BILL ANALYSIS Ó SENATE COMMITTEE ON APPROPRIATIONS Senator Ricardo Lara, Chair 2015 - 2016 Regular Session SB 330 (Mendoza) - Public officers: contracts: financial interest. ----------------------------------------------------------------- | | | | | | ----------------------------------------------------------------- |--------------------------------+--------------------------------| | | | |Version: February 23, 2015 |Policy Vote: GOV. & F. 7 - 0 | | | | |--------------------------------+--------------------------------| | | | |Urgency: No |Mandate: Yes | | | | |--------------------------------+--------------------------------| | | | |Hearing Date: May 28, 2015 |Consultant: Mark McKenzie | | | | ----------------------------------------------------------------- SUSPENSE FILE. AS AMENDED. Bill Summary: SB 330 would specify that an elected state or local official is deemed to have a prohibited financial interest in a public contract if the public official's spouse, child, parent, sibling, or spouse of the child, parent, or sibling has a financial interest in that contract, as specified. Fiscal Impact (as approved on May 28, 2015): Fair Political Practices Commission (FPPC) costs of up to $211,000 (General Fund) annually for 1/2 PY of legal staff to handle increased requests for written advice in conflict-of-interest cases, and 1 PY of staff for increased enforcement caseload (1/2 PY of legal staff and 1/2 PY of SB 330 (Mendoza) Page 1 of ? investigative staff). Background: Existing law prohibits members of the Legislature and state, county, district, judicial district, and city officers or employees from having a financial interest in any contract made in their official capacity, or by any body or board of which they are members. (Government Code Section 1090) Existing law also specifies circumstances under which an officer or employee is exempt from the prohibitions against having a financial interest in public contracts. Existing law authorizes the FPPC to enforce Section 1090 violations by bringing an administrative or civil action against a person subject to public contract conflict-of-interest provisions, as specified. Existing law also authorizes public officials who are subject to Section 1090 to request an opinion or advice from the FPPC regarding prohibitions against having a financial interest in public contracts. Proposed Law: SB 330 would, on or after January 1, 2017, expand the circumstances that give rise to a prohibited financial interest in a public contract. Specifically, this bill would deem an elected state or local officer to have a prohibited financial interest in a contract if the official's spouse, child, parent, sibling, or the spouse of the child, parent, or sibling has a financial interest in a contract made by the officer in his or her official capacity, or by any body, board, or commission of which that officer is a member. This bill requires that the same standards used to determine a public officer's financial interest under current law must be used to determine a financial interest with respect to any of the specified family relations. An individual lobbying on behalf of a contracting party would be considered an agent of that party for purposes of determining a prohibited financial interest. Related SB 330 (Mendoza) Page 2 of ? Legislation: AB 1090 (Fong), Chap 650/2013, expanded FPPC authority regarding enforcement of violations of Government Code Section 1090, dealing with elected officials' conflicts-of-interest in public agency contracts, and required FPPC to provide opinions and advice with respect to Section 1090. Staff Comments: This bill would strengthen conflict-of-interest laws by prohibiting lobbying efforts or financial interests of certain family members from unduly influencing state and local officials' public contracting decisions. The FPPC anticipates that this bill will result in a significant increase in requests from public officials for Section 1090 legal opinions and advice to determine whether they may have a financial interest in a contract as a result of a family relationship. The expanded conflict-of-interest provisions are also expected to result in additional FPPC enforcement action. The FPPC indicates it would incur additional costs of $210,934 annually for 1-1/2 PY of staff time within the legal and enforcement divisions, as specified above. There could be some offsetting penalty and fine revenues, but they are unquantifiable at this time. By expanding the prohibitions against public officials' financial interests in contracts, the bill creates a new crime, thereby imposing a state-mandated local program. Any local costs related to the enforcement of the new crimes are not reimbursable from the state, pursuant to the California Constitution and existing statute. Author amendments (as adopted on May 28, 2015): Proposed author's amendments would: Make the bill subject to existing provisions of Section 1090. Limit the conflicts-of-interest to individual members of the governing entity, rather than the entire governing body. SB 330 (Mendoza) Page 3 of ? -- END --