RALEIGH – Rep. Mary McAllister has lots of critics regarding her compensation as head of a state-funded nonprofit in Fayetteville that primarily provides counseling to those suffering from sickle-cell anemia.
Some criticize her $115,000 annual salary in 2005-06 as excessive because it is only a few thousand dollars less than state taxpayers paid Gov. Mike Easley that year. Others criticize McAllister’s pay because it represents 22 percent of the total budget of Operation Sickle Cell, and 33 percent of the amount the organization spent on its health programs. In other North Carolina communities, similar counseling organizations spent much lower percentages on compensation to their directors, and in one case the position was held by a volunteer.
But I think what is most egregious about McAllister’s arrangement is that she receives compensation both as an elected member of the legislative branch and as a contractor for the executive branch. The Fayetteville Observer reported that Operation Sickle Cell listed $523,190 in 2005-06 revenue. Nearly 90 percent of that came from government grants. The remaining revenue derived from government health-plan payments, rental income, and investment income. There appear to be no funds contributed to the project voluntarily by private donors.
When asked about the propriety of her compensation package, however, McAllister claimed that most of her salary came from “private sources.” Either she has a different definition of the term “private” or was so worried about the appearance of a state lawmaker receiving such a large sum from a state-funded nonprofit that she decided to be less than candid. Either explanation is, to put it charitably, less than flattering to the long-term lawmaker.
McAllister is hardly alone in having deriving income, sometimes substantial, from state-funded entities while also serving as a member of the General Assembly. Most famously, former Sen. Frank Ballance and his family members pocketed a significant amount of the state funds appropriated to the John Hyman Foundation, which was supposed to be delivering substance-abuse services but ended up mostly funding substantial abuses of power. Their behavior turned out to be criminal, and has been published via convictions and prison time. The problem doesn’t have to rise to the level of criminality to be worth doing something about, however. It seems to me the potential for conflicts of interests are so great that state lawmakers should be precluded from being employed by or serving on the board of state-funded nonprofits.
But where does it stop? Some lawmakers have also owned or worked for for-profit companies doing business with state government. Others have been full-fledged state employees, working as schoolteachers, college professors, or in various agencies and departments. If it is a conflict of interest to vote on state budgets that may eventually enrich you via grants to nonprofits, isn’t it also a conflict of interest to vote on state budgets that may enrich you in other ways?
Yes and no, I think. That is, if it makes sense to exclude lawmakers from financial or managerial involvement with state-funded nonprofits, it also makes sense to exclude them from involvement with the state’s for-profit business partners. I realize that could include such situations as large law firms that employ both legislators and counsel representing the state, or lower-level employees of big companies serving as legislators but not receiving McAllister-level pay. I still think such a provision would confer net public benefits, even though a few deserving individuals might not then become candidates for the legislature.
On the other hand, I don’t think it would make sense to extend the rule to prohibit state employees from serving as lawmakers. As long as they aren’t allowed to use their legislative power to meddle with their own specific agencies, these lawmakers don’t really have a financial interest that is distinguishable from the tens of thousands of other state employees who want a general pay raise or an improved health plan. The potential for true corruption – violating the trust of the many to confer advantage on the few – would seem to be minimal.
I’m not saying that a lawmaker who is also a schoolteacher doesn’t bring a kind of personal bias to discussions about education policy or teacher pay. But it’s not much different that a lawmaker who is also business owner bringing a particular perspective to discussions of the capital-gains tax – or, for that matter, a legislator who is also a private-school educator or parent bringing a particular perspective to discussions about education policy and teacher pay.
Hood is president of the John Locke Foundation.