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Ethics for Arkansas Municipal Officials

Presentation Outline

July 2013

David Schoen, Legal Counsel

Arkansas Municipal League

Tel: 501-978-6114

Fax: 501-537-7251

dschoen@



Sources of Law

• No one self-contained “ethics code” in Arkansas for municipal officials.

• Various Arkansas Constitutional provisions and statutes address ethical concerns.

• Case precedent.

• Attorney General Opinions (AGOs)

o not binding but provide interpretations or guidance in many areas in which the courts have not ruled, as well as providing discussions of the law in which they have.

The Arkansas Whistleblower Act

• Public employment relationship

• Good faith communication of waste or violation

• Reasonable basis in face

• To an appropriate authority

• Provide reasonable notice of the need to correct

• Adverse action based on the communication

Use of Public Funds

• Ark. Const. Article 12 sec. 5:

o “No county, city, town or other municipal corporation shall become a stockholder in any company, association or corporation; or obtain or appropriate money for, or loan its credit to, any corporation, association, institution or individual.”

o Applies to property as well as money. AGO 2004-055; 2002-099; Halbert v. Helena-West Helena Industrial Development Corp., 226 Ark. 620, 625-26, 291 S.W.2d 802 (1956).

o Exclusively personal use of county vehicle would violate this Article. AGO 2000-243. Incidental use may be OK if it serves a “public purpose” however, such as responding to emergencies.

o ACA 14-284-408: authorizes contributing free water to volunteer fire departments for firefighting and training. Constitutionally suspect as to private departments. AGO 94-147.

o Ark. Const. Article 16 sec. 13. Citizens may bring suit for “illegal exaction” (unlawful taxation or expenditures). Pogue v. Cooper, 284 Ark. 105, 679 S.W.2d 207 (1984) (County judge did not have power to lease county property to private interests or to contract with private persons to provide county equipment, supplies and personnel to perform services in the private sector, even if producing a profit).

o Case law: “Public Purpose Doctrine:” Public funds must be spent only for public purposes. This idea is usually interwoven with one or more of the constitutional sections cited above.

Donation of City Assets

• Donation of city assets is generally forbidden: see Ark. Const. art. 12 § 5 above.

o Expenditures which Attorney General’s office has opined are unlawful include: expenditures for Christmas, birthday, or other parties for city employees and family members; traveling expenses of municipal official's spouses; flowers, gifts and cards for city employees and families; Christmas presents (hams) for employees; employee picnics; and monetary payments to employees for long faithful service. AGO 91-410 and 94-317.

o Advertising .  Expenditure of A&P Funds to advertise private events or entities likely violates Art. 12 § 5.  (public purpose). 2008-121

o Permissible if expenditure is for a public purpose and benefits public at large.

▪ AGO 94-397 (distributing Christmas fruit baskets to city children is lawful)

o City may not donate to charities/non-profits.

o But the city may enter into contracts for public purposes. AGO 2002-099, 2001-035

▪ Adequate consideration is required, although the consideration may be “public advantage” (not necessarily pecuniary).

▪ Indemnification against liability is not a public purpose. See Entergy Arkansas, Inc. v. Arkansas Pub. Serv. Comm'n, 2011 Ark. App. 453, 384 S.W.3d 674 (2011)

▪ In-Kind agreements may be permissible. See City of Fort Smith v. Bates, 260 Ark. 777, 544 S.W.2d 525 (1976) (holding that the construction of a driveway by a city on private property in lieu of paying the owner cash for an easement was not prohibited).

• 14-42-108. Actions prohibited

(a)(1) It shall be unlawful for any official or employee of any municipal corporation of this state to receive or accept any water, gas, electric current, or other article or service from the municipal corporation, or any public utility operating therein, without paying for it at the same rate and in the same manner that the general public in the municipal corporation pays therefor.

(2)[Omitted].

(b)(1) It shall be unlawful for any city official or employee of any municipal corporation in this state to furnish or give to any person, concerns, or corporations any property belonging to the municipal corporation, or service from any public utility owned or operated by the municipal corporation, unless payment is made therefor to the municipal corporation at the usual and regular rates, and in the usual manner, except as provided in subsection (a) of this section.

(2) [Omitted].

(c)(1) Any person violating the provisions of this section shall be deemed guilty of a misdemeanor and upon conviction shall be fined in any sum not less than ten dollars ($10.00) nor more than two hundred fifty dollars ($250).

(2) Conviction shall ipso facto remove the official or employee from the municipal office or position held by him and shall render him ineligible to thereafter hold any office or position under, or in connection with, the municipal corporation.

Nepotism

• No state statute for municipalities.

• May be governed by city ordinance

Disclosure Act for Lobbyists and State and Local Officials.

• A.C.A. § 21-8-402. Definitions.

(18) “Public Servant” means all public officials, public employees, and public appointees.

• A.C.A. § 21-8-601. Lobbyist Reporting

A public servant shall be required to register as a lobbyist if he or she:

(a) Receives income from a nongovernmental person in excess of four hundred dollars ($400) in a quarter for lobbying; or

(b) Expends or is reimbursed in excess of four hundred dollars ($400), regardless of the source, in a quarter for lobbying, excluding the cost of informational material and personal travel, lodging, meals, and dues;

• 21-8-701. Financial Interest Statement:

o The following persons shall file a written statement of financial interest:

(1) A public official, as defined in § 21-8-402(17);

. . .

(9) A person appointed to one (1) of the following types of regional, municipal, or county boards or commissions:

(A) A planning board or commission;

(B) An airport board or commission;

(C) A water or sewer board or commission;

(D) A utility board or commission; or

(E) A civil service commission.

(10) A member of an advertising and promotion commission; and

(11) A member of a research park authority board under § 14–144–201 et seq.

• 21-8-402. Gift Defined

This section is quite lengthy and contains several exceptions not noted here. Basically it defines a gift as anything over $100.00 in value given without consideration of equal or greater value. (The amount is raised to $150.00 for plaques, trophies etc.).

• 21-8-801. Prohibitions

(a) No public servant shall:

(1) Receive a gift or compensation as defined in § 21-8-401 et seq., other than income and benefits from the governmental body to which he or she is duly entitled, for the performance of the duties and responsibilities of his or her office or position; or

(2) Purposely use or disclose to any other person or entity confidential government information acquired by him or her in the course of and by reason of the public servant’s official duties, to secure anything of material value or benefit for himself or herself or his or her family.

(b)(1) No person shall confer a gift or compensation as defined in § 21-8- 401 et seq. to any public servant, the receipt of which is prohibited by subdivision (a)(1) of this section.

(2)(A) The first violation of this subsection by any person other than a registered lobbyist shall result in a written warning.

(B) Upon a second violation and subsequent violations by persons other than registered lobbyists and upon a first violation by registered lobbyists, the penalties provided for in § 7-6-218 shall apply.

• Enforcement

o Violations are a class A misdemeanor. Ark. Code Ann. 21-8-403. This could potentially result in imprisonment of up to one year, Ark. Code Ann. 5-4-401(b)(1). In addition, a fine of up to one thousand dollars ($2,500.00) may be imposed, or twice that amount if the defendant derived pecuinairy gain from the offense. Ark. Code Ann. § 5-4-201.

o In addition, the Ethics Commission may:

(A) Issue a public letter of caution or warning or reprimand;

(B) impose a fine of not less than fifty dollars ($50.00) nor more than two thousand dollars ($2,000) for negligent or intentional violation

(C) Order the respondent to file or amend a statutorily required disclosure form; or

(D) Report its finding, along with such information and documents as it deems appropriate, and make recommendations to the proper law enforcement authorities.

Ark. Code Ann. § 7-6-218

Corruption in Public Office Statutes

• 5-52-101. Abuse of public trust.

o The statute prohibits the exchange of “any benefit” with the understanding that a person will be appointed, designated or nominated to a public office. Applies to a person either soliciting, offering, or accepting the benefit. This is a Class D felony.

• 5-52-104. Soliciting unlawful compensation

o requesting a benefit in exchange for action as a public servant knowing that one is required to perform without compensation other than authorized salary or at a lower level than that requested.

• 5-52-105. Attempting to influence a public servant

o Threatening violence or economic reprisal with the purpose to alter or affect the public servant's decision, vote, opinion, or action is a Class A misdemeanor.

• 5-52-106. Official misuse of confidential information

o (a) A public servant commits the offense of misuse of confidential information if, in contemplation of official action by himself or herself or a governmental unit with which he or she is associated or in reliance on information to which he or she has access in his or her official capacity and which has not been made public, the public servant:

o (1) Acquires or aids another to acquire a pecuniary interest in any property, transaction, or enterprise that may be affected by the information; or

o (2) Speculates or aids another to speculate on the basis of the information.

o (b) Misuse of confidential information is a Class A misdemeanor.

• 5-52-107. Abuse of office

o (a) A person commits the offense of abuse of office if, being a public servant and with the purpose of benefiting in a pecuniary fashion himself or herself or another person or of harming another person, the person knowingly:

(1) Commits an unauthorized act which purports to be an act of his or her office; or

(2) Omits to perform a duty imposed on him or her by law or clearly inherent in the nature of his or her office.

(b) Abuse of office is a Class B misdemeanor.

Incompatibility of Positions

• Common law incompatibility doctrine.

o Common law: the law arising from judicial decisions not based on legislation or a constitution.

o “Municipal officers are held by the courts to a strict accountability in their dealings with or on behalf of the municipal corporation; and in recognition of their incapacity to serve two masters, as an incident to the frailty of human nature, public policy has placed a disability to make a contract for the city where they are interested in it in any degree. The rule is so inflexible that no inquiry into their good or bad intention or to the fairness or unfairness of the contract is permitted.” Rogers v. Sangster, 180 Ark. 907, 23 S.W.2d 613, 614 (1930).

o “[I]ncompatibility exists where there is a conflict of interests, which includes, [among other things]. where one office is subordinate to the other….” Byrd v. State ex rel. Atty. Gen, 240 Ark. 743, 745, 402 S.W.2d 121, 123 (1966).

o “The bookkeeper for the city would to some degree be subject to the supervisory power of the mayor,” making the two positions incompatible. Thompson v. Roberts, 333 Ark. 544, 549, 970 S.W.2d 239, 241 (1998).

• Ark. Code Ann. 14-42-107. Interest in offices or contracts prohibited.

(a)(1) No alderman, member of any council, or elected official of a municipal corporation, during the term for which he or she has been elected or one (1) year thereafter, shall be appointed to any municipal office that was created or the emoluments of which have been increased during the time for which he or she has been elected except to fill a vacancy in the office of mayor, alderman, clerk, clerk-treasurer, recorder, or recorder-treasurer.

(2) No alderman or council member shall be appointed to any municipal office, except in cases provided for in §§ 14-37-101 et seq. -- 14-61-101 et seq., during the time for which he or she may have been elected.

(b)(1) No alderman, council member, official, or municipal employee shall be interested, directly or indirectly, in the profits of any contract for furnishing supplies, equipment, or services to the municipality unless the governing body of the city has enacted an ordinance specifically permitting aldermen, council members, officials, or municipal employees to conduct business with the city and prescribing the extent of this authority.

(2) The prohibition prescribed in this subsection shall not apply to contracts for furnishing supplies, equipment, or services to be performed for a municipality by a corporation in which no alderman, council member, official, or municipal employee holds any executive or managerial office or by a corporation in which a controlling interest is held by stockholders who are not aldermen or council members.

• The term “interest in a contract” in 14-42-107(b) includes employment by the city. Thompson v. Roberts, 333 Ark. 544, 550, 970 S.W.2d 239, 242 (1998).

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