Advisory Opinion No. 96-66

Re: Charles W. Beck

A. QUESTION PRESENTED

A councilor serving as a member of the Charlestown Town Council, an elected municipal official, requests an advisory opinion as to whether he can participate and vote on proposed amendments to the Town Inventory Tax Code given that he owns a business in the Town.

B. SUMMARY

It is the opinion of the Rhode Island Ethics Commission that the Code of Ethics requires the petitioner, a councilor serving as an elected member of the Charlestown Town Council to recuse himself from participation and voting on proposed amendments to the Town Inventory Tax Code. This advice is based on the financial benefit that will accrue to the petitioner and the unavailability of a class exception (R.I. Gen. Laws § 36-14-7(b)) to the instant matter. First, the petitioner will receive a direct financial benefit by voting on the Inventory Tax Code amendments resulting in a substantial conflict with the proper discharge of his duties in the public interest since he has reason to believe that he or his business will derive a direct monetary gain by reason of his official activity. (R.I. Gen. Laws § 36-14-5(a), 36-14-7(a)). Second, this matter does not fall within the class exception as the business subgroup is not "a significant and definable class". The petitioner should exercise the notice and recusal sections of the Code when the amendments to the Town Inventory Tax Code are considered by the Council. (R.I. Gen. Laws § 36-14-6)

C. DISCUSSION

1. Facts

The petitioner is the President of the Charlestown Town Council. As part of his duties, the petitioner is expected to vote on issues concerning the Town Inventory Tax Code. Amendments to the Town Inventory Tax Code are currently proposed. The petitioner represents that those changes would either reduce the amount of inventory tax paid by all Charlestown businesses or eliminate it completely.

The petitioner owns a small business in Charlestown which pays the Inventory Tax. The petitioner represents that approximately 100 businesses in Charlestown pay the Inventory Tax. The petitioner requests an advisory opinion as to whether he can vote on the amendments to the Inventory Tax since he is a business owner in Charlestown and, under the amendments, would pay less Inventory Tax.

2. Analysis

The Rhode Island Code of Ethics provides that the petitioner cannot have an interest in substantial conflict with the proper discharge of his duties in the public interest. A substantial conflict exists if the petitioner has reason to believe that he or his business will derive a direct monetary gain or suffer a direct monetary loss by reason of his official activity. However, the petitioner does not have an interest in substantial conflict with the proper discharge of his duties in the public interest if any benefit to him is no greater than to any similarly situated member of his business, profession, occupation, or group or significant and definable class of persons within that business, profession, occupation, or group. R.I. Gen. Laws §§ 36-14-5(a), 36-13-7(a), 36-14-7(b). Pursuant to R.I. Gen. Laws § 36-14-5(d), the petitioner is also prohibited from using his position or confidential information received through his position to obtain financial gain, other than that provided by law, for himself, any business associate, or any business which he represents or by which he is employed.

The Commission has applied the 7(b) exception where the matter concerned large groups, such all members of a community, all hunters, all social workers, or all state pension recipients. For example, in A. O. 95-101, the Commission concluded that a Town Solicitor and owner of rental property with trash receptacles could advise the town on an ordinance which applied to all municipal waste whether it was from a single or multiple family dwelling. Additionally, the Commission has found that a DEM employee could apply for hunting or fishing licenses and fish in streams stocked by DEM since he is a member of a significant and definable class of persons, the thousands of citizens of the State that take advantage of the outdoor activities under DEM's jurisdiction.

A. O. 93-65. The Commission has also found that legislators may vote on matters when they are part of a large class. See A.O. 94-25, A.O. 95-48, A.O. 95-55. However, where the legislator was part of a smaller subgroup of a class, the Commission concluded that the legislator could not participate in the matter. A.O. 95-55, A.O. 95-56, A.O. 95-63, A.O. 93-64, A.O. 95-65, A.O. 95-69, A.O. 95-70, A.O. 95-75.

The Commission has also issued advisory opinions where the group was more limited. See A.O. 91-97 (concluding Zoning Board of Review member can participate in Water District matters since as a customer of the Water District, he is a member of a significant class of similarly situated persons); A.O. 94-27 (concluding that the public official can participate in contract deliberations while her mother is a member of the union); A.O. 95-35 (finding that no violation would result for members of Pension Committee voting on general pension issues unless the plan would affect them either individually or as a member of a defined group). Nonetheless, in these opinions, the petitioner was a member of a "group" rather than of a subgroup.

Additionally, one advisory opinion granting the Section 7(b) exception considered a large subgroup. In A.O. 94-61, the Commission found that a 7(b) exception applied to members of the West Warwick Town Council who owned businesses or real estate within the municipality and who were to vote on tax incentives for new and expanded businesses if those votes impact on all businesses generally. This opinion can be distinguished in that the Commission considered that "hundreds of business entities and individuals" would be affected and that the possible benefit of the tax incentives to the Council members is more remote than the instant matter where the petitioner will receive a direct financial benefit.

After considering the petitioner's request, we conclude that the Code of Ethics prohibits the petitioner from participating or voting on amendments to the Town Inventory Tax Code. This is based on petitioner's direct financial benefit from amendments to the Town Inventory Tax Code and the inapplicability of Section 7(b) to the current situation. First, the petitioner will receive a direct financial benefit by voting on the Inventory Tax Code amendments resulting in a substantial conflict with the proper discharge of his duties in the public interest since he has reason to believe that he or his business will derive a direct monetary gain by reason of his official activity. Second, this matter does not fall within the "class exception" as all Charlestown taxpayers are the "group" and the estimated 100 businesses in Charlestown are a subgroup. This subgroup is not "a significant and definable class" of the taxpayer group and, as such, does not erase the appearance that the petitioner's actions are being influenced by the financial benefits to him. Therefore, this matter does not fall within the meaning of Section 7(b) of the Code. The petitioner should exercise the notice and recusal sections of the Code when the amendments to the Town Inventory Tax Code are considered by the Council.

Code Citations:

36-14-5(a)

36-14-6

36-14-7(a)

36-14-7(b)

Related Advisory Opinions:

95-101

95-75

95-70

95-69

95-65

95-63

95-56

95-55

95-48

95-35

94-61

94-27

94-25

93-65

Related Advisory Opinions Continued:

93-64

91-97

Keywords:

class exception