BILL ANALYSIS                                                                                                                                                                                                    

          |SENATE RULES COMMITTEE            |                        SB 330|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
          |327-4478                          |                              |

                                   THIRD READING 

          Bill No:  SB 330
          Author:   Mendoza (D)
          Amended:  6/1/15  
          Vote:     21  

           SENATE GOVERNANCE & FIN. COMMITTEE:  7-0, 4/15/15
           AYES:  Hertzberg, Nguyen, Bates, Beall, Hernandez, Lara, Pavley

           AYES:  Lara, Bates, Beall, Hill, Leyva, Mendoza, Nielsen

           SUBJECT:   Public officers:  contracts:  financial interest

          SOURCE:    Author

          DIGEST:  This bill specifies 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.


          Existing law:

          1)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  


                                                                     SB 330  
                                                                    Page  2

            members. (Government Code Section 1090)  

          2)Specifies circumstances under which an officer or employee is  
            exempt from the prohibitions against having a financial  
            interest in public contracts.

          This bill: 

          1)Expands the list of family relationships that give rise to a  
            prohibited financial interest in a public contract under  
            Section 1090 of the Government Code to include a public  





                     Spouse of an official's child, parent, or sibling. 

          1)Requires that the same standards used to determine a public  
            officer's financial interest under existing law must be used  
            to determine a financial interest with respect to any person  
            listed above.

          2)Directs that an individual lobbying on behalf of a contracting  
            party must be construed to be an agent of that contracting  
            party for purposes of determining a financial interest  
            pursuant to this bill's provisions.

          3)Provides that this bill is subject to existing provisions of  
            Government Code Section 1090.

          4)Limits the conflicts-of-interest to individual members of the  
            governing entity, rather than the entire governing body.


                                                                     SB 330  
                                                                    Page  3

          1)Purpose of the bill.  Existing law does not expressly forbid  
            state and local officials from awarding public contracts to  
            their adult children, parents, siblings, in-laws, or other  
            relatives.  This bill is motivated by concerns that the  
            lobbying efforts or financial interests of family members  
            beyond an official's household may be unduly influencing  
            official decisions in public contracting, thereby undermining  
            public confidence in government.  The author's office points  
            out that several other states' conflict of interest laws are  
            more expansive than California's.  For example, Arizona and  
            Indiana prohibit a public official from making or voting on a  
            contract that would benefit the official's spouse, parent,  
            sibling, child, stepchild, grandparent, grandchild, in-law,  
            and even unrelated persons who rely on the public official for  
            significant financial support.  Meanwhile, some states, like  
            Maine and West Virginia, even consider an official  
            "interested" in a contract if the contract would benefit the  
            official's "close business associate."  SB 330 brings state  
            and local agencies' conflict of interest restrictions into  
            line with policies adopted by other states, California's  
            public universities, and many private corporations. 

          2)Raising the stakes. While SB 330 clearly prohibits public  
            officials from making or voting on public contracts that would  
            benefit certain close family members, California judges can  
            already use the common law doctrine against conflicts of  
            interest to invalidate agreements tainted by this kind of  
            self-dealing.  However, officials who violate the common law  
            doctrine are not subject to criminal prosecution.  SB 330  
            significantly strengthens these common law prohibitions by  
            making it a crime, punishable by fines or jail time, for a  
            public official to make or vote on a public contract  
            benefitting his or her adult child, sibling, parent, or  
            in-law.  SB 330 raises questions about whether state law  
            should distinguish between imposing criminal penalties for  
            willful Government Code Section 1090 violations in which a  
            public official directly enriches him or herself, and  
            violations involving more remote financial interests, such as  
            those of an official's stepparents and in-laws.


                                                                     SB 330  
                                                                    Page  4

          3)Mandate.  Because a willful violation of Government Code  
            Section 1090's prohibitions is a crime, the Legislative  
            Counsel's Office says that SB 330's expansion of those  
            prohibitions creates a new crime.  By creating a new crime, SB  
            330 also creates a new state-mandated program.  But this bill  
            disclaims the state's responsibility for reimbursing local  
            governments for enforcing these new crimes.  That's consistent  
            with the California Constitution, which says that the state  
            does not have to reimburse local governments for the costs of  
            new crimes (Article XIIIB, 6[a] [2]).

          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:YesLocal:   Yes

          According to the Senate Appropriations Committee, Fair Political  
          Practices Commission 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 investigative staff).

          SUPPORT:   (Verified 5/29/15)

          None received

          OPPOSITION:   (Verified5/29/15)

          None received



          Prepared by:Toren Lewis / GOV. & F. / (916) 651-4119


                                                                     SB 330  
                                                                    Page  5

          6/1/15 17:21:36

                                   ****  END  ****