He Wheels. He Deals. Who Wins?

The Star-LedgerJuly 18, 2004



It was midafternoon on a Tuesday in July last year, the end of a red-eye legislative session that had begun the day before, and tobacco industry lobbyist Dale Florio sat alone just off the Assembly floor in the Statehouse waiting for a bill to pass. His eyes were puffy, and he wore the same brown suit he had put on more than a day earlier.

His bill was the state lawmakers’ last piece of business, ending a chaotic marathon of voting. Florio had only begun pushing for the legislation around 10 the night before in a rapid-fire succession of talks. A deal had been struck at the highest levels sometime around midnight, and when the bill came up for a vote that afternoon, there was no debate among the weary lawmakers. The bill passed, 77-0.

It takes months, even years, for most bills to arrive at the governor’s desk. This one took maybe 17 hours.

For the undisputed chief of New Jersey’s tobacco lobby, it was a remarkable victory in more ways than one.

It was a major plum for his largest account, Marlboro manufacturer Philip Morris, protecting the company and the other cigarette makers from bankruptcy in the face of multibillion-dollar jury awards. Florio pushed it through only hours after learning he would lose a long fight against a 55-cent-per-pack cigarette tax increase. And he got it done at the last minute, before the Legislature convened for a long recess.

As one veteran legislative staffer said at the time, “Things can happen quickly if the stars line up right.”

Even, it turns out, for America’s most embattled industry.

The tobacco makers have been under assault for 40 years. Smoking is outlawed in more and more public places. A $250 billion settlement with the states is draining profits. Courts are slapping them with multibillion-dollar judgments. They’ve been demonized in Hollywood films, hauled before Congress, subjected to countless damaging investigative news stories and TV reports.

On Thursday, they suffered another major setback when the U.S. Senate approved new federal regulation of tobacco products as part of a deal to end subsidies for the industry and buy out the nation’s tobacco growers. If House members approve the plan, it would give the Food and Drug Administration broad new powers to regulate sales, distribution and advertising for cigarettes and smokeless tobacco.

In New Jersey, the tobacco companies have little reason to expect any favors from a governor who has vowed to make the state “the front line of the war against cancer.” In three years, Gov. James E. McGreevey and the Legislature have pushed the state’s tax on cigarettes up by $1.60 per pack. Just this month, another increase brought it to $2.40, the country’s highest.

To hold back the tide of public opinion and political ill will, the industry has a horde of lobbyists not just in Washington, but in every state capital.

In Trenton, the tobacco lobby is led by one of the state’s savviest operators. Florio boasts meticulously cultivated relationships, command of Trenton’s inside game and a reputation as a generous campaign contributor. He can be found making the industry’s case at lunch and dinner, in fleeting encounters in Statehouse corridors, over cocktails at political fund-raisers, in faxes and handwritten notes.

Philip Morris paid Florio’s firm $248,000 last year, and spent another $34,000 on lobbying in the state, plus another $140,000 in political contributions. Overall, the tobacco industry and its allies spent $1.5 million influencing legislation, and lawmakers, in New Jersey.

It has paid off, to a degree.

True, they were defeated three years running in the fight against tax hikes.

But Florio and the other tobacco lobbyists have carved out quiet victories on no less important matters. They pushed through the jury-award law, for one thing. Even more significantly, they stalled legislation to prohibit smoking in restaurants, bars and virtually every other public place, a potentially crippling threat to the industry’s future.

In other words, the lobbyists did what the cigarette manufacturers – every special interest, in fact – hired them to do: They made the stars line up right.

* * *

At 49, Florio still has the trim build, and competitive streak, of the basketball standout he was growing up.

After a stint running Philip Morris’ local lobbying effort across the nation, Florio helped found Princeton Public Affairs Group. Over 17 years, it has grown into a bipartisan behemoth, Trenton’s largest lobbying firm, and Florio has become a wealthy man, with not one but two million-dollar homes, in Skillman and Stone Harbor.

In a state now run by Democrats, Florio is a conservative, pro-business Republican. He chairs the GOP in heavily Republican Somerset County.

But he stays in business because he’s a polished professional, not a firebrand partisan. Friendly but reserved, Florio is not one to raise his voice. When he protests a bill, he does it politely.

Despite his partisan credentials, he has crafted a comfortable relationship with leaders in both parties. Florio has worked closely with Assembly Majority Leader Joseph Roberts (D-Camden) on key legislation. McGreevey’s chief of staff, Jamie Fox, worked at Winning Strategies Washington, a sister company of Princeton Public Affairs co-owned by Florio, before joining the administration in 2002.

“Dale is a gentleman,” Fox said. “Some lobbyists can be bullies. Others are in it for the long term. They recognize that you can win some and lose some. They don’t operate on threats.”

Said Senate President Richard Codey (D-Essex): “He’s someone I trust.”

Florio and his partners – who include the son of a Democratic congressman, Bill Pascrell III, and a one-time Democratic state Senate President, John Russo – need to be on good terms with the Democrats in charge. More than 150 clients depend on them, from cell-phone companies to hospitals, oil firms to sports teams, developers to convenience stores.

No one keeps a scorecard for lobbying shops, but it’s a safe bet that Princeton Public Affairs didn’t become the state’s largest by losing more than it wins. Florio says the success flows from the strength of the firm’s arguments and the soundness of its strategies.

For Philip Morris, his message is that it is still legal to smoke, and it’s in no one’s interests to see the tobacco giants go bankrupt. He takes pains to explain to state officials and lawmakers how a whole swath of businesses – restaurants, bars, retail stores – rely in part on cigarette sales or smokers’ patronage. And he works to undermine his clients’ critics in conversations at every turn.

“The barbarians are at the gate. The zealots – they want to ban smoking entirely, I guess, except on your own property, in your own home,” Florio said in a typical interview with a reporter last year. Even delivering that sort of incendiary line, he does it in his quiet, low-key manner, as if to show he’s more reasonable, more sensible than his opponents.

But if the message is a factor in tobacco’s wins during the McGreevey era, it doesn’t hurt that Florio, and his clients, are major players on the nonstop fund-raising circuit where legislators solicit donations from special interests.

One reason Florio carries clout is that he has many clients making many campaign contributions, many at his own suggestion. Clients’ lobbying packages often include putting together a contribution strategy: who gets the contributions, how much and when. Among Princeton Public Affairs’ many clients, perhaps 50 of them give political contributions, Florio said.

In 2003, for instance, officials from PSE&G gave more than $42,000, drug maker Merck more than $41,000 and construction firm Conti Enterprises at least $32,000.

On top of that, Princeton Public Affairs chipped in $60,000 to candidates.

Florio, as county chair, also controls the Somerset County Republicans’ PAC, which contributed $198,000 to candidates. He kicked in $3,500 of his own money as well.

As for Philip Morris? It gave the maximum $25,000 contribution to Republican legislative leaders, who fought last year’s tax increases. The company also gave $25,000 to Democratic leaders, who did not. In all, the company gave $86,000 to the Republicans and $53,000 to the Democrats in 2003.

The pull of those political contributions helps explain why, when Florio showed up late on that budget night last year with one last-minute request, the state’s top officials stopped to listen.

Florio told them that the flood of lawsuits and massive damage settlements put the industry in financial peril. To appeal a judgment, a tobacco company was required to post as a bond the entire amount of the jury’s award. In Illinois, Philip Morris faced an order to put up $12 billion to fight a judgment.

The industry had for several years pushed states to pass a law that would limit such bonds to $50 million or $100 million. In Illinois and Minnesota, massive lobbying efforts still failed to get it through, and in Oregon, the governor vetoed it.

In New Jersey, Florio bypassed all of that.

Florio said it had more to do with good timing and sound lobbying strategy than his political pull. He was able to turn to his advantage a fast-approaching budget deadline, high-stakes bargaining and state legislators’ unhappiness about hitting up smokers with another tax increase.

“I don’t want to downplay it, but you had all of those things coming together,” he said.

It also came together for Florio during his fight against a ban on indoor smoking – an issue that, in many ways, is far more threatening to the industry than tax hikes.

For the four big tobacco firms who sell more than 90 percent of the cigarettes in the country – Philip Morris, R.J. Reynolds, Lorillard and Brown & Williamson – the worry is that tax hikes could prompt some people to quit and others to turn to less-expensive brands they don’t control. But more likely, they send smokers to other states or the Internet to feed their fix more cheaply.

A prohibition on smoking in bars and restaurants, however, could put a real dent in consumption, and the tobacco giants’ bottom lines.

It’s an idea floating from state to state, and in the spring of 2003, it arrived in New Jersey.

In Trenton, the cigarette companies publicly took a back seat in the fight against the smoking ban, instead deferring to an ally, the New Jersey Restaurant Association.

But everywhere you turn in the Statehouse – on every issue, it seems – Florio is there. Even if Philip Morris technically was watching from afar, their man was still in the mix, because Florio also lobbies for the restaurant association.

Florio and the restaurateurs quickly opened talks with Roberts about softening the bill.

Roberts is an unusually influential player in the Assembly, from fund-raising to strategic planning on major issues, lobbyists say. Florio had another reason for approaching Roberts: He had only recently sold his stake in Shore restaurants and bars.

The majority leader and the restaurants quickly landed on a deal allowing 20 percent of restaurant seats to be designated as smoking areas. And smoking would still be allowed without restriction in bars.

Roberts said he was trying to balance the interests of the public-health groups with those of the restaurants and taverns: “I wanted to make sure everybody is treated fairly,” he said.

But the damage to the smoking ban had been done. The public-health groups hated the compromise, and though it passed in committee, it eventually died a slow death.

At the same time Restaurant Association officials were fighting the ban, they were sitting down with Assembly Democrats to discuss how they could help them with their $500,000 “Taste of the State” fund-raiser.

The restaurants would provide free gourmet food and donations worth $14,000 leading up to the election. But Roberts said the discussions he had about the fund-raiser had nothing to do with the deal he fashioned on the smoking ban bill.

* * *

To appreciate fully the access and influence Florio enjoys, it helps to consider a man at the other end of the power spectrum in New Jersey.

Larry Downs is executive director of NJ Breathes, an umbrella group that handles anti-smoking issues for public-health groups. Downs grew up in a smoking household. His mother bought Salem menthols, his father Lucky Strikes. Every Christmas, their thoughtful son would give them the latest kick-the-habit product.

Today, he brims with the same sort of optimism about what he can accomplish, but he is still a player of limited sway in Trenton.

The gutting of the smoking ban legislation last summer left Downs spoiling for revenge. With the legislative elections ahead in November, Downs decided to try his hand at politics. The results weren’t pretty.

As nonprofits, public-health groups are generally barred from making political contributions or “electioneering.” Apart from NJ Breathes, however, Downs had set up a political group called the Smokefree Action Committee. He had raised a little money – very little. At $20,000, it was less, in fact, than just one of those Philip Morris donations to the legislative leaders.

Downs knew he would have to be creative if his PAC were to make any impact. He decided to focus his efforts in the 38th legislative district, where Sen. Joseph Coniglio (D-Bergen), an opponent of the smoking ban, was in a tough fight for re-election.

Smokefree Action spent $9,811 to call Democratic and independent women, telling them “Joe Coniglio is for Big Tobacco, while Rose Marie Heck is for kids. Can we count on your support for Rose Marie Heck on Election Day?” They got 2,451 responses of yes, and on the Monday morning before the election, calls went to those people urging them to vote for Coniglio’s Republican opponent.

It backfired. Coniglio won easily, and Democrats picked up two seats in the Senate, enough to claim control of the upper house. Codey would become the Senate president. He was never a fan of the smoking ban, which he considered unfair to restaurant owners. Now, he was irate at the anti-smoking groups’ campaign against Coniglio.

Codey assumed the presidency on Jan. 13. The bill has gone nowhere since.

Florio could not have orchestrated a better endgame to his fight.

When Democrats were hitting his client with tax increases, he had threatened the same sort of election-season revenge that Downs tried. But in the end, Florio knew better.

Sitting inside the wood-paneled conference room of his firm’s brownstone on State Street, right across from the Statehouse, Florio reflected on his strategy one day last fall.

When the legislative fight on an issue ends, he said, the smart lobbyist doesn’t launch a political war.

“You re-tool. You rethink,” he said. “And you get practical again.”