Minnesota has fallen behind the times on disclosure laws

"Transparency is the politics of managing mistrust."

— Ivan Krastev

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Enacted several years before the Vikings' last Super Bowl appearance, Minnesota's law governing disclosure of economic interests by public officials is dusty. If the state is to maintain its reputation for "good government," the statute needs smart, bipartisan refinement.

The public focus on conflicts of interest among federal public officials has sharpened, justifiably. Chants of "drain the swamp," accusations of "crony capitalism," calls for the release of tax returns and reports of self-dealing by Cabinet members bombard us. A New York congressman was just arrested in an insider-trading case.

According to Google Trends, the words "emolument clause" stir increased public interest.

Voters shrug off these matters, believing the only thing distinguishing good from bad public officials is their degree of corruption. Others whose trust is less jaded are apoplectic that public officials actually allow personal financial interest to impact policy. Both sensibilities present a serious credibility problem for public officials.

In Minnesota, the primary strategy for ensuring that our public officials do not put their financial interest ahead of the public interest is through disclosure. The logic is that a well-informed public will use its voting power to ensure that those in government act with fidelity. The key is for voters to have relevant information.

Minnesota law currently requires approximately 3,200 officials and candidates for public office — ranging from the governor to members of watershed districts — to file annual economic interest statements (EIS) with the Minnesota Campaign Finance and Public Disclosure Board. An EIS sets forth a public official's sources of income, interests in real property, business affiliations and securities holdings. The statute also requires some metropolitan-area officials to file an EIS with their local units of government.

Beyond its failing to house all EIS reports in one easy-to-access location, the statute applies a one-size-fits-all approach. A member of a local watershed district or of the Board of Physical Therapy fills out the same EIS form as a state senator. This unnecessarily burdens people serving local political subdivisions and boards and may discourage participation by those who cherish privacy. Unfortunately, legislative efforts to permit a tiered disclosure system failed earlier this year.

Meanwhile, although reducing disclosure obligations for certain officials seems appropriate, public officials charged with creating and implementing statewide policies and budgets need to provide greater disclosure.

Since Minnesota's disclosure statute was enacted, the proportion of households earning two incomes has increased from approximately 40 percent to more than 66 percent. As stated by the National Conference of State Legislatures, "Nearly all states require legislators to disclose some income-related information about family and household members." However, Minnesota does not require disclosure of household financial information beyond the direct earnings and holdings of the public official. This creates a yawning disclosure gap.

Further, elected officials often have budgeting and policy oversight of licensure or permitting procedures. Unlike other states, Minnesota does not require the disclosure of licenses or permits held by elected public officials. These officials may owe fiduciary duties to others through a nonpublic role as a trustee, investment adviser, member of a board, shareholder or lawyer. That means they owe a duty of loyalty to others that could potentially conflict with their public responsibilities.

Minnesota does require self-reporting by public officials and, where possible, abstention from acting if conflicts arise in the execution of their duties. However, that self-reporting requirement is toothless. Similarly, the statutory penalty provisions for late filing of EIS reports permit a maximum fine of $1,100, an amount that may have seemed substantial when the law was enacted but certainly does not work as a meaningful deterrent today. In reality, the only deterrent is public shaming, which is dependent on media interest.

In order to quell public cynicism and discourage public corruption, the next Legislature must create meaningful economic interest disclosure requirements with meaningful penalties. The issue is whether legislators are prepared to impose additional disclosure obligations on themselves or, through inaction, will fuel growing public mistrust.