05/03/1994 08:00 AM House STA

  CSSB 333(FIN)am - DISCLOSURE OF EXECUTIVE BRANCH CLOSE                       
  ASSOCIATIONS                                                                 
                                                                               
  CHAIRMAN VEZEY opened CSSB 333, by request of Legislative                    
  Budget & Audit, for discussion.                                              
                                                                               
  TAPE 94-52, SIDE B                                                           
  Number 016                                                                   
                                                                               
  RANDY WELKER, LEGISLATIVE AUDITOR, addressed CSSB 333.  He                   
  began CSSB 333 was introduced as a result of an audit                        
  Legislative Budget & Audit (LB&A) conducted on the Division                  
  of Fish & Wildlife (F&W), Department of Public Safety.  He                   
  noted a couple years ago the legislature passed legislation,                 
  as a result of a prior audit, that prohibited F&W protection                 
  officers from being employed also as assistant guides.  LB&A                 
  felt this was a direct conflict of interest and the                          
  legislature agreed.                                                          
                                                                               
  MR. WELKER explained CSSB 333 is focused on the aspect of                    
  close economic association between people who regulate                       
  industries and have the ability to exercise discretion, over                 
  people whom they may have economic associations with.  He                    
  commented in the F&W audit they found officers, or spouses                   
  of officers, who held commercial fishing licenses or owned                   
  commercial fishing vessels.  They found indications of                       
  significant property transactions between F&W protection                     
  officers and the industry they regulate.  Presently, there                   
  is nothing in law requiring those associations to be                         
  disclosed to anyone.                                                         
                                                                               
  MR. WELKER emphasized this problem does not only relate to                   
  F&W.  He gave a hypothetical example, whereby there is                       
  nothing in law that requires an alcoholic beverage control                   
  board inspector to inform anyone if he/she has an interest                   
  in a liquor license.  The intent of CSSB 333, he stated, is                  
  to put a disclosure requirement in law, in the executive                     
  branch ethics act, similar to that which exists in the                       
  legislative ethics act.  They are required to refrain from                   
  taking a withholding action that may be questioned because                   
  of their economic association.  CSSB 333 further provides                    
  the supervisor "can or should" either reassign functions, or                 
  direct the divestiture of the interest if it is in the best                  
  interest of the state.                                                       
                                                                               
  MR. WELKER commented the other section of CSSB 333 is an                     
  expansion of the nepotism prohibition in statute.                            
  Currently, the only relationship prohibited by state law is                  
  an employee cannot be related to the commissioner of the                     
  department in which they work.  LB&A does not believe it is                  
  appropriate for there to be any supervisor/subordinate                       
  relationships in state employment.  The amendment prohibits                  
  relationships of a supervisor position for anyone in the                     
  employee's immediate family.  This problem was noticed by                    
  the LB&A in an audit of the Alaska Psychiatric Institute                     
  where they found a supervisor had provided for the promotion                 
  and salary advancement of a member in their immediate                        
  family.  The addition of this section, he believed, would                    
  improve public perception and remove any possible direct                     
  conflicts that might exist.                                                  
                                                                               
  (REPRESENTATIVE KOTT entered the meeting at 9:55 a.m.)                       
                                                                               
  CHAIRMAN VEZEY observed the current nepotism statute has                     
  been in place without amendment since 1959.  He believed                     
  regulations also existed within agencies regarding nepotism.                 
                                                                               
  MR. WELKER replied there are some nepotism regulations in                    
  place, however, he was not sure they were solidly based in                   
  statute.  He felt the reading of the nepotism statute was                    
  very clear as to what it covered.                                            
                                                                               
  CHAIRMAN VEZEY interjected it read "department or agency,"                   
  therefore the definition was a little broader.                               
                                                                               
  MR. WELKER further stated if there are any regulations that                  
  try to prohibit lower level relationships they "may be                       
  suspect."                                                                    
                                                                               
  CHAIRMAN VEZEY replied they may be suspect in terms of their                 
  impact of law, but they are policy.  He noted the problem of                 
  nepotism arises particularly in rural areas.  Hiring of                      
  local people is often limited because of nepotism                            
  restrictions.                                                                
                                                                               
  MR. WELKER clarified the intent of LB&A is to place it                       
  permanently is statute so it applies equally to all                          
  departments and agencies.                                                    
                                                                               
  Number 164                                                                   
                                                                               
  CHAIRMAN VEZEY commented CSSB 333 may be wise for Anchorage                  
  and Fairbanks, but he questioned the impact on rural areas                   
  where the populations are significantly smaller.  He                         
  inquired to what degree CSSB 333 went.                                       
                                                                               
  MR. WELKER answered spouse, parent, children, grandparent,                   
  and regular members of the person's household.                               
                                                                               
  Number 190                                                                   
                                                                               
  CHAIRMAN VEZEY stated he did not intend to move CSSB 333 at                  
  this meeting, however, it was an interesting subject.  He                    
  was surprised to see the nepotism statute had not been                       
  amended since 1959 considering the changes in the ethics                     
  which took place in the 1970s and 1980s.  CHAIRMAN VEZEY                     
  held CSSB 333 in committee.                                                  
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  CHAIRMAN VEZEY, having no more business before the                           
  committee, adjourned the meeting at 10:00 a.m.