An unusually public dispute between two Republican state legislators that erupted last week has its roots in, of all things, a national debate over city-owned broadband systems.
The feud provides a window into how campaign contributions are used for influence in Raleigh, how outside organizations help craft legislation, and how General Assembly leaders can exert their power when challenged.
At issue is a 2011 North Carolina law that limited government-owned cable operations such as MI-Connection in Mooresville and Davidson. The legislation was vocally backed by telecommunications companies such as Time Warner Cable, who argued the government shouldn’t compete with the private sector.
North Carolina was the 19th state to pass such a law and its passage was preceded by a deluge of campaign contributions, according to a nonpartisan group that tracks political money.
The issue gained attention last week when Mooresville Rep. Robert Brawley publicly aired his dispute with House Speaker Thom Tillis, a Republican from nearby Cornelius.
In a letter read on the House floor, Brawley complained that Tillis had blocked a bill he had introduced that would have expanded the territory of MI-Connection. Tillis, he said, cited a “business relationship” with Time Warner Cable.
Tillis and Time Warner have denied any relationship. But the feud has put a spotlight on the campaign money the speaker, who is expected on Friday to announce his bid for the U.S. Senate, has received from Time Warner and other telecommunications companies as he rose to his powerful perch.
In the push for the 2011 legislation, telecommunications companies and trade associations steered $1.6 million to state lawmakers from 2006 to 2011, including Tillis, according to the National Institute on Money in State Politics.
During 2010-11, the $37,000 Tillis received from eight political action committees and trade associations, including Time Warner’s political action committee, was more than eight times what he received from the PACs from 2006 to 2008.
Proponents of the legislation say government-backed services shouldn’t be competing against private-sector companies such as Time Warner and AT&T. Opponents argue that municipal-backed systems can offer better service and more advanced technology to customers and need room to grow.
The American Legislative Exchange Council, or ALEC, a nonprofit that promotes free markets and limited government and receives funding from corporations such as Time Warner, has supported the effort to rein in city-owned systems that can offer cable TV, Internet and phone services. The group offers “model legislation” that can be used by lawmakers drafting their own bills. Tillis is a member of the ALEC board.
ALEC members have become concerned in recent years because cities are building broadband systems in areas already served by the private sector, said John Stephenson, director of ALEC’s communications and technology task force. This can lead to high costs for taxpayers if the municipalities incur debt to build the system, he said.
“Legislators are stepping in to protect taxpayers,” he said. North Carolina’s law takes an approach that is similar to ALEC’s model, but also includes differences, he said.Time Warner is a general member of ALEC with an interest in tax and telecom related issues, an ALEC spokesman said.
ALEC’s influence has shown up in a variety of bills this session, ranging from legislation requiring voter ID at the polls to allowing private school vouchers to repealing the federal health care law. Critics highlight the organization’s ties to business interests, while supporters say the organization is a useful resource.
Handing in his gavel
In the middle of the fight is MI-Connection, which was created in 2007 when Mooresville and Davidson agreed to buy the cable system from Adelphia in bankruptcy court.
Time Warner had originally sought to buy the operation, but the municipalities used a clause in their Adelphia contract to purchase it themselves. Officials said they feared Time Warner wouldn’t make necessary upgrades and said a locally run outfit could offer better service and cutting-edge technology.
Mooresville took on about $75 million in debt to buy the system, with about half guaranteed by Davidson.
Six years later, the system is a perennial election issue because the taxpayers of Mooresville and Davidson continue to subsidize its operations.
After taking office in January, Brawley, who returned to the House this year for a 10th term after last serving in 1998, said he met with officials at MI-Connection, which also serves customers in Cornelius. The Republican wanted to find a way for the municipalities to shed the operations, but said he learned MI-Connection needed to increase its value before selling to pay off its debt.
“It’s a big expense on the taxpayer,” Brawley said.
MI-Connection chief executive David Auger said the 2011 bill placed boundaries on the cable system, preventing it from expanding.
“All that we have asked for all along is that there be a level playing field,” Auger said. “Our competitors are unshackled and can go anywhere and so should we.”
Auger said MI-Connection did not have a role in Brawley’s bill. The legislation would expand the company’s service area to include government facilities and schools in Statesville.
The day after he introduced the bill in April, Brawley said Tillis came to his office, closed the door and asked him about the legislation, Brawley said in an interview this week.
“He said, ‘I have a relationship with Time Warner,’” Brawley said. “He didn’t say that’s why he was against the bill, but that was the impression I got.”
The dispute heated up last week when Brawley made comments about toll roads that apparently upset Tillis. The speaker demanded Brawley, who opposes toll roads, give up his co-chairmanship of the powerful finance committee in an unusually rare move. Brawley handed in his gavel and had his list of grievances read by the House clerk.
Tillis contributions grow
Tillis’ financial disclosure documents do not list a connection to Time Warner. But he was the state’s top recipient of contributions from the telecommunications industry from 2010 to 2011, according to the National Institute on Money in State Politics, a nonpartisan tracker of political contributions.
Time Warner Cable’s contributions have grown as Tillis has progressed from a newly elected member in 2006 to speaker in 2011. From 2006 to 2012, the PAC gave him $13,750, according to reports filed with the State Board of Elections.
Time Warner’s PAC contributions were among the largest of “noteworthy” contributions to his campaign from 2006 to 2012, according to the institute.
The telecommunications industry as a whole contributed $63,450 in that period, behind just five other sectors.
As speaker, Tillis rarely sponsors legislation and was not listed as a sponsor of the 2011 bill. But he was a primary sponsor in the 2009-10 session of legislation that called for a study on local government-owned telecommunications companies.
Tillis spokesman Jordan Shaw did not respond to requests for comment, but has said the speaker – a former IBM executive – doesn’t have a business relationship with the cable company.
The North Carolina Democratic Party has questioned whether a nonprofit group Tillis is involved with could have accepted money from Time Warner. Unlike individual campaign accounts, the group, structured as a 501(c)4, is not required to disclose its donors.
Time Warner Cable spokesman Scott Pryzwansky said the company makes contributions to candidates based on its “business objectives and policy priorities.” It gives only through its PAC and has not given to the 501(c)4 sponsored by the N.C. House Republican caucus, he said.
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