Trends in Lobbying in the States By Virginia Gray and David Lowery

Trends in Lobbying in the States By Virginia Gray and David Lowery LOBBYING This article synthesizes research findings on organizations registered to lobby state legislatures in the last 20 years. According to data collected and analyzed by the authors, the rapid growth in numbers of registered interests in the 1980s slowed by the end of the 1990s, and institutions became more dominant as a form of organizational representation. Introduction Among the many ways in which the states are ahead of the national government is in lobby disclosure laws. Not until 1996 after passage of the Lobbying Disclosure Act did Congress maintain comprehensive lobbying registration lists. In contrast, by 1980, 44 states required lobbyists to register, and by 1990 all states did. While there are variations in states statutory definitions of lobbying, for scholarly purposes one can make obvious adjustments to the registration lists (e.g., remove state agencies and individual lobbyists); then the stringency of the statutes has little statistical impact on interstate variation in number of registered organizations. 1 Thus scholars of state politics have been able to use state lobby registration data for over 20 years to study trends in interest groups and lobbying, while scholars of national politics have had comparable data for only a few years. This article reports on trends uncovered in analysis of state lobby registration data for 1980, 1990 and 1997-1999 conducted by Virginia Gray and David Lowery and reported in numerous scholarly publications. Our research is supplemented by similar information collected in 2000 by the Center for Public Integrity; this is the most recent information available. The Universe of Organized Interests: Rapid Growth, Then Moderation In the 1980s, there was widespread concern about the explosion of interest groups, and indeed this explosion was reflected in our data. (Note that we count the interest organization/business, not the individual lobbyist.) In 1980, there were 15,064 organizations registered to lobby in the states; by 1990, there were 29,352 entities registered, an increase of 95 percent in a decade. In the 1990s, the cries of advocacy explosion continued, but this time they were misplaced, as the explosion moderated a great deal. By 1999, the total number of registered groups was 36,961, an increase of 26 percent in 10 years. Thus, the advocacy explosion, as measured by numbers of interest organizations, seems to have ended; moderate growth was the norm in the 1990s. State Population Size Beneath the surface, however, there was considerable variation in the size and growth rates of state interest communities. As would be expected, larger states typically report more lobbying registrations than smaller states. For example, in 1999, California, Florida and Texas, three of the most populous states, had more than 2,000 interests registered to lobby. New Jersey, Illinois, Michigan, New York and Ohio all among the 10 largest states had more than 1,000 registered lobby organizations. But five less populated states Massachusetts (13th), Missouri (17th) Arizona (19th), Minnesota (21st) and Louisiana (24th) also had more than 1,000 registered groups. So the relationship between a state s population and number of interest organizations is not a direct one. Many states with similar populations have quite dissimilar numbers of interest organizations, leading political scientists to speculate that forces other than population size are spawning interest organizations. The Economy Our own research focuses on other factors, but particularly on the economy: as it becomes more complex there are more interests to be represented. Moreover, the economy furnishes the financial resources to support interest organizations. States with large GSPs (Gross State Product) are likely to have more manufacturing firms, consulting firms, environmentalists and every other type of interest organization than smaller states. For example, a large, complex economy such as California s is likely to foster both a large number of social groups and a complicated mix of organized interests that represents its multifaceted economy. Our data show that California s lobbying community responded to changes in patterns of economic growth. For example, its communications lobbying sector grew by 264 percent between 1990 and 1997, compared to the 50-state average growth of 79 percent. 2 But the number of communications interest The Council of State Governments 257

organizations that can be supported even by California s communications industry is limited. At some point, our research shows, there are simply no more resources available in the political environment to support more communications lobbying groups. We call this point the political system s carrying capacity for interest organizations. It is worth elaborating on this process because the carrying capacity sets the number of interest organizations each state can support. To continue our example, at first, if a state has a communications industry it will be relatively easy for an industry-wide lobbying organization to mobilize to represent the industry s interests before the state legislature. As the industry matures, the interests of big firms and start-up firms will start to diverge so that individual companies will begin to employ their own lobbyists. Soon similar-sized firms will band together, or perhaps firms in the same geographic area or market niche will coalesce. As the organizational space becomes crowded with communications lobbying organizations, the growth rate of new groups will slow; some older groups will be crowded out of existence as the carrying capacity is reached. Eventually, the communications sector s resources for interest group mobilization will be exhausted, and the growth of new organizations will cease. Perhaps a shakeout in the industry will occur, reducing firms resources for lobbying; this development further lowers the communications sector s carrying capacity. We have only to multiply this example across all economic sectors to see how economic resources define the political system s carrying capacity for interest organizations and how they set theoretical limits on each state s number of registered interests. A Fluid Community Concerns over the advocacy explosion focused on the numbers of newly created groups; unnoticed were the many advocacy groups that vanished from the lobbying scene. Some organizations ceased to exist entirely; others temporarily withdrew from lobbying because they had no issues on the legislative agenda. In any case, they were not represented in the state capitol by a registered lobbyist. An accurate demographic profile of lobbying organizations over time must be based on a net count that includes births, deaths and survivors. We found that of the 29,352 lobbying entities registered at the beginning of the decade, 17,546 of them, or about 60 percent, had ceased to lobby by 1997. 3 They had been replaced on the lobby rolls by 22,874 new organizations. Those organizations joined 11,806 continuing organizations for a net total of 34,680, an 18 percent increase in registered interests. These figures show that the state lobbying community is highly fluid, rapidly changing in composition as organizations become politically active or retire from the political influence process. Interest organizations move in and out depending on what issues are on the agenda. Demobilization is as important to understand as is the process of mobilization; both contribute to the total number of registered interests facing the state legislature. Policy Uncertainty Another force driving interest group mobilization is policy uncertainty. Threatened changes in government policy bearing on a business s interests often provide the impetus to hire a lobbyist or initiate a lobbying campaign. As new issues arise or old issues are aggravated, there may be a need for more or a different type of representation. However, no matter how salient the issue is to the company, if there is no chance that state government will address it, then few companies will be persuaded to spend more than a token amount of money on lobbying. If, on the other hand, a political party with a different agenda stands a good chance of being elected at the next opportunity, then new and potentially more threatening policies may be anticipated. Thus, states with competitive two-party systems should have larger numbers of registered interests. Indeed, this is what we found in 1990: anxiety over the outcome of the next election provoked higher levels of interest mobilization in two-party competitive states than in noncompetitive states. 4 Change in party control is a major source of policy uncertainty that activates interest group mobilization. Government Activity Other scholars theorize that the scope of governmental activity helps to determine the number of interest groups. As government expands in scope, either in its regulatory purview or in its spending largesse, new interests seek representation before government. Leech et al demonstrate that, at the national level, groups multiply and lobby in those areas where lawmakers have long been most active. 5 Government creates a demand for groups, they argue. We expect that the same principle operates at the state level and that variation in state governmental scope is one reason for variation in numbers of registered interest groups. For example, Minnesota s unusually large number of registered interests might be due to its activist government. Despite the plausibility of this hypothesis, we do not find that the size of state governments per se is strongly related to the size of their interest group communities. Rather, it is 258 The Book of the States 2003

government activity which may only be weakly or indirectly related to government size that matters. Some of this increased activity is surely the result of policy devolution from the national government. Overall, as the national government has transferred policy responsibilities to the state level, more interests have been mobilized across the states. The Substantive Composition of State Interest Communities: Relative Stability Many critics of the interest representation system assert that traditional business interests are heavily over-represented at both the national and state levels compared to organizations claiming to represent the public interest. 6 To such critics, the dominance of business interests constitutes strong evidence that American interest systems are heavily biased. However, in the last 30 years, many new citizens organizations have sprung up and are now lobbying at the national and state levels. The question is whether citizens organizations and other nonprofit organizations have grown at a faster or slower pace than for-profit organizations, thereby altering the balance of representation. The information we have collected over the years for our research project allows us to address this question. We identified organizations registered to lobby state legislatures in 1980, 1990 and 1997-1999 as belonging to one of 26 economic or issue sectors; we then loosely aggregated these sectors into organizations representing the for-profit sector and those representing the not-for-profit sector. Our analysis showed that the nonprofit share of the interest organization universe was 25 percent in 1980 and slipped to 23 percent in 1999; the for-profit share began at 75 percent and moved to 77 percent over the time period. 7 So despite new growth in various kinds of not-for-profit organizations, apparently the death or exit of nonprofits was sufficiently high that their share of the lobbying universe remained relatively unchanged for almost two decades. Business dominance remains a fact of life in state capitals. New Jersey has the distinction of being the most dominated by business, and New Mexico the least, according to our data. We theorize that the variation across states in business domination has to do with governmental activity. What is on the political agenda influences the composition of the registered interest population: the agenda attracts some interest groups intermittently and entices other entities, such as business, more consistently. Different sectors also differ in their economies of scale of organization and the homogeneity of their members interests. For organizations like the NAACP, for example, where members have relatively homogeneous interests, membership can grow quite large without the organization fragmenting into smaller daughter organizations representing narrower issue agendas. In contrast, business firms often have complex or heterogeneous interests, with some firms opposing the policy goals of others. As the number of potential members of a business interest organization grows, it will be more likely to fragment into daughter organizations better representing the specific, narrower concerns of its members. This intuition, in turn, suggests that the composition of state interest systems will differ markedly as economies increase in size and support more narrow interest organizations. In a state with a large health care industry, the Hospital Association will fragment into the For-Profit Hospital Association, the Nonprofit Hospital Association, the Teaching Hospitals Association, the Rural Hospitals Association, and so on. Similar fragmentation may take place among insurers, providers, and every other component of the health care industry if their interests are no longer homogeneous. Our research then suggests some theoretical and practical reasons for the continued dominance of business interests at the state level, despite the creation of many new nonprofit and citizens organizations. Our research does not address the normative question of bias in the interest group system, however. That is, we can identify which interests are represented by a few or by many organizations. But we cannot determine whether these patterns over- or under-represent these interests in any absolute sense. The Increasing Institutionalization of State Interest Group Communities Too often, interest group scholarship focuses on membership groups (ones that individuals join, such as the Sierra Club) and ignores lobbying on behalf of institutions such as businesses, hospitals, churches, local governments, universities and corporations. To overcome this deficiency, we divided organizations into three types: membership groups, institutions (organizations without members), and associations (of other organizations, e.g., the Chamber of Commerce or the League of Cities). As Figure A shows, the institutional proportion of registered interests has increased over time: from 40 percent in 1980 to 59 percent in 1999. Institutions, not associations and membership organizations, dominate state lobbying communities. Associations dropped from 29 percent to 22 percent, but member- The Council of State Governments 259

Figure A: The Increasing Institutionalization of Lobbying Organizations 60% 59% Proportion of All Groups 50% 40% 30% 20% 10% 39% 31% 29% 49% 23% 28% 19% 22% 0% 1980 1990 1999 Institution Membership Group Association Source: Calculated from data used in Virginia Gray and David Lowery, The Institutionalization of State Communities of Organized Interests. Political Research Quarterly 54 (2001):265-83; 1999 data, unpublished data calculated by the authors. ship groups suffered the greatest decline from 31 percent to 19 percent. The lobbying that goes on in state capitals today represents the interests of institutions, not individual citizens banding together. But it is important to note that the institutional form of interest representation was the most preferred mode in both the for-profit and nonprofit sectors in 1997. According to our rough categorization of the 26 sectors into for-profit and not-for-profit domains, 61 percent of the for-profit organizations were institutional in form, but so were 46 percent of the nonprofit organizations. This trend continues today as leaders of foundations, charitable organizations and other nonprofits realize that 501(c)(3) organizations can legally engage in lobbying and advocacy (though not electioneering). Thus, advocacy on behalf of the poor and the disadvantaged has become more institutionalized and more likely to be conducted by professionals. 8 This development may help to redress the imbalance between the larger number of for-profit registered interests compared to the smaller number of nonprofit interests registered to lobby. Much of Interest Group Politics Is Still Local Many observers, noting the rise of multistate lobbying firms, the diffusion of lobbying techniques across states, and the integration of policy agendas at the national and state levels, conclude that there has been a nationalization of interest group politics. However, our research shows that actually state interest communities remain highly local in composition. Of the roughly 35,000 registered interests in 1997, over half (53 percent) were unique or limited to a single state. 9 We found very localized interests such as the Tennessee Task Force Against Domestic Violence, Operation Clean Government in Rhode Island, Golden Age Fisheries in Alaska, and Vermont s Village of Johnson Water and Light Department. Many local interests are independent business corporations, like Boston Bank of Commerce, Talley Industries, and Randolph Jewelry and Loan. Generally, these seem to be entities with narrow geographic interests, not organizations that are fronts for larger national organizations or companies. As a contrast, we can look at the organizations registered to lobby in more than one state. Most of these operate in only a few states, with the mean being registration in only six states; this does not indicate that much nationalization is going on. Nonetheless, a few organizations lobby almost everywhere. Table A displays the 20 organizations active in the most states in 2000. They tend to have geographically broad interests that take them into nearly every state. For example, Anheuser-Busch, which surely sells beer in every state, in fact shows 260 The Book of the States 2003

Table A: Most Active Lobbying Organizations, 2000 No. of states Rank Organization registered in 1 Anheuser-Bush Companies Inc. 50 2 American Insurance Association 48 3 Brown & Williamson Tobacco Corporation 47 4 Lorillard Tobacco Company 46 5 AT&T Corporation 45 6 UST Public Affairs Inc. 43 7 MCI WorldCom Inc. 43 8 Pfizer Inc. 43 9 National Federation of Independent Businesses 42 10 RJ Reynolds Tobacco Company 41 11 Motion Picture Association of America 41 12 Health Insurance Association of America 40 13 Variable Annuity Life Insurance Company 40 14 Pharmacia & Upjohn Company 40 15 American Cancer Society 40 16 State Farm Insurance Companies 38 17 Glaxo Wellcome Inc. 38 18 Alliance of American Insurers 37 19 Merck & Co. Inc. 37 20 Wyeth-Ayherst Laboratories 37 Source:The Center for Public Integrity, The Fourth Branch State Project (http://www.publicintegrity.org). Note: Data are from state lobby registration forms filed by organizations registered to lobby in 2000. up on the lobby registration list of every state. The major insurers, the tobacco companies, the pharmaceutical manufacturers, and telecommunications companies do business in nearly every state. Policy and regulatory issues on the agendas of most state legislatures affect them, including regulation of insurance rates, anti-smoking legislation, deregulation of phone companies, and regulation of prescription drug prices. Overall, our research found that the sectors of manufacturing, insurance, communications and media were the ones whose organizations were most likely to be registered in multiple states. They also tend to have customers in many states. Otherwise, the old adage all politics is local seems to apply. Most interests lobbying at the state level are indigenous to the state. Constituents are exercising their right to petition their representatives, even if through an institutional lobbyist. And, our research shows, as the number of registered interests increases, there are relatively more local interests represented. Lobbying techniques may be diffusing across state lines and multistate firms may be expanding, but an extensive multistate lobbying presence is rare. Most of the registered interest organizations in a state are unique to that state. Interest politics is still local. Conclusions LOBBYING Using state lobby registration lists as data, four major trends are apparent: The dramatic increase in interest groups in the 1980s moderated during the 1990s. The lobby registration lists grew only 26 percent, compared to 95 percent in the 1980s. Business dominance continued: the for-profit share of the interest group universe was 77 percent in 1999, slightly more than in 1980. The institutionalization of interest organizations increased: from 40 percent in 1980 to 59 percent in 1999. Interest organizations remain rooted in their states: over half of registered interests are unique to one state. Our research focuses on ecological explanations for variations across the states in the size, growth and death rates of registered interests. We especially look at the impact of the economy, policy uncertainty, and governmental activity in producing different interest group communities in different states. These appear to be likely factors influencing the size and composition of states interest group communities. Notes 1 David Lowery and Virginia Gray, How Some Rules Just Don t Matter: The Regulation of Lobbyists, Public Choice 91 (1997): 139-147. 2 Jennifer Wolak, David Lowery and Virginia Gray, California Dreaming: Outliers, Leverage and Influence in Comparative State Political Analysis, State Politics and Policy Quarterly 1 (2001): 265. 3 Virginia Gray and David Lowery, The Expression of Density Dependence in State Communities of Organized Interests, American Politics Research 29 (2001): 378. 4 Virginia Gray and David Lowery, The Population Ecology of Interest Representation: Lobbying Communities in the American States (Ann Arbor, MI: University of Michigan Press, 1996), 146. 5 Beth L. Leech, Frank R. Baumgartner, Timothy La Pira and Nicholas A. Semanko, Drawing Lobbyists to Washington: Government Activity and the Demand for Advocacy, Paper presented at the Annual Meeting of the Midwest The Council of State Governments 261

Political Science Association, April 2002, Chicago. 6 For example, see Kay Lehman Schlozman and John T. Tierney, Organized Interests and American Democracy (New York: Harper and Row, 1986). 7 Virginia Gray and David Lowery, The Institutionalization of State Communities of Organized Interests, Political Research Quarterly 54 (2001): 271. 8 See, for example, Marcia Keller Avner, The Lobbying and Advocacy Handbook for Nonprofit Organizations (St. Paul, MN: Minnesota Council on Nonprofits/Amherst H. Wilder Foundation, 2002). 9 Jennifer Wolak, Adam J. Newmark, Todd McNoldy, David Lowery and Virginia Gray, Much of Politics Is Still Local: Multi-State Lobbying in State Interest Communities, Legislative Studies Quarterly, XXVII (2002): 537. About the Authors Virginia Gray is Robert Watson Winston Distinguished Professor of Political Science at the University of North Carolina at Chapel Hill. She is the co-editor of Politics in the American States, co-author of Minnesota Politics and Government and the author of numerous other books and articles on state politics. David Lowery is Thomas J. Pearsall Professor of State and Local Government at UNC, Chapel Hill. He and Gray have collaborated on many publications on state interest groups, including The Population Ecology of Interest Representation: Lobbying Communities in the American States. Lowery also has published widely in the areas of urban politics, budgeting, tax policy and public administration. 262 The Book of the States 2003