on electioneering without reporting the contributions.
But whether the BIAW will truly pay for defying the law is uncertain. The most the PDC can do on its own is slap the BIAW with a small fine.
A larger fine would have to be sought by Attorney General Rob McKenna.
The PDC has referred this case to the Attorney General's office, but we believe it is very unlikely that McKenna will opt to prosecute the BIAW, as they are strong supporters of his (and he is a strong supporter of them).
McKenna's office must decide by this Friday whether to prosecute.
McKenna's Democratic opponent, John Ladenburg, ought to make use of the next few days to build public pressure against McKenna and force him to act.
Even if that fails, however, the BIAW isn't necessarily out of the woods.
Attorney Knoll Lowney, who represents both the citizens that filed the PDC complaint and the BIAW trust beneficiaries who are suing the right wing lobby in court, said in a news release today that next week the plaintiffs will ask Thurston County Judge Christine Pomeroy to issue an injunction to stop the BIAW's diversion of retro rebate funds for political spending and unauthorized purposes.
Regardless of what happens next, fleeting justice was finally served today against a corrupt, abusive, and power hungry right wing special interest. The BIAW can scream "Unfair!" until the cows come home, but the ugly footprints they've left on our state's political landscape speak for themselves.
# Posted by Andrew : 7:58 PM
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