City officials are required to abide by specific laws regarding behavior and business decisions to prevent situations involving a conflict of interest. There are several types of “conflict:” holding concurrent offices with conflicting interests, involvement in a government contract and personal or pecuniary interest in a vote. If identified and handled correctly a “conflict” is not an issue.
Each official shall decide if any conflict of interest requires such official to be disqualified from participating in a discussion or voting. So, if a conflict exists, how can an individual be impartial enough to make this judgment call? When you begin to have a personal vested interest in a particular issue, it may be time to voluntarily excuse yourself from the issue. It is part of your responsibility as an elected official to recognize when this exists and remedy it.
The law goes on to occasionally FORCE you to remove yourself. NO SUCH official may participate in discussing or vote on an issue if the following circumstances apply (SDCL 6-1-17):
- the official has a direct pecuniary interest in the matter before the governing body or (this applies to any financial interest in the decision…such as family member employees, a new street in front of your business, etc.)
- at least 2/3 of the governing body votes that an official has an identifiable conflict of interest that should prohibit such official from voting on a specific matter.
Next is the contract issue: It is unlawful for any public officer or his agent to be interested in any contract entered into by the municipality. There are, however, some exceptions to this rule (SDCL 6-1-2):
Any contract involving five thousand dollars or less regardless of whether other sources of supply or services are available within the county, municipality, township, or school district, provided that the consideration therefore is reasonable and just;
Any contract involving more than five thousand dollars but less than the amount for which competitive bidding is required, and there is no other source of supply or services available within the county, municipality, township, or school district provided that the consideration therefore is reasonable and just and further provided that the accumulated total of such contracts paid during any given fiscal year shall not exceed the amount specified in SDCL 5-18A-14;
Any contract with any firm, association, corporation, or cooperative association for which competitive bidding is not required and where other sources of supply and services are available within the county, municipality, township, or school district, and the consideration therefore is reasonable and just, unless the majority of the governing body are members or stockholders who collectively have controlling interest, or any one of them is an officer or manager of any such firm, association, corporation, or cooperative association then any such contract shall be null and void;
Any contract for which competitive bidding procedures are followed pursuant to SDCL 5-18A or 5-18B, and where more than one such competitive bid is submitted;
Any contract for professional services with any individual, firm, association, corporation or cooperative, if the individual or any member of the firm, association, corporation or cooperative is an elected or appointed officer of a county, municipality, township or school district, whether or not other sources of such services are available within the county, municipality, township or school district, provided the consideration therefore is reasonable and just.
Any contract for commodities, materials, supplies, or equipment found in the state price list established pursuant to SDCL 5-18D-6 and 5-18A-28, at the price there established or below.
Any contract or agreement between a governmental entity specified in SDCL 6-1-1 and a public post secondary educational institution when an employee of the Board of Regents serves as an elected or appointed officer for the governmental entity, provided that the employee does not receive direct compensation or payment as a result of the contract or agreement.
Any contract with any firm, association, corporation, individual, or cooperative association for which competitive bidding procedures are followed pursuant to chapter 5-18A, and where only one such competitive bid is submitted, provided the procedures established in SDCL 6-1-2.1 are followed.
All of the conditions in each subsection must be met fully in order for the contract to be valid. (SDCL 6-1-2)Another statutory exemption to the provisions of SDCL 6-1-1 appears in SDCL 6-1-3. This statute allows a bank to be the official depository of funds notwithstanding that an officer, director, stockholder, or employee of a bank is an elected or appointed officer or treasurer of such county, municipality, township, or school district. (SDCL 6-1-3)
If competitive bidding procedures have been followed pursuant to chapter 5-18A, and the bid notice has been placed on the central bid exchange pursuant to SDCL 5-18A-13 for two weeks prior to the opening of bids, a bid from an officer of the governing body may be opened and accepted provided the consideration is reasonable and just as determined by the governing body or a disinterested governmental entity. (SDCL 6-1-2.1)
Finally, an elected official cannot hold concurrent offices if such positions are incompatible. The major lines of delineation in this area have been made by the Attorney General. For example, the Attorney General has determined that there are essentially four instances when offices are incompatible. They are: 1) when there are statutory prohibitions; 2) when one is subordinate to the other; 3) when one has supervision over the other; and 4) when the duties of the two offices are conflicting. (AGR 1949-50, p.37)
However, the Attorney General has also determined that, while the determination of whether a person may hold two or more positions is usually based upon incompatibility or inconsistency, the question of incompatibility or inconsistency never arises when there is a special statutory prohibition. The rule that governs will change from situation to situation. (AGR 1959-60, p.45)
Positions which are compatible include the following:
1) Mayor and state’s attorney; (AGR 1907-08, p. 215)
2) Office of mayor and member of the board of county commissioners; (AGR 1949-50, p. 37)
3) Mayor and state senator; (AGR 1949-50, p. 358)
4) Treasurer of a school district and trustee of an incorporated municipality; (AGR 1949-50, p. 75)
5) Assessor and register of deeds; (AGR 1949-50, p.56)
6) Office of county commissioner and membership on the governing board of a municipality; (AGR 1929-30, p. 278)
7) Office of state’s attorney and city attorney; (AGR 1949-50, p. 331)
8) Municipality marshal and sheriff or deputy sheriff; (AGR 1953-54, p. 84)
9) Police magistrate and candidate for the state legislature; (AGR 1953-54, p. 292)
10) Office of county clerk of courts and city councilman; (AGR 1955-56 p. 68-9)
11) Office of register of deeds and mayor; (AGR 1955-56, p. 217)
12) Office of county sheriff and peace officer of a municipality within the county; (AGR 1955-56, p.420)
13) Appointed municipality treasurer and treasurer of a school district. (AGR 1959-60, p. 45)
14) No mayor, alderman, commissioner, or trustee in a municipality is disqualified from holding office as a result of holding any liquor license. (SDCL 9-14-16)
15) City council and county commission. (AG Opinion 88-24)
16) Any mayor, alderman, commissioner, or trustee may serve in a volunteer, unsalaried municipal position or provide any service for the municipality if the compensation for such service does not exceed $5,000 per calendar year. (SDCL 9-14-16.1)
Positions which are incompatible include the following:
1) No mayor, alderman, commissioner, or trustee shall hold any other office under the municipality while an incumbent of any such office. No auditor or clerk may hold the office of treasurer in the municipality while an incumbent of such office. (SDCL 9-14-16)
2) A mayor may not be an attorney for a defendant in a criminal case for a crime committed within the municipality of which he is mayor. (State ex rel. Jones v. Taylor, 46 SD 354)
3) A city councilman may not be the defense attorney or counselor for a defendant charged with the violation of a municipal ordinance or a state law where the facts would also be a violation of the laws of his municipality. (AGR 1953-54, pp. 184-186)
4) Member of municipality board and janitor of a municipal building; (AGR 1932-34, p. 492)
5) County judge and city attorney; (AGR 1949-50, p. 133)
6) Member of a city council and municipal building, electrical, and plumbing inspector; (AGR 1955-56, pp. 105-106)
7) Member of city council and county high school board; (AGR 1949-50 page 75 and 1953-54, p.73)
8) Office of director of assessments and member of municipal governing board; (AGR 1955-56, p. 304)
9) County justice of the peace and the municipal chief of police; (AGR 1957-58, p. 116)
10) Municipality auditor and county auditor. (AGR 1959-60, p. 84)
11) Legislator and school board member. (AG Opinion No. 84-24)
12) Mayor and school board member of encompassing school district. (AG Opinion No. 85-23; Raymond v. Richardson, 6th Judicial Circuit, Sept. 18, 1985)
13) County director of equalization and school board member. (AG Opinion 86-6)
Despite the guidance provided by the Attorney General and case law, conflict remains a confusing subject. If (and when) you experience a conflict issue please consult with your city attorney or contact the League at 800-658-3633.