Article 18 of the New York State General Municipal Law sets forth the provisions regulating conflicts of interest for municipal officers and employees.(1) It applies to all municipalities in the state, except New York City.(2) "Municipality" is broadly defined to include not only counties, cities, towns, and villages, but a host of other local government entities as well, such as school districts, consolidated health districts, public libraries, and town and county improvement districts.(3) "Municipal officer or employee" is likewise broadly defined to include all officers and employees of the municipality, whether paid or unpaid, including board and commission members, and officers and employees paid from county funds.(4)
The provisions of Article 18 fall into five areas:(5) (1) the prohibitions on interests in contracts with the municipality;(6) (2) miscellaneous provisions on conflicts of interest (e.g., gifts, and appearances before municipal agencies);(7) (3) administration (local ethics laws, local ethics boards);(8) (4) disclosure in certain land use applications;(9) and (5) annual financial disclosure.(10) The purpose of this Article is to outline the various provisions governing municipalities and to suggest practical applications of Article 18 to the daily operation of municipalities.
I. PROHIBITED INTERESTS IN CONTRACTS
Government ethics laws do not regulate ethics per se but rather, as a general rule, regulate financial conflicts of interest, that is conflicts between a public official's private financial interests and public responsibilities. Article 18 covers "pecuniary and material interests rather than expressions of personal opinion."(11) For example, many governmental ethics laws prohibit a public servant from engaging in certain outside employment or from taking any action as a public servant that would benefit the public servant personally.(12)
In addition, state and local ethics laws seek to protect against divided loyalties on the part of public officers and employees. For example, a public servant may be prohibited from engaging in activities in conflict with his or her official duties or from acting on a matter that would financially benefit a member of the official's immediate family or his or her outside employer.(13) Likewise, a public servant may be prohibited from accepting gifts or gratuities from someone doing business with the official's government employer.(14) Finally, governmental ethics laws may contain miscellaneous provisions aimed at protecting privacy or preserving public confidence in the integrity of the governmental hiring or decisionmaking process or maintaining a level playing field among vendors. These provisions may restrict the use or release of confidential information, participation in certain political activities, the ability to enter into financial relationships with a subordinate or superior, or revolving door employment.(15)
The focus of Article 18 lies almost entirely in prohibiting a municipal officer or employee from having an "interest" in contracts with his or her municipality if the officer or employee has some power or duty with respect to the contract.(16) This prohibition, which contains fifteen exceptions, including exceptions to the exceptions, is sufficiently complicated to puzzle experienced municipal attorneys; to a lay person, it is virtually unintelligible. In addition, this prohibition often seems senseless when applied to smaller communities.(17) Furthermore, only limited case law exists to provide guidance in the area; instead one must consult the plethora of opinions issued by the Comptroller's Office and Attorney General's Office.(18)
When faced with an issue under section 801, the municipal attorney will need to engage in a five-step analysis, determining whether: (1) the individual is a "municipal officer or employee;"(19) (2) there is a "contract" with the municipality;(20) (3) the officer of employee has an "interest" in that contact;(21) (4) the officer or employee has the requisite power or duty under section 801; and (5) the officer or employee is covered by any of the exceptions in sections 801 or 802. …