"Texas legislators use campaign money collected from special interests to pay for luxurious lifestyles."

Lifestyles of the Corrupt and Elected

How do Texas legislators live large on their $7,200 salaries? Campaign funds pay for lavish perks and personal expenses, courtesy of special interests.

1/16/11

by Dave Mann & Abby Rapoport
Texas Observer
Copyright 2011

photo courtesy Beverly Wilshire Pool area at the Beverly Wilshire in Beverly Hills, where Sen. Jeff Wentworth stayed in 2008.

Troy Fraser enjoys the kind of job security most Americans can only dream of. He’s served in the Texas Senate for 14 years and won’t likely lose an election any time soon. The 61-year-old Republican from the conservative Central Texas resort area Horseshoe Bay hasn’t even faced a Democratic opponent since 1996. He’s run unopposed twice. His worst showing in the past decade came in 2008, when he was challenged by a Libertarian Party candidate and eked out a victory with a mere 85 percent of the vote. Barring a major scandal, Fraser can serve in the state Senate as long as he wants.

Yet Fraser has amassed one of the largest campaign funds in the Legislature, nearly $1.3 million. Nearly all of the money he’s raised in the past two years—about 97 percent—was contributed by special interests, according to a recent analysis by Austin’s KXAN. In the last two years, the finance, insurance and real estate industries combined gave Fraser a quarter of his total campaign donations.

You might wonder what Fraser, with no competitive election in sight, is doing with all this campaign money.

He’s living off it. Fraser, like all Texas legislators, is allowed to use campaign money to augment his lifestyle: to rent a condo, take his family on opulent trips and stay in exclusive hotels and resorts. Since he was last elected in 2008, Fraser has spent more than $388,000 in campaign funds, most of it unrelated to any election. Fraser tapped campaign money to help pay for a trip with his wife to Park City, Utah, during ski season. He and his wife also used the money to travel to Hawaii, San Francisco and Monterey, Calif., England, Spain, Russia, Germany, Puerto Rico, Panama and Costa Rica, where they stayed at a $400-a-night resort nestled among some waterfalls. Under Texas law, he could legally use campaign money to pay for these trips as long as they could be somehow connected to state business.

Watch a video from the luxury Springs Resort where state Sen. Troy Fraser stayed in Costa Rica.

Fraser also used campaign funds to pay dry cleaning bills, according to state records, an apparent violation of Texas election law. Fraser, like other lawmakers, is using his campaign account like a $1.3 million personal expense fund that corporate political action committees are constantly refilling with money.

Fraser’s spending has been extravagant but not unique. The Observer analyzed five years of campaign data filed with the Texas Ethics Commission by all Texas officeholders. We combed through 670,000 expenditures by hundreds of elected officials.

It’s difficult to determine how much money legislators are spending on non-campaign expenses. Many outlays aren’t labeled, and many others carry vague descriptions that make it nearly impossible to distinguish a legitimate campaign expense from a personal expenditure. But the Observer investigation uncovered a handful of legislators who likely violated Texas law. Fraser and three others paid personal expenses such as dry cleaning from their campaign accounts, which is expressly forbidden. And while many other expenses are likely legal, the Observer analysis found that legislators use campaign money collected from special interests to pay for luxurious lifestyles.

Attorney Gen. Greg Abbott used campaign funds to pay off cell phone bills, which averaged $600 a month. State Sen. Craig Estes, a Republican from Wichita Falls, rented a $3,000-a-month condo in a swank downtown Austin high-rise. Sen. Dan Patrick, a Houston Republican, dropped almost $600 to decorate his office with stuffed animal heads. Sen. Jane Nelson, R-Lewisville, took her husband to Hawaii. Her Senate colleagues John Whitmire, D-Houston, and Mario Gallegos Jr., D-Houston, traveled to the Aloha State too. Sen. Florence Shapiro, R-Plano, used campaign money to pay for a $1,200 stay at the oceanside El Conquistador Resort and Golden Door Spa in Puerto Rico. (Shapiro’s office noted that she was attending the Council of State Governments conference, which was held at the resort.)

No elected official has spent more on travel since 2005 than Gov. Rick Perry, whose campaign reported $442,000 in travel outlays, much of it out of state. The high cost stems from Perry and his staff’s affinity for traveling on private jets. Major campaign donors have flown the governor and his staff all over the country. These trips, listed as in-kind donations to Perry’s campaign, cost up to $10,000 per flight. Some of these donors weren’t flying Perry around simply out of generosity. On at least two occasions, when they reached their destination, Perry and his staff advocated for policies that would benefit the donor that flew them there.

“This is hugely broad,” says Craig McDonald of Texans for Public Justice. “You can take money from a special interest who’s lobbying on a bill near and dear to their heart, and you can take six friends to the Super Bowl with [the money]. It so often crosses the line into supplementing a legislator’s lifestyle.”

For decades, Texas law has permitted legislators to spend money from their campaign accounts to offset expenses they incur from holding elected office. Texas legislators are paid only $7,200 a year, among the lowest legislative salaries in the country. Their $168 per diem, one of the highest in the country, is meant to help defray the costs of coming to Austin and living in the city during session. But their campaign accounts often end up covering many of those expenses. That includes paying for apartments and cars in Austin, trips to policy conferences, and just about any expense they can ostensibly relate to legislative business.

Limitations are few. Legislators can’t tap campaign cash for “personal” spending. They can’t use campaign money to buy property. Beyond that, the Ethics Commission has used a narrow definition of “personal” expenses. The agency has deemed it legal for lawmakers to use campaign funds to pay for their cell phones.

While these rules have been in place since 1991, government watchdogs say the system has grown unseemly in recent years. With many legislators ensconced in safe districts and assured of re-election, and with more and more special-interest money at their disposal, politicians can freely treat themselves to extravagant lifestyles paid for by corporate PACs. It’s a system that sometimes amounts to legalized corruption.

“There needs to be some stricter regulations,” McDonald says. “Yeah, the law allows you to buy a Lexus, but should you maybe only be allowed to buy a Prius? I don’t know. But I think there have to be some guidelines on what is allowable and what isn’t beyond this broad category of ‘anything but personal use.’”

For instance, Sen. Fraser’s trips were ostensibly related to state business, so it was legal for him to use campaign money to take his wife, Linda, to some of the world’s most popular tourist destinations. In April 2010, Fraser and his wife visited Costa Rica for a “tour of wind farms,” as he later wrote on his state disclosure filings. A trip to Costa Rica may seem a tenuous business expense at best, but it was related to Fraser’s work in the state Senate. He’s long been involved in state wind-energy policy, and he chairs the Senate Committee on Natural Resources.

Asked about the trip, Fraser told the Observer he traveled through Costa Rica on his way to Panama. He said the new Panamanian president, Ricardo Martinelli, invited the senator to discuss how the country could boost its renewable energy output and emulate Texas, which is the world’s third-largest producer of wind energy, and Costa Rica, which generates more than 90 percent of its power from renewable sources. But the trip also included some nice perks. On April 21, 2010, the Frasers treated themselves to two nights at The Springs Resort and Spa, a stunning hotel ringed in waterfalls with panoramic views of surrounding volcanoes. Even the cheapest rooms run $400 a night during peak season. Fraser paid the $562 bill out of his campaign funds.

Fraser defends the expenditure. He says that the hotel was near two wind farms he planned to study and that those were the only two nights during his weeklong stay in Costa Rica that he charged to his campaign account. And, he says, it wasn’t that pricey. “Their normal rate was expensive. But I got a good deal.” True enough, Fraser’s bill averaged out to $280 a night, which is much less than the hotel’s listed rates.

Still, for two nights, the senator and his wife enjoyed a stay at one of the most desirable hotels in Costa Rica, courtesy of the Texas business lobby.

Ironically, it might be Fraser’s smaller expenses that land him in trouble. The Texas Ethics Commission’s rules on using campaign accounts are broad, but they do forbid politicians from using the money for a few specific expenses, including dry cleaning. Last January, the Ethics Commission fined state Rep. Phil King $1,300 in part for spending his campaign funds on dry cleaning bills.

Twice during the 2009 session, Fraser sent his dirty laundry to Cathy’s Cleaners—the transgression King made. “I had to get suits cleaned for use during session,” Fraser says. “I don’t wear suits any other time. You know that I’m retired. I don’t have a job that I wear a suit to. In my district, because it’s a rural district, I don’t wear a suit.”

Fraser wasn’t the only one. State Rep. Fred Brown preferred Tip Top Cleaners, where he took his clothes in August 2009. In 2007, Sen. Mike Jackson sent his suits out to American Cleaners 8. And back in 2005, Rick Hardcastle was a frequent customer at Jack Brown Cleaners, taking his clothes in 10 times during the legislative session. All four lawmakers appear to be in violation of the Ethics Commission’s 1992 decision that “legislators may not use political contributions to pay laundry and dry cleaning expenses incurred in Austin.”

When told the Ethics Commission had specifically prohibited using campaign money to pay for dry cleaning, Fraser said, “You’re telling me something I don’t know. Obviously, this isn’t a huge [amount of money] to me. I was not aware there was any concern about it. Never heard that one before.”

“Good muckraking,” he added.

The rules governing travel aren’t as clearly spelled out. For instance, conferences, no matter how far-flung or far-fetched, are generally safe, as are trips related to either public policy or a political race. But sometimes the trips aren’t quite so easily connected to state or election business. Houston Democratic Sen. John Whitmire spent $504 in June to stay at a California inn and attend a “district legislative wedding”—celebrating the nuptials of Rep. Ana Hernandez, a Democrat who lives in his district. Three times between 2008 and 2010, Sen. Shapiro flew to Washington, D.C., for Holocaust Museum board meetings. She used her campaign account to pay for a total of $2,100. The museum is funded through federal and private dollars and sits 1,300 miles from Shapiro’s district.

Shapiro’s office justified the expenditure, saying in a statement that, “As an elected official, Senator Florence Shapiro has been a national leader in the Jewish community. Because of her leadership, she was appointed by President George W. Bush to be on the board of the U.S. Holocaust Memorial Museum and these trips were to attend board meetings in her official capacity.”

Aerial view of El Congquistador Resort & Golden Spa in Puerto Rico, where Sen. Florence Shapiro stayed with campaign money.

(photo courtesy of El Conquistador Resort)

While the Ethics Commission rarely fines officials for their trips, in 2009, it levied the largest fine on record to Harris County Commissioner Jerry Eversole for using his campaign funds for personal costs. As the Houston Chronicle reported at the time, “Among the more egregious examples, according to the Ethics Commission, was a $10,000 trip to Florida he took with his wife and two friends, paid for out of his officeholder account.”

The more legally ambiguous expenditures are often the smallest. For instance, San Antonio Sen. Leticia Van de Putte, a Democrat, bought $268 in wedding gifts at Bed Bath & Beyond. Not to be outdone, Whitmire dropped $349 at the same store for a “constituent gift.” Back in 2006, Sen. Dan Patrick, a Houston Republican, used his account to spend $134 on clothes at Men’s Wearhouse—”for photo shoot,” his filing explains. And with almost no explanation, Sen. Judith Zaffirini, a Laredo Democrat, has spent almost $2,000 at Amazon.com, noting only that the money was for “books.”

Normally, legal trouble only comes to elected officials if a Texas resident actually files a complaint. From there, the Ethics Commission investigates, and penalties come in the form of fines. The fines often occur when expenditure reports are sloppily filed or contain technical errors. When Rep. Rene Oliveira, D-Brownsville, got in trouble for a variety of errors, ranging from alleged personal use violations like dry cleaning and grocery shopping to reporting errors, the Ethics Commission slapped him with a $3,000 fine for the technical problems but found insufficient evidence to punish him for personal use.

While small expenditures might get lawmakers fined, it’s the larger outlays—such as flying around the country on private jets belonging to major campaign donors—that can be more ethically troubling.

On Oct. 5, 2009, Gov. Perry and three aides boarded a private jet in Austin and flew to Biloxi, Mississippi. The jet belonged to Toby Neugebauer, an oil and gas investor. (As required by law, Perry’s campaign would report the $6,250 plane flight from Neugebauer as an “in-kind” campaign contribution.) Neugebauer and his wife have long supported Perry, donating more than $110,000 to him, according to Texans for Public Justice. Neugebauer may have been supporting Perry because he liked his ideological bent. But he also has a financial interest in backing the governor.

Neugebauer is a managing partner at Quantum Energy Partners, a Houston private equity firm that has invested millions in energy production in Texas. The firm invested heavily in the controversial natural gas drilling in North Texas’ Barnett Shale formation. The Texas Commission on Environmental Quality—the state’s regulatory agency, whose leaders Perry appoints—regulates drilling in the Barnett shale.

When they boarded Neugebauer’s jet last October, Perry and his aides were traveling to Biloxi for a meeting of the Interstate Oil and Gas Compact Commission, a governmental body made up of officials from energy-producing states. The commission advises states on energy production and regulatory policies. Perry addressed the commission as its incoming chairman for 2010—the first Texas governor to lead the commission since Mark White in 1985. In his speech, Perry emphasized the need for oil and natural gas production. “I believe that anyone discussing energy in our nation and world must begin by acknowledging the essential role that oil and gas have played throughout our history and the reality that they must continue as fundamental elements of our energy portfolio,” Perry said, according to Oil and Gas Journal, an industry publication.

The flight to Biloxi was one of at least 31 flights that Perry, members of his family or his employees have taken on the private jets of major donors in the past five years. On one occasion, in September 2007, James Leininger, the San Antonio school-voucher advocate, flew Perry’s son, Griffin, to Florida so he could attend events with the governor. On at least three other trips, major donors flew Perry staffers—public employees—to events that involved substantive policy discussions or state business.

In November 2006, Perry’s then-speechwriter Eric Bearse flew from Austin to Miami and then to Mexico City to attend the inauguration of Felipe Calderon on private jets paid for by Charles Tate, an investor who’s given the governor nearly $400,000, and by mega-developer Bob Perry, the governor’s most prolific individual donor. In December 2008, the Houston billionaire businessman Thomas Friedkin flew Perry’s deputy chief of staff, Kris Heckmann, to Philadelphia on his private plane to meet with President-elect Obama.

Then there’s the July 2008 flights on which Perry and five staffers flew to Washington and back to meet with Environmental Protection Agency officials. They got there on a private plane paid for by chicken magnate Lonnie “Bo” Pilgrim. The flights cost roughly $18,000 round-trip. Pilgrim flew Perry and staff to D.C. because he wanted the governor to lobby the EPA to lower federal quotas on ethanol production. (The details of this trip were first reported by the Houston Chronicle.) Pilgrim and others contended that too much ethanol production was raising corn prices and damaging his poultry business.

Perry brought along his policy team: his senior advisor Mike Morrissey, general counsel David Cabrales and energy policy aide Toby Baker. They met with high-level EPA administrators, but their arguments apparently weren’t compelling. The Bush administration rejected Perry’s request, and Pilgrim’s poultry business filed for bankruptcy later that year.

Asked why Perry’s office relies so heavily on private planes, Katherine Cesinger, the office’s deputy press secretary, e-mailed back, “The governor normally pays for air travel with non-state funds in an effort to minimize the cost to Texas taxpayers.” The governor’s office didn’t respond to a follow-up question about whether the governor and his staff risk conflicts of interest by using private travel sponsored by major donors who have a financial stake in their policy discussions.

Of course, a variety of legitimate costs come with being a state lawmaker, like having a place to stay in Austin and traveling back and forth from home. For that, the state’s $168 per diem is designed to pay for the higher costs of living that come with holding office. But for many lawmakers, those daily checks don’t cover their lifestyles. Take Sen. Craig Estes, who managed to find one of the most expensive condos in Austin. With the exception of two months, Estes paid at least $3,000 a month in rent between January 2007 and June 2010. The condo, in the upscale Westgate Tower across from the Capitol, has three bedrooms and three bathrooms, and it was recently listed at $749,000. Estes was well on his way to a down payment; in total, he spent around $130,000 on the luxury condo. Much of the time he was paying rent, the Legislature wasn’t in session. In all, Estes reported spending a whopping $106,000 out of his campaign account in just the first six months of 2010, even though he wasn’t on the ballot. He last stood for re-election in 2008, when he ran unopposed. In the two years since then, Estes has spent $347,000 from his campaign account.

“I agree that Austin is a very expensive city to live in, especially in close proximity to the Capitol,” Estes wrote in a statement. “It’s been very convenient to live across the street from the Capitol, but I am moving further away to save on campaign expenses.” Estes noted that his expenses were clearly covered under the Texas Election Code.

When lawmakers have to leave home (or their Austin home-away-from-home), many find new ways to live in luxury. When the American Bar Association met in Beverly Hills in 2008, Sen. Jeff Wentworth flew out and stayed at the extremely upscale Beverly Wilshire Hotel on Rodeo Drive—the same hotel featured in the film Pretty Woman. Following in the steps of Julia Roberts isn’t cheap. His campaign footed a $1,810 bill for the stay. That’s just one of many fancy hotel stays Wentworth has enjoyed. Since 2006, he’s charged his campaign for 20 such trips to policy conferences, going as far away as Fajardo, Puerto Rico, and totalling almost $24,000. These stays are likely legal under state ethics laws because they connect to Wentworth’s position as a senator representing his district.

Rep. Beverly Woolley certainly got to see the sights when she went on a trade mission from Texas to Qatar, paid for out of her campaign account. After using her $1,425 tickets on Qatar Airways, she checked into the Al Watani Sharq Village and Spa, dropping $500 at the resort. Then she headed to the city’s Hyatt Regency, where her campaign footed a $1,442 bill. The trip was ostensibly a “trade mission” in which Woolley accompanied then-Secretary of State Phil Wilson to help strengthen bonds between Texas and the Persian Gulf nation.

But when it comes to overseas travel, Sen. Rodney Ellis, D-Houston, might be the state senator most eager to spread his wings. Since 2006, he’s gone to China, Belize, Ghana, France and Belgium. The reasons vary—his trips to France and China were “trade missions,” and he went to Belgium and Belize to attend conferences. His trip to Ghana is more mysterious. “Observor—Assembly of African Union,” he listed as the purpose for his trip, “and participate in the opening Diaspora Center in Accra.”

Ellis justified the trip in a statement. “Over the years, developing international relationships has become increasingly integral to improving my ability to effectively serve my district and the state of Texas,” he wrote. “One out of every three jobs in Houston is directly related to foreign trade. My district, and the city of Houston, is an epicenter for international trade, economic relations, and includes numerous nationalities.” Of his trip to Accra, he said, “I did my best to represent my district and the state of Texas by meeting with most of the African heads of state who attended.”

One lobbyist interviewed for this story—who didn’t want to be quoted by name discussing lawmakers’ spending habits—contended that legislators often were justified in paying for policy conferences and other official business out of campaign accounts. If they use campaign funds, lawmakers must disclose the spending. If an outside interest pays their way, the public may never know about it. The only other options would be to charge the state or pay for it themselves.

“A member paying for this personally—when they’re doing this on state-related business—I don’t think that’s proper,” Fraser said. “I don’t want the state paying for it. In most circumstances, with a foreign country, I don’t want them paying for it. So the one that is left is the office-holder account. That is the accepted way of doing this. Members have done this for a long time. That is probably the most desirable way.”

Travel expenses are only a fraction of the payouts. There are also cell phones. Undoubtedly, many lawmakers use their phones for state and campaign business, a legally acceptable place to spend their campaign dollars. But some use their phones a lot. Between 2006 and 2010, Attorney Gen. Greg Abbott reported $33,000 in cell phone bills—averaging almost $600 a month. Sen. Eddie Lucio Jr., D-Brownsville, wasn’t far behind with his $24,000 in bills, and Lucio didn’t settle for just any phone. When the iPhone 4 came out in June, he promptly dropped $430 on an upgrade for Apple’s latest device.

Lucio’s not the only lawmaker with a preference for Apple products. This past summer Wentworth, along with his colleagues Dan Patrick and Rep. Wayne Christian, R-Center, all became owners of the trendy new iPad. Wentworth and Patrick limited themselves to the machines, spending $1,000 and $772 respectively. Christian, however, kept an eye out for all the bells and whistles. Among other accessories for what he filed as his “campaign iPad”: a $43 combo-charger, a $75 keyboard dock, $72 for a car charger, adapter and microphone, and $36 worth of screen savers.

Some lawmakers take a more narrow view of their expense accounts. When former Lt. Gov. Bill Ratliff served in the state Senate, he didn’t find himself on lavish vacations. “Honestly I didn’t do any of this traveling,” he says. “I went to one education conference in New Orleans.” He says he rarely dipped into his campaign account, outside of keeping an apartment in Austin.

Not that he didn’t have unexpected costs. Ratliff remembers specifically his small dog. “We had to kennel that dog when we came to session,” he said, explaining that he just paid the expenses out of pocket. “It cost me money in order to serve.” Still, he never considered using campaign dollars to cover the cost, instead just relying on his personal money and state salary: “I just felt like that was part of what [my salary] was for.”

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