Legislature(2017 - 2018)GRUENBERG 120
02/18/2017 11:00 AM STATE AFFAIRS
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HB 44-LEGISLATIVE ETHICS: VOTING & CONFLICTS 11:23:58 AM CHAIR KREISS-TOMKINS announced that the next order of business would be SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 44, "An Act requiring a legislator to abstain from taking or withholding official action or exerting official influence that could benefit or harm an immediate family member or certain employers; requiring a legislator to request to be excused from voting in an instance where the legislator may have a financial conflict of interest; and providing for an effective date." [Before the committee was CSSSHB 44(JUD).] 11:24:48 AM REPRESENTATIVE JASON GRENN, Alaska State Legislature, presented SSHB 44, as prime sponsor. He stated that the intent of SSHB 44 is to increase transparency within the legislature and allow the public to see with utmost certainty that conflicts of interest are taken seriously in Alaska. He asserted that the intent of SSHB 44 is not to prevent a legislator from voting on an issue, as legislators are elected to represent their constituents. He attested that SSHB 44 would neither directly stop a legislator from voting nor outright disqualify him/her from voting. He said that SSHB 44 lays out a standard procedure for a legislator to decide for himself/herself if he/she has a substantial conflict of interest. He opined that there is always room for improvement, and legislators can exemplify a higher standard. REPRESENTATIVE GRENN paraphrased from the sponsor statement, which read as follows [original punctuation provided]: SSHB 44 contains provisions to ensure conflicts are "substantial" before a legislator would be required to abstain from voting. Any benefit a legislator or a member of the legislator's immediate family might receive from supporting a particular piece of legislation would have to be greater than the benefit a large group of Alaskans would receive in order to require abstention. The bill and resolution recognize the responsibility of legislators to vote, except in clear cases where the outcome of the vote would result in substantial personal financial gain. This includes cases where an immediate family member or a legislator's employer would receive a large and direct financial benefit. 11:26:2 8 AM RYAN JOHNSTON, Staff, Representative Jason Grenn, Alaska State Legislature, on behalf of Representative Grenn, prime sponsor of SSHB 44, paraphrased from the sectional analysis, which read as follows [original punctuation provided]: Section 1: Defines the conflict of interest standards under which a Legislator may vote on a particular issue. Conflict is defined as substantial benefit or harm to the financial interest of the legislator's immediate family member, the legislator's employer, an immediate family member's employer, a person with whom the legislator is negotiating employment, or from whom the legislator or immediate family member has received more than $10,000 in income within the last 12 months. Exceptions to this include those outlined in Section 2, or while participating in public discussion or debate. Section 2: A legislator may not vote on a question in a committee and must request to abstain from voting on the floor if the legislator or an immediate family member has a substantial financial interest. A legislator may vote on an appropriations bill that meets the requirements of AS 37.07.020(a) or 37.07.100 (Executive Budget Act). Section 3: Defines "substantially benefit or harm" as the effect on the person's financial interest being greater than the effect on the financial interest of a substantial class of persons to which the person belongs as a member of a profession, occupation, industry, or region. Section 4: Defines "financial interest" as ownership of an interest or involvement in a business, property ownership, or relationship that is a source of income or financial benefit. Section 5: Provides that this Act only takes effect upon passage of a resolution amending Uniform Rule 34(b). Section 6: Provides for an effective date later than that of the resolution to Uniform Rule 34(b) referred to in Section 5. MR. JOHNSTON pointed out the change made by the House Judiciary Standing Committee, shown on page 2, line [20, of CSSSHB 40(JUD)]: a legislator is required simply to declare a conflict in committee before voting on a bill, rather than not being able to vote in committee. 11:29:03 AM MR. JOHNSTON cited an example of what would be considered a substantial conflict of interest for a legislator. He described a situation in which a legislator, voting on major roads in the Interior, is himself part of the substantial class of persons who lives in the Interior. He said that if that legislator votes on proposed legislation that affects a road that accesses only a parcel of land of which he/she is the sole owner, then the legislator has a substantial interest in the proposed legislation. He attested that the legislator's interest is different from or greater than that of anyone else living in the Interior, who also could benefit from a road to his/her house. He said that in this example, under the amendment to AS 24.60.030, subsection (g), proposed under SSHB 44, the legislator would be required to request an abstention. He noted that the example he cited is on page 6 of advisory opinion 2004- 02 in the research brief from Legislative Research Services, titled LRS Report 15.422, included in the committee packet. 11:30:43 AM REPRESENTATIVE BIRCH asked for the sponsor's perspective on a voter's role in evaluating the qualifications, merits, and "business" of the respective candidates and House members. He noted that candidates for House run for office every two years and candidates for Senate every four years. He expressed his concern that SSHB 44 would be "setting aside the voters." He asserted that through the election process, every candidate's opponents aptly and capably elucidate the affiliations and financial interests of that candidate. 11:32:04 AM REPRESENTATIVE GRENN asked if Representative Birch was asking how voters weigh in during a campaign process. REPRESENTATIVE BIRCH responded yes. He explained that voters understand a candidate's employment, such as a union business agent, a doctor, an engineer, a retail person, or a worker for a large multinational corporation. He pointed out that all candidates complete a public official financial disclosure (POFD) statement exposing their financial interests to the public. He asserted that there is an election process every two years, and if the public is validly and reasonably concerned, the issues are revealed through that process and by virtue of having an opponent. He expressed his concern that SSHB 44 disenfranchises the 17,000 people that each House member represents in his/her district. REPRESENTATIVE GRENN maintained that SSHB 44 focuses on unanticipated legislation. He referred to the example given by Mr. Johnston about a candidate owning property. He said that owning that property would not have been made known to the voters, nor would it be something that a candidate's opponent would have talked about. He offered that no one would "bring that to light" during a campaign. He gave an example of the state constructing a road through that property making the candidate a millionaire. He said, "Is that something that might be reflected in a future campaign? Perhaps. Is it something you should declare as a conflict of interest? Perhaps." 11:33:58 AM REPRESENTATIVE GRENN stated that SSHB 44 would give guidelines on what a substantial financial interest means regarding voting on proposed legislation and would allow a different process for those occasions. He opined SSHB 44 would create more transparency and a way for voters to be made aware of financial conflicts. He said he is not suggesting that there was anything hidden from the public before this legislation was introduced, but that the public be informed of any potential conflicts of interest as the legislature processes new legislation. REPRESENTATIVE BIRCH opined that if a legislator were on the receiving end of a $1 million benefit because of legislation, then he is cautiously optimistic that the media and the public would scrutinize it. He said one of the most substantial issues for the state currently is the $3 billion budget deficit. He offered that each legislator has a substantial interest in resolving that problem, and it will affect each person differently. He stated that a legislator's duty and obligation is to his/her individual voters and expressed his concern that a law will be passed that is "a little muddled around the edges" with varying ideas for what is "substantial." He opined that a legislator's constituency would be abandoned through challenges to a legislator's eligibility to vote on issues because of real or perceived conflicts. He offered that members do have an opportunity to announce a conflict on the floor [of the House or Senate]. He said he had a concern about disenfranchising the voters that legislators are elected to represent. REPRESENTATIVE GRENN maintained that SSHB 44 would allow the opportunity for a legislator who declares a conflict to speak to that conflict before the legislative body, as opposed to "what happens now with just a lone objection that is not on the record." He stated that SSHB 44 would allow the legislative body to "hear out" the conflict and vote on whether the legislator who has declared a conflict should abstain from voting. He said that in some states, a legislator with a conflict is not allowed to vote. He asserted that SSHB 44 allows for a public process and for the legislative body to vote on the potential conflicts. 11:36:50 AM REPRESENTATIVE BIRCH asked if there had been a situation that prompted introduction of SSHB 44. REPRESENTATIVE GRENN responded not at all. He stated that before he ran for office he was asked to resign from his job because of a potential conflict of interest. He said that he did so because he didn't want his campaign to have any sort of conflict of interest attached to it. He mentioned that 49 other states handle conflicts of interest differently and allow their legislators to be seen as transparently as possible. He asserted that the legislature can always build more trust with the voters. He said he believes SSHB 44 would help to do that. REPRESENTATIVE BIRCH commented that it was unfortunate that Representative Grenn resigned from his job, since Alaska has a citizen legislature. He added that hopefully every legislator has "another life" outside of the purported three months spent in legislative session. 11:37:59 AM REPRESENTATIVE KNOPP expressed his concern that the legislators would "muddy everything up in chambers and everybody is going to stand up and declare a conflict erring on the side of caution." He offered the following hypothetical scenario: a proposed legislation to fund a number of Interior roads is before the legislature in the capital budget, and the voting member of the legislature is a construction contractor. He said that although the project is going out for bid in a public process, and the floor sessions are public, the contractor, who may or may not bid on the project, has a conflict of interest. He asked, "Is that the road we're going to go down ... every single time we have something coming up here." MR. JOHNSTON responded that every legislator is required to vote on the final budget under AS 37.07.020(a). He said that in Representative Knopp's hypothetical situation, the legislator could declare his/her conflict of interest again, but the chair would rule him/her out of order, and the conflict of interest would not go to a legislative body vote. He added that this situation was unlike the earlier example, which did not involve a budgetary vote. 11:39:44 AM REPRESENTATIVE KNOPP asked what in the current process avoids declaring conflicts of interest, and what triggered the introduction of SSHB 44. REPRESENTATIVE GRENN said he does not have any personal anecdote to relay, and that the proposed legislation was drafted without input from anyone within or without the legislature. He asserted that his staff worked on SSHB 44 independently. He added that they solely focused on creating transparency so that the public can trust what the legislators are doing, when there is a perceived conflict of interest. He added that there is nothing that happened recently in the legislature prompting him to introduce the proposed legislation. He said, however, as he went door to door, his constituents mentioned that they felt legislators were doing their voters a disservice by not being more open and transparent. He said some referred to the lack of transparency as "tarmac disease" - when legislators hit the tarmac, the constituents "didn't know everything that was happening." He contended that people were looking for ways to know exactly "what was happening in Juneau." He said he has responded that there are cameras everywhere, social media, and documentation. He attested that the legislature does a very good job of trying to share everything done in the legislature. He maintained that anything that can be done to put more on the public record should be done. He opined that SSHB 44 does that. 11:42:21 AM REPRESENTATIVE JOSEPHSON opined that currently "this building is a remarkably partisan building" and offered his belief that if the public were aware of how partisan it is, they would be shocked. He mentioned that in the State of Hawaii, there are 25 senators. He said that currently all 25 senators are members of the Democratic Party. He went on to say that two years ago, 24 of the senators were Democrats and one was a Republican. He offered the following hypothetical scenario: The one Republican senator in Hawaii is a pineapple grower with a pineapple farm on the north shore of the island of Oahu. A Democrat has a "pineapple bill" and wants a unanimous vote. He is concerned that the Republican has a conflict of interest and would vote against his pineapple bill. Representative Josephson suggested that when the conflict of interest was declared by the Republican, the 24 Democrats would gang up against the Republican and find that the declared conflict was substantial; therefore, the Republican must be recused from voting. He expressed his concern that a member of the minority would not get the same objective hearing on a conflict of interest debate [as a member of the majority]. He asked, "How do you resolve that?" MR. JOHNSTON replied that there are many steps leading up to a legislator needing to recuse himself/herself during a floor session. He added that SSHB 44 leaves it up to the legislator to "stand on the floor" and make his/her own declaration of a conflict and request to abstain. No one can stand on the floor [of the House or Senate] and "call someone out." He said that in that scenario, the single minority member could request an advisory opinion from the Select Committee on Legislative Ethics prior to his/her declaration in the floor session. He offered that if the committee issued an advisory opinion that the legislator does not have a conflict, then the legislator can avoid declaring a conflict during the floor session and would have that opinion as backup if the majority members filed an ethics complaint. He concluded that there would be checks and balances and no super-majority control. 11:46:12 AM REPRESENTATIVE JOHNSON posed a scenario as follows: There is a district with all pineapple farmers. The people of the district have elected a pineapple farmer because that person is representative of the district. She asked if every time a pineapple bill comes before the legislature, the legislator would have to declare a conflict and would not be able to vote on the bill. She said that the people of the district, in essence, have lost their representation on the issue that most concerns them. MR. JOHNSTON said that under SSHB 44, simply being a pineapple farmer facing a pineapple bill does not constitute a conflict of interest. He asserted that it is "what's in the bill" that counts. He offered that if there is a tax on all pineapple farmers that is the same across the board, then the legislator would have the right to vote on that bill, because the bill is affecting the entire class of persons, industry, or region the same. He said if that pineapple bill only gives a tax incentive for pineapple farms over 1,000 acres, and that legislator owns the only pineapple farm over 1,000 acres, then that would constitute a substantial conflict, which should be declared. He said that simply being a part of an industry does not constitute an outright conflict of interest. There must be something in the proposed legislation that sets that legislator apart from the rest of the class to constitute a conflict of interest, such as only he/she would benefit or be harmed by the legislation. REPRESENTATIVE JOHNSON expressed two concerns: in an attempt to err on the side of caution, most legislators will over-declare; and in an effort to avoid voting on controversial legislation, legislators will want to be "conflicted out." REPRESENTATIVE TUCK stated that declaring a conflict of interest allows a legislator to avoid voting on proposed legislation from which he/she may personally benefit. He offered that currently it only takes an objection from one member to override that declaration in the legislature. Consequently, the legislator is required to vote on the proposed legislation. He opined that it is appropriate that the full legislative body decide if a legislator should vote, rather than just one person. He asserted that SSHB 44 offers protection for all members of the legislature, since there are times when a vote may hurt one's political career and times when a vote may hurt one's private career. He suggested the following scenario: A legislator is part owner of a nail salon. A proposed legislation benefits that nail salon, because it is the only salon that can handle the training [mentioned in the proposed legislation]. The legislator may be voting on behalf of the industry, but there is only one nail salon that can provide the services. Representative Tuck asked whether that legislator should be able to vote on that proposed legislation. He opined that SSHB 44 is an innocent bill, which would allow the full [legislative] body to decide if a legislator should vote on proposed legislation, rather than allow one person to decide. CHAIR KREISS-TOMKINS announced that SSHB 44 would be held over.