By The Associated Press
GULFPORT, Miss. (AP) — Lieutenant governor candidate Tate Reeves has vowed to “stand up to all of those people who want to borrow, borrow, borrow and say ‘Enough is enough’” to reduce state debt.
But Reeves, while serving as state treasurer, has received hundreds of thousands of dollars for his campaign coffers from lawyers, consultants and bankers who make millions in fees from government borrowing, often from non-bid contracts that Reeves helps negotiate.
A Sun Herald analysis of his donations shows dozens of lawyers and executives from a handful of firms that make money from government borrowing through legal, consultant and other fees on borrowing have contributed more than $400,000 to Reeves’ campaign war chest during his two terms as treasurer. In the same period, these firms have collected more than $48 million in fees.
Mississippi law limits corporate campaign donations to $1,000 a year. It’s common for many employees of a firm to make individual donations, which have no cap.
Reeves said there’s nothing untoward about such campaign donations. He said the small number of firms qualified to handle government borrowing are also some of the largest in the state and their officers donate to many campaigns. He attributes questions about his role in state borrowing or his campaign finances to “my opponent’s campaign (being) in desperate mode right now and trying to be relevant.”
“I have been very independent as state treasurer,” Reeves said. “I’m beholden only to the taxpayers.”
But his opponent, state Sen. Billy Hewes of Biloxi, says he believes such campaign funding is “a bit disturbing.”
“That may explain (Reeves’) reluctance to take any ownership in his role in bonds and borrowing for our state,” Hewes said. “If you’re going to criticize something, but then if there’s a connection or tie-in with the manner with which his campaign is financed by folks who’ve benefitted from his transactions, then he needs to talk about that.”
Hewes’ campaign finance records show he’s received nearly $40,000 from officers with the same firms.
“But the difference is, I don’t control any contracts,” Hewes said. “I don’t control where the moneys are placed. I don’t ever take money where strings are attached.”
Reeves said he doesn’t have sole control over such contracts, either. As treasurer, he is one of three on the State Bond Commission, along with the governor and the attorney general. The commission has to approve state borrowing and contracts with the lawyers and consultants who help.
Attorney General Jim Hood and others familiar with the state’s borrowing systems said his office and the governor’s typically defer to the treasurer’s on the mechanics of borrowing.
As the state’s chief financial officer, the treasurer also represents the executive branch on other entities that borrow millions, including the Mississippi Home Corp., Development Bank and Business Finance Corp., according to Reeves’ state treasurer website.
When governments in Mississippi borrow money, the fees associated with the deals often appear to be higher than similar fees paid by private corporations.
For instance, a recent bond issue of $350 million for Chevron had bond-counsel and financial-advisor fees of $200,000. A recent issue of $162 million for Mississippi Department of Corrections facilities had bond-council and advisor fees — from some of the same companies — of more than $925,000.
“There does seem to be a difference in fees, and on the surface a lack of competition,” said J.K. “Hoopy” Stringer, former state fiscal officer and head of the Department of Finance and Administration under Gov. Haley Barbour.
Reeves said differences between fees paid by government and businesses when they borrow are likely because large corporations “might have a lot of on-staff lawyers that do that kind of work.”
In recent years, much of the state’s borrowing has been through negotiated deals rather than competitive bid, although legal and other fees in many instances are capped by federal regulations for tax exempt bonds, Reeves said.
“That’s been the case since the financial meltdown in 2008,” Reeves said. “We went to the Legislature and asked them to give us the authority to do that, negotiated deals, and the Legislature approved it I would envision at some point in the near future it would make financial sense to do competitive transactions again.”
Max Arinder, director of the state legislative watchdog group, the PEER Committee, said that about a decade ago some lawmakers were calling for studies and possible reform in the fees paid to lawyers, consultants and banks on borrowing. He said these efforts were dropped and PEER hasn’t been called on to look into such fees since.
Reeves’ campaign donations — he had nearly $2 million in cash on hand at last reckoning — have shattered records for a Mississippi treasurer or lieutenant governor candidate. For the last several years, his bankroll grew so large that it prompted speculation Reeves was running for governor.
Reeves has said his campaign finance success is proof he has broad support in his run for lieutenant governor.
“Not only have we now received contributions from all 82 counties in Mississippi, but we continue to break records for a race for lieutenant governor in Mississippi,” Reeves said in a recent statement that he has repeated at campaign functions.
Reeves and Hewes have sparred in recent weeks over state borrowing. Reeves has said the Legislature, where Hewes has served for 20 years, has borrowed billions of dollars. Hewes has said that Reeves, as treasurer and one of three on the state board that oversees state bonding, has signed off on billions in debt himself.