| 1 | 1 | | 87R931 TJB-D |
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| 2 | 2 | | By: Middleton H.B. No. 1703 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | A BILL TO BE ENTITLED |
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| 6 | 6 | | AN ACT |
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| 7 | 7 | | relating to disclosure of certain relationships with local |
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| 8 | 8 | | government officers and vendors. |
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| 9 | 9 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 10 | 10 | | SECTION 1. Sections 176.001(1), (1-a), (2), and (2-d), |
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| 11 | 11 | | Local Government Code, are amended to read as follows: |
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| 12 | 12 | | (1) "Agent" means a third party who undertakes to |
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| 13 | 13 | | transact some business or manage some affair for another person by |
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| 14 | 14 | | the authority or on account of the other person. The term includes |
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| 15 | 15 | | a subcontractor and an employee. |
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| 16 | 16 | | (1-a) "Business relationship" means a connection |
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| 17 | 17 | | between two or more parties based on commercial activity of one of |
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| 18 | 18 | | the parties. [The term does not include a connection based on: |
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| 19 | 19 | | [(A) a transaction that is subject to rate or fee |
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| 20 | 20 | | regulation by a federal, state, or local governmental entity or an |
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| 21 | 21 | | agency of a federal, state, or local governmental entity; |
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| 22 | 22 | | [(B) a transaction conducted at a price and |
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| 23 | 23 | | subject to terms available to the public; or |
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| 24 | 24 | | [(C) a purchase or lease of goods or services |
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| 25 | 25 | | from a person that is chartered by a state or federal agency and |
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| 26 | 26 | | that is subject to regular examination by, and reporting to, that |
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| 27 | 27 | | agency.] |
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| 28 | 28 | | (2) "Family member" means a person related to another |
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| 29 | 29 | | person within the third [first] degree by consanguinity or the |
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| 30 | 30 | | second degree by affinity, as determined under [described by] |
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| 31 | 31 | | Subchapter B, Chapter 573, Government Code. |
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| 32 | 32 | | (2-d) "Investment income" means dividends, capital |
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| 33 | 33 | | gains, or interest income generated from: |
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| 34 | 34 | | (A) a personal or business: |
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| 35 | 35 | | (i) checking or savings account; |
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| 36 | 36 | | (ii) share draft or share account; or |
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| 37 | 37 | | (iii) other similar account; |
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| 38 | 38 | | (B) a personal or business investment other than |
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| 39 | 39 | | an investment in a: |
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| 40 | 40 | | (i) mutual fund; or |
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| 41 | 41 | | (ii) publicly traded company with a market |
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| 42 | 42 | | capitalization of $2 billion or more; [or] |
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| 43 | 43 | | (C) a personal or business loan; or |
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| 44 | 44 | | (D) a trust. |
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| 45 | 45 | | SECTION 2. Sections 176.003(a) and (e), Local Government |
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| 46 | 46 | | Code, are amended to read as follows: |
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| 47 | 47 | | (a) A local government officer shall file a conflicts |
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| 48 | 48 | | disclosure statement with respect to a vendor if: |
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| 49 | 49 | | (1) the vendor enters into a contract with the local |
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| 50 | 50 | | governmental entity or the local governmental entity is considering |
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| 51 | 51 | | entering into a contract with the vendor; and |
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| 52 | 52 | | (2) the vendor: |
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| 53 | 53 | | (A) has an employment or other business |
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| 54 | 54 | | relationship with the local government officer, [or] a family |
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| 55 | 55 | | member of the officer, or a business entity in which the officer or |
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| 56 | 56 | | a family member of the officer holds an ownership interest or is an |
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| 57 | 57 | | employee, that results in the officer, [or] family member, or |
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| 58 | 58 | | business entity receiving taxable income, including [other than] |
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| 59 | 59 | | investment income, that exceeds $2,500 during the 12-month period |
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| 60 | 60 | | preceding the date that the officer becomes aware that: |
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| 61 | 61 | | (i) a contract between the local |
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| 62 | 62 | | governmental entity and vendor has been executed; or |
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| 63 | 63 | | (ii) the local governmental entity is |
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| 64 | 64 | | considering entering into a contract with the vendor; |
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| 65 | 65 | | (B) has an employment or other business |
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| 66 | 66 | | relationship with the local government officer, a family member of |
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| 67 | 67 | | the officer, or a business entity in which the officer or a family |
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| 68 | 68 | | member of the officer holds an ownership interest or is an employee, |
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| 69 | 69 | | that the officer anticipates will result in the officer, family |
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| 70 | 70 | | member, or business entity receiving any amount of taxable income, |
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| 71 | 71 | | including investment income, in the future; |
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| 72 | 72 | | (C) has given to the local government officer, |
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| 73 | 73 | | [or] a family member of the officer, or a business entity in which |
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| 74 | 74 | | the officer or a family member of the officer holds an ownership |
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| 75 | 75 | | interest or is an employee, one or more gifts that have an aggregate |
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| 76 | 76 | | value of more than $100 in the 12-month period preceding the date |
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| 77 | 77 | | the officer becomes aware that: |
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| 78 | 78 | | (i) a contract between the local |
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| 79 | 79 | | governmental entity and vendor has been executed; or |
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| 80 | 80 | | (ii) the local governmental entity is |
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| 81 | 81 | | considering entering into a contract with the vendor; or |
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| 82 | 82 | | (D) [(C)] has a family relationship with the |
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| 83 | 83 | | local government officer. |
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| 84 | 84 | | (e) The commission shall adopt the conflicts disclosure |
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| 85 | 85 | | statement for local government officers for use under this |
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| 86 | 86 | | section. The conflicts disclosure statement must include: |
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| 87 | 87 | | (1) a requirement that each local government officer |
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| 88 | 88 | | disclose: |
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| 89 | 89 | | (A) an employment or other business relationship |
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| 90 | 90 | | described by Subsection (a)(2)(A) or (B), including the nature and |
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| 91 | 91 | | extent of the relationship; and |
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| 92 | 92 | | (B) gifts accepted by the local government |
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| 93 | 93 | | officer, [and] any family member of the officer, and any business |
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| 94 | 94 | | entity in which the officer or a family member of the officer holds |
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| 95 | 95 | | an ownership interest or is an employee, from a vendor during the |
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| 96 | 96 | | 12-month period described by Subsection (a)(2)(C) [(a)(2)(B)] if |
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| 97 | 97 | | the aggregate value of the gifts accepted by the officer, [or a] |
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| 98 | 98 | | family member, or business entity from that vendor exceeds $100; |
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| 99 | 99 | | (2) an acknowledgment from the local government |
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| 100 | 100 | | officer that: |
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| 101 | 101 | | (A) the disclosure applies to each: |
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| 102 | 102 | | (i) family member of the officer; and |
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| 103 | 103 | | (ii) business entity in which the officer |
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| 104 | 104 | | or a family member of the officer holds an ownership interest or is |
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| 105 | 105 | | an employee; and |
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| 106 | 106 | | (B) the statement covers the 12-month period |
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| 107 | 107 | | described by Subsection (a)(2)(C) [(a)(2)(B)]; and |
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| 108 | 108 | | (3) the signature of the local government officer |
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| 109 | 109 | | acknowledging that the statement is made under oath under penalty |
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| 110 | 110 | | of perjury. |
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| 111 | 111 | | SECTION 3. Sections 176.006(a), (a-1), and (c), Local |
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| 112 | 112 | | Government Code, are amended to read as follows: |
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| 113 | 113 | | (a) A vendor shall file a completed conflict of interest |
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| 114 | 114 | | questionnaire if the vendor has a business relationship with a |
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| 115 | 115 | | local governmental entity and: |
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| 116 | 116 | | (1) has an employment or other business relationship |
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| 117 | 117 | | described by Section 176.003(a)(2)(A) or (B) with a local |
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| 118 | 118 | | government officer of that local governmental entity, [or] a family |
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| 119 | 119 | | member of the officer, or a business entity in which the officer or |
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| 120 | 120 | | a family member of the officer holds an ownership interest or is an |
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| 121 | 121 | | employee [described by Section 176.003(a)(2)(A)]; |
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| 122 | 122 | | (2) has given a local government officer of that local |
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| 123 | 123 | | governmental entity, [or] a family member of the officer, or a |
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| 124 | 124 | | business entity in which the officer or a family member of the |
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| 125 | 125 | | officer holds an ownership interest or is an employee, one or more |
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| 126 | 126 | | gifts with the aggregate value specified by Section |
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| 127 | 127 | | 176.003(a)(2)(C) [176.003(a)(2)(B)], excluding any gift described |
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| 128 | 128 | | by Section 176.003(a-1); or |
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| 129 | 129 | | (3) has a family relationship with a local government |
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| 130 | 130 | | officer of that local governmental entity. |
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| 131 | 131 | | (a-1) The completed conflict of interest questionnaire must |
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| 132 | 132 | | be filed with the appropriate records administrator not later than |
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| 133 | 133 | | the seventh business day after the later of: |
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| 134 | 134 | | (1) the date that the vendor: |
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| 135 | 135 | | (A) begins discussions or negotiations to enter |
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| 136 | 136 | | into a contract with the local governmental entity; or |
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| 137 | 137 | | (B) submits to the local governmental entity an |
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| 138 | 138 | | application, response to a request for proposals or bids, |
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| 139 | 139 | | correspondence, or another writing related to a potential contract |
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| 140 | 140 | | with the local governmental entity; or |
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| 141 | 141 | | (2) the date the vendor becomes aware: |
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| 142 | 142 | | (A) of an employment or other business |
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| 143 | 143 | | relationship [with a local government officer, or a family member |
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| 144 | 144 | | of the officer,] described by Subsection (a)(1) [(a)]; |
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| 145 | 145 | | (B) that the vendor has given one or more gifts |
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| 146 | 146 | | described by Subsection (a)(2) [(a)]; or |
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| 147 | 147 | | (C) of a family relationship with a local |
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| 148 | 148 | | government officer. |
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| 149 | 149 | | (c) The questionnaire adopted under Subsection (b) must |
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| 150 | 150 | | require, for the local governmental entity with respect to which |
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| 151 | 151 | | the questionnaire is filed, that the vendor filing the |
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| 152 | 152 | | questionnaire: |
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| 153 | 153 | | (1) describe each employment or business [and family] |
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| 154 | 154 | | relationship described by Section 176.003(a)(2)(A) or (B) the |
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| 155 | 155 | | vendor has with each local government officer of the local |
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| 156 | 156 | | governmental entity, a family member of the officer, or a business |
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| 157 | 157 | | entity in which the officer or a family member of the officer holds |
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| 158 | 158 | | an ownership interest or is an employee; |
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| 159 | 159 | | (2) describe each family relationship the vendor has |
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| 160 | 160 | | with each local government officer of the local governmental |
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| 161 | 161 | | entity; |
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| 162 | 162 | | (3) identify each employment or business relationship |
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| 163 | 163 | | described by Subdivision (1) with respect to which the local |
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| 164 | 164 | | government officer, a family member of the officer, or a business |
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| 165 | 165 | | entity in which the officer or a family member of the officer holds |
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| 166 | 166 | | an ownership interest or is an employee, receives, or is likely to |
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| 167 | 167 | | receive, taxable income, including [other than] investment income, |
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| 168 | 168 | | from the vendor; |
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| 169 | 169 | | (4) [(3)] identify each employment or business |
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| 170 | 170 | | relationship described by Subdivision (1) with respect to which the |
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| 171 | 171 | | vendor receives, or is likely to receive, taxable income, including |
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| 172 | 172 | | [other than] investment income, that: |
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| 173 | 173 | | (A) is received from, or at the direction of, a |
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| 174 | 174 | | local government officer of the local governmental entity, a family |
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| 175 | 175 | | member of the officer, or a business entity in which the officer or |
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| 176 | 176 | | a family member of the officer holds an ownership interest or is an |
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| 177 | 177 | | employee; and |
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| 178 | 178 | | (B) is not received from the local governmental |
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| 179 | 179 | | entity; and |
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| 180 | 180 | | (5) [(4)] describe each employment or business |
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| 181 | 181 | | relationship with a corporation or other business entity with |
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| 182 | 182 | | respect to which a local government officer of the local |
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| 183 | 183 | | governmental entity[: |
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| 184 | 184 | | [(A)] serves as an officer or director[; or |
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| 185 | 185 | | [(B) holds an ownership interest of one percent |
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| 186 | 186 | | or more]. |
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| 187 | 187 | | SECTION 4. Not later than December 1, 2021, the Texas Ethics |
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| 188 | 188 | | Commission shall adopt a conflicts disclosure statement consistent |
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| 189 | 189 | | with Section 176.003, Local Government Code, as amended by this |
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| 190 | 190 | | Act, and a conflict of interest questionnaire consistent with |
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| 191 | 191 | | Section 176.006, Local Government Code, as amended by this Act. |
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| 192 | 192 | | SECTION 5. The changes in law made by this Act apply only to |
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| 193 | 193 | | an event requiring disclosure that occurs on or after January 1, |
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| 194 | 194 | | 2022. An event requiring disclosure that occurs before that date is |
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| 195 | 195 | | governed by the law applicable to the event immediately before that |
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| 196 | 196 | | date, and the former law is continued in effect for that purpose. |
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| 197 | 197 | | SECTION 6. This Act takes effect immediately if it receives |
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| 198 | 198 | | a vote of two-thirds of all the members elected to each house, as |
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| 199 | 199 | | provided by Section 39, Article III, Texas Constitution. If this |
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| 200 | 200 | | Act does not receive the vote necessary for immediate effect, this |
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| 201 | 201 | | Act takes effect September 1, 2021. |
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