Legislature(1993 - 1994)

04/19/1994 08:30 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
  SENATE BILL NO. 333                                                          
       An  Act  relating  to   disclosure  of  close  economic                 
       associations  by certain  state  employees and  to  the                 
       prohibition against nepotism in the executive branch of                 
       state government; and providing for an effective date.                  
  Co-chair Pearce  directed  that SB  333  be brought  on  for                 
  discussion and  referenced  file material  relating  to  the                 
  RANDY WELKER,  Legislative Auditor,  came before  committee.                 
  He explained that the bill was introduced by the Legislative                 
  Budget and Audit  Committee in response  to an audit of  the                 
  Dept.  of   Public  Safety,  Fish  and  Wildlife  Protection                 
  Division.  While the legislature had earlier passed law that                 
  made it illegal for fish and wildlife protection officers to                 
  be licensed as  guides, the audit highlighted  potential for                 
  an additional problem:   close economic association.   Those                 
  involved   in  the  legislative  branch  of  government  are                 
  required to disclose  such associations.   There is no  such                 
  requirement in  the executive branch ethics act.  During the                 
  audit, evidence was  found of  fish and wildlife  protection                 
  officers  who  either  own  commercial  fishing  permits  or                 
  commercial fishing vessels, or have  spouses who own permits                 
  or  vessels.   There  were  also indications  of significant                 
  property transactions between  fish and wildlife  protection                 
  officers  and  those  they  regulate.     Nothing  currently                 
  requires disclosure  of these associations.   This situation                 
  is not unique to  the Dept. of Public Safety.   Law does not                 
  presently prohibit  an ABC investigator from  being co-owner                 
  of  a liquor  license.    Further,  an oil  and gas  auditor                 
  within the Dept. of Revenue is not required to disclose that                 
  he or she  owns significant stock  in an oil  company.   The                 
  proposed  bill requires that  those who exercise substantial                 
  discretion in  regulatory or  audit matters  be required  to                 
  disclose economic  associations to their  supervisors.   The                 
  legislation also provides  for action  by the supervisor  in                 
  either reassigning  duties or  ordering  divestiture of  the                 
  Section  2  of the  bill extends  provisions of  the current                 
  nepotism statute.   The present prohibition only  extends to                 
  blood relations  to the  executive head  of the  department.                 
  The    law    should   include    all   employer/subordinate                 
  relationships in state  government.   Section 2 expands  the                 
  current prohibition.    The fiscal  note from  the Dept.  of                 
  Administration relates to changes in the nepotism statute.                   
  Discussion    followed    regarding   the    definition   of                 
  "supervisor."  Mr. Welker explained that  it is described as                 
  "a  position  as  immediate supervisor  or  as  a supervisor                 
  within the organizational structure."  Co-chair Pearce asked                 
  if the child of the Governor's  chief of staff could work in                 
  one  of   the  departments.     Mr.  Welker  said   a  legal                 
  interpretation of that situation would have to be made.                      
  In response  to a question from Senator Kelly concerning the                 
  definition  of  "public  officer,"  Mr.  Welker  voiced  his                 
  understanding that it refers to "any state employee."                        
  Senator Kelly stated his  discomfort with broad  application                 
  of expanded nepotism provisions.                                             
  Senator Sharp  voiced his understanding  that private sector                 
  nepotism restrictions generally allow for situations where a                 
  family member was an  employee prior to hire of  the related                 
  supervisor.    Co-chair Pearce  suggested that  the employee                 
  would not necessarily  have to be  discharged, in the  noted                 
  situation,  but merely transferred  to a  different section.                 
  Mr. Welker concurred.                                                        
  Senator  Kerttula attested  to  substantial  abuse in  areas                 
  covered by the proposed bill.                                                
  Mr. Welker directed attention to page  1, line 14, and noted                 
  language   requiring  that   the  "personnel   board"  adopt                 
  associated regulations.  The administration pointed out that                 
  all executive  branch ethics regulations  are developed  and                 
  defined by  the Attorney  General.   The administration  has                 
  thus asked that  "personnel board" be deleted  and "Attorney                 
  General" inserted in  lieu thereof.  Mr.  Welker recommended                 
  the change.                                                                  
  KEVIN RICHIE, Director, Division  of Personnel/EEO, Dept. of                 
  Administration, and MIKE McMULLEN, Personnel Manager, System                 
  Services,    Division    of    Personnel/EEO,    Dept.    of                 
  Administration,   came  before   committee.     Mr.   Richie                 
  referenced  the  $24.3 fiscal  note  and reiterated  that it                 
  relates  to  expanded nepotism  provisions.   He  noted that                 
  current statutes provide  no waiver for nepotism.   Proposed                 
  new law extends  to a "regular  member of the household"  as                 
  well.   That includes "other people living  in the household                 
  that weren't related by blood."  It includes a larger number                 
  of people  than previously covered,  and it is  assumed that                 
  grievances will be filed over this issue.                                    
  Senator Rieger directed attention to page  2, lines 4 and 5,                 
  and requested an explanation of "official action in a matter                 
  that directly involves a person . .  . ."  He then asked how                 
  the language would  be interpreted by the  Attorney General.                 
  Mr. McMullen explained that the  executive branch ethics act                 
  contains an  assumption  that relationships  exist.    Minor                 
  interactions are not conflicts of interest.                                  
  Co-chair Pearce asked representatives from the department if                 
  they were supportive  of the language change  recommended by                 
  Mr.  Welker.  Both  Mr. Richie  and  Mr.  McMullen responded                 
  affirmatively.  Mr. McMullen indicated that the change would                 
  reduce the fiscal note by $1.5.                                              
  Discussion   followed   regarding   expansion  of   nepotism                 
  prohibitions to cover  regular members of a  household.  Mr.                 
  Richie acknowledged that inclusion represents a policy call.                 
  He  noted  that today's  households  contain  equivalents of                 
  family members that are not related by blood or marriage.                    
  Senator Kerttula MOVED  for adoption of the  language change                 
  from "personnel board" to "Attorney General" at page 1, line                 
  14.  No  objection having been  raised, Amendment No. 1  was                 
  Senator Sharp MOVED that CSSB 333  (Fin) pass from committee                 
  with  individual  recommendations  and  accompanying  fiscal                 
  notes.  Senator  Kelly OBJECTED.   He attested to the  small                 
  size of the  state population and  the number of  households                 
  with members  working for state  government.  He  voiced his                 
  belief  that certain  nepotism prohibitions within  the bill                 
  were too broad.                                                              
  End:      SFC-94, #64, Side 1                                                
  Begin:    SFC-94, #64, Side 2                                                
  Co-chair Pearce called  for a show  of hands on the  motion.                 
  CSSB 333 (Fin) was REPORTED OUT of  committee on a vote of 4                 
  to 1.   It was  accompanied by  zero fiscal  notes from  the                 
  Office of the Governor  and the Dept.  of Labor and a  $24.3                 
  note from the Dept. of Administration.  Co-chairs Pearce and                 
  Frank and Senators  Kerttula, Rieger,  and Sharp signed  the                 
  committee report with  a "do pass" recommendation.   Senator                 
  Kelly signed "no recommendation."                                            
  Senator Kerttula asked for a brief recess.                                   
                       RECESS - 9:15 A.M.                                      
                      RECONVENE - 9:30 A.M.                                    

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