Report Title:

Financial Disclosure by Public Officers and Employees; Disclosure for Gifts; Publication of the Commission's Unsubstantiated Findings.

Description:

Exempts state officials from multiple ethics disclosure filing requirements during an election year if the official's financial position has not changed since the date of the previous filing; makes a confidential disclosure statement of a person who becomes a candidate a public record; lowers the value of a gift that must be reported by a legislator or public employee from $200 to $100; prohibits a public employee from taking official action directly affecting a family member; prohibits state board or commission members from doing business with their board; makes disclosures filed by additional state board members, including the Board of Regents, public records; amends the requirements for the commission to publish notice of its findings when a charge is unsubstantiated; modifies definition of financial interest. (SB299 HD1)

THE SENATE

S.B. NO.

299

TWENTY-SECOND LEGISLATURE, 2003

S.D. 1

STATE OF HAWAII

H.D. 1


 

A BILL FOR AN ACT

 

RELATING TO STANDARDS OF CONDUCT.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The purpose of this Act is to amend the financial interest disclosure requirements as follows:

(1) Exempt incumbent state officials from filing unnecessarily duplicative disclosure statements in an election year when their financial condition has not changed;

(2) Amend the definition of financial interest and expand public access to disclosure statements of certain members of state boards and commissions;

(3) Require a public official to disqualify him or herself from taking actions that affect a family member;

(4) Reduce the threshold for reporting gifts from $200 to $100.

This Act further requires the state ethics commission to publish a notice of the commission's finding that a charge was not substantiated and to make public the records of the charge.

The legislature finds that these changes to the laws governing standards of conduct of public officials will streamline disclosure of financial interests, tighten conflicts of interest for officials whose actions may affect family members, and expand public access to disclosure statements.

SECTION 2. Section 84-3, Hawaii Revised Statutes, is amended by amending the definition "financial interest" to read as follows:

""Financial interest" means an interest held by an individual[, the individual's spouse, or dependent children which is:] that:

(1) [An] Is an ownership or investment interest in a business[.];

(2) [A] Is a creditor interest in an insolvent business[.];

(3) [An] Provides a source of income, including employment, or prospective employment for which negotiations have begun[.];

(4) [An] Is an ownership or investment interest in real or personal property[.];

(5) [A] Is a loan or other debtor interest[.], except loans from a commercial lending institution made in the regular course of business on terms available to the public without regard to the individual's official status; or

(6) [A directorship or officership in a business.] Is a business entity in which the individual, or the individual's spouse or dependent child in the case of annual disclosures, as defined in section 84-17(e), is a director, officer, partner, or employee or holds a management position."

SECTION 3. Section 84-11.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Every legislator and employee shall file a gifts disclosure statement with the state ethics commission on June 30 of each year if all the following conditions are met:

(1) The legislator or employee, or spouse or dependent child of a legislator or employee, received directly or indirectly from one source any gift or gifts valued singly or in the aggregate in excess of [$200,] $100, whether the gift is in the form of money, service, goods, or in any other form;

(2) The source of the gift or gifts [have] has interests that may be affected by official action or lack of action by the legislator or employee; and

(3) The gift is not exempted by subsection (d) from reporting requirements under this subsection."

SECTION 4. Section 84-14, Hawaii Revised Statutes, is amended to read as follows:

"§84-14 Conflicts of interests. (a) No employee shall take any official action directly affecting:

(1) A business or other undertaking in which [he] the employee or the employee's spouse or dependent child has a [substantial] financial interest; [or]

(2) A private undertaking in which [he] the employee is engaged as legal counsel, advisor, consultant, representative, or other agency capacity[.]; or

(3) A business or undertaking in which the employee knows or has reason to know that the employee's spouse, dependent child, brother, sister, parent, emancipated child, or household member has a financial interest.

A department head who is unable to disqualify [himself] the department head on any matter described in [items] paragraph (1) [and], (2) [above will], or (3) shall not be in violation of this subsection if [he] the department head has complied with the disclosure requirements of section 84-17[; and].

A person whose position on a board, commission, or committee is mandated by statute, resolution, or executive order to have particular qualifications shall only be prohibited from taking official action that directly and specifically affects a business or undertaking in which [he] the person has a [substantial] financial interest[; provided that the substantial financial interest is related to the member's particular qualifications].

(b) No employee or employee's spouse or dependent child shall acquire financial interests in any business or other undertaking which [he] the employee has reason to believe may be directly involved in official action to be taken by [him] the employee.

(c) No legislator or employee shall assist any person or business or act in a representative capacity before any state or county agency for a contingent compensation in any transaction involving the State.

(d) No legislator or employee shall assist any person or business or act in a representative capacity for a fee or other compensation to secure passage of a bill or to obtain a contract, claim, or other transaction or proposal in which [he] a legislator or employee has participated or will participate [as a legislator or employee], nor shall [he] a legislator or employee assist any person or business or act in a representative capacity for a fee or other compensation on such bill, contract, claim, or other transaction or proposal before the legislature or the employee's agency [of which he is an employee or legislator].

(e) No employee shall assist any person or business or act in a representative capacity before a state or county agency for a fee or other consideration on any bill, contract, claim, or other transaction or proposal involving official action by the agency if [he] the employee has official authority over that state or county agency unless [he] the employee has complied with the disclosure requirements of section 84-17.

(f) For purposes of this section, an official action directly affects, or directly and specifically affects, a business or undertaking in which the employee has a substantial financial interest if it is reasonably foreseeable that it will have a material financial effect, distinguishable from its effect on the public generally, on the employee or a member of the employee's immediate family."

SECTION 5. Section 84-17, Hawaii Revised Statutes, is amended to read as follows:

"§84-17 Requirements of disclosure. [(a) For the purposes of this section, the terms:

"Disclosure period" refers to the period from January 1 of the preceding calendar year to the time of the filing of the employee's or legislator's disclosure of financial interests.

"Substantially the same" refers to no more than ten amendments or changes to the information reported for the preceding disclosure period.]

[(b) The] (a) An annual disclosure [of financial interest] required by this section shall be filed between January 1 and May 31 of [each] the calendar year [or within thirty days of one's election or appointment to a state position enumerated in subsection (c); provided that candidates].

(b) Every candidate for state elective [offices or] office, including delegates to the constitutional convention shall file [the required statements] a candidate disclosure no later than twenty days prior to the date of the primary election for state office or the election of delegates to the constitutional convention. All candidate disclosures shall be public records and available for inspection and duplication. Notwithstanding the foregoing, any candidate who filed an annual disclosure in the same election year and has no reportable change in financial condition need not file a candidate disclosure; provided their annual disclosure shall become public as if it were a candidate disclosure.

(c) All persons enumerated under subsection (d) who have not filed an annual disclosure in the year of appointment or election, shall file an annual disclosure within thirty days of appointment or election.

[(c)](d) The following persons shall file [annually] an annual disclosure with the state ethics commission [a disclosure of financial interests]:

(1) The governor, the lieutenant governor, the members of the legislature, and [delegates to the constitutional convention; provided that delegates to the constitutional convention shall only be required to file initial disclosures;] the trustees of the office of Hawaiian affairs;

(2) The directors and their deputies, the division chiefs, the executive directors and the executive secretaries and their deputies, the purchasing agents and the fiscal officers, regardless of the titles by which the foregoing persons are designated, of every state agency and department;

(3) The permanent employees of the legislature and its service agencies, other than persons employed in clerical, secretarial, or similar positions;

(4) The administrative director of the State, and the assistants in the office of the governor and the lieutenant governor, other than persons employed in clerical, secretarial, or similar positions;

(5) The hearings officers of every state agency and department;

(6) The president, the vice presidents, assistant vice presidents, the chancellors, and the provosts of the University of Hawaii and its community colleges;

(7) The superintendent, the deputy superintendent, the assistant superintendents, the district superintendents, the state librarian, and the deputy state librarian of the department of education;

(8) The administrative director and the deputy director of the courts;

(9) The members of every state board or commission whose original terms of office are for periods exceeding one year and whose functions are not solely advisory; provided that the governor's special advisory council for technology development established pursuant to section 27-42 not otherwise subject to this subsection shall be exempt from this subsection;

[(10) Candidates for state elective offices, including candidates for election to the constitutional convention, provided that candidates shall only be required to file initial disclosures;] and

[(11)](10) The administrator and assistant administrator of the office of Hawaiian affairs.

[(d)](e) The [financial disclosure statements] annual disclosures of the following persons shall be public records and available for inspection and duplication:

(1) The governor, the lieutenant governor, the members of the legislature, [candidates for and delegates to the constitutional convention, the members of the board of education,] and the trustees of the office of Hawaiian affairs[, and candidates for state elective offices];

(2) The directors of the state departments and their deputies, regardless of the titles by which the foregoing persons are designated; provided that with respect to the department of the attorney general, the foregoing shall apply only to the attorney general and the first deputy attorney general;

(3) The administrative director of the State;

(4) The members of the board of regents, the president, the vice presidents, the assistant vice presidents, the chancellors, and the provosts of the University of Hawaii;

(5) The superintendent, the deputy superintendent, the state librarian, and the deputy state librarian of the department of education;

(6) The administrative director and the deputy director of the courts; [and]

(7) The members of the board of education, the board of land and natural resources, the board of agriculture, the Hawaiian homes commission, the stadium authority, and the Hawaii community development authority, the Hawaii tourism authority, the natural energy laboratory of Hawaii authority, and the Hawaii paroling authority; and

[(7)] (8) The administrator and the assistant administrator of the office of Hawaiian affairs.

[(e)] (f) The information [on the financial disclosure statements] in annual disclosures shall be confidential, except as provided in subsection [(d).] (e). The commission shall not release the contents of the annual disclosures except as may be permitted pursuant to this chapter. Any person who releases any confidential information shall be subject to section 84-31(c).

[(f) Candidates for state elective offices, including candidates for election to the constitutional convention, shall only be required to disclose their own financial interests.]

(g) The annual disclosures [of financial interests] of all [other] persons designated in subsection [(c)](d) shall state, in addition to the financial interests of the person disclosing, the financial interests of the person's spouse and dependent children. All annual and candidate disclosures shall include:

(1) The source and amount of all income of $1,000 or more received, for services rendered, by the person in the person's own name or by any other person for the person's use or benefit during the preceding calendar year and the nature of the services rendered; provided that information that may be privileged by law or individual items of compensation that constitute a portion of the gross income of the business or profession from which the person derives income need not be disclosed;

(2) The amount and identity of every ownership or beneficial interest held during the disclosure period in any business [incorporated, regulated, or licensed to carry on business in the State] having a value of $5,000 or more or equal to ten per cent of the ownership of the business and, if the interest was transferred during the disclosure period, the date of the transfer; provided that an interest in the form of an account in a federal or state regulated financial institution, an interest in the form of a policy in a mutual insurance company, or individual items in a mutual fund or a blind trust, if the mutual fund or blind trust has been disclosed pursuant to this paragraph, need not be disclosed;

(3) Every officership, directorship, trusteeship, or other fiduciary relationship held in a business during the disclosure period, the term of office and the annual compensation;

(4) The name of each creditor to whom the value of $3,000 or more was owed during the disclosure period and the original amount and amount outstanding; provided that debts arising out of retail installment transactions for the purchase of consumer goods need not be disclosed;

(5) The tax map key number and street address, if any, and the value of any real property in the State in which the person holds an interest whose value is $10,000 or more, and, if the interest was transferred or obtained during the disclosure period, a statement of the amount and nature of the consideration received or paid in exchange for such interest, and the name of the person furnishing or receiving the consideration;

(6) The names of clients personally represented before state agencies, except in ministerial matters, for a fee or compensation during the disclosure period and the names of the state agencies involved; and

(7) The amount and identity of every creditor interest in an insolvent business held during the disclosure period having a value of $5,000 or more.

[(g)] (h) Where an amount is required to be reported, the person disclosing may indicate whether the amount is at least $1,000 but less than $10,000; at least $10,000 but less than $25,000; at least $25,000 but less than $50,000; at least $50,000 but less than $100,000; at least $100,000 but less than $150,000; at least $150,000 but less than $250,000; at least $250,000 but less than $500,000; at least $500,000 but less than $750,000; at least $750,000 but less than $1,000,000; or $1,000,000 or more. An amount of stock may be reported by number of shares.

Members of the board of regents, the board of land and natural resources, the board of agriculture, and the Hawaiian homes commission who file annual disclosures need not report, where an amount is required to be reported, the actual dollar value of the financial interest or the dollar range of value.

[(h)](i) The state ethics commission shall provide a long form of annual disclosure on all even-numbered years and a short form of annual disclosure for subsequent annual filings on all odd-numbered years in those instances where the financial interests of the person disclosing are substantially the same as those reported for the preceding disclosure period.

[(i)](j) Failure of a legislator[, a delegate to the constitutional convention,] or employee to file [a] an annual disclosure [of financial interests] as required by this section shall be a violation of this chapter. Any legislator[, delegate to a constitutional convention,] or employee who fails to file [a] the annual disclosure [of financial interests] when due shall be assessed a penalty of $50. The state ethics commission shall notify a person, by registered mail, return receipt requested, of the failure to file and the annual disclosure [of financial interests] shall be submitted to the commission not later than 4:30 p.m. on the tenth day after notification of the failure to file has been mailed to the person. If [a] the annual disclosure [of financial interests] has not been filed within ten days of the due date, an additional penalty of $10 for each day [a] the annual disclosure remains unfiled shall be added to the penalty. All penalties collected under this section shall be deposited in the State's general fund. Any monetary penalty for late filing shall be in addition to any other action the commission may take under this chapter for violations of the state ethics code. The commission may waive any penalties assessed under this subsection for good cause shown.

[(j)](k) The chief election officer, upon receipt of the nomination paper of any person seeking a state elective office, including the office of delegate to the constitutional convention, shall notify the ethics commission of the name of the candidate for state office and the date on which the person filed the nomination paper. The ethics commission, upon the expiration of the time allowed for filing, shall release to the public a list of all candidates who have failed to file [financial disclosure statements] a candidate disclosure and shall immediately assess a late filing penalty fee against those candidates of $25 which shall be collected by the state ethics commission and deposited into the general fund. The ethics commission may investigate, initiate, or receive charges as to whether a [candidate's financial disclosure statement discloses the financial interests required to be disclosed] person's candidate disclosure complies with the disclosure requirements of this chapter. After proceeding in conformance with section 84-31, the ethics commission may issue a decision as to whether a candidate has complied with [section 84-17(f)] subsection (g) and this decision shall be a matter of public record.

(l) For the purposes of this section:

"Annual disclosure" means the public or confidential disclosure of financial interests required of persons enumerated under subsection (d) to provide information on financial interests of the disclosing person and that person's spouse and dependent children as specified under subsection (g).

"Candidate disclosure" means the public disclosure of financial interests required of candidates for state elective office or the constitutional convention who are required to provide information on their own financial interests as specified under subsection (g).

"Disclosure period" means the period from January 1 of the preceding calendar year to the time of the filing of the annual disclosure.

"Substantially the same" means no more than ten amendments or changes to the information reported on the annual disclosure for the preceding disclosure period."

SECTION 6. Section 84-31, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) If after twenty days following service of the charge and further statement of alleged violation in accordance with this section, a majority of the members of the commission conclude that there is probable cause to believe that a violation of this chapter or of the code of ethics adopted by the constitutional convention has been committed, then the commission shall set a time and place for a hearing, giving notice to the complainant and the alleged violator. If a majority of the members of the commission conclude that there is no probable cause to believe that a violation of this chapter or the code of ethics adopted by the constitutional convention has been committed, then the commission shall publish statewide a notice of the commission's finding that the charge was unsubstantiated and that a probable cause finding has not been made, at which point the unsubstantiated charge and related documents shall become public records. Upon the commission's issuance of a notice of hearing, the charge and further statement of alleged violation and the alleged violator's written response thereto shall become public records. The hearing shall be held within ninety days of the commission's issuance of a notice of hearing. If the hearing is not held within that ninety-day period, the charge and further statement of alleged violation shall be dismissed; provided that any delay that is at the request of, or caused by, the alleged violator shall not be counted against the ninety-day period. All parties shall have an opportunity to:

(1) [to be] Be heard[,];

(2) [to subpoena] Subpoena witnesses and require the production of any books or papers relative to the proceedings[,];

(3) [to be] Be represented by counsel; and

(4) [to have] Have the right of cross-examination.

All hearings shall be in accordance with chapter 91. All witnesses shall testify under oath and the hearings shall be open to the public. The commission shall not be bound by the strict rules of evidence but the commission's findings must be based upon competent and substantial evidence. All testimony and other evidence taken at the hearing shall be recorded. Copies of transcripts of such record shall be available only to the complainant and the alleged violator at their own expense, and the fees therefor shall be deposited in the State's general fund."

SECTION 7. Section 84-17.5, Hawaii Revised Statutes, is amended to read as follows:

"§84-17.5 Disclosure files; disposition. (a) All [financial disclosure statements] annual disclosures filed by a legislator[,] or employee[, or delegate to a constitutional convention] shall be maintained by the state ethics commission during the term of office of the legislator[,] or employee[, or delegate] and for a period of six years thereafter. Upon the expiration of the six-year period, the [financial disclosure statement] annual disclosure and all copies thereof shall be destroyed.

(b) Upon the expiration of six years after an election for which a candidate for state elective office or a constitutional convention has filed [a financial disclosure statement] a candidate or annual disclosure, the state ethics commission shall destroy the candidate's [financial disclosure statement] candidate or annual disclosure and all copies thereof, unless the candidate holds an office enumerated under section 84-17(d).

(c) [Financial disclosure statements] Annual disclosures provided for in section 84-17[(d)] (e) and candidate disclosures provided for in section 84-17(c) shall cease to be public records once the six-year period in subsection (a) or (b) has run.

(d) Nothing herein shall bar the state ethics commission from retaining [a financial disclosure statement] the annual and candidate disclosures or [copy of a financial disclosure statement] copies thereof that [has] have become part of a charge case or advisory opinion request, or is part of an ongoing investigation.

(e) For purposes of this section, "candidate disclosure" and "annual disclosure" have the same meaning as set forth in section 84-17(e)."

SECTION 8. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun, before its effective date.

SECTION 9. If any provision of this Act, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act, which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 10. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 11. This Act shall take effect upon its approval.