Advisory Opinion No. 97-130

Re: Pascoag Fire District

A. QUESTION PRESENTED

Counsel for the Pascoag Fire District, on behalf of the Fire District and its Board of Utility Commissioners, regional elected positions, requests an advisory opinion as to whether and under what conditions the Commissioners may propose and/or receive a stipend for their service.

B. SUMMARY

It is the opinion of the Rhode Island Ethics Commission that the Code of Ethics prohibits members of the Board of Utility Commissioners of the Pascoag Fire District, regional elected positions, from proposing, voting or otherwise participating in any process or mechanism that would result in the receipt of a stipend of up to $5,000 per year by individual incumbent members of the Board of Utility Commissioners for administrative services rendered. However, a mechanism whereby the Board of Commissioners or the voters approve the receipt of a stipend by Commissioners, including re-elected incumbents, elected at an annual meeting subsequent to the approval of the stipend would be consistent with the provisions of the Code of Ethics.

C. DISCUSSION

1. Facts

The Board of Utility Commissioners of the Pascoag Fire District governs the District’s Electric and Water Departments and has full responsibility for the Fire Department. The Board is composed of seven members, elected by voters of the District, who serve staggered three-year terms. The Board is vested with authority to exercise all functions for the full management of the departments of the District. It exercises such functions incorporating information and advice from, among others, its General Manager, who reports to the Board.

The Commissioners have never received any remuneration for their services. Due to greater time sacrifices required of the Commissioners, the District has expressed interest in awarding individual Commissioners a stipend of up to $5,000 per year for administrative services rendered. Counsel for the District requests an advisory opinion as to whether and under what conditions the Commissioners may propose and or receive a stipend.

2. Analysis

In General Commission Advisory (GCA) No. 6 the Commission opined that the Code of Ethics prohibited public officials from taking any action affecting their own salary or benefits. An important basis for that general advisory is the provision in the Code that a public official has a substantial conflict of interest with his/her duties in the public interest if the official has reason to believe or expect a financial gain by reason of his/her official activity. See R.I. Gen. Laws §§ 36-14-5(a), 7(a).

In General Commission Advisory Opinion No. 6, the Commission clarified the responsibilities of all public officials who are in a position to grant themselves salary increases, or who may have any role in the granting of such increases. The Commission stated that, in general, it would be a violation of the Code of Ethics for a public official to vote on, participate in the discussion of, promote or otherwise have any role in the granting of a raise or increase of benefits to themself. Where a public official takes any action with regard to salary or other benefits of employment which will benefit him or her directly, a probable violation of the Code of Ethics will occur. The Commission referred specifically to Celona v. R.I. Ethics Commission, 544 A.2d 582, wherein the Court stated:

There is no language in the … statute that limits violations to circumstances where a public official renders a decision that results in financial gain. Rather … a conflict exists if the public official has reason to believe or expect that he [or she] *** will derive a direct monetary gain *** by reason of his [or her] official activity.

The Commission consistently has ruled that public officials may not introduce, participate in the discussion of, or vote on compensation and health benefit issues affecting themselves in their current term of office. See A.O. 97-64; A.O. 93-74; A.O. 89-27 (Commission concluded Little Compton Town Council members may not consider or vote upon increase in stipend received by Councilors if those members voting would directly benefit from it). Even where town councilors have submitted salary increases subject to approval by the electorate, the Commission has found probable violations where the pay raise was submitted by and for currently serving council members. See A.O. 89-32. Thus, the Board of Utility Commissioners may not promote, participate in the discussion of, or vote upon the receipt of a stipend by any incumbent Commissioner. Prohibiting members of the Board from participating in discussions of or voting on receiving the stipend will not unfairly impact them as they sought election for the offices now held at a time when no stipend existed. See A.O. 95-52.

The Commission has opined that public officials may vote on salary increases to take effect in the subsequent term, provided, however, that such votes are taken prior to candidacy declarations being filed for the next general election. See e.g., A.O. 96-21. Where recipients of future benefits are unknown at the time of discussion and voting, there is no risk of a violation of the Code of Ethics. See A.O. 93-82; A.O. 83-69 (Portsmouth Water and Fire District Board members may have pay raises benefiting Board members take effect far enough into the future so that actual beneficiaries of compensation or increases are not certain to be the Board members so voting). By requiring votes on the stipend to be taken in such manner, an individual Commissioner may not know if he or she will seek re-election and/or if another candidate may file a declaration for his or her seat. Therefore, a Commissioner cannot reasonably expect to receive a financial benefit by virtue of his or her official activity, and no Code of Ethics violation occurs. See R.I. Gen. Laws §§ 36-14-5(a), 7(a).

A direct benefit would accrue to members of the Board of Utility Commissioners who seek re-election unopposed if votes are taken regarding the proposed stipend after candidacy declarations are filed for the next election. In such case, the increased compensation would inure to the unopposed incumbent, thus giving him or her, "reason to expect that he or she would derive direct financial gain by reason of his or her official activity in violation of R.I. Gen. Laws §§ 36-14-5(a), 7(a). Therefore, any such Commissioner must give notice and recuse from participating in the discussion or voting on any matter relating to the award of a stipend to Utility Board Commissioners. See also A.O. 93-82; A.O. 93-73; A.O. 90-42.

In Advisory Opinion 95-52, the Commission addressed an issue similar to the instant matter. In that advisory, the Commission opined that the Code of Ethics prohibited members of the Little Compton Town Council from participating in any discussion or votes regarding the receipt of a stipend of up to $5,000 by any other member(s) of the Council for administrative duties carried out on behalf of the Council. The appropriation of the stipend and the mechanism by which it was to be allocated were based upon the recommendations made by a committee formed by and on the initiative of the Town Council to review Council member compensation. Although such recommendations were to be voted on and approved by the electorate at their annual financial town meeting, in which Council members did not participate or vote, the recommendations applied to sitting Town Council members. Again, prohibiting such participation would not unfairly impact the sitting Town Council members, as no potential stipend existed at the time they ran for office.

Counsel for the Fire District requests that the Commission consider an appropriate mechanism by which a stipend may be approved for and received by individual members of the Board of Utility Commissioners. Given the present context it appears the only appropriate mechanism is one that dictates that any stipend not take effect until after the next election of the individual Commissioners. The manner in which the stipend is proposed is not determinative. Rather, whether it takes effect immediately or only after an independent intervening event (i.e., an election) is critical. Therefore, regardless of which mechanism might be chosen by the Fire District, only Commissioners, including re-elected incumbents, elected at an annual meeting subsequent to the approval of the stipend are entitled to receive it consistent with law.

Code Citations:

36-14-5(a)

36-14-7(a)

Related Advisory Opinions:

GCA 6

97-64

96-21

95-52

93-82

93-74

93-73

Related Advisory Opinions Continued:

90-42

89-32

89-27

83-69

Keywords:

Compensation

Financial interest