A State conflict of interest law applies to all elected or appointed municipal officials and employees. AS 29.20.010 makes it illegal for a municipal official or employee to participate in an official action in which he or she may have a substantial financial interest, and requires that each municipality adopt a conflict of interest ordinance requiring that:

• a member of the governing body declare a substantial financial interest they might have in an action to be decided and ask to be excused from a vote on the matter;
• the presiding officer rule on whether or not a conflict of interest exists and whether the member should be excused from voting;
• a majority vote of the governing body is required to override the decision of the presiding office; and that
• any municipal employee or officer, other than a member of the governing body, not participate in an official action in which they have a substantial financial interest.

This statute also provides that, even if a municipality has not adopted a conflict of interest ordinance locally, the provisions of this statute automatically apply.

Another state law, AS 39.50.020, requires that public officials file a financial disclosure statement to identify any financial or business interest that might present a conflict of interest. A municipality may, after holding an election and putting the question before the voters, exempt itself from the filing requirement if a majority of the voters authorize the exemption. (AS 39.50.145). The Alaska Public Offices Commission (APOC) administers this law. For additional information on declaration of candidacy and financial disclosure, see the LOGON section on 'Preparing for a General Municipal Election' under 'Elections' in the LOGON Links to the left.

What is a conflict of interest?

Simply stated, a conflict of interest is when a person does not appear neutral and the outcome of a decision or action could affect him or her personally without due consideration for the public good. Title 29, the title of state statute that requires that a municipality adopt a specific conflict of interest ordinance, does not define what conflict of interest is. However, Title 39, the title that requires financial disclosure by municipal officers and employees, lists reporting guidelines that can provide guidance on what constitutes conflict of interest. AS 39.50.030 provides a lengthy list of items that have to be reported, including, but not limited to, the sources of all income over $1,000 and gifts over $250 received by the person, the person's spouse or spousal equivalent, or the person's child, and the identity of the business in which any of these is a stockholder, owner, officer, director, partner, proprietor, or employee during the preceding calendar year, etc.

Following is a list of examples of financial interests that a municipal officer or employee who matches the circumstance should bring to the attention of the governing body or other appropriate official. This is, of course, not a list of all possible conflicts of interest. It is just some common examples.

• A municipal officer or employee (or a member of his or her immediate family) individually, jointly, or in partnership with another has an interest in land or buildings that will be affected by the vote or action.
• A municipal officer or employee (or a member of his or her immediate family) is party to or beneficiary of a contract for a sum of $l,000 or more that will be affected by the vote or action.
• A municipal officer or employee (or a member of his or her immediate family) is individually, jointly, or in partnership with another the owner of a business, or has an interest in a business of $l,000 or more that will be affected by the vote or action.
• A municipal officer or employee (or a member of his or her immediate family) is a member of a board of directors or governing body or an officer of, or holds a management position with an organization that has financial dealings of $l,000 or more with the municipality that will be affected by his or her vote or action.

Local ordinances should spell out what is considered a conflict of interest and who is subject to the ordinance.

What is the difference between conflict of interest and financial disclosure?

Conflict of interest is addressed in AS 29.20.010, which makes it illegal for a municipal official or employee to participate in an official action in which he or she may have a substantial financial interest.

Financial disclosure is addressed in AS 39.50.020, which requires municipal officials and candidates for elected office to file a statement reporting what are their sources of income and/or business (substantial financial interests).
AS 39.50.010 provides a detailed list of the purpose behind the disclosure.

What if you are not sure if you have a conflict of interest?

If a person thinks that there is a conflict of interest, but is not sure, the matter should be brought before the governing body or other appropriate authority to decide the issue. Stemming from the fourteenth amendment to the U.S. Constitution regarding due process and fair and equal representation, the courts have created the "appearance of fairness" doctrine, which essentially requires that the public trust be maintained by ensuring that an action not only be fair, but that it also appears fair. This fairness doctrine also applies to outside contacts with interested parties that can be viewed as an attempt to sway opinion (ex parte contact) and should be declared also.

A member of the public who thinks that a municipal officer or employee may have an undisclosed conflict of interest may also bring the matter up for discussion and request a determination.

How do you declare a conflict of interest?

The procedure for declaring a conflict of interest should be spelled out in the local ordinance. Under state law, AS 29.20.010, a member of the governing body is required to declare a conflict and ask to be excused from the vote. The presiding officer then rules on the request and either grants the request or requires the member to vote (a majority vote of the membership can override the decision).

In the case of a municipal official or employee, they may declare the conflict to the affected board or commission or their supervisor. This statute does not provide for a ruling by the governing body to determine whether a conflict exists when the action involves a municipal official (such as a planning commissioner) or municipal employee who has declared a conflict of interest. Instead, it prohibits any participation.

What happens after you declare a conflict of interest?

The presiding officer decides whether a conflict exists and the member is either excused from voting on a matter in which the member has or believes he or she has a substantial financial interest or the presiding officer decides that the conflict is not significant enough to excuse the vote. If the presiding officer is the member making the request or has a related financial interest in the same matter, the governing body must authorize another person who has no financial interest in the matter to rule on the request.

The presiding officer's decision may be overridden by a majority vote of the governing body; however, any affected member may not vote.

In the matter of a member of the governing body participating in debate, who has been excused from voting, care should be taken to ensure the appearance of fairness. Though not specifically prohibited from participating, as is the case with other municipal officials, the statutes do not address whether a member of the governing body may participate in debate. If your ordinance does not address this issue, common sense with consideration of the appearance of fairness should guide this action. Participation also includes soliciting the vote of another member, or encouraging any official or officer to act in a certain way in regard to a subject.

What if a person fails to declare a conflict of interest?

If a conflict of interest is discovered after an official action has been taken, the governing body may cancel the action or take any other steps necessary. Local ordinances should spell out what action will be taken if a person knowingly violates the conflict of interest law and any penalties that might apply. Failure to disclose a conflict of interest can be viewed as a violation of the oath of office or terms of employment and may be grounds for removal.

What if the number of governing body members declaring a conflict of interest results in less than a majority of the governing body membership for voting purposes?

If there is a decision to be made that may be controversial, it is not a good policy to act on a matter when one or more regular members are absent. If members are absent and conflict of interest prevents some members present from voting on a matter, the action should be set aside until all members can be present.

If there is another reason that a majority of the membership can't vote, it may be necessary to appoint a temporary committee of persons who have no real or perceived interest in the matter to study the issue and provide a neutral recommendation.

Publications:

• A Primer for City Council Members
• The Mayor's Handbook: A Primer for Small City Mayors

Recommended web site search topics:

• Division of Elections
• Department of Law
• Alaska Public Offices Commission (APOC)
• Conflict of interest

Alaska Statutes

• AS 29.10.200(8) Limitation on home rule powers, conflict of interest.
• AS 29.20.010 Conflict of interest declaration requirement.
• AS 29.20.020 Public notice/meetings.
• AS 29.20.160 Procedures of governing bodies, meeting schedule and procedure, chair, public record.
• AS 29.20.250-.280 and .500 Mayor powers and duties, delegation in mayor's absence.
• AS 29.20.300-.320 Boards and commissions.
• AS 29.26.240-.360 Recall.
• AS 39.50.010 Purpose of financial disclosure.
• AS 39.50.020 Financial disclosure statement.
• AS 39.50.145 Financial disclosure statement filing exemption.
• AS 39.50.200 Definitions.
• AS 39.52.960 Definitions.
• AS 44.62.310 Government meetings public.