SENATOR TAYLOR introduced SB 333 (DISCLOSURE OF EXECUTIVE BRANCH              
 CLOSE ASSOCIATIONS) at the request of the Legislative Budget and              
 Audit Committee, and asked RANDY WELKER, Legislative Auditor, to              
 review the legislation.                                                       
                                                                               
 (Due to a malfunction in the taping of the first tape of the                  
 committee meeting, the minutes for SB 333 have been compiled from             
 the log notes, and selected parts of the Memorandum from RANDY                
 WELKER, the Legislative Auditor for the Legislative Budget and                
 Audit Committee.)                                                             
                                                                               
 MR. WELKER:  "This memorandum is provided to briefly summarize the            
 contents of Senate Bill 333.  The bill introduced by the                      
 Legislative Budget and Audit Committee is in response to an audit             
 released last year.                                                           
                                                                               
 The impetus for the suggested changes comes primarily from our                
 audit of the Department of Public Safety's Division of Fish and               
 Wildlife Protection (FWP).  However, the problem identified is not            
 limited to only FWP.  Other public officials with discretionary               
 authority could also be placed in a conflict of interest position.            
                                                                               
 Section 1 of the bill establishes a requirement for disclosure of             
 the formation or maintenance of a close economic association                  
 similar to that contained in the Legislative Ethics Act.                      
                                                                               
 The bill also requires a public officer, if it appears feasible and           
 in the best interests of the state, to refrain from taking or with-           
 holding official action in a matter that directly involves a person           
 with whom the public officer has a close economic association.                
 However, if taking or withholding official action is not avoidable,           
 the public officer shall immediately disclose the action to the               
 public officer's designated supervisor.                                       
                                                                               
 The bill requires a supervisor, to whom a public officer has made             
 a disclosure, to make a written determination of whether the                  
 officer's involvement could constitute a conflict of interest.  The           
 supervisor could reassign duties to avoid the conflict or the                 
 supervisor may direct the divestiture or removal by the officer of            
 the financial interest given rise to the conflict.                            
                                                                               
 Section 2 of the bill is a change to the nepotism prohibition in              
 statute.  As the result of an isolated circumstance we found at the           
 Alaska Psychiatric Institute, we are recommending that the statute            
 be expanded.  Currently the only relationship that is prohibited is           
 that a person may not be employed in the same department or agency            
 if they are the spouse of, or related by blood to, the executive              
 head of a principal state department agency.                                  
                                                                               
 We are recommending that the statute be expanded to include all               
 supervisory/subordinate relationships (not just a relationship to             
 the commissioner) and that the definition of relationship is                  
 expended to include a regular member of the officer's household.              
                                                                               
 I appreciate the Committee's consideration of this legislation.  If           
 enacted, this legislation will help improve the public perception             
 and clarify the legislature's disapproval of close economic                   
 associations by public officials who have discretion in taking or             
 withholding official action that may affect the public officer or             
 a person with whom the public officer has an economic association."           
                                                                               
 MR. WELKER presented some recommendations for suggested changes in            
 AS 39.90.020, AS 24.60.090, and AS 39.52.960.                                 
                                                                               
 There was some discussion among the committee members about close             
 economic ties, first and second cousins, and how disclosures should           
 be determined.                                                                
                                                                               
 KEVIN RICHIE, Director for the Division of Personnel/EEO, Dept. of            
 Administration, answered questions by SENATOR LITTLE on class                 
 action suits, infringements, and adverse actions.                             
                                                                               
 SENATOR JACKO moved to pass SENATE BILL NO. 333 (DISCLOSURE OF                
 EXECUTIVE BRANCH CLOSE ASSOCIATIONS) from committee with individual           
 recommendations.  Without objections, so ordered.