Gifts to Local Governments - Two Very Different Examples

Gifts to local governments have become an issue recently in Sacramento, CA and Richland Hills, TX. I wrote about various aspects of this issue over two years ago. It's time to raise it with respect to concrete examples.

Basically, gifts to local governments by businesses and individuals with a business relationship to the local government carry a strong appearance of impropriety. However, they are generally not dealt with in ethics codes. In fact, many ethics codes require that gifts to officials be turned over to the local government. The City Ethics Model Code does not do this, but it does require that "Gifts of property, money, or services given nominally to the city must be accepted by a resolution of the legislative body." This is worth rethinking.

Because the benefits of these gifts can be great, there is a lot of pressure on officials to accept them. Also, companies present their gifts as paying back for the community's generosity to them, apparently the opposite of a bribe to an official. But it is not always easy to tell the difference, and there is always the future relationship between city and company to consider.

In Richland Hills, according to an article in the Star-Telegram, an energy company currently negotiating a lease to drill on city property wants to give the city $200,000 to rebuild a community center. A company spokesperson said, "As a matter of our practice, we always direct the bulk of our charitable contributions to areas where we have active operations." That sounds reasonable. Why give contributions where you have no interest? But where you have an interest, and spend to support it, conflicts of interest may appear.

Some council members are insisting that they will not accept any gift until a contract has been finalized. But the damage has been done; the offer is on the table. And in addition, the company's operations will be regulated by the government, and the contract will just be a short-term lease. In the future, there will be negotiations about extensions, and the new community center may be a consideration in how the company is treated. It's hard to toss out so charitable a company in preference for a company that has done nothing for the community.

Others in the community think the talk of a conflict of interest is ridiculous. The energy company gives contributions throughout the area. It's just the way the company operates, and it's good for everybody. It's hard to imagine that the gift will be turned down, at least after the lease has been approved by the council.

In Sacramento, a new mayor came in this year with a new vision of government. On his idealist.org page (seeking volunteers, apparently), he wrote, "With a small staff, the Mayor’s goal is to change the way politics works in Sacramento – to ensure that decisions are made based on the interests of its citizens and children, and not based on factions or party politics."

Although he is a weak mayor in a council-manager city, according to an article in yesterday's Sacramento Bee, Kevin Johnson has a large team of volunteers and would like to increase his staff with money from private sources. State law requires that the mayor's office disclose anyone who donates more than $5,000 a year, and that staff members fill out economic interest statements.

Such gifts would be even more of a problem than giving to a mayor's charity, because he will directly benefit from the gifts by having a larger staff. In a weak-mayor city, where the mayor has only four full-time staff members, a few more staff members would mean a lot.

It's interesting that in California, the solution to this problem is disclosure. In the Richland Hills matter, the contributor wants there to be full disclosure. It's hard to imagine such a gift being given secretly. In the Sacramento situation, however, contributors would most likely not want their gifts to be publicized. Therefore, it is important that they be identified, and $5,000 seems a high cutoff point. It's almost like an ongoing campaign contribution, giving the mayor staff beyond what the city feels a weak mayor needs to operate his office.

It's not what the city needs so much as what the mayor wants to have under his control. It makes sense for him, and might very well be good for the city, but that's what politics is about:  negotiating with those who hold the public pursestrings for more money to do what you feel is important. Going outside the city budget to do this involves not only gifts that could be seen as buying special consideration, but also an attempt to change the political balance in a weak-mayor city. It's no accident that Johnson's principal issue is changing Sacramento's government to a strong mayor form.

Update:An editorial in today's Sacramento Bee sets forth some excellent requirements for dealing with the mayor's volunteers, so that their conflicts, if they have any and when they arise, are dealt with openly and responsibly.

Robert Wechsler
Director of Research-Retired, City Ethics

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