By Deborah J. Kollars, Best Best & Krieger.
In the wake of various investigative reports and public scandals, three California lawmakers have proposed reform legislation aimed at providing greater transparency and accountability in government. Three separate bills, now making their way through the Legislature, aim to strengthen the Government Code and Political Reform Act, and have implications for local government agencies.
Assemblyman Mike Gatto (D-Glendale) introduced AB 10 in December 2014. According to Gatto, the bill “Provides much needed reform of the reporting requirements of the state’s elected officials.”
Under the bill, as introduced, elected officials would be required to more fully disclose information about business ventures and business partners, and disclose when they excuse themselves from voting based on a conflict of interest. The bill would increase thresholds for triggering a disqualifying financial interest and expand reporting requirements to provide more detail about officials’ income, property and investments.
Specifically, AB 10 proposes changes in four main components of disclosure:
- Modernize the financial interest thresholds that necessitate a public official excusing him or herself from a governmental decision. These numbers have been updated only once since 1974. Under the bill the new threshold at which a public official has a disqualifying financial interest in sources of income changes from $500 to $1,000; in investments in business entities from $2,000 to $5,000; and in interests in real property from $2,000 to $10,000.
- Include additional middle tiers and upper tiers in the financial disclosures on the FPPC’s Form 700.
- Require a more detailed disclosure of holdings, specifically a more thorough description of any businesses and the names of any business partners.
- Add an additional disclosure to the Form 700 that requires public officials to specify any instances in the previous year where a financial interest has been cause for a recusal from being involved with or making a governmental decision.
- On April 7, the bill was amended to amend Government Code section 82105, which defines political “contributions,” and excludes from the definition “behested” payments for legislative, governmental or charitable purposes. As amended, the bill would now require candidates and elected officials — for one year after they leave elective office — to report within 30 days following the receipt of a behested payment in excess of $5,000.
Gifts of Travel
SB 21 by Sen. Jerry Hill (D-San Mateo), also introduced in December, is a reintroduction of a portion of SB 831 from the 2014 legislative session, which was vetoed by Gov. Jerry Brown. The legislation would provide for greater transparency about public officials’ travel by requiring both state and local elected officials to disclose to the Fair Political Practices Commission the destination of travel paid for by special interests. The legislation also would require nonprofits that pay for travel by public officials to disclose the name of the donors responsible for funding the travel. While the bill establishes a state-mandated local program, it does not provide reimbursement to local agencies.
According to Hill, “under current law, the public has no way of knowing who is paying for legislator travel or where they are going. Donors hide behind nonprofits, preventing the public from knowing who was behind the gift to the elected official.”
Conflicts of Interest
SB 330 by Sen. Tony Mendoza (D-Artesia) is aimed at preventing elected and government officials from voting on public contracts when a family member has a financial interest or may benefit in the outcome of the contracting decision. Mendoza seeks to align California’s conflict of interest laws with those of other states, as well as private corporations.
Specifically, SB 330 would amend the Government Code to define when a public official is deemed to have a financial interest in a public contract to include situations where the public officer’s spouse, child, parent, sibling or the spouse of the child, parent or sibling has a financial interest in any contract under consideration in his or her official capacity. Under current law, any public official who has a direct or indirect financial conflict of interest must disqualify themselves from voting or participating in decisions related to that contract.
As it is currently proposed, a violation of the law will result in disqualification from ever holding any office in California, prison time and/or a fine of not more than $1,000. A local district attorney or the California Attorney General would have the authority to investigate alleged violations of the law and the discretion to pursue criminal prosecution. If they decide not to pursue a criminal prosecution, officials can turn the case over to the FPPC for an administrative or civil action.
Each of these bills is currently making its way through the legislative process and would not take effect until 2017. However, public officials should take note of the proposed changes afoot and be prepared to be more transparent and accountable in the years ahead.
Deborah J. Kollars is an associate in Best Best & Krieger’s Sacramento office. Her law practice focuses on water, land use and environmental matters. She provides advisory, litigation and transactional services to cities, counties and public agencies. She can be reached at firstname.lastname@example.org.