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Builders groups facing state scrutiny

Tue., Sept. 16, 2008

Political spending broke rules, regulators say

OLYMPIA – Seven weeks before Election Day, a political player with some of the deepest pockets in Washington is in trouble.

State regulators Monday decided that a subsidiary of the Building Industry Association of Washington and another builders’ group “committed multiple apparent violations” of the state’s election finance law. They’re asking the attorney general to investigate.

In nearby Thurston County Superior Court, meanwhile, a lawsuit charges that the BIAW and its affiliates are wrongly spending millions of dollars on politics. Critics are seeking an injunction that the builders say would cripple the politically active trade group in the final weeks of a tight governor’s race.

On Monday, attorneys for the builders told the state Public Disclosure Commission that any violations were an accounting misunderstanding, not an effort to hide anything. As big spenders on behalf of Republican gubernatorial candidate Dino Rossi and other conservative candidates, they say they’re being unfairly targeted.

“It’s harassment,” said BIAW attorney Tim Harris. “It’s an attempt to shut down political speech.”

Critics scoffed.

“We don’t see this as a simple oversight but as a calculated disrespect for the law,” said Cheryl Murfin, with the liberal political advocacy group Fuse.

At issue is about $585,000 that the builders set aside in July 2007 to spend on this year’s governor’s race. The money and its source weren’t reported until Aug. 20, 2008, when it was dumped into a BIAW-backed political committee opposing Gov. Chris Gregoire.

“It doesn’t take a chorus of pin-dancing angels to tell me this is not the spirit or the letter of the law,” said Ken Schellberg, chairman of the state Public Disclosure Commission. “I think it is an egregious lapse of judgment.”

The Spokane Home Builders Association was the largest donor among the 11 local builders’ groups that contributed. It gave $126,095.

Four members of the PDC, a campaign-finance watchdog group, voted unanimously Monday afternoon to send the case to Attorney General Rob McKenna.

“I personally don’t think they’re trying to hide anything,” said Commissioner Jim Clements, a Republican former state senator. But he said the builders should “follow a process that’s more transparent.”

The PDC also voted Monday to send another case to McKenna. The group decided that a “Just 10%” political fundraising effort by the Master Builders Association of King and Snohomish Counties over the past 2 ½ years was overtly political enough that the $708,000 effort should have been declared a political committee. Of that, about $411,000 was spent on political contributions, polls and campaign-related research.

That means individual companies that donated money should have been reported. They weren’t.

Scott Hildebrand, a lawyer for the Master Builders Association, said the group doesn’t necessarily agree that the “Just 10%” campaign needed to declare itself a political committee. But if the PDC thinks so, he said, “we’re happy to do that.”

“We’ve not let this go unreported through any untoward motives on our part,” he told the commission. “Frankly, it’s been ignorance, if anything.”

An attorney for the group that triggered both investigations was skeptical, saying the builders have years of experience as major players in politics.

“The BIAW and the MBA were caught red-handed secretly fundraising over $1.2 million, largely for the governor’s race,” said Knoll Lowney, who filed complaints on behalf of former state Supreme Court Justices Faith Ireland and Robert Utter, among others.

In the Thurston County Superior Court case, Lowney is challenging a workplace-safety rebate program that is the foundation of the BIAW’s cash flow.

He’s seeking an injunction to bar the group and its affiliates from spending millions of its dollars on politics. Such spending, Lowney and three BIAW member companies say, violates a BIAW trust fund intended to market and promote a workers’ compensation rebate program for safe worksites.

“Plaintiffs believe that without this Court’s intervention, millions of dollars of trust funds will be spent on electioneering between now and the general election, at an increasing pace,” Lowney wrote to the court.

In the group’s response, filed Monday, the BIAW says the suit is akin to political censorship.

“This case is the latest attack by political opponents on a major source of BIAW’s revenue, in an attempt to silence its members in the weeks before an important election,” the brief says, criticizing its opponent’s “tortured arguments and fanciful theories.”

Much of BIAW’s money comes from the “retro program.” Like many employers, builders pay workers’ compensation premiums to the state. By banding together, the companies can reduce their risk of costly on-the-job injuries. If payments exceed the annual claims by workers, the money is refunded to BIAW. It keeps 10 percent, the local builders association keeps another 10 percent and the rest is sent back to the members.

The Washington Farm Bureau runs a nearly identical program that keeps 20 percent of the rebated dollars.


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