Sacramento Mayor Steinberg opens side business as consultant

February 24, 2017

| The Sacramento Bee

Sacramento Mayor Darrell Steinberg on Friday announced he will open his own consulting firm as a side business to his elected duties.

Steinberg said in a letter to the city that the eponymous consultancy will have two clients to begin: The California Hospital Association and Meristem, a private educational facility for those on the autism spectrum.

“I made a pledge during my campaign that I would fully disclose any outside work that I do, and I’m following through on that pledge,” said Steinberg. “It’s in the spirit of the kind of atmosphere and culture we are trying to create here at City Hall.”

The California Hospital Association is a policy and advocacy organization for hospitals in the state. Health care giants Kaiser and Sutter are among its 400 members, both of which are significant employers in Sacramento.

Sutter has an ongoing and close relationship with Steinberg. In January, Sutter Health gave $1.5 million to his Steinberg Institute to partner on mental health issues. Last week, Sutter promised $5 million in matching funds to support Steinberg’s plan to move affordable housing vouchers to the homeless population. Sutter also pledged to attempt to raise an additional $5 million from other private companies for that program.

Ethics experts said that the consultancy could present conflicts for Steinberg, but that it wasn’t inherently unethical or illegal.

“It’s not ideal because it raises questions,” said Jessica Levinson, a law professor and ethics expert at Loyola Law School in Los Angeles. “I also don’t think it’s the kind of thing that is going to bring down the city of Sacramento … The reality may be that there is not a problem other than appearances, but in politics, appearances matter.”

Craig Powell, president of the watchdog group Eye on Sacramento, agreed that the side business was a “potential problem,” but not an immediate one.

“We’ve long had a tradition in Sacramento of our elected officials being employed or engaging in business, so it kind of goes with the territory,” said Powell. “If his practice is relegated mostly to advising on state legislative matters and policy matters, it’s less of a conflict.”

In a letter to the city attorney, Steinberg said his consulting would be of “limited scope,” and if conflicts did arise, he would recuse himself from those matters.

City Attorney James Sanchez confirmed via email that the city charter allowed the mayor to take outside work.

“The mayor can perform other compensated duties so long as those do not present other legal conflicts or prevent him from meeting his charter requirements,” Sanchez said.

Powell said another issue is that the mayor’s position is full time with the city, while the council members are considered part time. The mayor’s salary is $127,722 plus a $7,000 transportation allowance and a $2,000 technology allowance, according to the city clerk. Powell said that some constituents may expect the mayor to devote himself full-time to city work, and that another job could take his focus off of city business.

“To the extent it distracts his time, it will come at a cost to the city,” Powell said.

“I think in my first month here, I’ve demonstrated I’m more than a full-time mayor, and I don’t intend to let up,” said Steinberg.

Mayoral spokesman Jason Kinney said Steinberg asked the city attorney for an opinion on whether a conflict would exist for city business involving any of the 50 board members of the California Hospital Association, some of whom are based in Sacramento. Kinney said the city attorney found no immediate conflicts.

“The issue is whether you attribute any CHA payments made to the Steinberg consulting firm to any of their 50 individual board members. On that limited question, we do not believe the CHA payments would be attributable to the individual board members,” Sanchez said via email.

Powell also pointed out that while Steinberg’s current clients did not represent overt conflicts, future ones would need to be vetted to ensure there is no conflict with city business. He said it would be a best-practice for the mayor to disclose new clients as they are added to his roster, rather than reporting them at the end of the year as required by disclosure rules. Steinberg voluntarily disclosed the formation of his practice and initial clients to The Sacramento Bee on Friday and informed the City Attorney’s Office. He said he would disclose new clients as he signed them up.

Kinney said the mayor would not disclose how much he was being paid by his consulting clients, but that he would include that information in required end-of-year filings in the mayor’s statement of economic interest.