Bill to stop lawmakers’ legislative consulting hits hurdle

House Speaker Cameron Sexton’s bill designed to stop lawmakers from doing consulting business for fellow legislators ran into a wall Thursday because of concerns it would allow 112th General Assembly members with state contracts to continue “in perpetuity.”

Sexton, a Crossville Republican, and Lt. Gov. Randy McNally, an Oak Ridge Republican, sponsored the legislation after a January FBI raid stung the General Assembly. McNally has termed legislator’s businesses that contract with third parties for services such as mailers as “money laundering.”

But when House Republican Caucus Chairman Jeremy Faison introduced the measure Thursday, it ran into a firestorm of protest. Some lawmakers appeared concerned it would stop legislators from owning rental property subsidized by the Tennessee Housing Development Agency or writing prescriptions for TennCare recipients. 

Others raised concerns it would let some legislators continue contracting with the state even when their current contracts end but preclude incoming lawmakers from getting the same opportunities. 

The amendment says prohibitions on bidding on, selling or offering for sale any service to the state would not apply to members of the 112th General Assembly as long as the legislator holds office for consecutive terms if the service was provided prior to the member’s election and the nature of the services is disclosed.

Faison, who wound up postponing consideration until Monday, said the measure would stop lawmakers from doing political consulting work for their colleagues, but he balked at immediately changing other language. He said later he would be working with lawmakers who raised questions.

Under a proposed amendment, Faison confirmed to House members that anyone in the 112th General Assembly contracting with the state would be able to keep that contract and then continue contracting.

Faison, a Cosby Republican, explained that language would be added to the bill “because you came in elected with an expectation of how you were getting income and it would be wrong for us to stop you.”

Anyone elected to the Legislature in subsequent years, however, would not be allowed to contract with other lawmakers or the state. And those with 50% or more ownership in a company would not, although they could hold 40% ownership and get involved in a state contract.

Sexton said afterward he believes the bill is still on course but acknowledged House members had numerous questions. He noted grandfather provisions are common in legislation but pointed out the ultimate goal is to stop lawmakers from doing business with the state.

“I think there was a lot of confusion. I think it was clear there were a lot of members this could affect. We worked with the ones who notified us,” Sexton said.

The Speaker called it a “good government bill the public wants” and said he plans to keep pushing it because it’s “good state policy.”

Sexton confirmed the bill takes care of questions surrounding the FBI raid and legislative mailers handled through new vendors in 2020, all using the same postal code. In addition, he said, it stops legislators from contracting with others in the legislative branch. 

Former House Speaker Glen Casada of Franklin and Rep. Robin Smith, R-Hixson, who have done political consulting work for some legislators, are caught up in the FBI probe, as is Casada’s former chief of staff, Cade Cothren. Rep. Todd Warner, a Chapel Hill Republican, is a subject of the investigation as well. Casada told the Tennessee Lookout he has closed down his consulting business, Right Way.

Questions have been raised about whether Cothren is connected to a mysterious, new political vendor named Phoenix Solutions, which was paid more than $200,000 by the House Republican Caucus for campaign work in the 2020 election cycle.

Smith directed lawmakers to contract with Phoenix Solutions, which also did some work for lawmakers on taxpayer-funded constituent mailers. Most members who unwittingly did business with Phoenix Solutions have said they regret it.

Phoenix Solutions, which was based in New Mexico, used the same postal code for campaign mailers as Dixie Strategies, which Warner hired, and a political action committee called Faith Family Freedom Forum, which made independent campaign literature on behalf of Warner before he defeated incumbent Rep. Rick Tillis in the Republican primary. Tillis had criticized Casada’s administration in an anonymous Twitter feed.

Sexton’s bill appeared to be gaining enough momentum to pass Thursday, with Democratic Rep. Bo Mitchell, normally opposed to Republican legislation, saying he supported it. That is, until lawmakers raised questions about allowing legislators who hold contracts with the state to continue doing business as usual.

Rep. Sam McKenzie, a Knoxville Democrat, pointed out the bill seems aimed at “undoing a potential conflict.”

“Why wouldn’t you add verbiage not to grandfather them in perpetuity? Why not stop it once their contract is over?” McKenzie said.

State Rep. Antonio Parkinson requested Faison delay consideration and to add language requiring legislators to end their business when current contracts expire.

Parkinson, a Memphis Democrat, said the bill should put an end to all lawmakers doing business with the state to avoid creating an advantage for some lawmakers.

“I’m not saying to cut off anybody’s contract that currently has a contract. I’m saying when that contract expires, it just should sunset, it shouldn’t be renewed if we’re going to make it so lawmakers don’t do business with the state,” Parkinson said.

Adding those prohibitions would make the bill “more transparent” and build trust for voters to assure them no lawmakers are doing business with the state, Parkinson said.

Lt. Gov. McNally said Thursday some legislators have third-party dealings with the state government and noted the House bill will have exemptions for those.

The House bill is trying to prevent individuals from setting up a business, then collecting money from other House or Senate members and sub-contracting the money out to a mailing organization and keeping some of the profits, McNally said. 

“It’s just a way of, in my opinion, of money laundering, and it should not occur. I would be in full support of what Speaker Sexton’s trying to do,” McNally said.

McNally spokesman Adam Kleinheider said Senate rules cover much of what is addressed in the legislation, specifically that a senator would not be allowed to renew a contract once it ends.

“Because that portion of the bill would affect only House members, Lt. Gov. McNally is agreeable to the amendment,” Kleinheider said.