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A08232 Summary:

BILL NOA08232
 
SAME ASSAME AS S07258
 
SPONSORWallace
 
COSPNSR
 
MLTSPNSR
 
Add 5-b, amd 80, Leg L; amd 74, Pub Off L; amd 94, Exec L
 
Prohibits members of the legislature and statewide elected officials from receiving certain income.
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A08232 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A8232
 
SPONSOR: Wallace
  TITLE OF BILL: An act to amend the legislative law, the public officers law and the executive law, in relation to prohibiting members of the legislature and statewide elected officials from receiving certain income   PURPOSE OR GENERAL IDEA OF BILL: The bill would institute a restriction on the amount of outside earned income legislators and statewide elected officers could receive during their term in office and prohibiting certain activities that can create an appearance of impropriety. The restrictions on outside earned income and prohibited activities are similar to the restrictions and prohibi- tions that apply to members of the United States Congress.   SUMMARY OF PROVISIONS: Section 1 of the bill amends the legislative law by adding a new section, 5b. § 5-b restricts members of the legislature from receiving outside earned income in excess of 15% of their base legislative salary in any given calendar year for the duration of their terms in office. "Outside earned income" does not include salary, benefits, or allowances made by New York State, income from military or National Guard service, income from pensions or other continuing benefits from previous employment, income from certain investment activities, income from family-owned businesses where the member's services are not a material factor in the production of income, copyright royalties, or compensation for services rendered prior to becoming a member of the legislature. Additionally, members of the legislature would be prohibited from receiving compensation for practicing a profession that involves a fidu- ciary duty, being employed by a firm that provides professional services involving a fiduciary relationship, allowing their name to be used by a firm that provides professional services involving a fiduciary relation- ship, receiving compensation as an officer or member of a board of directors, receiving compensation for teaching without prior notifica- tion to and approval from the Legislative Ethics Commission, or receiv- ing advance payments on copyright royalties. Section 2 of the bill amends the legislative law by adding a new subpar- agraph f-1 to paragraph 7 of Section 80, requiring the Legislative Ethics Commission to promulgate guidelines for members of the legisla- ture to notify the Commission of their intention to accept a compensated teaching position, and for the Commission to evaluate and issue a deter- mination on such requests. Section 3 of the bill amends subparagraph 9(a) of Section 80 of the legislative law to give the Legislative Ethics Commission the authority to impose penalties on members who knowingly and intentionally violate the restrictions and prohibitions contained in the new section 5-b of the legislative law, or make false statements about such restrictions and prohibitions on their annual finance disclosure forms. The Commis- sion can levy a civil penalty of up to $40,000 and the value of the compensation received as a result of such violation. In lieu or in addi- tion to a civil penalty, the Commission may refer violations to the appropriate prosecutor. Section 4 of the bill amends the public officers law by adding a new subsection-74-j. This would restrict statewide elected officers, such as the Governor, from receiving outside earned income in excess of 15% of their base salary in any given calendar year for the duration of their terms in office. "Outside earned income" does not include salary, bene- fits, or allowances made by New York State, income from military or National Guard service, income from pensions or other continuing bene- fits from previous employment, income from certain investment activ- ities, income from family-owned businesses where the officer's services are not a material factor in the production of income, copyright royal- ties, or compensation for services rendered prior to becoming a member of the legislature. Additionally, statewide elected officers would be prohibited from receiving compensation for practicing a profession that involves a fidu- ciary duty, being employed by a firm that provides professional services involving a fiduciary relationship, allowing their name to be used by a firm that provides professional services involving a fiduciary relation- ship, receiving compensation as an officer or member of a board of directors, receiving compensation for teaching without prior notifica- tion to and approval from the Joint Commission on Public Ethics, or receiving advance payments on copyright royalties. Section 5 of the bill amends the executive law by adding a new subpara- graph o to paragraph 9 of Section 94, requiring J-COPE to promulgate guidelines for statewide elected officers to notify J-COPE of their intention to accept a compensated teaching position, and for the Commis- sion to evaluate and issue a determination on such requests. Section 6 of the bill amends subdivision 14 of Section 94 of the execu- tive law to give J-COPE the authority to impose penalties on statewide elected officers who knowingly and intentionally violate the restrictions and prohibitions contained in this bill, or make false statements about such restrictions and prohibitions on their annual finance disclosure forms. The Commission can levy a civil penalty of up to $40,000 and the value of the compensation received as a result of such violation. In lieu or in addition to a civil penalty, the Commis- sion may refer violations to the appropriate prosecutor. Section 7 of the bill provides that the act shall take effect January 1, 2023.   JUSTIFICATION: Over the past several decades, the public's trust in their elected offi- cials has steadily eroded as scandal after scandal has rocked Albany. Most recently, a statewide elected officer received more than $4 million in advance payments from a publishing company for writing a book about the Coronavirus pandemic in New York. While there are ongoing investi- gations into this and several other matters, this bill would remove the appearance of public corruption in state government by restricting the outside income of state legislators and statewide elected officers. This bill adopts the same restrictions that apply to members of the United States Congress, where members of that body are restricted from earning more than 15% of their base salary in outside income and are banned from certain forms of outside income that most often give the appearance of impropriety. Doing so in New York will help to refocus elected officials' priorities to representing their constituents rather than writing books or entering into fiduciary relationships with clients that may have business before the State.   PRIOR LEGISLATIVE HISTORY: New Bill   FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS: To be determined   EFFECTIVE DATE: This act shall take effect January 1, 2023.
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A08232 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          8232
 
                               2021-2022 Regular Sessions
 
                   IN ASSEMBLY
 
                                     August 25, 2021
                                       ___________
 
        Introduced  by M. of A. WALLACE -- read once and referred to the Commit-
          tee on Governmental Operations
 
        AN ACT to amend the legislative law, the public  officers  law  and  the
          executive  law,  in relation to prohibiting members of the legislature
          and statewide elected officials from receiving certain income

          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
 
     1    Section  1. The legislative law is amended by adding a new section 5-b
     2  to read as follows:
     3    § 5-b. Prohibition on outside earned income for members. 1.   Starting
     4  in  calendar year two thousand twenty-three, a member of the legislature
     5  may not have outside earned  income  attributable  to  such  year  which
     6  exceeds  fifteen  percent  of  the gross annual salary of members of the
     7  legislature, pursuant to section five of this article.
     8    2. a. For the purposes of  this  section,  the  term  "outside  earned
     9  income"  includes,  but  is  not  limited to, wages, salaries, fees, and
    10  other forms of compensation for services actually rendered.
    11    b. For the purposes of this section, the term "outside earned  income"
    12  does not include:
    13    (1) salary, benefits, and allowances paid by New York state;
    14    (2)  income  attributable  to  service  with  the military reserves or
    15  national guard;
    16    (3) income from pensions and other continuing benefits attributable to
    17  previous employment or services;
    18    (4) income from investment activities, where the member's services are
    19  not a material factor in the production of income;
    20    (5) income from a trade or business in which the member or their fami-
    21  ly holds a controlling interest, where the member's services are  not  a
    22  material factor in the production of income;
    23    (6)  copyright  royalties, fees, and their functional equivalent, from
    24  the use or sale of copyright, patent and similar forms  of  intellectual
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD11672-02-1

        A. 8232                             2
 
     1  property  rights,  when received from established users or purchasers of
     2  those rights; and
     3    (7) compensation  for  services  actually  rendered  prior  to January
     4  first, two thousand twenty-three, or prior to being sworn in as a member
     5  of the legislature.
     6    3.   Notwithstanding any other provisions  of  law  to  the  contrary,
     7  members of the legislature are prohibited from:
     8    a.  receiving compensation for affiliating with or being employed by a
     9  firm,  partnership,  association,  corporation,  or  other  entity  that
    10  provides  professional  services  involving  a  fiduciary  relationship,
    11  except for the practice of medicine;
    12    b. permitting their name to be used by such a firm, partnership, asso-
    13  ciation, corporation, or other entity;
    14    c. receiving compensation for practicing a profession that involves  a
    15  fiduciary relationship except for the practice of medicine;
    16    d.  receiving  compensation as an officer or member of the board of an
    17  association, corporation, or other entity;
    18    e. receiving compensation for teaching, without prior notification  to
    19  and approval from the legislative ethics commission;
    20    f.  receiving advance payments on copyright royalties, fees, and their
    21  functional equivalents.
    22    4. A member of the legislature who knowingly  and  willfully  violates
    23  the provisions of this section shall be subject to a civil penalty in an
    24  amount  not  to  exceed  forty  thousand  dollars. Assessment of a civil
    25  penalty shall be made by the legislative ethics commission. The legisla-
    26  tive ethics commission, acting pursuant to subdivision eleven of section
    27  eighty of this chapter, may, in lieu of or in addition to a civil penal-
    28  ty, refer a violation  to  the  appropriate  prosecutor  and  upon  such
    29  conviction,  but  only  after  such  referral,  such  violation shall be
    30  punishable as a class A misdemeanor.
    31    § 2. Subdivision 7 of section 80 of the legislative law is amended  by
    32  adding a new paragraph f-1 to read as follows:
    33    f-1.  Promulgate  guidelines for members of the legislature to request
    34  permission from the commission to accept compensation for teaching,  and
    35  promulgate  guidelines for the commission to evaluate and issue a deter-
    36  mination for such requests.
    37    § 3. Paragraph (a) of subdivision 9 of section 80 of  the  legislative
    38  law,  as  amended  by  section 9 of part A of chapter 399 of the laws of
    39  2011, is amended to read as follows:
    40    (a) An individual subject to the jurisdiction of the  commission  with
    41  respect  to  the imposition of penalties who knowingly and intentionally
    42  violates the provisions  of  subdivisions  two  through  five-a,  seven,
    43  eight,  twelve,  fourteen  or  fifteen  of  section seventy-three of the
    44  public officers law or section five-b of this  chapter  or  a  reporting
    45  individual  who knowingly and wilfully fails to file an annual statement
    46  of financial disclosure or who knowingly and  wilfully  with  intent  to
    47  deceive makes a false statement or gives information which such individ-
    48  ual  knows  to  be false on such statement of financial disclosure filed
    49  pursuant to section seventy-three-a of the public officers law shall  be
    50  subject  to  a  civil  penalty in an amount not to exceed forty thousand
    51  dollars and the value of any gift, compensation or benefit received as a
    52  result of such violation. Any such individual who knowingly  and  inten-
    53  tionally  violates the provisions of paragraph a, b, c, d, e, g, or i of
    54  subdivision three of section seventy-four of  the  public  officers  law
    55  shall be subject to a civil penalty in an amount not to exceed ten thou-
    56  sand dollars and the value of any gift, compensation or benefit received

        A. 8232                             3
 
     1  as  a  result of such violation. Assessment of a civil penalty hereunder
     2  shall be made by the commission with respect to persons subject  to  its
     3  jurisdiction.  In  assessing  the  amount  of  the civil penalties to be
     4  imposed, the commission shall consider the seriousness of the violation,
     5  the  amount  of gain to the individual and whether the individual previ-
     6  ously had any civil or  criminal  penalties  imposed  pursuant  to  this
     7  section,  and  any other factors the commission deems appropriate. For a
     8  violation of this section, other than for conduct  which  constitutes  a
     9  violation  of  subdivision twelve, fourteen or fifteen of section seven-
    10  ty-three or section seventy-four of the public officers law, the  legis-
    11  lative  ethics  commission  may,  in  lieu  of or in addition to a civil
    12  penalty, refer a violation to the appropriate prosecutor and  upon  such
    13  conviction,  but  only  after  such  referral,  such  violation shall be
    14  punishable as a class A misdemeanor. Where the commission  finds  suffi-
    15  cient cause, it shall refer such matter to the appropriate prosecutor. A
    16  civil penalty for false filing may not be imposed hereunder in the event
    17  a category of "value" or "amount" reported hereunder is incorrect unless
    18  such  reported  information  is falsely understated. Notwithstanding any
    19  other provision of law to the contrary, no other penalty, civil or crim-
    20  inal may be imposed for a failure to file, or for  a  false  filing,  of
    21  such  statement,  or  a violation of subdivision six of section seventy-
    22  three of the public officers law, except that the  appointing  authority
    23  may  impose disciplinary action as otherwise provided by law. The legis-
    24  lative ethics commission shall be deemed to  be  an  agency  within  the
    25  meaning  of  article three of the state administrative procedure act and
    26  shall adopt rules governing the conduct of adjudicatory proceedings  and
    27  appeals  taken pursuant to a proceeding commenced under article seventy-
    28  eight of the civil practice law and rules relating to the assessment  of
    29  the  civil  penalties  herein authorized. Such rules, which shall not be
    30  subject to the promulgation and hearing requirements of the state admin-
    31  istrative procedure act, shall provide for due process procedural  mech-
    32  anisms  substantially  similar  to those set forth in such article three
    33  but such mechanisms need not be identical in terms or scope.  Assessment
    34  of  a civil penalty shall be final unless modified, suspended or vacated
    35  within thirty days of imposition, with respect to the assessment of such
    36  penalty, or unless such denial of request is reversed within  such  time
    37  period,  and  upon  becoming  final  shall  be  subject to review at the
    38  instance of the affected reporting individuals in a proceeding commenced
    39  against the legislative ethics commission, pursuant to article  seventy-
    40  eight of the civil practice law and rules.
    41    § 4. Subdivision 3 of section 74 of the public officers law is amended
    42  by adding a new paragraph j to read as follows:
    43    j. (i) Starting in calendar year two thousand twenty-three, no officer
    44  elected  to  a statewide office within the state may have outside earned
    45  income attributable to such year which exceeds fifteen percent of  their
    46  gross annual salary.
    47    (ii)  (A)  For  the purposes of this section, the term "outside earned
    48  income" includes, but is not limited  to,  wages,  salaries,  fees,  and
    49  other forms of compensation for services actually rendered.
    50    (B) For the purposes of this section, the term "outside earned income"
    51  does not include:
    52    (1) salary, benefits, and allowances paid by New York state;
    53    (2)  income  attributable  to  service  with  the military reserves or
    54  national guard;
    55    (3) income from pensions and other continuing benefits attributable to
    56  previous employment or services;

        A. 8232                             4
 
     1    (4) income from investment activities, where the member's services are
     2  not a material factor in the production of income;
     3    (5)  income  from  a  trade  or business in which the officer or their
     4  family holds a controlling interest, where the  officer's  services  are
     5  not a material factor in the production of income;
     6    (6)  copyright  royalties, fees, and their functional equivalent, from
     7  the use or sale of copyright, patent and similar forms  of  intellectual
     8  property  rights,  when received from established users or purchasers of
     9  those rights; and
    10    (7) compensation for  services  actually  rendered  prior  to  January
    11  first, two thousand twenty-three, or prior to being sworn in as a state-
    12  wide elected officer.
    13    (C) Notwithstanding any other provisions of law to the contrary, offi-
    14  cers elected to a statewide office within the state are prohibited from:
    15    (1) receiving compensation for affiliating with or being employed by a
    16  firm,  partnership,  association,  corporation,  or  other  entity  that
    17  provides  professional  services  involving  a  fiduciary  relationship,
    18  except for the practice of medicine;
    19    (2)  permitting  their  name  to  be used by such a firm, partnership,
    20  association, corporation, or other entity;
    21    (3) receiving compensation for practicing a profession that involves a
    22  fiduciary relationship except for the practice of medicine;
    23    (4) receiving compensation as an officer or member of the board of  an
    24  association, corporation, or other entity;
    25    (5) receiving compensation for teaching, without prior notification to
    26  and approval from the joint commission on public ethics; and
    27    (6) receiving advance payments on copyright royalties, fees, and their
    28  functional equivalents.
    29    (D)  An  officer  elected  to  a statewide office within the state who
    30  knowingly and willfully violates the provisions of this section shall be
    31  subject to a civil penalty in an amount not  to  exceed  forty  thousand
    32  dollars.  Assessment  of  a  civil  penalty  shall  be made by the joint
    33  commission on public ethics. The joint commission on public ethics, may,
    34  in lieu of or in addition to a civil penalty, refer a violation  to  the
    35  appropriate  prosecutor  and  upon  such conviction, but only after such
    36  referral, such violation shall be punishable as a class A misdemeanor.
    37    § 5. Subdivision 9 of section 94  of the executive law is  amended  by
    38  adding a new paragraph (o) to read as follows:
    39    (o)  Promulgate  guidelines for statewide elected officials to request
    40  permission from the commission to accept compensation for teaching,  and
    41  promulgate  guidelines for the commission to evaluate and issue a deter-
    42  mination for such requests.
    43    § 6. Subdivision 14 of section 94 of the executive law, as amended  by
    44  section  6  of  part A of chapter 399 of the laws of 2011, is amended to
    45  read as follows:
    46    14. An individual subject to the jurisdiction of  the  commission  who
    47  knowingly  and intentionally violates the provisions of subdivisions two
    48  through five-a, seven, eight, twelve or fourteen  through  seventeen  of
    49  section  seventy-three  of  the public officers law, section one hundred
    50  seven of the civil service law, or a reporting individual who  knowingly
    51  and  wilfully  fails to file an annual statement of financial disclosure
    52  or who knowingly and wilfully with  intent  to  deceive  makes  a  false
    53  statement  or  fraudulent omission or gives information which such indi-
    54  vidual knows to be false on such statement of financial disclosure filed
    55  pursuant to section seventy-three-a of the public officers law shall  be
    56  subject  to  a  civil  penalty in an amount not to exceed forty thousand

        A. 8232                             5
 
     1  dollars and the value of any gift, compensation or benefit received as a
     2  result of such violation. An individual who knowingly and  intentionally
     3  violates  the provisions of paragraph a, b, c, d, e, g, or i of subdivi-
     4  sion  three  of section seventy-four of the public officers law shall be
     5  subject to a civil penalty in an  amount  not  to  exceed  ten  thousand
     6  dollars and the value of any gift, compensation or benefit received as a
     7  result of such violation.  An individual who knowingly and intentionally
     8  violates  the  provisions of paragraph j of subdivision three of section
     9  seventy-four of the public officers law shall  be  subject  to  a  civil
    10  penalty  in an amount not to exceed forty thousand dollars and the value
    11  of any gift, compensation or  benefit  received  as  a  result  of  such
    12  violation.  An  individual subject to the jurisdiction of the commission
    13  who knowingly and willfully violates article one-A  of  the  legislative
    14  law  shall  be subject to civil penalty as provided for in that article.
    15  Except with respect  to  members  of  the  legislature  and  legislative
    16  employees,  assessment of a civil penalty hereunder shall be made by the
    17  commission with respect to persons subject  to  its  jurisdiction.  With
    18  respect  to  a  violation  of any law other than sections seventy-three,
    19  seventy-three-a, and seventy-four of the public officers law, where  the
    20  commission  finds  sufficient cause by a vote held in the same manner as
    21  set forth in paragraph (b) of subdivision thirteen of this  section,  it
    22  shall refer such matter to the appropriate prosecutor for further inves-
    23  tigation.  In assessing the amount of the civil penalties to be imposed,
    24  the commission shall consider the  seriousness  of  the  violation,  the
    25  amount  of  gain to the individual and whether the individual previously
    26  had any civil or criminal penalties imposed pursuant  to  this  section,
    27  and  any  other  factors  the  commission deems appropriate. Except with
    28  respect to members of the legislature and legislative employees,  for  a
    29  violation  of this subdivision, other than for conduct which constitutes
    30  a violation of section one hundred  seven  of  the  civil  service  law,
    31  subdivisions  twelve  or  fourteen through seventeen of section seventy-
    32  three or section seventy-four of the  public  officers  law  or  article
    33  one-A of the legislative law, the commission may, in lieu of or in addi-
    34  tion to a civil penalty, refer a violation to the appropriate prosecutor
    35  and  upon such conviction, such violation shall be punishable as a class
    36  A misdemeanor. A civil penalty for false filing may not be imposed here-
    37  under in the event a category of "value" or "amount" reported  hereunder
    38  is  incorrect  unless  such reported information is falsely understated.
    39  Notwithstanding any other provision of law to  the  contrary,  no  other
    40  penalty,  civil or criminal may be imposed for a failure to file, or for
    41  a false filing, of such statement, or a violation of subdivision six  of
    42  section  seventy-three  of  the  public  officers  law,  except that the
    43  appointing  authority  may  impose  disciplinary  action  as   otherwise
    44  provided by law. The commission may refer violations of this subdivision
    45  to  the  appointing  authority  for  disciplinary  action  as  otherwise
    46  provided by law. The commission shall be deemed to be an  agency  within
    47  the  meaning  of article three of the state administrative procedure act
    48  and shall adopt rules governing the conduct of adjudicatory  proceedings
    49  and  appeals  taken  pursuant  to  a  proceeding commenced under article
    50  seventy-eight of the civil  practice  law  and  rules  relating  to  the
    51  assessment  of  the  civil  penalties  herein  authorized and commission
    52  denials of requests for certain deletions or exemptions to be made  from
    53  a financial disclosure statement as authorized in paragraph (h) or para-
    54  graph  (i)  of subdivision nine of this section. Such rules, which shall
    55  not be subject to the approval requirements of the state  administrative
    56  procedure  act,  shall  provide  for  due  process procedural mechanisms

        A. 8232                             6
 
     1  substantially similar to those set forth in article three of  the  state
     2  administrative  procedure  act but such mechanisms need not be identical
     3  in terms or scope. Assessment of a civil penalty or commission denial of
     4  such  a  request  shall  be  final unless modified, suspended or vacated
     5  within thirty days of imposition, with respect to the assessment of such
     6  penalty, or unless such denial of request is reversed within  such  time
     7  period,  and  upon  becoming  final  shall  be  subject to review at the
     8  instance of the affected reporting individuals in a proceeding commenced
     9  against the commission, pursuant to article seventy-eight of  the  civil
    10  practice law and rules.
    11    § 7. This act shall take effect January 1, 2023.
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