(SitNews) Ketchikan, Alaska - A 2014 study in the Public Administration Review looking at the impact of government corruption on states’ expenditures lists Alaska as among the 10 most corrupt states -- leading to the Alaska Democratic Party to allege members of the Alaska House Majority are corrupt.

The new study, “The Impact of Public Officials’ Corruption on the Size and Allocation of U.S. State Spending" by The American Society for Public Administration, identifies factors that have been correlated with higher levels of corruption. These include isolated state capitals, legal systems with resource constraints and even those with abundant natural resources.

Defining corruption as the “misuse of public office for private gain,” the authors of the study, John L. Mikesell of Indiana University Bloomington, and Cheol Liu of the City University of Hong Kong, note that public and private corruption can have a range of negative effects: lower-quality work, reduced economic productivity and higher levels of income inequality and poverty.

The authors argue that public officials’ corruption should cause state spending to be artificially el of evated. Corruption increased state spending over the period 1997–2008. During that time, the 10 most corrupt states could have reduced their total annual expenditure by an average of $1,308 per capita—5.2 percent of the mean per capita state expenditure - if corruption had been at the average level of the states. Moreover, at the expense of social sectors, corruption is likely to distort states’ public resource allocations in favor of higher-potential “bribe-generating” spending and items directly beneficial to public officials, such as capital, construction, highways, borrowing, and total salaries and wages. The authors use an objective, concrete, and consistent measurement of corruption, the number of convictions.

In their analysis, Mikesell and Liu examined more than 25,000 convictions of public officials for violating federal corruption laws. Factors weighed included states’ population, employment and income levels, as well as legal resources, degree of fiscal centralization, political structure and election cycle. Based on this method, the the most corrupt states according to the study are:

The researchers explored two possible theories: First, higher levels of corruption should cause states’ spending levels to be higher than they would be otherwise. Second, corruption would distort states’ spending priorities in ways that favor bribes from private firms and others.

This study led to Zack Fields, Communications Director of the Alaska Democratic Party, to issue a press release in which he states, "Following the VECO scandal, Alaska legislators have drawn harsh criticism as they voted to give tax breaks to their private sector employers, push megaprojects that would enrich their own families, and cheat local governments by devaluing the TransAlaska Pipeline."

Mike Wenstrup, Chair of the Alaska Democratic Party, also commented on the study saying, “Alaskans are very suspicious of Sean Parnell’s motives as he hands over our resource wealth to his former employers and Outside special interests.”

In a press release, the Alaska Democratic Party alleged conflicts of interest in the Alaska State Legislature to include:

• Two state Senators who are Conoco Phillips employees voted to give billions of dollars in oil tax breaks to their private sector employers by supporting the Oil Giveaway. One of those Senators won election following a gerrymandering orchestrated by Sean Parnell.
• Governor Parnell fired an Alaskan so he could appoint Outsiders to the State Assessment Review Board, with the goal of devaluing the TransAlaska Pipeline on behalf of companies that include his former employer. Devaluation of the pipeline would allow oil companies to fleece local governments by tens of millions of dollars.
• Speaker Mike Chenault spearheaded gas line legislation for a project that would terminate in his district, where he owns an oil and gas services company that could benefit from contracts associated with the project.
• Senator Cathy Giessel pushed a bill to raise DMV fees paid by Alaskans, even though the fee hike wasn’t necessary and the fees would enrich a Republican donor.
• Representative Lynn Gattis, is pushing for a Knik Arm Crossing project that would enrich her family. Gattis’ family is the largest land owner near the proposed right of way. Gattis also obtained payments from the Mat-Su borough for railway right of way while she was serving in the Mat-Su local government, even though payments from the Borough violated conditions of agricultural subsidies Gattis was receiving simultaneously from the state of Alaska.
• Representative Eric Feige is pushing for state funding of the road to Umiat, a project that would enrich the company for which he wife works. Feige’s wife’s firm Linc Energy has said that state funding of the road is what makes Linc’s project economical. Feige’s wife’s salary doubled and she was promoted at Linc after Feige was elected. Linc also acquired thousands of acres of oil leases at the terminus of the proposed road shortly after Feige’s election.

Alaska Speaker of the House Mike Chenault released the following statement in response to the Democratic Party attacking members of the House Majority as corrupt. “This is just another example of electioneering by the Democrats,” Chenault, R-Nikiski, said. “They’re grasping at straws to avoid talking about the real issues facing Alaskans. While I hate to dignify such actions with a response, accusing people of corruption is very serious, and warrants a response.”

The Alaska Democratic Party's comments on “The Impact of Public Officials’ Corruption on the Size and Allocation of U.S. State Spending" by The American Society for Public Administration that included Alaska in the top ten corrupt states in America. The report used information from 1976 to 2008. “Most Alaskans remember those dark days in the early 2000s,” Chenault said. “In response to those actions of a few, we now have some of the most stringent ethics rules and reporting requirements to make sure corruption does not darken our doorstep again. We’ve worked hard to restore faith in a clean process; to restore dignity and integrity to our institution.

“Calling someone corrupt is a serious allegation and shouldn’t be thrown around just because you disagree with a person,” Chenault said. “We won’t be bullied, we won’t be intimidated and we will not tolerate these words being thrown around without substantial evidence to back them up.

“The press release singled out me and Representatives Eric Feige and Lynn Gattis,” Chenault said. “I’ve said it on the record countless times that I didn’t care where a gasline terminated, as long as it was the most economic project; and I didn’t make the decision to end it in Nikiski. Reps. Feige and Gattis are some of the most honorable people that I have worked with. I’ll be damned if I sit back and watch while their integrity is questioned based on twisted versions of reality.

“The report cited the amount of money spent on construction projects as a contributing factor to the corruption rankings,” Chenault said. “We’re investing money back into the community every year. Healthy capital budgets fund jobs, roads, parks, school improvements and more that Alaskans need and desire. We listen to the people that we’ve been elected to represent. To say that I’m corrupt, that members of the majority are corrupt because we listen to our constituents and provide them with jobs and community improvements is simply ludicrous. The Democratic Party should be careful; their members have advocated tirelessly for much of the capital budget spending.

“If the Democratic Party feels that a member of the House is corrupt they should contact the appropriate law enforcement agency for an investigation. I personally welcome any scrutiny. I have nothing to hide,” Chenault said.

Responding to Chenault defensiveness over Alaska’s “Most Corrupt” Status... “There are so many conflicts of interest in Chenault’s caucus that the Speaker got winded before he could defend all of them,” said Mike Wenstrup, Chair of the Alaska Democratic Party. “Since the Speaker has taken it upon himself to defend his colleague’s conflicts of interest, I thought I’d provide him a more complete list:”

More conflicts of interest alleged by the Alaska Democratic Party in the Alaska State Legislature:

• Rep. Mike Hawker negotiated a sole-source, no-bid deal with a campaign contributor that increased taxpayer costs by 500% for a legislative building so fancy that it has come to be known as the “Taj Mahawker.”
• Rep. Lance Pruitt voted to support Sean Parnell's Oil Giveaway. Now Mary Ann Pruitt, Rep. Pruitt's wife, rakes in money from oil companies defending the Oil Giveaway through her media firm.
• Governor Parnell cancelled Alaska Hire, a longstanding goal of Associated General Contractors, and AGC has returned the favor by fundraising for the Governor and members of the legislature, which did nothing to fix the Governor’s cancellation of local hire requirements.
• Cruise industry executives pumped hundreds of thousands of dollars into lobbying and campaign contributions for legislators who rolled back the citizen ban on cruise ship sewage dumping. As the Anchorage Daily News reported this week, the Republican cruise ship sewage bill even could allow dumping of partially treated sewage while cruise ships are docked in Alaska communities.

Findings of “The Impact of Public Officials’ Corruption on the Size and Allocation of U.S. State Spending":

• Corruption and elevated state expenditures were found to be positively correlated. Over the period studied, if the 10 most corrupt states had been at the average level of corruption, they could have reduced their annual expenditures by $1,308 per capita, or 5.2% of the mean per-capita expenditure.
• More-corrupt states tend to spend more on areas that are fertile ground for practices most conducive to corrupt practices such as bribery, kickbacks, extortion, nepotism and patronage. These include construction and highway projects, salaries and wages, borrowing, correction and police protection.
• Construction projects find particular favor because they present a wealth of corruption opportunities: “First, construction involves large, complex, nonstandard activities, so the quality of construction can be very hard to assess. Second, domestic and international construction industries are dominated by a few monopolistic firms. Third, the industry is closely linked to the government. Governments have major roles as ‘clients, regulators, and owners’ of construction companies. It is very common to bribe government officials to gain or alter contracts and to circumvent regulations related to construction.” (As an example, in 2008 Bechtel/Parsons Brinckerhoff and other construction firms paid $450 million to resolve a series of criminal and civil liabilities related to Boston’s “Big Dig” highway expansion.)
• Given that highways make up a large part of U.S. infrastructure spending, states with higher levels of corruption tend to spend more on roads. The authors cite Census Bureau data indicating that in 2008, states spent $92 billion on construction projects, including highways. This constituted 81% of their total capital outlay that year, $113 billion. States with higher degrees of corruption also tend to borrow more, frequently for the capital, construction and highway projects that provide the greatest opportunity for private gain.
• More-corrupt states tend to spend more on corrections and police protection in a self-reinforcing cycle: Government officials can advance their personal interests by maximizing state budgets for correctional facilities and services. Citizens are then more exposed to corruption, and this can increase their demand for prisons and police.
• Government services not seen as potential sources of private gain tend to be neglected by corrupt officials, including elementary and secondary education, health services and hospitals. They suffer not only because favored projects divert scarce resources, but also when officials and private firms siphon off additional funds. “The harmful impact of corruption on education persists even after expenditures on education is divided into subcategories: elementary and secondary education and higher education. These results imply that public officials’ corruption reduces states’ investment in education overall.”

“The results of this article suggest that preventing public officials’ corruption and restraining spending induced by public corruption should accompany other efforts at fiscal constraint,” the researchers conclude. “Increases in states’ expenditures on capital, construction, highways and borrowing are not problematic in themselves…. However, policy makers should pay close attention that public resources are not used for private gains of the few but rather distributed effectively and fairly.”

The study also listed the least corrupt states. Residents of these states can take comfort in the fact that they’re not in the top 10 most corrupt.

On the Web:

“The Impact of Public Officials’ Corruption on the Size and Allocation of U.S. State Spending"

Source of News: 

The American Society for Public Administration
Public Administration Review
The Impact of Public Officials’ Corruption on the Size and Allocation of U.S. State Spending
http://onlinelibrary.wiley.com/doi/10.1111/puar.12212/full

Alaska Democratic Party
www.alaskademocrats.org

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Ketchikan, Alaska

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