The attempt by Republican members of the Georgia House to elect a new speaker and clean up the mess created by the Glenn Richardson scandal is dredging up another controversy from the recent past: the stealth maneuverings to give Gov. Sonny Perdue an undisclosed tax break that was worth $100,000 to the governor.
The central figure in that tax break controversy was Rep. Larry O’Neal (R-Bonaire), who was then Perdue’s real estate attorney and today is one of the leading contenders for the speaker’s position relinquished by Richardson.
If O’Neal is elected by House Republicans at their Thursday caucus to become the new speaker, questions about that tax break received by Perdue in the form of HB 488 will continue to haunt the capitol hallways.
The odyssey of HB 488 began in February 2005 when O’Neal introduced the bill, which provided for the deferment of state taxes on property sales when similar property was purchased in another state. The bill originally applied to property sales from the year 2005 onwards.
The highly technical tax bill quickly passed the House and went to the Senate, where it was assigned to the Senate Finance Committee. While in the Senate committee, the bill was amended so that it would be retroactive to 2004 – and thus would apply to property transactions conducted that year on behalf of Perdue, whose real estate attorney was O’Neal. The tax break made possible by the retroactive clause amounted to about $100,000 for Perdue.
State Revenue Commissioner Bart Graham, who had requested the original version of HB 488 to make Georgia’s tax laws consistent with other states, said later he did not know about the retroactive amendment being added to the bill and did not request it.
The Senate passed the bill with the amendment that had been added in committee. O’Neal presented the new version of HB 488 to the House on March 29, 2005 and asked members to approve it, but did not mention that an amendment benefiting Perdue had been added to the measure. The House approved the amended version of HB 488 without dissent and Perdue signed the bill into law on April 12.
When Perdue signed HB 488, he did not disclose publicly that he would benefit from a sizeable tax break contained in the legislation. The tax break did not surface publicly in media accounts until August 2006, when Perdue was in the middle of a reelection campaign against Democratic Lt. Gov. Mark Taylor.
The news about the tax break hit like a bombshell in the campaign and was seized upon by Democrats as an issue to use against the incumbent governor.
Perdue avoided answering questions from the media about the tax break, instead sending out his campaign flack, Dan McLagan, to attack the Atlanta Journal-Constitution for reporting the story. Ironically, McLagan has since been working in the gubernatorial campaign of Secretary of State Karen Handel, who is using the fallout from the Republican controversies to support her own call for “ethics reform.”
O’Neal also kept a low profile at the time, limiting his public comments about the tax break legislation largely to reporters for the Macon newspapers.
He told a Macon Telegraph reporter that Democrats were criticizing the Perdue tax break because “It sells great for a political campaign . . . I think they couldn’t criticize the way we govern, and this is all they had.”
O’Neal also told the Telegraph at one point that Perdue and his staff had played no role in the measure that gave the governor the tax break. “My good name is worth a lot more than saving the governor $100,000,” O’Neal was quoted by the Telegraph. House Minority Leader DuBose Porter (D-Dublin) called the comments from O’Neal “unbelievable.”
The Perdue property dealings and tax break were widely criticized by Democratic operatives in the fall of 2006 but had little impact on the voters, who reelected Perdue over Taylor by a 20-point margin.
Shortly after the 2006 election, House Republicans met at the capitol to elect their officers for the next two-year term and closed ranks behind O’Neal, who was given the honor of formally nominating Richardson for another term as speaker.
Richardson lashed out at the state’s “liberal media” for their coverage of Perdue’s real estate dealings and said angrily, “If you attack one of us, you attack all of us, and we stand with you, Larry . . . We will not be swayed by attacks from the liberal media.”
At the same time Richardson was launching that attack on the media during the 2006 caucus meeting, he was also involved in his notorious affair with an Atlanta Gas Light lobbyist, a relationship that would later force him to resign as speaker when it was confirmed by his former wife.
In January 2007, a college student named Edward Chapman who had worked as a research staffer for the Georgia Democratic Party filed an ethics complaint against O’Neal over the HB 488 controversy.
Chapman alleged in his complaint that O’Neal, as the chairman of the House Ways and Means Committee, “used his position as a Member of the House to bestow a financial benefit upon a client of his private law practice.”
The O’Neal complaint was filed about two weeks after Democratic Party Chairman Bobby Kahn filed an ethics complaint against Richardson, alleging that Richardson had an “inappropriate relationship” with the Atlanta Gas Light lobbyist.
Both the Kahn complaint and the Chapman complaint were dismissed by legislative review panels without hearings or investigations being held.
The allegation in the Kahn complaint about Richardson’s relationship with a lobbyist has since been confirmed by Richardson’s divorced wife, Susan. She said in a Nov. 30 interview with TV newsman Dale Russell that Richardson had a “full-out affair” with the lobbyist during the period when Richardson was trying to get legislation passed that would have benefited the lobbyist’s employer, Atlanta Gas Light.
Just three days after Susan Richardson’s interview was aired on TV, Glenn Richardson was forced to step down as speaker, necessitating Thursday’s caucus vote on a new speaker.
The controversy over the Perdue tax break has become an issue in O’Neal’s campaign to become the new speaker. O’Neal addressed some of the points in the controversy in an email he sent to House Republicans this week.
O’Neal said, in part:
The canon of legal ethics prevents a lawyer from discussing legal work for past or present clients. As you know, I have done legal work for the governor. That has limited what I could say about the governor’s land matter and the legislation I sponsored.
However, the governor has for the first time released me to talk about all aspects of these matters, and the details I can share will show the extent to which this witch hunt has harmed my reputation unfairly.
The extent of my work for the governor has been greatly exaggerated. I currently do no legal work for him. In addition, I will be leaving my law firm on Friday of this week if you elect me so I can serve as a full-time speaker, and I will not have any legal clients except to conclude matters currently with my office.
I hope this answers any questions about the extent of my legal work for the governor.
On the specific tax legislation involved, I will begin with a summary of the legislation:
1. It was technical, involving interstate land exchanges, considered at that time unconstitutional anyway by the revenue department, which penalized only Georgia residents.
2. The change the law enacted had already passed in 49 states. Georgia was the last state to pass this law for its citizens.
3. It was retroactive, which has been made to be unusual but is common tax law practice, particularly when the legislation will ensure Georgians are treated the same as other states’ citizens, which is what we were doing with this bill.
4. It has been falsely claimed that only one taxpayer benefited from this bill. Hundreds of Georgians have had their taxes reduced by this bill, a fact that you may independently confirm with the Georgia Department of Revenue.
5. I, personally, did not benefit financially from this bill in any way.
6. Lastly the retroactivity complained of was done by an amendment actually added in the Senate so one must believe the Bobby Kahn machine that a representative can amend a bill in the Senate, which is now and was then against every rule of the Senate and the Constitution of the state of Georgia; hence impossible on its face or the “immaculate amendment.” . . .
. . . Even though Kahn and the Democrats failed to convince the voters of any wrongdoing in 2006, they did not stop. Kahn vowed to get the IRS to audit the matter.
What you do not know is that Kahn succeeded. An IRS audit was conducted after the election. Until now, I have not been able to discuss the results or even the existence of that audit. However, with Gov. Perdue’s permission, I can now tell you about audit’s results.
The IRS sent a team of federal auditors to conduct a full forensic audit of every aspect of this land issue transaction. It was a multi-week, full-blown, on-site examination.
The result was that the IRS made zero adjustment to the taxes involved and exonerated me once and for all for any wrongdoing in this matter.
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