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William G. Dressel Jr, Executive Director - Michael J. Darcey, CAE, Asst Executive Director

Just What is a "Conflict of Interest" Anyway?

Some of the requirements of the “Local Government Ethics Law” are relatively straightforward and easy to understand. Local public officials must file financial disclosure statements, and members of independent authorities cannot do business with or appear before those authorities for a year after they leave the body.

However, perhaps the central concept of this law, enacted in 1991 to restore and preserve the public trust in local government, is far less clear. Exactly what type of interest must an official have in a given issue to create a conflict sufficient to prevent him or her from participating in any decisions concerning the matter?

The statutes are clear that it need not be the official’s own interest that is in conflict with his or her duty to the public. If a member of the official’s immediate family, defined as a spouse or dependant child living in the same household, or a business in which he or she has at least a 10% interest, has such a conflict, that conflict is attributed to the official.

The statutes also make it clear that this conflicting interest can be either a financial or a personal interest. It must also be an interest that the official, family member, or business does not share with the general public. Beyond these parameters, however, the standards are less clear.

The case law has given general guidance only. In most cases, it is the “practical feel of the situation”, on a case by case basis, that will determine the existence of a conflict. If the potential for conflict exists, the official should recuse himself or herself from participating in the decision.

Some conflicts are easier to see. A court has recently ruled that a new council member cannot vote on the reappointment of his spouse to the planning board, no matter how long she has served or how qualified she is. The potential and appearance of conflict in such a situation is clear.

However, in other situations, a slight twist in the facts can change the outcome. For example, suppose a council is voting on whether to fix all 27 of the potholes in the municipality that were created by last winter’s storms. One of these potholes is on the street where Councilman X lives, right near his house. Can he vote on whether to fix all of the potholes? This would probably not be viewed as a potential conflict, since he would not realistically be expected to vote to fix all 26 others just to get the one on his street fixed. Furthermore, the general public in the municipality shares the interest with him in getting all of these potholes fixed.

On the other hand, suppose the municipal budget is so limited that only five of these potholes can be fixed. Can he participate in deciding which ones should be fixed? He should probably not take part in this situation, because, if the pothole on his street is one of those chosen, it could appear that his personal interest guided his vote.

Case law under the statutes have also indicated that, even where a conflict is present, if recusal will mean there is no longer a quorum so that the governing body cannot act, the official or officials with a conflict may have to participate anyway. However, this exception must be narrowly construed. Therefore, in the above pothole case, if three of the six council members lived on streets with potholes, it might well be necessary for them to vote, despite the potential conflict.

What should you do if you are unsure about whether a conflict exists in a particular situation? As with all legal issues, you can, of course, check with your municipal attorney. If you are still not certain, you can get a second opinion on the matter by requesting an advisory opinion from the state Local Finance Board. These opinions are available to municipal officials who want to know if a proposed action of theirs would be a conflict of interest.

When deciding what to do in a given instance, remember that it is always a good idea to err on the side of caution when it comes to ethical questions. After all, as a local government official, your most valuable asset is your reputation.

This article is for informational purposes only, and is not intended as legal advice .

This article was prepared by Deborah M. Kole, Staff Attorney. She can be reached at the League, ex. 37, or by email at dkole@njslom.com



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