BILL ANALYSIS Ó
SB 1011
Page 1
Date of Hearing: August 3, 2016
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Lorena Gonzalez, Chair
SB 1011
(Mendoza) - As Amended August 1, 2016
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|Policy |Elections and Redistricting |Vote:|6 - 0 |
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| |Local Government | |5 - 0 |
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Urgency: No State Mandated Local Program: YesReimbursable:
No
SUMMARY:
This bill provides, commencing January 1, 2018, for the purposes
of Government Code Section 1090 dealing with conflicts of
interests in contracts, that a public officer with membership on
any state or local body, board, or commission, is deemed to have
a remote interest in a contract if the officer's child, parent,
sibling, or the spouse of the child, parent, or sibling, has a
financial interest in the contract, unless the financial
SB 1011
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interest of those other persons is not known to the public
officer.
FISCAL EFFECT:
1)The Fair Political Practices Commission (FPPC), pursuant to
legislation enacted in 2013, has authority to: (a) commence
administrative or civil enforcement actions for violations of
Section 1090 and related statutes; and (b) issue written
opinions or advice in response to requests from persons
subject to these laws. The FPPC will experience an increase in
advice requests from public officials to determine whether
they may have a financial interest in a contract as a result
of a family relationship. Ongoing General Fund costs could be
up to $210,000 annually for 1.5 positions in the legal and
enforcement divisions.
2)Potential but likely minor increase in state costs to the
extent anyone is sentenced to state prison for violation of
the bill's provisions. (The penalty for violation of the
conflict of interest provisions is a fine of not more than
$1,000, or by imprisonment in the state prison, and by
permanent disqualification from holding any office in this
state.)
COMMENTS:
1)Purpose. According to the author, "The perception that
political agendas coincide with personal financial interests
is a common thread of concern amongst the public. Although
Public officers are prohibited from entering into state
contracts that directly benefit them financially, Public
officers may be seen as having biases in their public contract
decisions when the specific contract decision directly affects
SB 1011
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a child, parent, sibling, or the spouse of a child, parent, or
sibling."
2)Background. Section 1090 of the Government Code generally
prohibits a public official or employee from making a contract
in his or her official capacity in which he or she has a
financial interest. In addition, a public body or board is
prohibited from making a contract in which any member of the
body or board has a financial interest, even if that member
does not participate in the making of the contract. This
prohibition, contained in Section 1090, dates back to the
second session of the California Legislature (Chapter
136/Statutes of 1851).
State law recognizes two categories of exceptions to Section
1090. One category is "remote interests". Where a government
official has a "remote interest" in a contract, he or she must
take three steps before the body on which he or she sits may
vote on that contract. First, the official must disclose the
interest to the government body. Second, the interest must be
noted in the government body's official records. Finally, the
official with the "remote interest" must abstain from
participating in the review and approval of the contract.
State law lists 16 situations that qualify as "remote
interests." While the willful failure of an officer to
disclose a remote interest in a contract would subject that
officer to the conflict of interest penalties, the contract
itself is not subject to cancelation due to the violation
unless the contracting party had knowledge of the fact of the
remote interest of the officer at the time the contract was
executed.
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3)Precedent-Setting. This bill creates a new "remote
interest," establishing a situation under which the
financial interests of an elected official's relatives
create a remote interest for the official. Most
previously-established remote interests were designed to
narrow the reach of Section 1090, by taking interests
that were found by legal opinions to be financial
interests under Section 1090, and redefining those
interests as "remote interests." Conversely, this bill
expands the scope of Section 1090 through the creation of
a new remote interest, i.e. it makes interests currently
not covered by Section 1090 subject to that law by
defining those interests as "remote interests."
Because actions that affect the financial interests of a
public official's spouse or dependent child may have a
corresponding impact on the official, existing conflict of
interest laws generally recognize that the financial interests
of an official's spouse or dependent child can create a
conflict of interest for the official. This bill, however,
breaks new ground by extending the conflict of interest
provisions of Section 1090 to situations where a governmental
decision does not have the potential for having a financial
impact on an elected official. Instead, this bill deems a
public official's ties by blood or marriage with siblings,
children, parents, and the spouses of those relatives to be
sufficiently important as to prohibit the official from
participating in a contracting decision.
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4)Prior Legislation. In 2015, SB 330 (Mendoza), a similar bill,
was held on this committee's Suspense file. SB 330 was a
somewhat more broad, however, in that it included the public
officer's spouse, which the FPPC indicates would have
increased the complexity of enforcement and advice.
Analysis Prepared by:Chuck Nicol / APPR. / (916)
319-2081