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HomeMy WebLinkAbout86-567 CarmellaJames D. Carmella, Esquire 724 Church Street Indiana, PA 15701 STATE ETHICS COMMISSION 308 FINANCE BUILDING P.O. BOX 11470 HARRISBURG, PA 1 71 08 -1 470 TELEPHONE (717) 783 -1610 May 30, 1986 ADVICE OF COUNSEL 86 - 567 Re: Municipal Authority, Statements of Financial Interests Dear Mr. Carmella: This responds to your letter of April 30, 1986, wherein you requested the advice of the State Ethics Commission. Issue: Whether members of the Indiana County Municipal Airport Authority are required to file Statements of Financial Interests pursuant to the State Ethics Act. Facts: You currently serve as the solicitor for the Indiana County Municipal Airport Authority which was established on May 30, 1980. The authority was established pursuant to the Municipal Authorities Act of 1945, 53 P.S. , 5301 et. seq. The Certificate of Corporation for the authority indicates that it is to have all of the powers, duties, requirements and restrictions as set forth in the Municipal Authorities Act. You advise that the authority is currently composed of 9 members. The members recently were advised of the Statement of Financial Interests filing requirement pursuant to the State Ethics Act. You advise that the individual members of the authority have stated their intention to resign in the event that they are required to file. As a result, you have requested the advice of the State Ethics Commission as to the application of said requirement to these individuals. In addition to the foregoing, you have specifically requested the additional advice of the Commission in relation to the following items: 1. Are members of the authority required to file if they resign their position on the authority? 2. If the county hoards of commissioners dissolve the authority, is there still a need for the authority members to file? James D. Carmella, Esquire May 30, 1986 Page 2 3. Would receipt of $500 or more from a corporation in which the authority member owns stock not in excess of 5% be a source of income that would be required to be reported? 4. Would the receipt of interest on a savings account or other investment be considered a source of income that would be reportable? 5. Would receipt of rental income in excess of $500 be reportable as a source of income and is the amount of the income determined from the gross figure or from the net figure arrived at after expense income deduction? Discussion: The State Ethics Commission has recently addressed the issue of whether non - compensated members of municipal authorities are required to file Statements of Financial Interests in accordance with the State Ethics Act. See, Dice, 85 -021. In that opinion, the Commission determined that members of municipal authorities, formed under the Pennsylvania Municipal Authorities Act of 1945, are public officials within the definition of that term as set forth in the State Ethics Act. As a result, the Commission determined that said members must file Statements of Financial Interests. The opinion in the aforementioned matter was issued on October 23, 1985, and at that time the Commission determined that the filing date would be effective May 1, 1986, coveri ng fi nanci al i nterests for the preceedi ng calendar year. In the Di ce opinion, the Commission noted that the definition of public official, as set forth in the State Ethics Act, provided as follows: Section 2. Definitions. "Public offici al ." Any elected or appointed official i n the Executive, Legislative or Judicial Branch of the State or any political subdivision thereof, provided that it shall not include members of advisory boards that have no authority to expend public funds other than. reimbursement for personal expense, or to otherwise exercise the power of the State or any political subdivision thereof. "Public official" shall not include any appointed official who receives no compensation other than reimbursement for actual expenses. 65 P.S. 402. As can be noted from the above statutory enactment, as originally promulgated, the Ethics Act excluded officials who were appointed and received no compensation other than reimbursement for actual expenses. The Commission, however, went on to note that in Snider v. Thornburgh, 469 Pa. 159, 436 A.2d 593, (1981), the Supreme Court of Pennsylvania determined that the definitional phrase "public official" was unconstitutional insofar as it James D. Cannella, Esquire May 30, 1986 Page 3 operated to exempt appointed /non - compensated officials from Ethics Act coverage. As a result, the court stated that the exclusion of appointed non - compensated officials from the definition of public officials is removed. As a result, the term public official is now defined as follows: Any elected or appointed official i n the executive, 1 egi sl ative or judicial branch of the state or any political subdivision thereof, provided that it shall not include members of advisory boards that have no authority to expend public funds other than reimbursement for personal expense, or to otherwise exercise the power of the state or any political subdivision thereof. 65 P.S. §402, (as modified by Snider v. Thornburgh, supra.) In order to determine whether municipal authority members are public officials within this definition, it must be determined whether or not such authorities are merely advisory boards that have no power to expend public funds or otherwise exercise the power of the State or political subdivisions. Municipal authorities are clearly independent agencies that are part of the Commonwealth. Commonwealth v. Erie Metropolitan Transit Authority, 281 A.2d 882, 444 Pa. 345, (1971). Appointed members of such agencies are, without doubt, "public officials ". One need look no further than the powers and duties of said authorities in order to determine that they are more than advisory in nature and do, in fact, have the power to exercise the power of the State. See, 53 P.S. §306. We will not here outline all of these powers as they are clearly delineated in the Municipal Authorities Act. Indeed, a number of judicial pronouncements have already held such authority members to be public officials. Commonwealth ex. rel. McCreary v. Major, 343 Pa. 355, 22 A.2d 686, (1941). In Forney v. State Ethics Commission, 56 Pa. Comrnw. 539, 425 A.2d 66, (1981), it was clearly established that such members were public officials within the purview of the Ethics Act. Except for the then existing exemption, all authority members would have been required to file the Statement of Fi nanci al Interests. Based upon the foregoing, the Commission determined that members of municipal authorities were public officials within the purview of the State Ethics Act and that they are, therefore, required to file Statements of Fi nanci al Interests. As a result, you are advised that the members of the Indiana County Municipal Airport Authority are within the purview of the State Ethics Act and are requi red to file Statements of Fi nanci al Interests. James D. Carmella, Esquire May 30, 1986 Page 4 In relation to your question regarding whether the members of the authority are alleviated from the filing requirement if they resign upon the receipt of this advice, the Commission has recently set forth the rules and regulations of the Commission as previously enacted. See, PA Bulletin vol. 16, No. 12, March 22, 1986. The Commission, pursuant to that notice, set forth the regulations of the Commission which specifically indicate that a public official who serves in office during a calendar year must file a Statement of Financial Interests even if they resigned during that calendar year. The only exception to this particular provision is if the public official serves out the end of a normal term of office which expires in January and participates in no non - routine matter, then said individual is not requi red to fil e a Statement of Fi nanci al Interests. Thus, members of the authority, if they served and continued to serve during calendar year 1986, would be requi red to file Statements of Fi nanci al Interests. The aforementioned notice also indicated that those members of municipal authorities who resigned prior to January 1, 1986, would not be required to file Statements of Financial Interests. In relation to your question as to whether members of municipal authorities are required to file, if said authority is terminated by the members of the county commissioners, the Pennsylvania State Ethics Commission has recently addressed a similar issue. In Martin, 86 -003, the State Ethics Commission concluded that members of a municipal authority, although public officials within the financial interests filing requirements of the State Ethics Act, would not be required to file Statements of Financial Interests by May 1, 1986, if the only action that said authority members take during the year is action to terminate the authority's existence. Thus, if the only official action that the members of the Indiana County Municipal Authority will take in this year is action to terminate the authority's existence, then said members would not be required to file Statements of Financial Interests. If the members, however, have al 1 ready taken any affirmative action in relation to their positions, said exemption would not be applicable. In relation to your comment that the members of the municipal authority intend to resign i f they are requi red to file Statements of Fi nanci al Interests, while we do believe that such action is a concern, the Ethics Commission cannot make its determinations under the Ethics Act based upon threats from public officals that they will resign if the Act is applicable to them. We do believe that the public officials involved should strongly consider their position in relation to this and should take the time to review the Statements of Financial Interests before they act in such a manner. The Statements of Fi nanci al Interests generally requi re only a limited di sclosure of the individuals financial position. Many officials have not taken the time to review said statement and we believe that one who resigns his position prior to reviewing said statement is clearly acting without a full knowledge of the facts and requirements of the law. In any event, while we encou these individuals to continue their public service regardless of the application of the State Ethics Act to them, this Commission may not base its decisions upon the contemplated activities of such officials. James D. Carmel la, Esquire May 30, 1986 Page 5 In relation to these specific questions which you have posed in relation to the filing requirements, we advise as follows: All sources of income in excess of $500 in any given year must be reported, this would include sources of $500 which are received from a corporation in which the authority member owns stock even if said ownership is not in excess of 5 %. While the individual would not be required to list this corporation as a business entity in which said member has a financial interest, the corporation would be requi red to be listed as a source of income. Additionally, interest on savings accounts and other investments that produce an excess of $500 a year, individually, must be reported as sources of income. A vested pension from which the individual is currently receiving monthly installments i s not requi red to be reported. Conclusion: Members of municipal authorities are public officials in accordance with the provisions of the State Ethics Act and, thereby, required to file Statements of Financial Interests pursuant to that law. The exemptions currently set forth in the Ethics Act are stated above and the specific items to be included on the Statements of Financial Interests are similarly outlined above. Pursuant to Section 7(9)(ii), this Advice is a complete defense in any enforcement proceeding initiated by the Commission, and evidence of good faith conduct in any other civi 1 or criminal proceeding, providing the requestor has disclosed truthfully all the material facts and committed the acts complained of in reliance on the Advice given. This letter is a public record and will be made available as such. Finally, if you disagree with this Advice or if you have any reason to challenge same, you may request that the full Commission review this Advice. A personal appearance before the Commission w i l l be scheduled and a formal Opinion from the Commission will be issued. Any such appeal must be made, in writing, to the Commission within 15 days of service of this Advice pursuant to 51 Pa. Code 2.12. Si nc ohn Gener ti no Counsel