The National Association of State Treasurers is expected to approve a resolution this week that would call on many of its members to expand the amount of information they report to state agencies about the political contributions they receive.

"NAST believes ... information about contributions shoudl be included in reports" to state agencies, the group said in a two-page resolution that was approved by the association's board of directors in March. The resolution is scheduled for a vote at the group's annual meeting in New Orleans July 9 to 13.

The draft resolution says that not only should the name and address of contributors giving a total of $100 or more be reported, but also the occupation and employer of each contributor.

Currently, many states require those running for treasurer and other elected offices to report only the name and address of their contributors. Election reform groups say, however, that it is impossible to track gift-giving by corporations and their employees unless the full identity of the contributor is reported.

"The integrity of the governmental process, the competitiveness of campaigns, and public confidence in elective officials are diminishing," warns the resolution, which was drafted this winter by the association's Task Force on Integrity in the Municipal Marketplace, chaired by Missouri Treasurer Bob Holden. "Disclosure of contributions and expenditures is needed to maintain [that] integrity."

The resolution goes on to say: "High campaign costs are forcing officeholders to spend more time on fund-raising and less time on public business. The pressure to raise contributions is distracting officeholders from urgent governmental matters."

The task force convened amidst growing controversy over political gift-giving in the municipal arena that led to the enactment on April 25 of a tough new rule on industry contributions to state and local officials by the Municipal Securities Rulemaking Board.

Rule G-37 bars dealers from doing business with a jurisdiction within two years after a firm, its political action committee, or its municipal professionals contribute directly or indirectly to an official of the state or local government.

The treasurers' resolution urges state treasurers to take a leading role in supporting meaningful campaign reform efforts at all levels of government. It also urges treasurers to report the total amount of all contributions received during any one reporting period and the total amount of contributions received for the year to date. Also, the combined amount of contributions of less than $100 given by any one source should be reported, the draft resolution says.

Code of Ethics

This week the treasurers are also expected to approve a draft code of ethics, the first such document developed by the group.

"State treasurers shall fulfill the public trust and shall be guided by the highest expectations of integrity in their political activities, including fund-raising for campaign expenses," says the draft.

"This is the first time as treasurers they are thinking about a code of ethics for" themselves, said Milton Wells, director of the office of federal relations for the association. "Most of it is totally common sense."

While the resolutions are likely to be applauded by federal regulators, they fall short of steps pushed last fall by Securities and Exchange Commission Chairman Arthur Levitt Jr.

Levitt wrote to 11 trade groups in late October urging them to join 17 Wall Street firms and voluntarily agree to stop accepting political contributions from the underwriters who handle their offerings. The 17 firms agreed Oct. 18 to bar their municipal departments from contributing to state and local officials who are responsible for awarding lucrative negotiated deals.

The treasurers association was one of eight state and local groups that sent a letter to Levitt Dec. 20 unsuccessfully urging him to delay implementing the MSRB's Rule G-37 until a myriad of problems with the rule could be addressed.

Levitt continued the push for treasurers to join the contributions ban in a luncheon speech before the treasurers association in Washington on March 2.

"You are the fiscal watchdogs of our 50 states," Levitt said. "You have great authority. Use it. I ask you to set the process in motion to evaluate how debt is issued in your state, and how it can be less susceptible to patronage at every level."

A Hard Road

But implementing reforms at the state level is easier said than done, warned Washington State Treasurer Daniel K. Grimm in a telephone interview last week. Grimm has unsuccessfully pushed state legislation for the past three years that would bar contributions to treasurers or those running for the office of treasurer from individuals that do business managing pension funds and other state assets.

House and Senate panels held hearings on the issue, but action on the legislation was deferred, Grimm said.

The treasurers association also is expected to adopt a resolution calling for disclosure of agreements between participants in negotiated deals.

The move comes as the SEC's enforcement division is conducting a broadening investigation of possible influence peddling in the municipal market.

"Terms and/or existence of all joint accounts and/or any other feesplitting arrangements by and between financial professionals should be disclosed and approved by the state treasurer," the draft resolution says.

Financial professionals should include in any proposal submitted to the state treasurer the name of anyone or any firm -- including attorneys, lobbyists, and public relations professionals -- hired to promote the selection of particular firms, the resolution continues.

The draft says that joint proposals from firms should be permitted only if a state treasurer's solicitation requests or permits joint proposals.

Those that plan to enter into joint accounts or any fee-splitting arrangements should "fully disclose and have approved by a state treasurer any plan to share tasks, responsibilities, and fees earned, and disclose the financing professionals with whom this sharing is proposed," the draft says.

And within 45 days after a bond sale, all participating underwriters should file with treasurers individual post-sale reports that have a full accounting for all bonds sold and all commissions earned "and any other compensation paid or earned in connection with the sale," the draft says.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.