Follow the Money - Part 5 (The Incentive Program)

So far we’ve looked at the one way flow of funds. We’ve seen that when businesses seeking contracts or concessions, and individuals seeking concessions give money to city council members’ election committees, the vote seems to go in the direction of the money. This happens whether the money is given before or after the vote, and neither the council member nor the business nor the individual ever mention this financial relationship.

Could all of this simply be the results of chance? You tell me.

But now we have one of those rare cases where instead of the deck being stacked in one direction, the money flows in two directions. The case concerns a proposed 2010 “purchase incentive program” that would have rebated consumers 0.5 percent on purchases over $20,000. The program had been successful in Anaheim and was clearly designed to increase business for car dealers, who were struggling in Lake Forest at the time, and some of them have closed down since.

On April 20, 2010, then Mayor Herzog voted against the proposed program. Herzog was quoted in the OC Register  as claiming that - “I don't think $100 will make a difference to someone buying a $20,000 or more car."

What Herzog didn’t say is that he accepted campaign contributions from auto dealers in other cities, and the purchase incentive program in Lake Forest might be viewed as competition to them. Here are some examples of Herzog’s campaign contributions from auto dealers outside Lake Forest –

• 10/11/2006 - $250 from Crevier BMW in Santa Ana

• 10/19/2006 – Orange County Auto Dealers Association in Costa Mesa

Council member Dixon, on the other hand, was the main supporter of the proposal and was quoted as saying - "I'm deeply disappointed. I would have thought a sales tax rebate incentive would have been a no-brainer to help business and people in the city." What Dixon didn’t say was that he accepted money from a business that could be impacted favorably by this ordinance. He received $1000 from Urban Chrysler Jeep Dodge in Foothill Ranch on 1/25/2007.

So…

Dixon gets money from a local auto dealer and he’s in favor of a rebate program that helps local auto dealers. Herzog gets money from auto dealers in other cities, who are competitors to our local auto dealers, and he votes against helping local auto dealers.

Here we have a perfect example of how the money flows help predict how the council member will vote. You would think that then Mayor Herzog would vote for anything that would help local business. Indeed, his sidekick Richard Dixon who almost always voted the same way as Herzog, called it a “no brainer”. Yet Herzog, with money in his election committee from foreign auto dealers, votes in the direction of his contributors.

In Summary

We’ve looked at businesses seeking contracts with the city, businesses seeking concessions from the city, and individuals seeking concessions from the city and the case is always the same. If you know how the money flowed, you know how the council member voted. This trend, which might be dismissed as purely chance by the skeptical, is highlighted when opposing money flows meet and the votes by the council members go with the flow.

My study tracked nearly $100,000, but the true figure is much greater. The behavior of individuals, businesses, and council members makes it difficult to trace the sources of all the funds that city council members’ election committees are getting. On the other end, the $13,000,000 to the businesses is only the tip of the iceberg in terms of how vested interests are enriched by city council decisions.

IMHO we need a change in morality. We need our council to change their code of ethics to incorporate the following:

1. I will not accept any money or gift of value from any person or business that has a contract with the city.

2. I will not accept any money or gift of value from any person or business that comes before the city seeking a concession that will improve the financial situation of that person or business.

3. If I have accepted money or a gift of value from a person or business in the past, and that person or business comes before the Council for a contract or a concession, I will either (a) return the money/gift or (b) abstain from voting.

4. These guidelines apply to the businesses as well as any employees or stockholders in the businesses, and any associated companies, and these guidelines apply to myself as well as persons in my direct family.

That won’t cover 100% of the tom foolery that politicians are capable of, but it will go a long way toward fixing the problem and insuring that decisions made by city council members are not influenced, even remotely, by money.