Another City Council Conflict of Interest?

Last week Councilmember Tammy Morales tweeted out an interesting announcement: she recently joined the board of the Economic Opportunity Institute, a Seattle-based organization that advocates for progressive tax policy (among other issues) and heavily lobbies the City Council.

The Economic Opportunity Institute and its long-serving executive director, John Burbank, are well known in City Hall; they are prolific lobbyists of the City Council. The SEEC lobbying report details the expenses that Burbank and his colleagues have accrued while lobbying the city on behalf of EOI, though it doesn’t provide an accounting for the number of hours spent doing so. However, EOI’s annual IRS Form 990 fills in the details, including the labor costs for their substantial lobbying work over the last few years.

To say EOI has a long-standing cozy relationship with the City Council is an understatement. In 2017 Burbank and EOI were the driving force behind the Council’s passage of an income tax — and Councilmember Herbold arranged to pay them $49,500 for their work on the tax bill (just below the threshold where it would need to be bid out). In the process, the city and EOI signed a “common interest agreement” that allowed them to communicate back-and-forth under the protection of attorney-client privilege, shielding their communications from both public document requests and from discovery in subsequent court cases.

In the process of advancing the income tax measure, the Council’s visitor logs show that EOI also lobbied Councilmembers Burgess, O’Brien, Herbold, Sawant, Harrell, Gonzalez, and Johnson. In subsequent years Burbank and his colleagues at EOI have continued to lobby Councilmembers on progressive tax policy and other issues.

According to EOI, Morales was elected to their board on February 19, 2021, and the first board meeting in which she participated was April 23. According to documents uncovered in a public documents request, on April 20 Burbank began lobbying her in earnest over a proposal for spending some of the city’s federal ARPA (Advanced Research Projects Agency) funding to pay for a $2 per hour “pandemic wage increase” for childcare workers in the city, akin to the Council’s recently-passed $4 per hour “hazard pay” for grocery workers. Burbank indicated that he was also lobbying Councilmembers Mosqueda, Herbold, Gonzalez, and potentially their other colleagues.

Morales’ chief of staff, Alexis Turla, responded that they were interested in engaging further, and started the process of scheduling a meeting for Burbank with Morales. The meeting with Morales took place on April 28.

After the meeting, Turla followed up with Burbank, indicating that they were moving the proposal forward — and asking him to write on behalf of Morales’ office both the description of the funding proposal to be submitted as well as talking points and statistics to justify it. Burbank happily provided them.

As SCC Insight has recently written, the city’s ethics code has two relevant parts for Councilmembers (and other city employees) with relation to the kinds of conflicts of interest implicated by sitting on the board of an outside organization that transacts this kind of business with the city.

First, it requires decision-makers, including Councilmembers, to recuse themselves from involvement in decisions and/or votes when they have a material financial interest in the outcome. Second, it prohibits them from participating in official duties  “when it could appear to a reasonable person, having knowledge of the relevant circumstances, that the covered individual’s judgment is impaired because of either (a) a personal or business relationship not covered under subsection 4.16.070.A.1 or 4.16.070.A.2, or (b) a transaction or activity engaged in by the covered individual.”  However, on that second part, the Councilmember has the option of simply disclosing the potential conflict in advance to the Executive Director of the Seattle Ethics and Elections Commission and to the City Clerk rather than recusing herself.

In this case, Morales neither recused herself and her staff from participating with Burbank on the funding proposal, nor did she disclose it, according to the SEEC.

In an email response this Tuesday to an inquiry as to how she planned to handle potential conflicts of interest with EOI, Morales said, “The Seattle Office of Ethics and Elections is clear that there is no conflict unless a matter comes before Council in which EOI has a financial interest. If that happens I would have to recuse myself, which I plan to do.”

This is incorrect — the answer only states the first half of the conflict of interest requirements, omitting the disclosure and potential recusal requirements where a reasonable person would find that her judgment is impaired because of the conflict. After confirming that understanding with SEEC Executive Director Wayne Barnett via email Tuesday, Barnett wrote, “I did speak with the CM today and share with her the disclosure requirement as well.”

This is more evidence of the problems with the city’s ethics code, and the culture of casual laziness that envelops it. Despite the fact that Morales was trained on the policy when she joined the Council last year, she did not remember it. Even if she did, all that she was required to do to circumvent it was to disclose the conflict to Barnett and the City Clerk. And neither official is empowered under the policy to require her to recuse herself upon learning of the conflict. Barnett is also not required to proactively make information about disclosures he receives available to the public, even though they are public records; in fact, last week when SCC Insight asked whether he would consider posting them on the SEEC web site when he receives them (he receives 10 to 15 per year on average), he responded:

I have weighed this in the past and am of two minds.  On the one hand, you are correct, these are public records and there is an argument that in the name of transparency they ought to be posted on our web site.  On the other hand, I am worried that employees would be more reluctant to file disclosures if they knew they would be posted publicly.

Let’s take a hypothetical, based on an actual dealing I had with an employee about 10 years ago.  This employee had been on a few dates with a member of a consulting team working for their department.  The employee was at a place in the organization where they had very little likelihood of taking actions that could benefit the consultant, and the relationship was in its earliest stages, but I still persuaded the employee to disclose the relationship.  My fear is that an employee in that same position would not be keen to file a disclosure for all the world to see, for all eternity, that they had been dating some person.  I don’t know about you, but that’s not information I want showing up in a Google search.

That disclosure gave the employee’s department an opportunity to be mindful of the relationship, and I would maintain that the public benefit of that needs to be weighed against the public benefit of these disclosures being posted to the Internet.  It’s not an easy call in my opinion.

Perhaps there is validity to Barnett’s argument for employees working under an elected official or one who is appointed; in those cases there is provision in the ethics code for the appointing authority or their manager to prohibit participation once disclosed. But elected officials have no such check and balance: they can simply and quietly disclose it to the SEEC and the City Clerk, and there is no authority that can force them to recuse themselves. And if the SEEC keeps the information to itself, it’s unlikely that the public will find out — in this case, had Councilmember Morales not tweeted it out last week, the fact that she had joined EOI’s board probably would have gone unnoticed until next April when she filed her next annual financial disclosure form.

The conflict of interest is also an issue for EOI, since as a board member Morales has a legal fiduciary duty of care to act in the best interests of the organization. The Washington Secretary of State provides more information on the responsibilities of board members, including their “duty of care.”  EOI has a written conflict of interest policy that all of its board members are required to read and attest to. Under its definition of a financial interest that represents a conflict, it includes “a compensation arrangement with the Organization or with any entity or individual with which the Organization has a transaction or arrangement.” Morales certainly has a compensation arrangement with the City of Seattle; whether EOI’s current dealings with the City constitute a “transaction or arrangement” is a matter of interpretation — and under EOI’s policy, would ultimately be decided by EOI’s board governance committee.

But the real head-scratcher is the lack of concern on any of the parties — the SEEC, EOI, and Morales — of the obvious appearance of a conflict of interest independent of whether one agrees or disagrees with EOI’s policy goals. Morales’ duty to act in the best interest of EOI as a board member is at odds with her duty to the City of Seattle as a City Councilmember, even if their policy goals are aligned the vast majority of the time, because in the end they can’t share the top spot in her priority list. Most individuals and organizations work hard to avoid this kind of appearance of conflict, but in this case they all appear to be leaning in. As discussed recently with the case of Brianna Thomas, this approach to government ethics erodes the public’s trust in government and their elected officials, at a time when public trust is at a low point.