Niello said he has recused himself on occasions when he thought a conflict might be perceived -- as when the Legislature considered raising processing fees for car sales.
Government watchdog groups contend that private business can be a distraction from a public official's job and raises questions about whether decisions are made on merit. They note that Congress prohibits its members from engaging in professions that provide services involving a fiduciary relationship.
Kathay Feng, executive director of California Common Cause, called for similar restrictions in California, saying: "The loophole that allows legislators to moonlight and have an outside business should be closed."
In Eng's case, the education bill sponsored by L.A. Unified also affected three small school districts. Eng, who reported more than $100,000 in income from his law firm last year, said he did not see any conflict in his vote because other attorneys in his firm did the work on the school contract.
Eng said he works about 60 hours a week on his legislative job. He said it makes him a better legislator because it gives him expertise in the critical area of immigration.
"I feel I have a special place in the California Legislature because I've dealt with that issue," he said.
Others raised the issue of restrictions that term limits impose. Legislators need to keep businesses so they have something to return to when they leave office, said Assemblyman Bill Maze (R-Visalia).
"You don't have any kind of retirement [benefit] with the Legislature," said Maze, owner of a farming enterprise and a property-inspection business.
One lawmaker who sympathizes with the arguments of the public-interest groups is Assemblyman Mark De Saulnier (D-Concord). He said a factor in his decision to sell his bar and grill when he was elected in 2006 was to avoid the appearance of conflict. Lawmakers are considering a nickel tax on alcoholic drinks, for instance.
And he said he did not believe that as a full-time assemblyman he would have time to run a business. "I just couldn't do both," he said.
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patrick.mcgreevy@latimes.com
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(BEGIN TEXT OF INFOBOX)
Legislators' outside jobs
California legislators are allowed to own businesses or hold other outside jobs, and 30 report doing so.
SENATORS
Sam Aanestad (R-Grass Valley): Oral surgeon. Owns private practice.
Dave Cox (R-Fair Oaks): President and owner of insurance company.
