ADVISORY OPINION 2006-7

Application of Code of Ethics for Public Officials

to State-Subsidized Discount

INTRODUCTION

The Citizen’s Ethics Advisory Board issues this advisory opinion in response to a request for an opinion submitted by the state Department of Transportation (DOT).  In that request, the DOT asked whether, under the Code of Ethics for Public Officials, chapter 10, part 1, of the General Statutes (Code of Ethics), DOT employees who work at the Bradley International Airport (airport) may accept certain discounts from airport vendors that are subsidized by the DOT.     

BACKGROUND

            The following facts, presented by the DOT, are relevant to this opinion.  The DOT contracts with several vendors to provide food, beverage, and other retail services at the airport’s terminals.  Under certain of these contracts, the DOT receives a fixed percentage of the vendor’s gross sales receipts, or a minimum annual guarantee, whichever is greater.  A vendor may reduce the amount it is obligated to pay under these contracts by way of a 10 percent discount on food and non-alcoholic beverages purchased by airline and airport employees.  For example, one of these contracts currently in effect provides as follows: 

For the period commencing of [sic] April 1, 2004 and for the remainder of the term of this Agreement, the percentage of Gross Receipts fee shall be the sum of fourteen and three quarters percent (14.75%) of Gross Receipts from the sale of alcoholic beverages and twelve and three quarters percent (12.75%) of Gross Receipts from the sale of food and all other items and services except for the sales of food and non-alcoholic beverages to airline and Airport employees who shall receive a discount of ten percent (10%), in which case two point seventy-five percent (2.75%) of its Gross Receipts from such sales. 

(Emphasis added.)  Thus, if a vendor provides a 10 percent discount on food and non-alcoholic beverages purchased by airline and airport employees, then it must pay the DOT 2.75 percent of its gross receipts from those sales; but if the vendor does not provide such a discount, then it must pay the DOT 12.75 percent of its gross receipts from those sales.

            These discounts are made available to all individuals possessing an airport security badge, a group that includes employees of the following entities: airport vendors, airport construction contractors, the Transportation Security Administration, the DOT, and other state agencies.  The group is made up of only a small percentage of state employees; indeed, only 285 (approximately 7 percent) of the 4153 individuals with the requisite security badge work for the state.  Of the 285 state employees eligible for the discount, 130 are employed by the DOT.

QUESTION

The DOT asked whether its employees who work at the airport may accept this state-subsidized discount on food and non-alcoholic beverages.    

ANALYSIS

The Code of Ethics prohibits a public official or state employee from knowingly accepting any “gift,” directly or indirectly, from a regulated donor, a category that includes registered lobbyists and any persons[1] the official or employee knows or has reason to know are: (1) doing business with or seeking to do business with his or her department or agency; (2) engaged in activities directly regulated by such department or agency; or (3) prequalified under General Statutes § 4a-100.[2]  General Statutes § 1-84 (j) and (m).  In the case at hand, because the airport vendors are doing business with the DOT (and may in fact be registered lobbyists in the state of Connecticut), they are regulated donors under the Code of Ethics.  Thus, any benefits, such as the discounts in question, provided by these vendors to DOT employees are subject to a “gift” analysis under subsections (j) and (m) of § 1-84.

We must determine, therefore, whether the 10 percent discount on food and non-alcoholic beverages constitutes a “gift,” which, broken into its component parts, is defined as follows: (1) anything of value (2) which is directly and personally received, (3) unless consideration of equal or greater value is given in return.  General Statutes § 1-79 (e).  It is clear that the first two parts of this three-part definition are satisfied: (1) a 10 percent discount on food and non-alcoholic beverages constitutes something “of value”; and (2) if a state employee accepts the opportunity to partake of or utilize such discount, then the discount will be deemed to have been “directly and personally received.”  See Regs., Conn. State Agencies § 1-92-54 (a).  This leaves for us to determine whether the third part of the definition is satisfied; that is, whether consideration of equal or greater value is given to the airport vendors in return for the discount. 

To answer this question, we turn to the terms of the contract at issue, which, as noted above, provides as follows: an airport vendor that provides a 10 percent discount on food and non-alcoholic beverages purchased by airline and airport employees must pay the DOT 2.75 percent of its gross receipts from those sales; but an airport vendor that does not provide such a discount must pay the DOT 12.75 percent of its gross receipts from those sales; a difference of 10 percent.  Thus, for example, if an airport vendor sells $100 worth of food and non-alcoholic beverages to a DOT employee, then in the former case (i.e., discount) it must pay $2.75 to the DOT ($100 x 2.75 = $2.75); while in the latter case (i.e., no discount) it must pay $12.75 to the DOT ($100 x 12.75% = $12.75); the $10 difference being the value of the 10 percent discount provided to the DOT employee by the airport vendor on the $100 transaction.  Accordingly, by way of the 10 percent reduction in the airport vendor’s gross receipts fee, the DOT gives consideration of equal value for—or, in other words, bears the entire cost of—the 10 percent discount made available to the DOT employee by the airport vendor. 

            In light of such consideration, the discount at issue does not constitute a “gift,” as that term is defined under the Code of Ethics.  See General Statutes § 1-79 (e) (“anything of value, which is directly and personally received, unless consideration of equal or greater value is given in return” [emphasis added]).  If, however, an airport vendor were to offer a DOT employee a discount in excess of the state-subsidized 10 percent discount, the portion exceeding 10 percent would constitute a “gift,” thereby triggering a “gift” analysis under subsections (j) and (m) of § 1-84. 

CONCLUSION

            It is the opinion of the Citizen’s Ethics Advisory Board that, under the Code of Ethics, DOT employees who work at the Bradley International Airport may accept this state-subsidized discount on food and non-alcoholic beverages.

By order of the Board,

______________________________

Patricia T. Hendel

Chairperson

Dated October 31, 2006