May a legislator, individually or as a partner, participate in a state loan program when the available funds were allocated by the Legislature prior to the legislator taking office?

The pertinent conflict of interest laws to be considered here are:

Constitutional Section 109 states:

"No public officer or member of the legislature shall be interested, directly or indirectly, in any contract with the state, or any district, county, city, or town thereof{ authorized by any law passed or order made by any board of which he may be or may have been a member, during the term for which he shall have been chosen, or within one year after the expiration of such term."

Code Section 25-4-101 states:

"The legislature declares that elective and public office and employment is a public trust and any effort to realize personal gain through official conduct, other than as provided by law, or as a natural consequence of the employment or position, is a violation of that trust. Therefore, public servants shall endeavor to pursue a course of conduct which will not raise suspicion among the public that they are likely to be engaged in acts that are in violation of this trust and which will not reflect unfavorably upon the state and local governments."

Code Section 25-4-103(d), (f)(i)(ii), (g)(v), (h), (1), and (p)(i)(ii)(iii) states:

"(d) 'Business with which he is associated' means any business of which a public servant or his relative is an officer, director, owner, partner, employee or is a holder of more than ten percent (10%) of the fair market value or from which he or his relative derives more than One Thousand Dollars ($1,000.00) in annual income or over which such public servant or his relative exercises control.

(f) 'Contract' means:

(i) Any agreement to which the government is a party; or

(ii) Any agreement on behalf of the government which involves the payment of public funds.

(g) 'Governmental' means the state and all political entities thereof, both collectively and separately, including but not limited to:

(v) Any department, agency, board, commission, institution, instrumentality, or legislative or administrative body of the state, counties or municipalities created by statute, ordinance or executive order including all units that expend public funds.

(h) 'Governmental entity' means the state, a county, a municipality or any other separate political subdivision authorized by law to exercise a part of the sovereign power of the state.

(1) 'Pecuniary benefit' means benefit in the form of money, property, commercial interests or anything else the primary significance of which is economic gain. Expenses associated with social occasions afforded public servants shall not be deemed a pecuniary benefit.

(p) 'Public servant' means:

(i) Any elected or appointed official of the government;

(ii) Any officer, director, commissioner, supervisor, chief, head, agent or employee of the government or any agency thereof; or of any public entity created by or under the laws of the State of Mississippi or created by an agency or governmental entity thereof; any of which is funded by public funds or which expends, authorizes or recommends the use of public funds; or

(iii) Any individual who receives a salary, per diem or expenses paid in whole or in part out of funds authorized to be expended by the government."

Code Section 25-4-105(1), (2), (3)(a) and (4)(g) states:

"(1) No public servant shall use his official position to obtain pecuniary benefit for himself other than that compensation provided for by law, or to obtain pecuniary benefit for any relative or any business with which he is associated.

(2) No public servant shall be interested, directly or indirectly, during the term for which he shall have been chosen, or within one (1) year after the expiration of such term, in any contract with the state, or any district, county, city or town thereof; authorized by any law passed or order made by any board of which he may be or may have been a member.

(3) No public servant shall:

(a) Be a contractor, subcontractor or vendor with the governmental entity of which he is a member, officer, employee or agent, other than in his contract of employment, or have a material financial interest in any business which is a contractor, subcontractor or vendor with the governmental entity of which he is a member, officer, employee or agent.

(4) Notwithstanding the provisions of subsection (3) of this section, a public servant or his relative:

(g) May contract with the Mississippi Veteran's Home Purchase Board, Mississippi Housing Finance Corporation, or any other state loan program, for the purpose of securing a loan; however, public servants shall not receive favored treatment."

I am a recent elected State Legislator which in 1995, before being sworn in the public office had made request for State Assistance.

Though I had not voted on any funding of programs, the questions I have are: If funds are allocated during the time that I was not in office, does that make me an eligible recipient? Can I be a partner with anyone that receive these funds?

Besides the above, the requestor advised the Commission's staff that the Legislature during the 1996 Session amended the Mississippi Small Business Assistance Act in House Bill No. 595.2  These amendments made three (3) primary changes to the Act. They are: 1) PDD's may retain 25% of interest earned on repayment funds being held to reloan and require the PDD's to annually file a report on the retained interest with the Secretary of the Senate and the Clerk of the House; 2) Repeal Code Section 57-10-511 on July 1, 1997; and, 3) change the interest rate on loans to no more than 4% above the federal discount rate from 2% above the highest bond interest rate.

The Commission formally adopts Advisory Opinion No. 96-083-E, with attachments, in response to this request and by attachment incorporates it into this opinion.

Based solely on the facts and circumstances presented by the requestor, the Commission's opinion is as follows.

Constitutional Section 109 and Code Section 25-4-105(2), both cited above, would not prohibit the requestor, individually or as a partner, from participating in the Mississippi Small Business Assistance Program because the authorizing legislation, including the bonding authority, was passed by the Legislature prior to the requestor becoming a legislator.

Furthermore, House Bill No.595's amendments to the Act do not create a violation of Constitutional Section 109 and Code Section 25-4-105(2), even though the Bill was passed during the member's term, as the three (3) changes do not authorize or reauthorize the loan contracts.

Code Section 25-4-l05(3)(a), cited above, also does not prohibit the requestor's participation in this Program because of the exception set forth in the above cited Code Section 25-4-105(4)(g).

1See §§57-10-501 et seq., Mississippi Code Annotated of 1972 (amended)
2 House Bill No.595, 1996 Legislative Session, is attached

Code Section 25-4-105(1) prohibits public servants from using their official positions to obtain a pecuniary benefit for themselves, a relative or a business with which they are associated.

To avoid using their official positions to obtain a pecuniary benefit, the public servants must totally and completely recuse themselves from subject matters providing the pecuniary interests. An abstention is a vote with the majority of the governing entity's board and therefore does not qualify as a recusal.

A total and complete recusal requires that the public servant not only avoid debating, discussing or taking action on the subject matter during the official meeting, but also avoid discussing the subject matter with other board members, staff or any other person prior to and after the official meeting. This includes casual comments, as well as detailed discussions, made in person, by telephone or by any other means.

Al so in order to properly recuse oneself from a matter, the public servant must leave the room or area where such discussions, considerations and/or actions take place. The minutes of the governing entity's board should state the public servant left the meeting by showing him or her absent for that matter.

Therefore to avoid violating Code Section 25-4-105(1), the requestor should recuse himself from any matter coming before the Legislature that concerns the Mississippi Small Business Assistance Act. Whether or not the requestor violated Code Section 25-4-105(1) during the Legislature's passage of House Bill No.595, of the 1996 Legislative Session, is a question of fact for a court of competent jurisdiction.

The issue presented by the requestor also must be viewed as it relates to Code Section 25-4-101, set forth above. This code section sets the tone for the conflict of interest laws as the Legislature's "Declaration of Public Policy." This public policy can be summarized as any circumstance having the potential of creating suspicion among the public and reflecting unfavorably upon the state or local government should be closely reviewed by public servants with the intent to reduce or eliminate any suspicion on the part of the public which detracts from the public's trust in state or local government.

Clearly, a legislator's participation in the Mississippi Small Business Assistance Act has the potential of creating suspicion among the public and reflecting unfavorably upon the state government. Therefore, the requestor should recuse himself from any matter coming before the Legislature concerning the Act.

Ronald E. Crowe, Executive Director