HOUSE FINANCE COMMITTEE APRIL 24, 1998 1:55 P.M. TAPE HFC 98 - 125, Side 1 TAPE HFC 98 - 125, Side 2 TAPE HFC 98 - 126, Side 1 CALL TO ORDER Co-Chair Gene Therriault called the House Finance Committee meeting to order at 1:55 p.m. PRESENT Co-Chair Hanley Representative Kelly Co-Chair Therriault Representative Kohring Representative Davies Representative Martin Representative Davis Representative Moses Representative Foster Representative Mulder Representative Grussendorf ALSO PRESENT Ben Brown, Staff, Senator Kelly, Neil Slotnick, Assistant Attorney General, Commercial Section, Department of Law. SUMMARY SB 105 "An Act relating to legislative ethics; relating to the filing of disclosures by certain legislative employees and officials; and providing for an effective date." SB was HELD in Committee for further consideration. "An Act relating to legislative ethics; relating to the filing of disclosures by certain legislative employees and officials; and providing for an effective date." BEN BROWN, STAFF, SENATOR KELLY spoke in support of SB 273. The Select Committee on Legislative Ethics requested the legislation. It incorporates several recommendations to improve the legislative ethics code passed in 1992. The legislation also deals with the State Elections Act and the Executive Branch Ethics Act. The State Elections Act was amended due to concerns regarding fundraising during the legislative session. He observed that section 1 has already been enacted into state law. He noted that there are some issues in the State Elections Act that the bill needs to address. The Executive Branch Ethics Act is being amended to more closely correspond to the Legislative Ethics Act. He reviewed SB 273: SECTION 1: AS 15.13.072.(d) PROHIBITED SOLICITATION & ACCEPTANCE OF CONTRIBUTIONS. This section will be removed from the next proposed committee substitute because it has already been incorporated into law with the passage of SB 275. SECTION 2: AS 15.13.074(c) PROHIBITED CONTRIBUTIONS Some of this language was included in SB 273. The date that the proclamation is filled would remain. Section 2 would also lengthen the period of time after an election in which a candidate may continue to raise money to either 60 days after the election or the end of the calendar year, whichever comes first. Mr. Brown noted that sections 3, 4 and 5 relate to disposal of unused campaign assets, a provision of the Campaign Finance Reform Initiative. Unused funds can be transferred to an office account. The office account was called the Legislative Office Account, which created confusion with the Legislative Affairs Agency office account. The accounts were renamed as the Public Office Expense Term (POET) account. A POET reserve account was created to allow funding to be transferred at $5 thousand dollars a year to minimize the tax debt. The POET account statutes are made retroactive. SECTION 3: AS 15.13.110(a) POET ACCOUNT REFERENCE IN REPORTING REQUIREMENTS This section changes the name of the account a victorious legislative candidate can establish with unused campaign assets under 15.13.116, from legislative office account to Public Office Expense Term (POET) account. SECTION 4: AS 15.13.116(a) DISBURSEMENT OF CAMPAIGN ASSETS This section allows a transfer of unused campaign assets to a POET account or to a POET account reserve in accordance with the new subsection which follows. Sections 93, 94, and 95 allow this section and Section 5 to take effect immediately and to be retroactive to the 31st of December 1996. SECTION 5: AS 15.13.116(d) DISBURSEMENT OF CAMPAIGN ASSETS This section adds a new subsection (d) which allows a legislator to transfer up to $5000 annually from a POET account reserve to a POET account. It further allows a transfer of unused campaign assets of up to $20,000 by senators and $10,000 by representatives to a POET reserve. SECTION 6: AS 23.20.526(d) EXCLUSION FROM DEFINITION OF `EMPLOYMENT' This section makes a conforming amendment based on changes in this bill to the Public Official Financial Disclosure law (39.50) to ensure that public employees who are eligible for unemployment compensation remain eligible. (Refer to Attachment 1 - Cramer memo, 13th February `98.) SECTION 7: AS 24.25.010(e) SUBPEONA POWERS: The Legislative Ethics Code specifically grants the Ethics Committee authority to subpoena witnesses under 24.60.150(b)(2). This section amends the statute that sets out general authority for legislative subpoenas and requires presiding officers' concurrence, providing that the section does not apply to the ethics committee, as it currently does not apply to the Legislative Council or the Legislative Budget & Audit Committee. Like the Ethics Committee, both Leg Council and LB&A are permanent interim committees with express grants of authority to subpoena witnesses. Mr. Brown explained that a problem could occur if the Speaker or President or their staff were the subject of a complaint, they would have to concur in the issuance of a subpoena. This would be a conflict of interest. SECTION 8: AS 24.45.041(b) REPORTING OF SPOUSAL RELATIONSHIPS BY LOBBYISTS This section adds a new provision to the law requiring legislative lobbyists to disclose spousal relationships with legislators, legislative employees, and some public officials. It cites the definition of spousal equivalent at 39.50.030(g). SECTION 9: AS 24.45.171(12) DEFINITIONS This section clarifies the definitions of public official and public officer in relation to the legislative lobbying law, excluding judicial and municipal officers, but including legislative directors. Mr. Brown noted that sections 10 - 60 deal with the Legislative Ethics Code. SECTION 10: AS 24.60.030(a) LEGISLATIVE ETHICS CODE BEHAVIORAL RESTRICTIONS This section amends the Legislative Ethics Code to refine the restrictions on behavior by persons in the legislative branch. It specifically disallows the use of public resources for nonlegislative purposes or for partisan political purposes. It allows limited use of some resources if the cost is nominal or reimbursement is made, and permits facsimile use on the same terms as telephone use. "Nongovernmental" was changed to "nonlegislative". New language was added to clarify that the use of public funds, facilities, equipment, services, or government asset or resource for a nonlegislative purpose, for involvement in or support of or opposition to partisan political activity, or was prohibited. Limited use of state property and resources for personal purposes if the use does not interfere with the performance of public duties and either the cost or value related to the use is nominal or the legislator or legislative employee reimburses the state for the cost of the use is allowed. "Facsimile" was added on page 10, line 29. Section 10 allows Leg Council to designate space for health and fitness purposes to allow legislative use of the Capitol School gym. This language was added to address the issue that space solely used by legislators may be a violation of the code. The Ethics Committee issued an advisory opinion that would not allow equipment bought by legislators to be used in a public space as a private benefit. The Capitol School gym will be a shared space. Section 10 also allows legislators to use their private offices in the Capitol during session, and for a five-day window before and after session, for personal or political purposes if there is no cost and the use doesn't interfere with performance of public duties. Mr. Brown stated that the legislation "allows legislators, and not staff, to have a special bubble of protection around them in their private offices. So, they can use them to continue being active in whatever businesses or socials that they would have been back in home, if there is no cost or it is very minimal, or there is reimbursement." SECTION 11: AS 24.60.030(c) POLITICAL MASS MAILING This section extends a current provision of the Legislative Ethics Code which prohibits use of state funds to print or distribute a mass mailing from or about a legislator who is a candidate for State office during the period 90 days before the primary and ending the day after the general election. The current ban is expanded to include legislative employees. It also expands the ban to candidates for federal or municipal office, or for telephone or electric co-operative boards. This prohibition does not apply to a legislator's LAA office allowance, and would therefore primarily restrict the use of committee or leadership funds for a political mass mailing. Co-Chair Therriault questioned if the ban would apply to staff time spent folding or stuffing mailings. Mr. Brown stated that legislator's would not be protected for using staff time for campaign mailings. Mailings would have to be for legitimate legislative use. SECTION 12: AS 24.60.030(d) CAMPAIGN LITERATURE This section adds fundraising notices to the list of current prohibitions on distributing or posting campaign literature in State facilities. It expands the current prohibition to include legislative employees, and allows a legislator to post materials related to "nostalgic" materials, such as a past election in a private legislative office. SECTION 13: AS 24.60.030(f) BOARD MEMBERSHIP This section changes the board membership disclosure period from 30 days to 60 days and requires the ethics committee to publish disclosures in the journal. It exempts legislators and legislative employees whose appointments are already published in the journal from disclosing redundantly. Many state boards and commissions have legislative members who are appointed by the Speaker. This eliminates redundant disclosures. SECTION 14: AS 24.60.030(g) CONFLICTS OF INTERESTS This substantially changes the prohibition on participating in legislative, political or administrative action, if there is an equity or ownership interest in something that the action affects. Unless forced to by the Uniform Rules a legislator could not vote on a question if the legislator has an interest. It deletes language relating to participation in legislative, political or administrative action. It assumes that the appropriate time for the public to be informed and for a person not to be able to act is when they vote. The drafting of amendments and preparatory work before the vote would not have to be disclosed. Mr. Brown observed that section 14 is being conformed to common practice. SECTION 15: AS 24.60.030(h) POLITICAL ACTIVITY DURING THE WORK DAY This section adds a new subsection to the restrictions on legislative behavior, which requires an employee to take leave for the period of time the employee is engaged in political campaign activities, other than incidental campaign activities. It permits political campaign activities on government time if the activities are part of the normal legislative duties, including answering phone calls and handling incoming correspondence. SECTION 16: AS 24.60.031(a) FUNDRAISING DURING SESSION This section clarifies that the restrictions on fundraising during session are in effect on a day when either body is in regular or special session. It prevents a legislator or legislative employee from soliciting or accepting contributions for legislative campaigns during session, accepting money from an event held for legislative political purposes during session, or expending money for a legislative campaign if the money was raised during session. An exemption was added in State Affairs for contributions made in the 90 days preceding an election in which a legislator is a candidate. Mr. Brown observed that the components of SB 275 are not in compliance with this section of the Legislative Ethics Law. Legislators seeking statewide office are permitted to raise money under SB 275. Under current law, legislators would not be able to raise money during a special session. Under SB 105 legislators could continue fund raising during a special as long as it is not 90 days proceeding the election. SECTION 17: AS 24.60.031(c) BAN ON FUNDRAISING WHEN TRAVELING AT STATE EXPENSE This section adds new subsections to the fundraising restrictions in the Legislative Ethics Code. Subsection (c) prevents travel at State expense to a place where a fundraiser is planned within 48 hours of the travel. It allows State-paid travel if the fundraiser is at least 48 hours after the travel occurs, if a subsequent trip (not paid for by the State) is made between the two locations, or if the travel is to convene or adjourn for a legislative session in the capital city. Subsection (e) defines `campaign fundraising event'. Mr. Brown observed that the intent is that fundraising be allowed following the convening or adjourning travel. Similar language was added to the Executive Branch Ethics Act to govern the conduct of the Governor and Lieutenant Governor. Co-Chair Therriault questioned how the provision would work. Members concluded that further clarification was needed. Mr. Brown stated that he had prepared an amendment to address a second trip. Representative Davies observed that Ethics Committee has advised him to apportion the cost of trips that include state and private business. He noted that it is difficult to apportion costs. He recommended that half of the cost be paid from campaign funds. He noted the imposition on the legislator's time. Mr. Brown stated that he is concern with the definition of fundraising event. He stated that would work with members for a better solution. Mr. Brown explained that the Legislative Ethics Committee requested section 18. SECTION 18: AS 24.60.039(b) EMPLOYMENT DISCRIMINATION This section reflects the ethics committee's shared jurisdiction with the State Commission for Human Rights on complaints filed against a legislator or legislative employee concerning violations of 18.80.220 (Unlawful employment practices). Current law requires the committee to accept a complaint alleging a violation of that statute just as it would hear any other complaint. Section 18 gives the committee the option of referring those who file a complaint of employment discrimination to the human rights commission, deferring consideration of the complaint until after the commission has completed its proceedings. SECTION 19: AS 24.60.040(a) CONTRACTS & LEASES This section broadens contract and lease criteria beyond those currently in the Legislative Ethics Code to restrict a legislator or legislative employee from having a financial interest in a State contract or lease unless it is let through competitive bidding. It expands in accordance with the State Procurement Code, is worth $1000 or less annually, or is standardized under publicly established guidelines and generally available to the public. This allows participation in contracts or leases that are let under 36.30, addressing a variety of award methods, including sole-source. It also allows participation in contracts or leases let under procedures similar to these, addressing such agencies as the University, the Railroad, and the Legislature. The threshold for being involved in a contract or lease is raised from $1000 to $5000. Section 19 also requires a legislator or legislative employee to disclose family members' interests in State contracts or leases, if they are known or reasonably ought to be known. SECTION 20: AS 24.60.040(c) CONTRACTS & LEASES This section adds a new subsection clarifying that a grant, contract, or lease deriving from a State loan or benefit program listed in 24.60.050 is not subject to this section. The ethics committee annually publishes a list of programs that do not meet the criteria in 24.60.050(a) and requires disclosure of participation in any of the listed programs. Section 20 clarifies that a grant that results in a contract is subject to this section. SECTION 21: AS 24.60.050(c) REFRAINING FROM PUBLICATION This section mandates disclosure of involvement in State programs and loans by the deadline established in 24.60.105. Persons who received a benefit for the Violent Crimes Compensation Board would be excluded. SECTION 22: AS 24.60.060(b) PROTECTIVE ORDER This section adds a new subsection that specifies Ethics Committee can issue protective orders. Failure to uphold the protective order would be a violation of the code. This allows the committee to broaden discovery by the subject while still protecting any innocent or uninvolved parties. SECTION 23: AS 24.60.070(b) DEADLINE FOR CLOSE ECONOMIC ASSOCIATION DISCLOSURE This section cites 24.60.105 as the deadline for disclosure of close economic associations, and adds a 60-day timeline for disclosure of new associations. SECTION 24: AS 24.60.070(d) SPOUSE/SPOUSAL EQUIVALENT LOBBYIST DISCLOSURE This section adds a new subsection which requires a legislator or legislative employee who is married to or who is the spousal equivalent of a lobbyist, to disclose under close economic association the name and address of each of the lobbyist's clients and the total compensation received from each client annually. Changes to the list must be reported within 48 hours. Mr. Brown observed that in the absence of a prohibition on spousal lobbying that full disclosure was considered the best approach. SECTION 25: AS 24.60.080(a) GIFT RESTRICTIONS This section increases the maximum cumulative annual gift limit in the Legislative Ethics Code from $100 to $250. It clarifies that there is a ban on solicitation, acceptance, or receipt of anything of monetary value from a lobbyist during session, except for food or beverage for immediate consumption. In response to a question by Representative Martin, Mr. Brown the increase was recommended by the Committee. Representative Mulder observed that the issue came up when a member was married during the interim. Mr. Brown pointed out that gifts from family members do not have to be reported. SECTION 26: AS 24.60.080(c) GIFT RESTRICTION EXEMPTIONS This section clarifies that a stay in a vacation home located outside the State is not an exempted gift. It allows legislators and legislative employees to accept discounts while on State business if the discount benefits the State. It allows legislators and their personal staff (but not other legislative employees) to accept discounts and welcoming gifts in the capital city during session. Mr. Brown noted that welcoming gifts would have to be offered to all 60 offices, including both majority and minority offices. SECTION 27: AS 24.60.080(d) GIFT REPORTING This section increases the reference to the maximum cumulative annual gift limit from $100 to $250. It mandates reporting of gifts of travel and hospitality within 30 days of receipt of the gift. It changes the reporting deadline for gifts not related to legislative status to the 15th of March of the following year, and specifies that the disclosure need include only a description of the gift and the giver's identity (not the actual value). Section 27 also calls for the ethics committee to forward gift disclosures by legislators and legislative directors to APOC. Mr. Brown noted that this is the first deadline change. The legislation changes the APOC date to March 15th. The goal is to simplify the disclosure process. He observed that legislators would not have to list gifts twice, since the Ethics Committee will forward gift disclosures by legislators and legislative directors to APOC. SECTION 28: AS 24.60.080(e) `LOW BUDGET' CAMPAIGNS This section makes a technical change to conform with the State Elections Act, to allow campaign contributions under $2,500 hundred dollars to fall within the exemption from coverage by the Legislative Ethics Code. (Tape Change, HFC 98 - 125, Side 2) SECTION 29: AS 24.60.080(f) GOVERNMENT GIFTS This section allows acceptance of a gift from a foreign government, the U.S. government, another state government, or a municipal government, on behalf of the Legislature. The gift must be delivered to Leg Council within 60 days. Gifts under $250 do not have to be reported. SECTION 30: AS 24.60.080(g) IMMEDIATE FAMILY This section expands the meaning of the terms `immediate family' and `family member' only for the purposes of the gift section. The definition is expanded to include spousal equivalents; parents, siblings, grandparents, aunts, and uncles of a spouse or spousal equivalent; and, stepparents, stepsisters, stepbrothers, step-grandparents, step-aunts, and step-uncles of a person, a person's spouse, or a person's spousal equivalent. Mr. Brown observed that the definition of family member is narrower in the rest of the ethics code. SECTION 31: AS 24.60.080 NEW GIFT RESTRICTION EXEMPTIONS This section adds new exempting subsections to the ban on receiving gifts. New subsection (h) permits soliciting and accepting gifts on behalf of charitable organizations, which is in accordance with advisory opinions issued by the ethics committee. This allows members to raise money for charity. New subsection (i) sets out that gifts of volunteer services for legislative purposes may be accepted by a legislator, legislative committee, or legislative agency as a gift to the State, so long as the person donating the services is not paid by another source. Subsection (i) further allows a legislator, legislative committee, or legislative agency to accept a University intern or Job Training Partnership Act trainee as well as any other educational trainee the committee approves. Subsection (i) also requires volunteers, interns, and educational trainees to comply generally with the Legislative Ethics Code, with the exceptions of certain sections: contracts and leases, close economic associations, nepotism, and representation before state agencies and affords them the protection of the ethics complaint process under 24.60.170. New subsection (j) sets out that gifts from another source to a family member of a legislator or legislative employee fall within restrictions and reporting requirements. New subsection (k) states that the value of a gift is fair market value, to the extent that fair market value can be determined. Representative Martin asked if spousal equivalents would be included. Mr. Brown clarified that spousal equivalents are included under the definition of family member under the legislative branch and executive branch ethics codes. SECTION 32: AS 24.60.085(a) EARNED INCOME & HONORARIA This section would allow legislators and legislative employees to accept compensation that is less than fees generally charged. This would allow pro bono work. It prevents legislators from charging more than the value of the service. SECTION 33: AS 24.60.100 REPRESENTATION This section sets a March 15th deadline for reporting representation before a State agency, citing 24.60.105. SECTION 34: AS 24.60.105 DEADLINE FOR FILING DISCLOSURES This section establishes a deadline of the 15th of March of the following year for most disclosures in the Legislative Ethics Code including board memberships, interests in state contracts or leases, participation in State programs and loans; close economic associations, and representation of clients. It mandates disclosure within 30 days of an interest begun or acquired during the regular session, except for session's final 30 days, which must be reported by the 15th of March of the following year. Disclosures are listed on page 23, line 7. SECTION 35: AS 24.60.130(f) COMMITTEE PER DIEM & TRAVEL This section authorizes the ethics committee's public members to receive per diem and travel compensation. SECTION 36: AS 24.60.130(h) MEMBER DISQUALIFICATION This section prohibits a legislative member of the ethics committee from participating in a complaint proceeding if the subject of the complaint is the member, or the subject supervised by the member. The process for designating a new member to serve on the ethics committee in the place of a disqualified member is in new subsection 24.60.130(o), added by Section 37 of the bill. SECTION 37: AS 24.60.130(o) APPOINTMENT OF COMMITTEE ALTERNATES This section adds a new subsection which sets out that each presiding officer appoints an alternate legislative member of the ethics committee when appointing regular members. Alternate members must have the same qualifications as regular members and must be confirmed just as a regular member is. If a regular member is disqualified from serving, the ethics committee chairman or subcommittee chairman confidentially designates the alternate to serve for the course of that proceeding. Mr. Brown explained that members cannot serve if a complaint is issued regarding the member or their staff. The Speaker or Senate President would appoint an alternate. The filing of a complaint is confidential. The appointment would require a two-thirds concurrence. Mr. Brown observed that Amendment 0-LS0074\R.7, dated 4/23/98 would add a provision to allow a member of the Committee to be removed. A two-thirds vote of both members would remove a public member. A legislative member could be removed by a two-thirds vote of its members. SECTION 38: AS 24.60.134(a) RESTRICTIONS ON COMMITTEE MEMBERS This section expands the restrictions on the ethics committee's public members, staff, and contractors by prohibiting participation in political management or political campaigns for federal, state and local office (regardless of whether the campaign is partisan or nonpartisan), or participation in campaigns for or against ballot measures. Section 38 further prohibits the ethics committees' public members, staff, and contractors from attending fund-raisers or contributing to political parties, to legislative candidates, to incumbent legislators or legislative employee running for other public office, or to a person running for another office against an incumbent legislator or legislative employee. Section 38 maintains the existing restriction on lobbying activities. Mr. Brown observed that there have been concerns regarding excessive political activity on the part of a contractor to the Ethics Committee. Section 38 would clarify that, for the life of the contract, that a contractor could not participate in political management or political campaigns. SECTION 39: AS 24.60.134(c) EXEMPTION FROM CODE OF SOME CONTRACTORS This section permits a contractor with the ethics committee to request an exemption for some members of the corporation or partnership from compliance with some or all prohibitions against political activity. If the committee contracts for outside legal counsel with an attorney who is part of a large firm with branches Outside, a strict reading of current law might mandate that all employees of the firm comply with the Legislative Ethics Code. This section gives the committee the latitude to grant such request. Mr. Brown explained that all members of a large company, which is under contract to the Committee, would not have to abide by the provisions of the code. Only members working with the Committee would be under the provisions of the code. The firm must initiate the action. SECTION 40: AS 24.60.160 ADVISORY OPINIONS This section provides that the ethics committee must issue an advisory opinion to a newly elected legislator within 60 days of a request from such a person, doubling the current response deadline of 30 days. It further allows the committee to issue an advisory opinion to a person who anticipates becoming a legislative employee within 45 days. The Committee could take longer than 60 days if the person who asked for the opinion is in agreement. SECTION 41: AS 24.60.170(a) INITIATION OF COMPLAINTS This section changes the statute of limitations for consideration of ethics complaints from five to two years, consistent with the time limit for the Executive Branch Ethics Act, and coterminous with the length of a single House term, and establishes that a complaint against a legislator must be filed within a year of the legislator's departure from the Legislature. Section 41 prevents the ethics committee from considering complaints against all members of the legislature, all members of one its houses, or against former employees. It further allows the committee to reinstate a complaint closed upon an employee's termination if the employee is rehired within two years of the date the complaint was filed. It also provides for the same procedure with a former legislator who resumes legislative service within two years of the date of the complaint, affecting former staffers who are elected to the legislature and former legislators who are hired as staffers. Mr. Brown pointed out that a House term is for two years. He added that allowing for reinstitution of complaints expands the reach of the code. Representative Davies questioned if a similar provision would be considered for the Executive Branch Ethics Code. Mr. Brown stated that a similar provision was considered. He stressed that the codes are different and that it would be difficult to have the standards of one code apply to the other. Mr. Brown added that section 41 should reduce the number of frivolous complaints. A complaint filed against all members would not be considered. SECTION 42: AS 24.60.170(b) REQUIREMENTS OF COMPLAINANT This section allows any person to file a written complaint under oath stating that the complainant has reason to believe a violation occurred and describing known facts in support of the complaint. It mandates that the ethics committee provide a complaint form, and advise complainants that they may be asked to testify in support of their complaints. Section 42 further sets out that the committee can only accept new complaints or release public information on pending complaints outside of campaign periods as defined in subsections (o) and (p), added by Section 49 of the bill. Section 42 provides that the committee must immediately provide subjects of complaints with copies. SECTION 43: AS 24.60.170(c) PRELIMINARY TREATMENT OF COMPLAINTS This section allows the ethics committee to have staff preliminarily examine complaints for legal sufficiency and credibility of information, then recommend action to the committee based on information and evidence contained in the complaint. It explicitly allows the committee and staff to solicit additional information from the complainant and subject, though neither is obligated to provide information. Section 43 allows for dismissal of complaints that are frivolous, lack credible information, or fall outside the committee's jurisdiction. It further clarifies that proceedings under this subsection are confidential and that confidentiality may be waived by the subject in compliance with subsection (i). Mr. Brown emphasized that this provision is intended to make the return of complaints for insufficient information or frivolity easier and enable the Committee to make the best and highest use of the committee staff's time. It enables the Committee to get more clarification from the complainant and speak to the subject. SECTION 44: AS 24.60.170(f) LACK OF PROBABLE CAUSE This section states that if there is lack of probable cause that a violation of the ethics code occurred, the complaint must be dismissed, and that unsubstantiated portions may be dismissed. It mandates that the Committee issue a decision explaining the dismissal, and establishes that deliberation and vote on the dismissal order and decision are not open to the public or to the subject of the complaint. It further calls for copies of a dismissal order and decision to be sent to the complainant and the subject. SECTION 45: AS 24.60.170(g) CORRECTIVE ACTIONS This section allows the ethics committee to issue an opinion (which must go to both the complainant and the subject) recommending corrective action after finding probable cause that a violation occurred. It lets the subject comply with the opinion or request a hearing under subsection (j), and lets the committee amend or affirm the opinion after this hearing. Section 45 sets out that if a subject agrees to comply with an opinion but fails to do so in a timely manner, the committee may formally charge the person under subsection (h) or refer the matter to a supervisory authority. It empowers the supervisory authority to enforce corrective actions, or decline to do so and refer the matter back to the Committee, which retains the power formally to charge the person. Mr. Brown observed that this provision is similar to provisions in the Executive Branch Ethics Code. He explained that the intent is assure corrective actions are taken. SECTION 46: AS 24.60.170(h) FORMAL CHARGES BEYOND CORRECTION ACTIONS This section conforms subsection (h) to the new language in subsection (g), empowering the committee formally to charge a person who fails to complete corrective actions, or if investigation reveals a violation requiring sanctions instead of, or in addition to, corrective actions. SECTION 47: AS 24.60.170(i) DISCOVERY This section allows the subject of a complaint to engage in discovery under Alaska Rules of Civil Procedure, and lets the ethics committee adopt procedures concerning discovery, including allowing discovery at an earlier stage than formal charges and imposing reasonable restrictions on release of information to the subject of a complaint (to protect the privacy of persons not under investigation). It further prevents the committee from imposing restrictions on discovery by the subject unless the complainant agrees to be bound by similar restrictions concerning release of information, and has not made public the information in or about the complaint or the filing of the complaint. Mr. Brown pointed out that complainants are not usually involved in discovery. He noted that the intent is that the provision provide protection to subjects of complaint. He observed that there is little the Committee can do to control the behavior of complainants. SECTION 48: AS 24.60.170(l) CONFIDENTIALITY This section sets out that ethics committee proceedings are confidential until the determination of probable cause, and that complaints and all documents produced or disclosed in the course of an investigation are confidential as well. It mandates that the committee transmit information obtained in the course of an investigation to appropriate enforcement authorities. Section 48 clarifies that all meetings of the committee concerning complaints are closed to the public and non-members of the committee, though the committee may permit the subject of a complaint to attend a meeting other than deliberation on probable cause. It further limits a complainant's ability to waive confidentiality for others. Mr. Brown observed that section 48 would apply when there are multiple subjects in the same complaint. SECTION 49: AS 24.60.174(o) (p) (q) MORATORIA ON NEW COMPLAINTS/RELEASE OF PUBLIC INFORMATION This section adds three new subsections which concern handling of complaints by the ethics committee during campaign periods. Subsection (o) provides that the committee shall return a complaint concerning a candidate received during a campaign period unless the subject waives the right to suspension of consideration within 11 days. If provides that the committee must notify the would-be complainant of the right to refile the complaint at the end of the campaign period. Subsection (p) sets out that the committee may not proceed beyond the point of confidentiality on a complaint concerning a candidate that is pending when a campaign period begins, preventing action under subsections (f), (g), and (h), unless the subject waives the right to suspension of proceedings. Subsection (q) defines a campaign period for this section as beginning on the later of 45 days before the primary election in which one is a candidate; or the day one files for office, and ending the day of the general or special election, the day after primary results are certified, or the day a candidate withdraws. Mr. Brown stressed that the protection is necessary to prevent politicization of the ethics process. Representative Davies questioned why a complaint would not be accepted and held until after the moratorium. Mr. Brown observed that a complainant could misrepresent the fact that a complaint was filed against a candidate. Complaints would be accepted after the moratorium. Co-Chair Therriault pointed out that a complaint could be used to accomplish a political goal. Representative Davies noted that complaints are confidential. Co-Chair Therriault noted that an allegation could be made but that nothing would be pending before the Committee. He added that the moratorium can be waived. Mr. Brown stressed that the provision minimizes the ability of a complainant to take political advantage of the ethics process. Co-Chair Therriault emphasized that the intent is to protect the Committee from being dragged into campaigns. Representative Mulder noted that complaints have been held till just before an election. He maintained that complaints should be filed in a timely manner, not with the intended consequence of affecting an election. Representative Davies acknowledged concerns, but questioned why the complaint could not be accepted quietly. Representative Mulder emphasized that acceptance of a complaint provides legitimization. Representative Davies stressed that receipt of the complaint by the Committee would not be publicly known. Mr. Brown agreed that the Committee would not tell anyone of the complaint. He observed that in most instances complainants or other persons bring the complaint to the attention of the media. Mr. Brown noted that subsection (p) deals with a moratorium on public information of pending complaints. He noted that the House Finance Committee might wish to leave both levels of protection or remove subsection (p). He stated that the Committee could investigate a complaint that was initiated 46 days before the primary. However, the Committee would not proceed beyond outlining the scope of the investigation until after the election. He observed that the moratorium could be waived. SECTION 50: AS 24.60.174(a) TIMETABLE FOR COMPLIANCE/ RECOMMENDED FINES This section sets out procedures for the Legislature and the ethics committee to follow concerning sanctions on legislators. Mr. Brown explained that when a subcommittee finds that a legislator has done something wrong, it recommends sanctions to that legislator's chamber. One of the recommendations can be expulsion. If the recommendation is anything less then expulsion a timetable is implemented. Section 50 mandates that the committee include a suggested timetable for compliance reports when recommending sanctions on a legislator found in violation of the Code. Section 50 also allows the committee to recommend fines that the legislative body may impose if the legislator does not comply in a timely manner. SECTION 51: AS 24.60.174(e) TIMETABLE FOR SANCTIONS This section adds a new subsection requiring a legislative body to report to the ethics committee the sanctions and timetable for compliance it has adopted. It further requires a legislator to report to the committee on compliance with the sanctions, in accordance with the timetable. Section 51 lets the committee determine if the legislator has failed to comply fully and in a timely manner, and recommend imposition of fines or additional sanctions. SECTION 52: AS 24.60.176(a) RECOMMENDATIONS WHERE VIOLATOR IS A LEGISLATIVE EMPLOYEE This section sets out that the ethics committee will recommend sanctions for a legislative employee to the employee's appointing authority, defined in 24.60.176(b) by Section 53 of this bill. It establishes that appointing authorities may impose the sanctions recommended by the committee or different sanctions, and that the appointing authority enforces the sanctions and reports to the committee on the employee's compliance. Mr. Brown noted that House and Senate Records were added on page 33, line 28. The Legislative Council is the default when an appointing authority is not identified. SECTION 53: AS 24.60.176(b) APPOINTING AUTHORITY. This section adds a new subsection which defines which person or committee is the appointing authority for all legislative employees. SECTION 54: AS 24.60.178 RECOMMENDED SANCTIONS This section adds a new section which lists sanctions the committee may recommend for violations of the Code, enumerated in subsection (b). Subsection (c) lets the committee recommend that the subject be required to pay all or some of the costs related to the investigation or adjudication of the complaint. SECTION 55: AS 24.60.200 FINANCIAL DISCLOSURE BY LEGISLATORS, LEGISLATIVE DIRECTORS & PUBLIC MEMBERS This section adds public members of the ethics committee to the group of persons who must file Legislative Financial Disclosures (LFD). It adds spousal equivalents to the group of persons about whom income information must be disclosed, and deletes the requirement that gift information be included in the LFD. Mr. Brown observed that previous versions of the bill required financial disclosure to APOC by legislative employees that are compensated at range 19 and above. This dramatically increased the fiscal impact of the legislature. This provision was withdrawn. SECTION 56: AS 24.60.210 DEADLINES FOR FILING This section changes the deadline for filing an LFD from the 15th of April to the 15th of March. SECTION 57: AS 24.60.250 EFFECT OF FAILURE TO FILE This section sets out that APOC must notify the Lieutenant- Governor of a legislative candidate's failure to file an LFD, which results in that person's forfeiture of office. It calls for APOC to notify Leg Council or LB&A if a legislative director or the Ombudsman fails to file. Mr. Brown noted that Amendment 0-LS0074\R.5 would address whom should be informed by APOC if a public member of the Committee fails to file. The presiding officer would be informed. SECTION 58: AS 24.60.260(a) REFERENCE TO FINES This section prohibits false statements in disclosures, and establishes that filing after the deadline constitutes a violation of the Legislative Ethics Code. SECTION 59: AS 24.60.260(c) FINES FOR FAILURE TO FILE This section permits the committee to impose fines for late disclosures, not to exceed $2 per day, to a maximum of $100 per late disclosure, unless the lateness was inadvertent which makes the maximum fine $25. SECTION 60: AS 24.60.990(a)(5) IMMEDIATE FAMILY This section expands the general definition of immediate family for the Code. Mr. Brown clarified that the definition used in section 60 is narrower than the definitions used for gift disclosure. Parents, children and siblings have to be financially dependent or share a significant financial interest. SECTION 61: AS 24.60.990(a)(15) & (a)(16) SPOUSAL EQUIVALENT/STATE OFFICE DEFINITIONS This section provides new general definitions of spousal equivalent and state office to the Code. Mr. Brown noted that section 61 completes the legislative ethics portion of the bill. Portions of the bill pertaining to the Executive Branch Ethics Act begins with section 62. SECTION 62: AS 39.25.070 PERSONNEL BOARD POWERS AND DUTIES This section simplifies the reference to the Executive Branch Ethics in the State Personnel Act (39.25). Line 1, page 38 was changed amended to remove the specific duties carried out by the Personnel Board. SECTION 63: AS 39.25.160(e) BAN ON CANDIDACY OF EXEMPT EMPLOYEES This section extends the ban on candidacy for State or national elective political office by State employees to include the exempt service. It exempts some members of the exempts service from this ban. Mr. Brown noted that the exempt service includes University employees, teachers, and volunteer firefighters. Co-Chair Therriault clarified that a state employee would have to terminate their position when they file their declaration of candidacy. (Tape Change, HFC 98 -126, Side 1) Mr. Brown explained that legislators were exempted from the ban to allow them to retain their positions while the run. Legislators are exempt employees. SECTION 64: AS 39.25.160(j) PROHIBITION ON POLITICAL ACTIVITY ON GOVERNMENT TIME This section adds a news subsection to the State Personnel Act which explicitly prohibits State employees from engaging in campaign activities on behalf of political candidate on government time. It clarifies that Division of Election employees may carry out duties related to elections, and members and employees of the Commission on Judicial Conduct may carry out duties related to evaluation of judges, and exempts elected State officials from the ban. SECTION 65: AS 39.50.020 REPORT OF FINANCIAL AND BUSINESS INTERESTS This section changes the requirements for Public Official Financial Disclosures, setting out that public officials listed in 39.50.200 must file reports within 30 days after taking office as a public official. It changes the filing deadline to the 15th of March, and specifies that all non-municipal officials file with APOC, while municipal officials file with appropriate local authorities. SECTION 66: AS 39.50.030(a) CONTENTS OF FINANCIAL REPORTS This section changes the requirements for the contents of a public official financial disclosure statement. It lists that reports must contain information specified in subsections (b) and (d), and deletes the unnecessary reference to assets or liabilities under $500, household goods, and personal effects. SECTION 67: AS 39.50.030(b) CONTENTS OF FINANCIAL REPORTS This section changes the reporting requirements for executive branch public officials to include income sources over $1000. It adds a requirement for public officials to report any income of over $250 that is a gift. It changes the requirement to report trust or fiduciary relationships or loans only when they exceed $1000. Section 67 mandates reporting state contracts held, bid, or offered by a partnership or professional corporation of which an official is a member; deletes a requirement for reporting a state contract or natural resource lease held, bid, or offered by an official's mother or father; and, adds an official's spouse to the group on whom an official must report if the spouse holds a natural resource lease. SECTION 68: AS 39.50.030(d) CONTENTS OF FINANCIAL REPORTS. This section adds new subsections which alter requirements for Public Official Financial Disclosures. Subsection (d) calls for public officials to report close economic associations with legislators, other public officials, lobbyists, or any public officer for the governor and lieutenant-governor. Subsection (e) sets out that new close economic associations must be reported within 60 days of their formation. Subsection (f) calls for disclosure of client information for lobbyists with whom the public official has a close economic association, and for updating of this information within 48 hours for new lobbying contracts. Subsection (g) defines several terms for the purposes of this section. SECTION 69: AS 39.50.070 FAILURE TO REPORT BY CERTAIN STATE EMPLOYEES This section provides for penalties for most public officials who fail to file reports. SECTION 70: AS 39.50.200(a)(8) DEFINITIONS This section redefines public official to include judicial officers, the governor, the lieutenant-governor, commissioners, directors, deputy directors, and many persons in the governor's office. Mr. Brown noted that a previous version in the Senate included legislative employees that were range 19 and higher. The House State Affairs Committee changed this section to define "public official" by the nature of a person's job. He observed that as a judicial officer, the governor or the lieutenant governor, commissioners, deputy directors, special assistants and legislative liaisons. He noted that subsection (d) may be too broad. He observed that section 70 might need to be amended. Amendment 0- LS0074\R.9 would amend this section and reduce the fiscal impact. SECTION 71: AS 39.52.010(a) FINDINGS AND PURPOSE This section augments the preamble to the Executive Branch Ethics Act. SECTION 72: AS 39.52.120(b) MISUSE OF OFFICIAL POSITION This section sets out what sorts of behavioral restrictions apply to executive branch employees. It explicitly bans coercion of subordinates and use of state resources for partisan political purposes, and defines partisan political purposes. Mr. Brown observed that this section parallels AS 24.60.030. He emphasized that a public officer may not use state time, property, equipment, or other facilities to benefit personal or financial interests. There is no specific reference to partisan political purposes. He referred to page 47, line 7: a public officer may not "use or authorize the use of state funds, facilities, equipment, services, or another government asset or resource for partisan political purposes this paragraph does not prohibit use of the governor's residence for meetings to discuss political strategy and does not prohibit use of the communications equipment in the governor's residence so long as there is no special charge to the state for the use". SECTION 73: AS 39.52.120(d) BAN ON FUNDRAISING AFTER TRAVEL AT STATE EXPENSE This section adds new subsections to the behavioral restrictions in the Act. Subsection (d) prevents travel at State expense to a place where a fund-raiser is planned within 48 hours of the travel. It allows State-paid travel if the fund-raiser is at least 48 hours after the travel occurs, if a subsequent trip is made between the two locations and is not paid for by the State, or if the travel was to the capital city. Subsection (e) defines campaign fundraising event. Subsection (f) adds criteria for determining whether or not a public officer is considered to be on government time, and mandates that leave be taken for political campaign activities that are not minor, inconsequential, and unavoidable. Mr. Brown noted that concerns regarding travel definitions would need to be amended in sections 17 and 73. SECTION 74: AS 39.52.130(b) GIFTS This section increases the value of a gift that may be received in the executive branch from $50 to $150. If requires disclosure of a gift received due to a public officer's governmental status whether or not the officer can take or withhold official action that affects the giver. Mr. Brown pointed out that it would still be illegal for a public officer to accept a gift if it can reasonably be inferred that the gift is intended to influence the public officer. He added that there is no exemption for food or beverage for immediate consumption or hospitality. Gifts that are connected to governmental status would be disclosed even if the officer can take or withhold official action that affects the giver. Representative Martin questioned why the section should not be deleted. SECTION 75: AS 39.52.130(e) & (f) GOVERNMENT GIFTS This section adds new subsections, the first of which allows acceptance of a gift from a foreign government, the U.S. government, another state government, or a municipal government, on behalf of the State. The recipient must notify the governor's office within 60 days for instructions on appropriate disposition of the gift. Mr. Brown observed that subsection (f) clarifies that "a public officer who knows or reasonably ought to know that a family member has received a gift because of the family member's connection with the public office held by the public officer shall report the receipt of the gift by the family member to the public officer's designated supervisor if the gift would have to be reported under this section if it had been received by the public officer or if receipt of the gift by a public officer would be prohibited under this section." SECTION 76: AS 39.52.170(c) OUTSIDE EMPLOYMENT This section adds a new subsection which bans commissioners from accepting outside employment for compensation. SECTION 77: AS 39.52.180(d) RESTRICTIONS ON POST-OFFICE EMPLOYMENT This section adds a new subsection which restricts the governor, lieutenant-governor, and commissioners from lobbying for compensation for a year after leaving service. Volunteer lobbying would be allowed. SECTION 78: AS 39.52.210(a) DECLARATION OF POTENTIAL VIOLATIONS This section requires public employees to report potential violations to the attorney-general as well as to a supervisor. Mr. Brown observed that this section is intended to increase the flow of information in a way that makes executive branch ethics work better without additional cost. NEIL SLOTNICK, ASSISTANT ATTORNEY GENERAL, COMMERCIAL SECTION, DEPARTMENT OF LAW reviewed sections 79 - 84. SECTION 79: AS 39.52.210(b) DECLARATION OF POTENTIAL VIOLATIONS This section requires an employees supervisor to provide a written determination of whether of not a violation reported under subsection (a) exists, to both the employee and the attorney-general. SECTION 80: AS 39.52.220(a) VIOLATIONS BY MEMBERS OF BOARDS AND COMMISSIONS This section requires members of boards or commissions to disclose a matter that may result in a violation on the public record and in writing to supervisor and to the attorney-general. It further requires board or commission member's ethics supervisor to provide a written determination of whether of not a violation exists, to both the member and the attorney-general. SECTION 81: AS 39.52.230 REPORTING OF POTENTIAL VIOLATIONS This section requires a supervisor to provide a copy of a report of potential violation of the Act to the attorney- general. SECTION 82: AS 39.52.260 SUBMISSION OF QUARTERLY REPORTS TO THE PERSONNEL BOARD This section requires the attorney- general to submit copies of quarterly reports from ethics supervisors, and the attorney-general's review of these reports, to the Personnel Board. SECTION 83: AS 39.52.270 DISCLOSURE STATEMENTS This section adds a new section which makes filing of disclosure statements a provision of the Act. Subsection (a) calls for the statements to be true, correct, and complete. Subsection (b) sets out that ethics supervisors must review disclosures and report potential violations disclosed therein to the attorney-general. Subsection (c) defines disclosure statement to include reports filed under 39.52.210 - 240. SECTION 84: AS 39.52. 310(a) MORATORIUM ON INITIATION OF COMPLAINTS/RELEASE OF PUBLIC INFORMATION This section prevents the attorney-general from initiating a complaint against the governor or lieutenant-governor who is a candidate during a campaign period, defined in subsection (k). Mr. Slotnick noted that this provision mirrors a similar provision in the Legislative Branch Ethics Act. In response to a question by Representative Davies, Mr. Slotnick explained that anyone can file a complaint. This provision allows the attorney general to initiate a complaint upon receipt of information, that does not come in the form of a complaint, that indicates that a violation of the ethics code has occur. This includes the governor or lieutenant governor, but restricts the ability to initiate a complaint if it is within 45 days of a campaign period. SECTION 85: AS 39.52. 310(c) MORATORIUM ON RECEIPT OF COMPLAINTS This section prevents the Personnel Board from accepting a complaint against the governor or lieutenant- governor who is a candidate during a campaign period, defined in subsection (k). It further allows the Personnel Board to contract for or hire independent counsel without consulting the Department of Law. Mr. Brown noted that the Department of Law could be bypassed if the complaint involved the attorney general, governor or the lieutenant governor are the subjects of the complaint. SECTION 86: AS 39.52. 310(j) & (k) MORATORIUM ON CONSIDERATION OF COMPLAINTS This section adds new subsections. Subsection (j) provides that the Personnel Board shall return a complaint concerning a candidate received during a campaign period unless the subject waives the right to suspension of consideration within 11 days. If provides that the committee must notify the would-be complainant of the right to refile the complaint at the end of the campaign period. Subsection (k) defines a campaign period for this section as beginning on the later of 45 days before the primary election in which one is a candidate or the day one files for office, and ending the day of the general or special election, the day after primary results are certified, or the day a candidate withdraws. SECTION 87: AS 39.52.320 DISMISSAL BEFORE FORMAL PROCEEDINGS This section sets out that the attorney- general must dismiss complaints if there is no probable cause that a violation occurred, and notify the complainant and the subject under the terms of 39.52.335(c). SECTION 88: AS 39.52.335 SUMMARY OF DISPOSITION OF COMPLAINTS & REVIEW BY PERSONNEL BOARD This section adds a new section which expands the Personnel Board's oversight of the Executive Branch Ethics Act as enforced by the attorney- general. Subsection (a) mandates forwarding of all complaints received by the attorney-general to the Personnel Board. Subsection (b) requires monthly reporting of the status of pending complaints. Subsection (c) sets out that if a complaint is dismissed or resolved, the attorney- general must report this to the Board, the subject, and the complainant. Subsection (d) allows the complainant to file comments with the Board within 15 days. Subsection (e) calls for the Board to review the summary at its next meeting, allows the Board to compel attendance of the subject , complainant, and attorney-general, and to compel production of documents. Subsection (f) allows the Board to issue a report on the disposition of the complaint. Subsection (g) governs the confidentiality of its report if the summary filed by the attorney-general is confidential. Subsection (h) sets out the steps the Board may take if its recommendation is that the resolution or dismissal be made public. Mr. Slotnick observed that sections 87 and 88 were added to tighten up the Personnel Board's oversight of the attorney general's ability to dismiss or plea bargain complaints. Under the current system, the attorney general is required to file a confidential summary with the Board, but there are no provisions stating what the Board can or cannot do with the summary. The House State Affairs Committee mandated that after the confidential summary is filed that the attorney general must attend the next meeting of the Personnel Board. Interested parties would be allowed to sue the State to make the matter public if there is substantial evidence that a violation had occurred. This leaves intact situations were there have been no plea bargain or dismissal. He clarified that the legislation would eliminate the criminal penalty for disclosure of a confidential matter. Mr. Brown observed the difficulty of gagging complainants. Mr. Slotnick He emphasized that complaints are clearly confidential until they are made public. SECTION 89: AS 39.52.340(a) CONFIDENTIALITY This section sets out that ethics proceedings are confidential and that complaints and all documents produced or disclosed in the course of an investigation are confidential as well. It mandates that the attorney-general transmit information obtained in the course of an investigation to appropriate enforcement authorities. SECTION 90: AS 39.52.960(11) DEFINITION OF IMMEDIATE FAMILY This section changes the general definition of immediate family member for the Act. SECTION 91: POET RESERVES FOR INCUMBENTS This section allows current legislators to transfer unused campaign assets to a POET account reserve under the provisions of Section 5 of this bill. SECTION 92: RETROACTIVITY FOR POET ACCOUNT RESERVE This section makes Sections 4, 5, and 91 retroactive to the 31st of December 1996. SECTION 93: PARTICULAR EFFECTIVE DATE This section makes Sections 1, 2, 4, 5, 91, and 92 effective immediately under 01.01.070(c). SECTION 94: GENERAL EFFECTIVE DATE This section makes Sections 3 and 6 through 90 effective on the 1st of January 1999. Mr. Brown observed that it would take the executive Branch a little while to confirm to the new disclosure requirements. Everything would be effective January 1, 1999, except for a few specific portions of the legislation. He observed that section 16 should have an immediately effective. Representative Martin observed that ethics law is confusing and suggested educational seminars. Mr. Brown emphasized that the legislation will improve existing law. He noted that ethics training is provided at the beginning of the legislative session. ADJOURNMENT The meeting adjourned at 3:50 p.m. House Finance Committee 9 4/24/98 p.m.