Legislature(2007 - 2008)BELTZ 211
02/12/2007 01:30 PM Senate JUDICIARY
| Audio | Topic |
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| Start | |
| SB64 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | SB 64 | TELECONFERENCED | |
SB 64- DISCLOSURES & ETHICS
CHAIR FRENCH announced that the business before the committee is
to continue the overview of SB 64, which began on February 8.
DAVID JONES, Senior Assistant Attorney General, Civil Division,
Department of Law, continued the overview starting on Section 4.
It relates to electronic filing requirements of financial
disclosures from legislators, legislative directors, and public
members of the Select Committee on Legislative Ethics.
1:38:29 PM
MR. JONES said the governor's bill has three other disclosure
improvements that apply to candidates and public officials in
the executive branch.
CHAIR FRENCH asked if that pertains to electronic filing or the
broader topic of disclosure and the amount of information that
is released.
MR. JONES replied the three provisions include electronic
filing, filing with broader disclosure of details about
finances, and disclosures from former public officials.
Section 5 requires disclosure from former public officials
within 90 days of leaving service in an official position. This
would apply to the governor, to high-ranking executive branch
officials, to judicial officers, to certain municipal officers,
and to other public officials as defined in Chapter 50 of Title
39. Basically this section would extend the existing financial
disclosure requirements to the final period of service.
Section 6 requires more detail in the financial disclosures that
candidates and public officials file with APOC. The threshold
for reporting income or interest is reduced to $1,000 from the
current $5,000 level. The disclosure would include: the source
of the income, the amount received, the number of hours it took
to earn the income, and details regarding the services that were
provided. The $1,000 threshold would also apply to the existing
disclosure requirements for stocks, trusts, similar interests,
loans, loan guarantees, and indebtedness.
MR. JONES said DOL is currently comparing the definitions in AS
39.50.200 with the list of boards and commissions so it's
possible that an amendment will identify additional boards and
commissions that should be subject to the financial disclosure
requirements.
1:41:51 PM
Section 7 requires that candidates and public officials
electronically file financial disclosures. Again, APOC may grant
exceptions in extraordinary circumstances.
MR. JONES explained that Sections 8-11 contain four substantive
improvements to the Executive Branch Ethics Act.
Section 8 defines an "insignificant financial interest" for the
purpose of the Executive Branch Ethics Act. It establishes a
presumption that stock or other business ownership is
insignificant if the value of the interest is less than $5,000.
The presumption addresses a situation where an interest is worth
less than $5,000, but has the potential for substantial increase
as a result of an official action by the executive branch
member. In such cases a designated ethics supervisor would make
the determination - perhaps after consulting the attorney
general. He noted that SB 19 addresses the issue somewhat
differently.
Responding to a question from Senator Therriault he said Section
8 says: "Stock or other ownership interest in a business is
presumed to be insignificant if the value of the stock or other
ownership interest is less than $5,000."
1:44:59 PM
CHAIR FRENCH recalled that someone made a point that the
presumptive phrase could cover the situation where a stock
fluctuates; some days it's over the $5,000 limit and some days
it's under.
MR. JONES agreed and continued to Section 9. It establishes a
presumption that all gifts from a lobbyist to a public officer
or a member of the officer's immediate family are improper
unless the lobbyist is giving the gift to an immediate family
member.
MR. JONES said the presumptive phrase would allow flexibility to
accommodate varying circumstances such as the following
hypothetical example. Before accepting a wedding gift from a
neighbor who happens to be a lobbyist, an executive branch
administrative clerk would ask a designated ethics supervisor to
make a determination of whether the gift is permissible. The
supervisor would use the standard of whether a reasonable person
could infer that the gift was intended to influence official
duties. In that circumstance it would seem to be overreaching to
prohibit the wedding gift, he stated.
CHAIR FRENCH asked about the volume of gifts currently coming to
executive branch members from lobbyists.
MR. JONES said he did not have that information. "Those gifts
would be reported only if they exceed $150 to executive branch
members," he said. The reports go to the designated ethics
supervisor in each individual department.
CHAIR FRENCH asked if the restriction is strictly a prohibition
on gifts from lobbyists or a blanket prohibition. He asked if
the president of BP be prohibited from giving gifts to
Department of Revenue employees.
MR. JONES said yes; existing law prohibits gifts when it would
be reasonable to infer that the gift is intended to influence
official action. Also, there is a reporting requirement if a
gift is worth more than $150. SB 64 establishes an additional
presumption that gifts from lobbyists are intended to influence
the performance of official duties.
CHAIR FRENCH questioned whether this doesn't amount to an
outright ban. "If every gift is presumed to be intended to
influence the performance of official duties, why in the world
would we tolerate that practice?"
MR. JONES said it's close to but not quite an outright ban.
First, there is the explicit exemption for gifts to family
members and second, the presumption is established to deal with
the neighbor-lobbyist wedding-gift situation.
1:51:08 PM
SENATOR WIELECHOWSKI said SB 64 appears to say that no public
officer may receive meals or drinks from a lobbyist. He asked
about the current law.
MR. JONES agreed that SB 64 says that. Current law says that
when beverage and other hospitality is provided at someone's
home, it is presumed that it is not intended to influence
official action.
CHAIR FRENCH asked for clarification of whose private home that
covers.
MR. JONES said, "The regulation seems to indicate that the
intent is to cover the home of the person giving the gift and
not just anyone's home."
CHAIR FRENCH asked if that means that an individual can not take
an executive branch member to lunch, but the individual may
entertain the executive branch member at his or her home.
MR. JONES said existing law prohibits a gift that, it would be
reasonable to infer, is intended to influence official action.
He said that regulation has an explicit exception that applies
to hospitality provided at the provider's home.
MR. JONES restated that under current law providing food and
beverage is not prohibited outright. What is prohibited is a
gift that it would be reasonable to infer is intended to
influence official action.
CHAIR FRENCH asked if the ban is prophylactic or have there been
ethics complaints.
MR. JONES said he believes that it is prophylactic.
1:53:40 PM
SENATOR THERRIAULT asked if presumptive language is
automatically "rebuttable" such that a person could go to the
department ethics supervisor who could make the case and
exercise the latitude.
MR. JONES said that is both the intent and his understanding.
SENATOR THERRIAULT posed a hypothetical situation where a
lobbyist organized a breakfast meeting with an administration
official and the chair of the local PTA. He asked if it's okay
if the PTA chair pays for the breakfast.
MR. JONES replied it would be okay if the gift is small. By
regulation there is a presumption that anything less than $50 is
not intended to influence official action. "And assuming - based
on that regulation - that it would be unreasonable to infer that
the gift was intended to influence official action." There
wouldn't be an outright ban on a lobbyist's client paying for a
gift, he said, but generally there would be a ban on a lobbyist
paying.
1:56:26 PM
MR. JONES explained that Section 10 amends AS 39.52.180(a) with
respect to restrictions that apply after someone leaves the
executive branch. Under current law a two-year restriction
prevents a former executive branch member from working for
compensation on a matter in which he or she was personally and
substantially involved.
SB 64 eliminates an exception that currently exists for work on
legislation and regulations. The current two-year restriction is
extended to include work that former executive branch employees
did on legislation and regulations during state service. He
noted that the Senate Finance Committee adopted a similar
provision for SB 19.
MR. JONES explained that section 11 extends the existing one-
year ban on lobbying to include deputy commissioners of
principal departments, and those holding policy-making positions
in the governor's office. He clarified that the policy-making
phrase was taken from the definition section of the financial
disclosure provisions for APOC. The intent is that persons in
the governor's office that must file financial disclosures with
APOC would also be subject to the one-year restriction on
lobbying after leaving state service. SB 19 has a similar
provision.
MR. JONES said that Sections 12-14 are procedural. Section 12
limits application of the post state employment restrictions so
they apply only to persons who leave the executive branch after
the bill's effective date. Section 13 makes electronic filing
provisions effective on July 1, 2007 and Section 14 makes the
remainder of the bill effective immediately.
2:00:21 PM
CHAIR FRENCH referenced electronic filing in Section 4, page 3
and asked Mr. Jones to specify to which individuals this would
apply. In particular he asked if this would apply to municipal
races for assembly and school board as well as various borough
positions.
MR. JONES explained that Section 4 applies to legislators,
legislative directors and public members of the Select Committee
on Legislative Ethics. Section 1, which also has an electronic
filing requirement, applies to campaign groups, political
parties, and candidates for state elective offices. Section 7
applies to the governor, the lieutenant governor and public
officials including executive branch members who are currently
required to file financial disclosures with the APOC. The APOC
definition of public official also applies to judicial officers
including judges and justices as well as certain elected
officials such as assembly members.
CHAIR FRENCH asked if it would also apply to school board
members.
MR. JONES said yes, it applies to borough or city mayors borough
assembly members, city council members, school board members,
elected utility board members, city or borough managers, members
of a city or borough planning or zoning commission in a home
rule or general law city or borough or unified municipality.
CHAIR FRENCH pointed out it would also apply to city councils.
MR. JONES agreed.
CHAIR FRENCH questioned if there is any organized form of
government to which it would not apply.
MR. JONES replied, "None come to mind."
2:03:12 PM
CHAIR FRENCH noted that Tammy Kempton from APOC sent a letter
correcting testimony she gave at the last hearing. During the
hearing she indicated that about 50 percent of the people that
file do so electronically. When she rechecked the data she
discovered that in the last election cycle just 78 of the 511
candidates filed electronically. He emphasized that that
represents 15 percent so it's important to keep in mind that
this would impose a significant new requirement on 85 percent of
the candidates for office.
CHAIR FRENCH questioned whether the administration had
considered narrowing the requirement and focusing on just the
governor and lieutenant governor. He asked Mr. Jones if, during
deliberations on the preparation for the bill, any sort of
stratifying had been done to determine which offices are the
least important and which are the most important with regard to
electronic filing.
MR. JONES replied the discussion focused on the fact that "this
is an opportunity to allow technology to promote democracy."
With electronic filing citizens can find out more about the
interests of their public officials and candidates. This would
help citizens make more informed decisions about contacting
legislators and in the polling booth. "We didn't dissect it
further to determine whether those same interests would apply in
more localized elections, but the principle seems to be the
same. The more you know about the people that are representing
you, the more informed a decision you can make about whether you
want them to represent you."
CHAIR FRENCH agreed with the principle, but suggested there
needs to be some balance when 85 percent of the candidates have
not taken advantage of the method. Noting that hand written
documents can be scanned and posted online quickly, he asked if
that avenue had been considered.
MR. JONES said scanned data is not searchable and scanners were
not mentioned when the bill was discussed. It would be an
improvement over going to APOC and looking at a handwritten
document, but it's not as accessible as one that is filed
electronically.
SENATOR HUGGINS asked about the exemption for not reporting.
MR. JONES said there is a $5,000 low-budget campaign exception.
SENATOR HUGGINS said he would assume that would be removed at
some point.
MR. JONES said he could not speak for the governor or the
legislative director, but there is a pending bill that removes
the exemption. That is not a governor's bill, he said.
CHAIR FRENCH asked if the Alaska Municipal League (AML) had
taken a position on the bill.
MR. JONES said not to his knowledge.
SENATOR WIELECHOWSKI asked if the bill would sweep in new groups
that would be required to file.
MR. JONES replied the intent is to address the method of filing
and not to add new groups.
SENATOR THERRIAULT mentioned campaign disclosures and a
successful initiative that rolled back language such that the
source of contributions under $100 didn't have to be disclosed.
He noted that some candidates raise $40,000 a year now under the
wording of that initiative and there is no information as to
where that money came from. He asked if the administration had
considered adding the language back as part of the disclosure
requirements.
MR. JONES replied that issue was not addressed.
SENATOR HUGGINS agreed that that is a large loophole.
CHAIR FRENCH clarified that the governor's bill does not propose
to change that law.
MR. JONES stated that the only changes that are proposed with
respect to campaign finance and legislative activity are
disclosure requirements. For campaign financing the proposed
change is electronic filing.
CHAIR FRENCH asked for an explanation of the different purposes
of the disclosures in Title 24 and Title 39 and whether the
times that the disclosures are due fall on the same date.
MR. JONES replied he believes the purposes are the same. That is
to provide information to the public about elected or appointed
officials' financial interests that may affect their official
actions. He said he also believes that Title 24 and Title 39
disclosures are each due on March 15 every year.
Responding to further questions, Mr. Jones said it is his
understanding that legislators are covered only through Title
24; Title 39, Chapter 50 does not apply to legislators.
SENATOR HUGGINS asked how this would affect people who were
lobbyists before entering state service.
MR. JONES opined that it may be overreaching to prohibit the
appointment of someone who had previous experience as a
lobbyist. "There may be folks with lobbyist experience that have
very special skills to bring to a position." Given the size of
the state, he worries about tying the governor's hands to the
point that the pool of available people is too stringently
restricted. It seems that if the governor makes a poor choice
and it reflects poorly and may create an appearance of conflict,
then the public will hold the person accountable through
election or public opinion messages. That's a better way to
handle the issue than to establish a statutory prohibition, he
stated.
SENATOR HUGGINS clarified his point is not about hiring
lobbyists. "It's what you hire them for and what ... they can do
once they are in a state service job in connection to whom or
what they were doing as a lobbyist."
MR. JONES said the same analysis applies.
SENATOR THERRIAULT questioned whether this kind of prohibition
had been litigated because it may have constitutional problems.
The courts understand and allow some prohibition against trading
on the public trust when moving from executive branch service
into lobbying, but moving from the private sector into a public
trust position is not the court's concern or latitude. Someone
moving in this direction is not necessarily trading on
knowledge, expertise or connections that were made previously,
he stated.
MR. JONES said he was not aware of any litigation, but he agrees
that there is potential for a constitutional argument to be made
against such a prohibition.
SENATOR WIELECHOWSKI read part of Section 5 as follows:
Sec. 39.50.020. Report of financial and business
interests. (a) A public official other than the
governor or the lieutenant governor shall file a
statement giving income sources and business
interests, ...
He asked if a rational still exists to exempt the governor and
lieutenant governor or if they are covered in another provision.
MR. JONES said the governor and lieutenant governor are excepted
from the initial requirement because they filed their initial
disclosures as candidates for elective office. The March 15
deadline applies for every subsequent financial disclosure.
2:19:03 PM
CHAIR FRENCH found no further public testimony and closed public
testimony. He stated his intention to prepare a committee
substitute. It would capture the ethics provisions that were not
in SB 19 or SB 20 as well as other cleanup suggestions from the
administration and APOC. He asked members to comment
particularly with regard to electronic filing.
2:20:15 PM
SENATOR WIELECHOWSKI stated the belief that there are advantages
to electronic filing, but he questions the need for requiring it
to "bleed down" to the lower levels such as school board and
local city races. Although a lot of people in the Bush have
Internet access, if they don't "this could be extremely onerous
for many people in smaller races." For that reason he has
questions at this point.
SENATOR THERRIAULT mentioned Sections 10 and 11 and questioned
how they would be addressed relative to the current versions of
SB 19. Those sections could be dropped, but we must keep in mind
that the way the idea is achieved is different, he said. With
regard to electronic filing he said he has concerns and perhaps
it would be better to start slowly with a tiered system that
over time expands to the lower level races. He noted that Ms.
Kempton said the new system is quite different and he would be
interested in receiving a demonstration. Perhaps that would help
allay some of his concerns.
SENATOR HUGGINS said he is interested in knowing what the term
"extraordinary" means. He expressed the opinion that if 85
percent of the people aren't filing electronically, there will
be difficulties if it becomes mandatory. He agreed with Senator
Therriault that phasing in the requirement is worth considering.
CHAIR FRENCH said that scanning the documents and using a PDF
file may split the difference and he would contact APOC to learn
what it would take to do that. It "is fairly cheap, fairly
quick, and a fairly easy way to get instant or fairly instant
access to a campaign disclosure form." Acknowledging that the
PDF format is not searchable, he said that function could be
incorporated over time as the data is entered into the system.
The public really wants access to the forms to see if there has
been an influx of cash or a shifting of alliances, but in the
governor's race, for example, it can take four or five days
before APOC can enter all the last minute data. That means it
takes that long before the public is able to see what is in that
filing and "that's the missing gap in my view," he stated.
SENATOR WIELECHOWSKI asked if the candidates or APOC would scan
the forms. He noted that current APOC law says disclosure forms
must be postmarked by the due date and that might need to be
changed to say that the form must be received by the due date.
SENATOR THERRIAULT commented on mail service in remote areas and
questioned whether that is reasonable.
2:27:58 PM
CHAIR FRENCH asked Ms. Miles if the APOC report is presumed to
be timely if it is postmarked by a certain date or in APOC's
possession by the date.
BROOKE MILES, Executive Director, Alaska Public Offices
Commission (APOC), advised that it's the postmark.
SENATOR WIELECHOWSKI asked if APOC receives campaign documents
well after the filing deadlines.
MS. MILES said absolutely; it is fairly common. Sometimes it's
inadvertent and due to unreliable mail service "and sometimes
when campaign documents are mailed from the East Coast with an
expectation that they would get here bulk mail in two days, one
wonders how the filer could have that expectation." Regulation
states that a postmark is the determining factor and she thought
that was adopted after a court case.
SENATOR THERRIAULT commented that it can be difficult to capture
all the data for a particular reporting window and get it
postmarked by the deadline, which is two or three days later.
CHAIR FRENCH suggested that the seven-day report before an
election is only report for which it is a serious issue. That's
when "everyone's blood is up and the disclosures are coming
faster," he said.
SENATOR HUGGINS asked what sort of corrective measures APOC
takes when reporting is noncompliant.
MS. MILES explained the penalties are different under campaign
disclosure law and financial disclosure law, but for
noncompliance - when a report is late or missing information
there is always a $50 per day civil penalty. If information is
missing the report is considered to be late until the
information is received. She continued to say:
The commission staff looks at this in a somewhat fair-
minded way. For example, when a candidate files a
report and lists 300 contributors at X dollars amount.
As you're aware, you're filing a report that is
telling ... your constituents and the Alaskan public
all of the money you have received from $1 up. And
you're also required to give that person's name and
address. Under current guidelines when that person has
given you more than $250 you're required to give
occupation and employer.
So case at hand, Mr. Chairman, were we to receive a
report that disclosed some 300 contributors at X
dollars amount and say three or four that might have
required occupation and employer are missing, we
usually try to handle with a phone call to the
candidate or the candidate's chair and ask that they
do their best to obtain that information and get it to
us. And when that happens cooperatively, no civil
penalty is assessed.
CHAIR FRENCH asked if the seven day report is the last
comprehensive report that is due preceding an election cycle.
MS. MILES said under current guidelines that is correct.
CHAIR FRENCH asked the time span between when the reporting
period closes and when the report is actually due.
MS. MILES replied the end of the reporting period is always
three days before the filing day.
CHAIR FRENCH asked if the seven day report is due seven days
before the election.
MS. MILES said yes; the report is due on a Tuesday and the last
day for which a candidate reports contributions is the preceding
Friday.
CHAIR FRENCH asked if there has ever been an instance where a
seven day report didn't reach APOC because of a mail service
delay.
MS. MILES said she is sure there has been such an instance, but
there have also been instances where the person was a day late
in mailing the report. "We don't always receive all of the
reports on time to get them published before Election Day." This
year all were published, but this is the first year that ever
happened.
CHAIR FRENCH asked if APOC employs extra staff to help enter
data at election time.
MS. MILES said yes and she also offers overtime to existing
staff. Sometimes it's more helpful to use experienced staff to
enter data from handwritten campaign disclosure reports because
they may be more familiar with the names, she stated.
SENATOR THERRIAULT asked what the motivation is for filing
electronically. Is it so the public has immediate access to the
information or so that APOC can run a more efficient operation,
he asked.
MS. MILES said the purpose is to provide better public service
and to establish long-term technology efficiencies for the
agency. Remember, she said, APOC is asking for not only the
information on campaign disclosure reports, but also on all the
financial disclosure reports that all commissioners and
governor's assistants file, which is not available online in any
format.
With regard to scanning reports and putting the information into
a PDF file she advised that the Department of Administration has
said that scanning the thousands of pages that come in every
year is not affordable in terms of bandwidth.
2:39:09 PM
SENATOR WIELECHOWSKI referenced the APOC zero fiscal note and
suggested that there will be efficiencies and cost savings over
time.
MS. MILES agreed and said she though she indicated that "we
would of course be seeking efficiencies once it is established."
CHAIR FRENCH read the last sentence of the APOC fiscal note
which says: "It is not anticipated that this measure will add to
the costs of the Public Offices Commission." It doesn't mention
saving money or relieving any of the current burdens, he said.
MS. MILES replied, "But it will."
CHAIR FRENCH held SB 64 in committee.
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