Baucus not inclined to plan earmark disclosure request
By Elana Schor
The Hill
May 3, 2007
Finance Committee chief Max Baucus (D-Mont.) is unlikely to follow the example of three other chairmen who have imposed voluntary earmark-disclosure rules on their members’ requests.
According to a Baucus aide, Baucus does not anticipate sending an earmark letter because the Finance Committee’s informal rule against so-called “rifle-shot” tax benefits makes the panel a special case.
That means that the Senate’s defense authorization, water resources and appropriations bills are expected to reveal earmark sponsors, while targeted tax and tariff breaks will stay veiled for now.
Initially, Sen. Jim DeMint (R-S.C.) had called for an immediate Senate rules change to implement earmark standards approved earlier this year. To preempt that move, the three chairman sent letters to their panels’ members calling for voluntary earmark disclosure instead.
As the aide argued, tax provisions are distinct from appropriations.
“For 20 years the [Finance] Committee has had an anti-rifle shot rule enforced by committee chairmen, prohibiting provisions that apply to one taxpayer,” the aide said. “Chairman Baucus will continue to enforce this rule and supports the provision in [the Senate ethics bill] that would require disclosure of provisions with limited tax benefits.”
The rifle-shot rule, as former Finance Chairman Chuck Grassley (R-Iowa) described it, requires that any tax benefit the committee considers affect “at least 10 entities.”
Considering the internal rule, Grassley said, “I think it’s a stretch of the use of the word ‘earmark’ to include tax provisions as earmarks.”
Grassley acknowledged that one type of earmark not subject to the rule is tariff suspension requests, which lawmakers submit to the tax-writing panels in an annual ritual that often benefits specific companies in their districts. But he contended that tariff breaks already receive a thorough scrubbing from trade regulators and lawmakers, making an order to label them unnecessary.
Earmark analysts said that the Finance Committee’s rifle-shot rule misses the point of disclosing targeted tax benefits. These provisions were dubbed “tax earmarks” during last year’s revolt by Republican appropriators, who felt they were unfairly singled out by a narrow definition of the term.
“To not direct members to actually stand by their earmarks is irresponsible for the committee,” said Steve Ellis, a vice president at Taxpayers for Common Sense. “This isn’t saying that you can’t push for an earmark or a tax preference. You just have to say you’re doing it.”
Despite the assertion by former Ways and Means Committee Chairman Bill Thomas (R-Calif.) that his committee also abided by the rifle-shot rule, several tax earmarks made it into the 2004 FSC/ETI tax bill, most notoriously a ceiling-fan break for Home Depot.
Richard Kogan and James Horney, both at the liberal-leaning Center on Budget and Policy Priorities (CBPP), questioned how much teeth the rule would have in practice.
“It may be against committee rules,” said CBPP senior fellow Kogan. “But committee rules aren’t self-enforcing. If the chairman doesn’t object or nobody raises a point of order, it stays in.”
Horney, CBPP’s director of federal fiscal policy, echoed GOP appropriators’ objections last year in comparing the uneven standards for spending and tax earmarks.
“You could have a provision that benefits an entire congressional district and that’s an appropriations earmark, but you can have a tax benefit that goes to 12 companies and that’s not an earmark under the rifle-shot rule,” Horney said.
DeMint’s initial earmark-disclosure rule followed the rifle-shot standard of more than 10 beneficiaries, but Senate Majority Whip Dick Durbin (D-Ill.) replaced it on the floor with what he described as a stronger standard. In a January floor speech, Durbin argued that defining a tax earmark as enriching more than 10 entities “allows for a loophole.”
“We do not come up with a number … but, rather, keep it in the category of a tax benefit that is clearly designed to help a limited group of taxpayers of a certain group compared with others,” Durbin said.
A GOP aide said that Baucus’s decision not to send a letter raised questions about whether Democrats were ready to keep their promises of earmark transparency.
“It’s telling that Senators Reid and Durbin can’t get their own chairmen in line on their signature ethics issue,” the GOP aide said. “Durbin decried immediate earmark disclosure as piecemeal, but there’s nothing more piecemeal than allowing every committee chairman to make their own rules.”
The final Senate standard pegged a tax earmark as benefiting a “limited group” of companies or people, but it kept the tariff-break definition at fewer than 10 entities. Ellis noted that the “limited group” definition can be applied more narrowly or more broadly than the Finance rifle-shot rule, allowing members leeway to report earmarks as fully as they see fit.
The Baucus aide pointed out that committee reports already label provisions in tax bill as narrowly or broadly applicable.
The tariff suspensions bill is generally assembled late in the year, by which time Democrats expect tax-earmark rules to have the force of law regardless of Baucus’s move. But the Senate’s first targeted tax breaks of the year could come as soon as this month on the energy bill.
And if last year’s lobbying measure — which never made it to conference — offers any preview of this year’s talks, official tax-earmark rules may be slow in coming. Ellis said the uncertain future of earmark transparency calls for not just a letter from Baucus, but support from Senate Majority Leader Harry Reid (D-Nev.) and House Speaker Nancy Pelosi (D-Calif.).
“Should Baucus do it? Yes. Should Reid move forward with a Senate rules change? Yes,” Ellis said. “Should Speaker Pelosi and the House get off the dime and pass [a lobbying bill]? Priceless.”
Rep. Gary Miller (R-Calif.) helped secure several earmarks in the 2005 transportation bill that would benefit projects of his business partner, Lewis Operating, according to House sources and an analysis of the bill’s earmarks and San Bernardino County, Calif., land records.
In the years leading up to the bill’s passage, Miller’s financial ties to the company, one of the largest privately held real-estate development companies in the country, have grown. The year before the transportation bill passed, Miller borrowed $7.5 million from Lewis Operating to purchase land from it. Lewis Operating Corp. is also one of Miller’s top campaign contributors; employees of the company have donated $22,150 to Miller’s campaign committee since his election to Congress in 1998.
Miller also has partnered or been involved with a number of real-estate transactions with the company in the past five years, making $1.1 million to $6 million in profits from deals involving Lewis Operating in some part of the transaction, according to the lawmaker’s financial disclosure reports.
The FBI has been investigating several of Miller’s land deals, particularly the sale of 165 acres to the city of Monrovia in 2002. Miller made at least $10 million on the deal, but has faced scrutiny for avoiding paying capital gains taxes on the land by telling the IRS that the city had threatened to seize the land through eminent domain, and subsequently reinvesting the profit into land purchased from Lewis Operating.
Miller has denied any wrongdoing in the matter, arguing that he legally claimed eminent domain in the Monrovia sale and that there is nothing improper about his business partnership with Lewis Operating and his role in attaining earmarks in the transportation bill that benefit the company and some of his partnership ventures with it.
A spokesmen for Miller did not return a call seeking comment.
In a written statement, Randall Lewis, the executive vice president for Lewis Operating Corp., defended the company’s relationship with Miller and other government officials: “For three generations, Lewis Group has been committed to acting according to the highest and strictest ethical standards. And that high standard applies to any relationships with government officials.”
In 2005, before Democrats took over the House majority, Miller was the only California Republican on the transportation panel and served as the point man for the state’s highway priorities, according to several GOP House sources.
The bill included $4 million for an interchange on Interstate 15 at Base Line Road in Rancho Cucamonga. The interchange is immediately adjacent to the city’s largest planned community, Victoria Gardens, a 150-acre area with 300 homes and a 1.3 million square-foot shopping center, which anchors the city’s redevelopment efforts, according to its website.
The city of Rancho Cucamonga’s redevelopment agency also touts improvements to the interchange as a major accomplishment on the capital improvement program section of its website.
“This project will improve traffic circulation for both on-ramps and off-ramps at Base Line Road, now being utilized heavily due to development within the project area,” a section in the agency’s 2005-2009 implementation plan reads.
(Miller is developing more than 382 acres in an unincorporated foothills area of Rancho Cucamonga known as Carrari Ranch into multi-million dollar homes. That area is on the opposite end of town from the Base Line interchange and would not directly benefit from the earmark.)
Miller also helped secure several earmarks for the town of Fontana, where he has recently bought land owned by Lewis Operating and sold it to the city’s redevelopment agency. Fontana also is home to one of Lewis Operating’s largest planned communities, Sierra Lakes, encompassing 700 acres that includes 1,850 homes surrounding an 18-hole golf course, clubhouse, a 62-acre shopping center and a 20-acre park. Miller owned land along Sierra Lakes Parkway less than a mile from the planned community.
Sierra Lakes is just over a mile away from the former Rialto Municipal Airport, which Miller helped close through a provision in the same transportation bill, the first time an airport was closed by an act of Congress. Before the provision closed the airport, the city of Rialto — where the airport is located — already had granted Lewis Operating an exclusive agreement to develop the airport land into Renaissance, a community consisting of 2,500 homes, parks and 80 acres of retail space on the former airport property and adjacent land.
Lewis Operating has multiple projects in the cities of Fontana and Rialto, areas that received several earmarks in the 2005 legislation. One is Valley Trails, a 295-acre space consisting of 1,150 homes located less than two miles away from another highway project, the Cypress Avenue overpass, which received $2.4 million in the transportation bill.
Other earmarks in the 2005 bill that stand to benefit Lewis Operating projects in San Bernardino County include:
• $6.8 million for Pine Avenue extension from Route 71 to Euclid Ave. in the city of Chino. The extension is less than a mile from the Preserve, a Lewis Operating planned community, and less than two miles from Parkside, another Lewis Operating planned community.
• $1.2 million to establish an Interstate 15 interchange at Nisqualli and Mojave River Crossing in Victorville, Calif. The interchange is about a half a mile from Parkview, a Lewis Operating planned community.
• $400,000 to widen and realign U.S. 395 in the city of Hesperia. Lewis Operating lists The Promontory as one of its planned communities on its website. A city official said the company has not submitted a formal application for the project.
