Wednesday, August 7, 2024

The curious timing of Citizens Bank PAC campaign donations

What you can buy for $200 in the General Assembly

by Nancy Lavin, Rhode Island Current

A $200 political donation is hardly a game-changing sum for Rep. Marvin Abney of Newport, or Rep. Scott Slater of Providence.

But the pair of contributions to the top two lawmakers on the House Committee on Finance from Citizens Bank’s political action committee came a day before the panel approved a revised fiscal 2025 budget. They were part of Citizens’ session-long spending strategy to drum up support for a controversial bank tax rewrite.

The political check-writing appears to have paid off. The bill signed into law by Gov. Dan McKee on June 24 will reduce Citizens’ state property tax bill by allowing the bank to eliminate in-state payroll and property from what it owes. 

The Rhode Island-based financial services giant celebrated the win for its wallet, bringing the Ocean State in line with Massachusetts, which enacted a similar tax change Jan. 1.

The private tax savings will cost the state an estimated $15 million in annual tax revenue — most of which would come from Citizens, although other banks’ tax payments may also change. The state has declined to disclose information about any individual taxpayers, including Citizens. 

Citizens’ proposal was originally boohooed by legislators, who said they needed more time to consider the complex proposal. But in an about-face, House Speaker K. Joseph Shekarchi revived the bill days later, whipping it through the multi-step legislative approval at warp speed.

Abney and Slater, who were among the 64 state representatives to approve the bill on the final day of session, each did not respond to calls for comment on Monday.

But victory doesn’t come cheap. In addition to spending $25,000 on an extra lobbyist for the final month of the session, the bank through its political action committee also shelled out nearly $7,000 in donations, much of it to lawmakers with direct influence over the budget, according to financial reports filed with the Rhode Island Board of Elections.

Eleni Garbis, a Citizens spokesperson, declined to comment when asked how, if at all, donations were used to win support for the tax change. The $6,825 in contributions made by the Citizens Bank PACOM from Jan. 1 to June 30 marks a 64% increase over the $4,174 in donations made during the first six months of 2023, as well as the highest total contributions for that time period over the last five years, according to Rhode Island Current analysis of campaign finance reports.

‘Rhode Island is no different’

It’s not unusual for companies to leverage political donations and hire lobbyists to curry favor with legislators or office holders. International Game Technology and Bally’s Corp. (then known as Twin River World Holdings) spent half a million dollars on lobbyists in 2019 when lawmakers were considering a 20-year-contract extension with the Rhode Island Lottery to run the state’s gambling operations, WPRI reported. 

“It’s well-established that political donations are a way to buy access to politicians, and Rhode Island is no different than every place that relies on private donations to fund elections,” John Marion, executive director of Common Cause Rhode Island, said. 

But in more than half of states, lobbyists, political action committees and other influential power players are prohibited from making campaign donations during the legislative session, according to information from the National Conference of State Legislatures.

Since Rhode Island is not one of them, lawmakers can leverage their policymaking power to boost their campaign coffers.

“Rhode Island leaders have learned how to maximize the benefit of that system by holding fundraisers at the end of the legislative session,” Marion said.

Citizens made a flurry of small-dollar donations to lawmakers in the final week of the legislative session, just as the tax change bill was revived. But financial records show that campaign contributions to big names on Smith Hill began as soon as the session started, with negotiations over the policy proposal having begun late in 2023, Shekarchi said previously.

Shekarchi, who as House Speaker controls the purse strings on the final state spending plan, was the biggest beneficiary of Citizens’ PAC donations, with $1,400 across three contributions this year. Senate President Dominick Ruggerio and McKee received $900 and $500, respectively.

‘Personal friend’

The trio of power players received donations from the PAC in years past: $1,000 apiece in 2022 and 2023, with $1,500 given to McKee in 2021. This year, they also benefited from separate, individual campaign donations from Mike Knipper, Citizens executive vice president and head of property and procurement. Knipper, who warned lawmakers that failure to make the tax change could make the bank pull its jobs and headquarters from the state, gave $1,000 to McKee, $750 to Shekarchi and $450 to Ruggerio.

Last year, Knipper gave $250 to Shekarchi and nothing to McKee or Ruggerio. In 2022, when all three officials were up for reelection, Knipper donated $500 to McKee and $200 to Ruggerio.

Shekarchi in an email on Monday said his campaign donations do not have any impact on legislative policy discussions.

“I worked very hard in the final weeks of the session with Governor McKee, his Budget Office and the Senate to adopt legislation to collaboratively keep Rhode Island’s banking tax structure competitive with Massachusetts,” Shekarchi said. “Citizens Bank has 4,200 employees in Rhode Island and I didn’t want to be considered as the Speaker who lost these good-paying jobs to a neighboring state.”

He also called Knipper a “personal friend.” 

Mike Trainor, a spokesman for McKee’s campaign, also said campaign donations did not affect his decisions as governor.

“In making his decisions as Governor, Dan McKee’s sole criteria is what he believes is best for Rhode Island,” Trainor said. “There is no connection here with any political contribution.”

Ruggerio responded similarly.

“As with every decision I make, the decision to address the banking tax code was made entirely on the merits of the policy,” Ruggerio said in an email Monday night. “In this case, the change to our tax code kept Rhode Island on par with neighboring Massachusetts, treated banks similarly to other corporations, and helped keep thousands of quality jobs here in Rhode Island.”

The governor and chamber leaders were not the only beneficiaries of Citizens’ financial favor. The Citizens PAC donated $2,650 to 13 other state lawmakers, including Slater and Abney, House Majority Leader Christopher Blazejewski, Senate Majority Leader Ryan Pearson, Senate Finance Chairman Lou DiPalma, Senate Majority Whip Valarie Lawson and Rep. Joe Solomon, who sponsored the bill.

A $500 donation was also made to the RI Senate Leadership PAC, the same day lawmakers unveiled a revised $13.9 billion budget proposal, sans Citizens’ requested tax rewrite. 

Less than two weeks later, on June 10, Shekarchi announced the tax change was back on the table, and on June 13, the final day of the legislative session, both chambers approved the legislation with only slim opposition on each side.

None of the eight Democrats — two representatives and six senators — who voted against the tax change received campaign donations from Citizens PAC or from Knipper.

Updated to include a response from Senate President Dominick Ruggerio.

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Rhode Island Current is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Rhode Island Current maintains editorial independence. Contact Editor Janine L. Weisman for questions: info@rhodeislandcurrent.com. Follow Rhode Island Current on Facebook and X.