Key Concept: Conflict of Interest

KEY QUESTION: 

What steps must county judges and commissioners take to prevent a conflict of interest?

REFERENCE POINTS: 

• Texas Local Government Code Section 81.002 (a)
• Texas Local Government Code Chapter 171, Special Disclosure Affidavit
• Texas Local Government Code Chapter 176, Conflicts Disclosure Statement

TALKING POINTS:

1. According to Section 81.002 (a) of the Local Government Code, before taking on the duties of a county judge or county commissioner, the judge and commissioners must take their official oath and swear in writing that the judge or commissioner “will not be interested, directly or indirectly, in a contract with or claim against the county”  with the following exceptions:
   • a contract or claim expressly authorized by law; or
   • a warrant issued to the judge or commissioner as a fee of office.
2. Chapter 171 of the Local Government Code requires the filing of a special disclosure affidavit in the event of a conflict of interest. This statute was designed to identify and disclose the conflict before any action is taken and requires the official to abstain from participation if a conflict exists.  The attorney general has held that contracts that are governed by Chapter 171 are not barred by the oath provisions in Section 81.002.
3. According to Chapter 171, a “substantial interest” in a business entity or real property means that the county judge or commissioner or a first-degree relative of the county judge or commissioner:
   • Owns 10 percent or more voting stock or shares.
   • Owns 10 percent or more or $15,000 or more of fair market value.
   • Receives funds exceeding 10 percent of annual gross income.
   • Has an equitable or legal ownership equal to $2,500 in real property.
4. To determine a conflict under Chapter 171, a judge or commissioner should consider the following key questions:
   • Is a vote or decision pending before the commissioners court that involves a business entity or real property?
   • If so, do I (or does a first-degree relative) have a substantial interest in the business entity or real property?
   • If so, will action on the matter have a “special economic effect” on the business entity – or on the value of the real property – that is distinguishable from the public effect?
5. Chapter 176 of the Local Government Code requires the filing of a conflict disclosure statement in certain circumstances related to government contracts. However, this statute does not restrict or limit the ability of the judge or commissioner to discuss, decide, or vote upon the contract being considered.  The judge or commissioner must file the conflict disclosure statement if the vendor under consideration has:
   • An employment or other business relationship with the county official or first-degree family member that results in either receiving taxable income, other than investment income, of more than $2,500 in the 12 months prior to the contract consideration; or
   • Given the official or family member one or more gifts valued at more than $250 in the 12 months prior to the contract consideration.
6. Violation of Chapter 176 and 171 may result in criminal penalties. For detailed information  on these chapters, go to https://www.oag.state.tx.us/AG_Publications/pdfs/conflict_easy.pdf.