Record $18M spent lobbying legislature

FRANKFORT, Ky. – Combatants in a beer industry turf war enlisted squads of extra lobbyists in late 2014, helping to drive the amount of money spent on lobbying the General Assembly for the year to a record of about $18.4 million.

Saying it is under siege from interests who want to unfairly strip it of its distributorships, Anheuser-Busch last fall increased from two to 10 the number of Frankfort lobbyists on its payroll. And it paid the 10 lobbyists $113,333 during the final four months of the year.

At the same time, distributors and others who say allowing brewers to be distributors creates monopolies that harm consumers formed a lobbying group called Kentuckians for Entrepreneurship and Growth — or KEG — and retained 14 lobbyists. KEG reported $16,058 in expenses for the final four months of 2014.

Anheuser-Busch and KEG are only two of about 650 groups that are registered with the Legislative Ethics Commission and combined to set the spending record.

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State law requires any company or group that pays money to an employee or outside lobbyist to directly engage with legislators on bills to register and report its lobbying expenses to the ethics commission.

Reports filed by those groups covering the final four months of last year were filed within the past week. And, combined with totals from reports filed earlier in the year, show that $18.4 million was reported in lobbying spending for the year, eclipsing the $17.8 million in 2012.

Records of the ethics commission show that more than 90 percent of those expenses are in salary or fees paid to lobbyists, and the rest in other expenses.

"It's way too much, and it's growing," said Richard Beliles, chairman of the watchdog group Common Cause of Kentucky. "It's disturbing because the big lobbying spenders are powerful groups and most of them have political action committees that give to legislative candidates. This gives them access to legislators, and it makes it awfully hard for the little guy to be heard."

Tobacco giant Altria Group — parent of Philip Morris USA and U.S. Smokeless Tobacco — reported spending more than any other group on lobbying last year — $323,097, although it had a relatively limited agenda and says none of its lobbying costs were aimed at opposing the "smoke free" bill.

Most other big-spending groups were large associations that lobby on scores of bills for their members. The Kentucky Chamber of Commerce ranked second at $291,158, and the Kentucky Hospital Association was third at $183,919.

AT&T, which unsuccessfully lobbied to end its obligation to provide basic service to all customers, was fourth — reporting $169,005 in lobbying costs.

The Kentucky Medical Association ranked fifth at $164,362. And because of its big lobbying expenses late in the final months of the year — Anheuser-Busch rose to sixth on the list at $160,063.

The world's largest brewer is defending itself against House Bill 168 in the current legislative session. The bill, supported by KEG and sponsored by House Speaker Greg Stumbo, D-Prestonsburg, would prevent brewers from also holding distributorships — a move KEG says will restore a post-Prohibition system in the alcoholic beverage industry that keeps producers, distributors and retailers separate as a check against any one player having too much power.

In a statement, KEG said it organized to launch a lobbying effort "to preserve the local jobs at risk with mega monopolistic brewers acquiring distributorships in Kentucky."

The 14 lobbyists registered to work for KEG are with the lobbying firms headed by former Republican Party Chairman John McCarthy and former Kentucky Democratic Party Chairman Terry McBrayer.

Damon Williams, vice president of sales and marketing for Anheuser-Busch of Louisville, said it had to beef up its lobbying effort to derail HB 168, which Williams calls, "an attempt to put us out of business after a 40-year track record of being an excellent corporate citizen in Kentucky."

The brewer previously had been represented by the firm of Frankfort lobbyist John Cooper, but among those it retained last fall are top veteran lobbyists Ronny Pryor, Mike Helton and Judy Taylor.

Last spring, The Courier-Journal reported Altria as the top spending lobbying group through the legislative session, in which it successfully lobbied against any increase in tobacco taxes sought by Gov. Steve Beshear.

Altria spokesman David Sutton said he suspected Altria topped the list because in addition to the amount it paid lobbyists, it reported other related costs. These, he said, included "costs associated with making our trade partners, adult tobacco consumers and the tobacco growers we contract with aware of the tax proposals and encouraging them to make their views known to Kentucky legislators."

Still, the tobacco giant's lobbying costs are mostly comprised of $220,000 in fees it paid last year to three top Frankfort-based lobbyists: $125,000 to James "Jitter" Allen, $65,000 to Mike Shea, and $30,000 to John McCarthy.

Besides opposing efforts to raise the cigarette tax and impose a new tax on electronic cigarettes, Altria successfully lobbied last year for the industry-backed version of a bill to ban the sale of electronic cigarettes to minors.

"We did not lobby on the public place smoking ban bill," Sutton said.

Other big lobby spenders say their costs are driven by the need to argue the interests of large memberships to the General Assembly.

"We're the largest broad-based business association in the state with about 3,500 members," said Brian Sunderland, senior vice president of public affairs for the Kentucky Chamber of Commerce. "… We have a very broad legislative agenda, we typically track over 300 bills in a long session, about 250 in a short session."

Michael Rust, president of the Kentucky Hospital Association, said, "The General Assembly is always considering lots of laws and regulations affecting the 130 Kentucky hospitals we represent. We had a lot of focus in last year's budget session on hospital reimbursement and the budgeting of Medicaid funds."

Reporter Tom Loftus can be reached at (502) 875-5136. Follow him on Twitter at @TomLoftus_CJ.

TOP LOBBYISTS

Here are the 20 groups that reported spending the most on lobbying the Kentucky General Assembly in 2014:

1. Altria (Philip Morris USA), Richmond, Va., tobacco, $323,097

2. Kentucky Chamber of Commerce, Frankfort, business issues, $291,158

3. Kentucky Hospital Association, Louisville, hospitals, $183,919

4. AT&T, Louisville, telecommunication deregulation, $169,005

5. Kentucky Medical Association, Louisville, doctors, $164,362

6. Anheuser-Busch Companies, Smyrna, Ga., brewery, $160,063

7. Kentucky Justice Association, Louisville, trial lawyers, $155,550

8. Kentucky Farm Bureau Federation, Louisville, agriculture, insurance, $133,174

9 (tie). Buffalo Trace Distillery, Louisville, distillery, $120,000

9 (tie). Hewlett-Packard Co., Palo Alto, Calif., technology, $120,000

9 (tie). Molina Healthcare Inc., Sacramento, Calif., health care $120,000

12. Churchill Downs, Louisville, horse racing, gambling, $118,478

13. Kentucky League of Cities, Lexington, cities, $117,742

14. Anthem Inc., Louisville, health insurance, $111,250

15. Home Builders Association of Kentucky, Frankfort, home builders, $109,854

16. Norton Healthcare Inc., Louisville, hospital, $107,712

17. UPS, Louisville, package delivery, $107,341

18. EQT Corp., Pittsburgh, Pa., oil and gas exploration, $106,006

19. Century Aluminum of Kentucky, Hawesville, aluminum plant, $104,019

20. Kentucky Beer Wholesalers, Midway, beer wholesalers, $99,658