The Decline of ALEC

Last month, Eric Schmidt, the chairman of Google, blasted the American Legislative Exchange Council in an interview on National Public Radio, accusing ALEC of “literally lying” about climate change.

“The facts of climate change are not in question anymore,” Schmidt declared. “And the people who oppose it are really hurting our children and our grandchildren and making the world a much worse place. And so we should not be aligned with such people.”

Google withdrew its membership, and was soon followed by Yelp and Facebook. One month before this, Microsoft had dropped its membership. At least 80 corporations have publicly dropped their ALEC membership since the liberal Center for Media & Democracy (CMD) launched its ALEC Exposed website in 2011, Business Week reported.

To some degree, the dispute pits newer industries against older ones. ALEC’s board is heavy with fossil fuel representatives, including those from Exxon Mobil; Koch Companies Public Sector, LLC, a subsidiary of Koch’s oil and chemical conglomerate; Energy Future Holdings, an electric utility company; and Peabody Energy, the world’s largest coal corporation.

But there are also many old-line companies that have dropped out of ALEC, including Coca-Cola, General Electric, Kraft, McDonald’s, Walmart and Bank of America.

ALEC has a strong connection to Wisconsin, where a study found that 41 lawmakers, almost one-third of the legislature, are members of ALEC, and 61 legislators had a record of voting 100 percent of the time in favor of ALEC-supported legislation.  A proposed bail bond bill, which would have been a boon to the bail bond industry, is one one example of such legislation.

Gov. Scott Walker, former Gov. Tommy Thompson and former U.S. Senator Bob Kasten are all Republicans who were members of ALEC as legislators and Walker aggressively introduced ALEC-sponsored bills as an assemblyman (but the governor did veto the bail bond bill, which was opposed by judges, prosecutors, defense attorneys, sheriffs and clerks of court across the state). The national treasurer for ALEC is state Sen. Leah Vukmir (R-Wauwatosa). The conservative Bradley Foundation is a key funder of ALEC and its chief antagonist, the CMD, which has released many revealing studies on ALEC, is based in Madison.

Another state connection is one of the group’s co-founders, Paul Weyrich, the Racine, WI native who got his start as a Milwaukee Sentinel reporter and went on to become one of the key architects of the conservative movement in America. ALEC was begun in 1973 as the Conservative Caucus of State Legislators, in order to counter the rise of the federal Environmental Protection Agency and other forces seen as too liberal. Its members, however, felt the word “conservative” was unpopular with the public at the time, so the organization was renamed the American Legislative Exchange Council.

“According to Common Cause, one-quarter of all state legislators in the U.S. were members of ALEC in 2012” the Legislative Gazette reported, and “more than 95 percent were Republican.” A story in The Guardian estimated the group had 2,200 legislative members as of 2011.

Only 2 percent of ALEC’s funding comes from their legislative members, who pay small membership fees, the story noted. Most of its funding comes from the much higher fees charged to corporate members. Some companies would also give grants to ALEC, such as a $1.4 million grant from Exxon Mobil. According to Greenpeace, ALEC received $525,858 from Koch foundations from 2005 to 2011. In 2010 National Public Radio reported that tax records showed corporations had collectively paid as much as $6 million a year to ALEC.

At ALEC conferences, legislators would attend conferences promoting ALEC’s agenda, and meet representatives and lobbyists from corporate members. ALEC would also create model bills, which legislators in some states have introduced verbatim. The CMD gained access to ALEC’s records and published a July 2011 study documenting over 800 model bills. These included bills to privatize public education, cut taxes, reduce public employee compensation and workplace rights, oppose Obamacare and resist state action to reduce global warming gas emissions.

“Experts and watchdog groups say ALEC has supplied some of the dominant legislative proposals in Arizona, Wisconsin, Colorado, Michigan, New Hampshire and Maine,” the New Jersey Star Ledger reported.

Until the CMD study, the group had generally managed to operate under the radar. Since then, ALEC has gotten wide scrutiny from the mainstream media, particularly after the group got criticism (beginning in March 2012) for its national drive to promote the “Stand Your Ground” gun law that became the subject of national controversy after the killing of 17-year-old Trayvon Martin in Florida.

In response, both legislative and corporate members of the group began to drop out. Common Cause has estimated that 400 legislative members, or one-quarter of ALEC’s membership, has left since then. As of this September, the CMD’s count showed that 93 corporations and 19 non-profits have publicly cut ties with ALEC, with just three of them subsequently returning to the group.

The decline in membership has had a big financial impact on ALEC. Over the first six months of 2013, it suffered a shortfall on its projected budget of $547,500 in sponsorship of its thrice-yearly national conferences, and a further shortfall of $440,792 on its general support from memberships and an overall shortfall of $1.4 million on expected dues of $3.9 million, the Guardian reported.

In response, the group has launched its “Prodigal Son Project,” identifying more than 40 lapsed corporate members it wants to attract back into the fold.

Perhaps in response to the loss of funding, the huge, Milwaukee-based Bradley Foundation has upped its annual funding of ALEC from $70,000 in 2012 to $100,000 in 2013. All told, the foundation has funneled to $390,000 to the group since 2009.

Curiously, Bradley gave not one dollar to the group in the four prior years for which it lists annual reports, from 2005 through 2008. What turned it into such a fan? One possibility is the influence of Walker, who was widely seen as the Republican favorite for governor by 2008, and whose 2010 campaign would be headed up by Bradley president Michael Grebe.

Since his early days as a state legislator, Walker had been a fan of ALEC. He introduced several bills between 1997 and 1999 to allow private prisons in Wisconsin, including one to privatize state prison operations and another that would allow private companies to open prisons here to house inmates from other states. Walker noted in 1998 that longtime ALEC member Corrections Corporation of America wanted to expand into Wisconsin.

Meanwhile, ALEC faces another challenge to its financing. The group has always functioned as a 501(c)(3) under the tax laws, a designation for nonprofit organizations that exempts them from taxes but bars them from spending a “substantial part” of their monies on lobbying.

But Common Cause charges that ALEC’s mission is to lobby for state legislative changes. “In fact, they are lobbyists…taxpayers are subsidizing their lobbying,” Dale Eisman of Common Cause told the Legislative Gazette.

Common Cause submitted a complaint to the IRS Tax Whistleblower Office in 2012, “alleging that ALEC was a lobbying organization and should lose its status as a non-profit charity,” the publication reported. If the IRS (which had had its own problems of late) agrees with Common Cause’s argument, ALEC would be subject to massive back taxes and corporate members would have to pay their own back taxes, since any money given to ALEC was considered tax exempt.

In Wisconsin, Common Cause and the CMD filed suits against five Republican lawmakers, all of whom had refused to release any emails of communications they had regarding ALEC.  Ultimately, “as part of a settlement agreement, the five legislators admitted that ALEC-related records were held on their personal email accounts and are covered by the Open Records Law,” CMD Staff Counsel Brendan Fischer noted in a press release.  “They are finally complying with the law and agreeing to release those records to the public.”

The five legislators — Representatives Jeremy Thiesfeldt (R-Fond du Lac), Tyler August (R-Lake Geneva), Dan Knodl (R-Germantown), Tom Larson (R-Colfax), and Pat Strachota (R-West Bend) — “also acknowledged they have a duty as elected officials to fully comply with records requests from the public,” and agreed to pay $2,520 in court costs and attorney’s fees involved in bringing the lawsuit, Fischer noted.

The CMD also initiated a similar lawsuit against Vukmir, who resisted releasing her ALEC-related emails and ultimately was required to release the records and pay $2,500 in damages.

ALEC may well survive all these challenges. But the once little-known group which operated for decades behind closed doors has suddenly become far more transparent, which is already changing how it operates. That may ultimately reduce its impact on state legislatures.