Many are surprised to learn that campaign contributions to local elected officials do not create legal conflicts of interest, which would prohibit the public official from voting on matters involving the campaign contributor.
The issue was revisited in a fairly recent California Court of Appeal decision, All Towing Services LLC v. City of Orange (October 2013) 220 Cal.App, 4th 946. The facts of that case involve a solicitation of proposals for towing services by the City of Orange. The City awarded contracts to several of the tow companies that submitted proposals. However, an unsuccessful proposer sued the City alleging violations of the Political Reform Act because two council members had received campaign contributions from at least two of the companies that were awarded contracts.
The Political Reform Act was enacted by the California legislature in 1974. The Political Reform Act prohibits public officials from participating in or making decisions if he or she has a financial conflict of interest. However, the Political Reform Act expressly excludes campaign contributions from its definitions of gifts and income creating financial conflicts of interest.
The Court in the All Towing Services case ruled in favor of the City of Orange concluding that the acceptance of the campaign contributions by the council members did not create a financial conflict of interest under the Political Reform Act.
The Political Reform Act’s exclusion for campaign contributions to elected officials serves constitutional and practical ends. The California Supreme Court in a previous decision explained that to disqualify a city council member from acting on a development proposal because the developer had made a campaign contribution to that member would threaten constitutionally protected political speech and associational freedoms. Campaign contributions have consistently been held to be a protected form of free speech under the First Amendment.
The Supreme Court also provided a practical example justifying the exclusion. The Supreme Court explained that if a campaign contribution automatically disqualified the recipient after his election from considering a matter in which the contributor has an interest, an enterprising developer could disqualify all known environmentalists who are running for the office by making nominal contributions to the campaign committees of such persons. Future applications of the developer could then be judged by a panel from which all known environmentalists have been disqualified.
While the Political Reform Act does not prohibit local elected officials from participating in decisions involving persons from which the elected official has received a campaign contribution, those contributions must be publicly disclosed. In addition, while the Political Reform Act allows elected public officials to accept campaign contributions without creating a financial conflict of interest, the same is not true for other officers of a public agency, such as members appointed to boards and commissions.
The Political Reform Act and other conflict of interest laws are complex and can be difficult to navigate. The facts of each particular situation must be fully explored before determining whether a public official has a disqualifying conflict of interest. Carmel & Naccasha frequently provides advice on compliance with the Political Reform Act to its numerous public agency clients. Heather Whitham is a partner at Carmel & Naccasha LLP whose practice focuses primarily on representing public agency clients. Heather can be reached through her email address which can be found on her biography page here or at 805-546-8785.