Prohibited gifts to the Governor
Since November 5, 2014 it has been illegal for the Governor and many other public officials to accept a “gift” from a lobbyist or from someone who employs or contracts with a lobbyist. That is the date when Issue 3 of 2014 became effective. The prohibited gifts provision is now codified at Ark. Const. Art. 19, § 30.
The Arkansas Constitution prohibits an officeholder from accepting a gift (over $100) from a lobbyist or from an individual or business who employs or contracts with a lobbyist.[i] The prohibition was proposed by the Arkansas General Assembly and submitted to a vote of the people.
Many states have a similar prohibition, as an anti-corruption measure. It is a matter of public trust and the appearance of undue influence.
Under Arkansas’ ethics law, “gift” has a broad definition. “’Gift’ means any payment, entertainment, advance, services, or anything of value, unless consideration of equal or greater value has been given therefor.” Because the definition is broad, the Constitution then carved out a long list of exemptions. Even “campaign contributions” would have been prohibited but for the inclusion of a specific exemption from the definition of “gift.”
Despite the Constitution’s prohibition, Governor Asa Hutchinson is still accepting lobbyist gifts through his Asa PAC.
What is Asa PAC? Governor Asa Hutchinson has his own Political Action Committee (PAC) which is named Asa PAC.[ii] Asa PAC includes donations from businesses and individuals. The Governor uses his PAC money to support candidates who support his agenda and punish those who don’t. For example, the Governor used his Asa PAC money to try to unseat Representative Josh Miller who is too conservative for the Governor.
Having a PAC is not an issue, the Governor and some other politicians (both Republican and Democrat) have their own PACs. The issue is contributions made by lobbyists and their employers. These contributions are prohibited gifts. The gifts benefit the Governor by providing money he uses to support other candidates and therefore increasing his power and influence. Again, there is a long list of exceptions to the gift law, but there is no exception for gifts given through the Governor’s PAC.
Examples of lobbyist contributions to Asa PAC. We chose these examples because the gift givers were easy to identify without having to look through piles of lobbyist reports in order determine whether the person is a lobbyist or employs or contracts with a lobbyist. We assume a closer examination of the reports would show more lobbyist-related donors giving to the Governor’s Asa PAC. These donations range from $1,000 to $5,000 each.
- Registered lobbyists and those authorized to lobby by a business registered to lobby: Richard Bearden, Capitol Advisors Group, Marvin Childers, Robert Coon, Hargraves Consulting, Ron Fuller, Noble Strategies, Clint Reed
- Employers of lobbyists: AT&T Services Inc., Entergy, Southwest Energy, Walmart, Wholesale Beer Distributors of Arkansas
- PACs of employers of lobbyists: Arkansas Poultry Federation PAC, Arkansas State Chamber PAC
You may be thinking:
- Why is it a gift to the Governor when Asa PAC is a separate legal entity and has its own separate officer? Arkansas’ ethics law doesn’t allow you to avoid ethics rules by setting up paper thin boundaries. If it did, an officeholder could always skirt the gift prohibition by merely having gifts placed in the name of his business or an immediate family member. Such an interpretation would make the gift prohibition meaningless. Having a separate officer to handle Asa PAC at the Governor’s direction doesn’t work either because it is the Governor who is the beneficiary of having the PAC.
- Why is it a “gift” when the Governor doesn’t keep the donation and instead turns around and gives the money to other candidates?
First, a contribution to Asa PAC clearly bestows a benefit to the Governor – increasing his or her power and prestige by supporting allies and punishing foes.
Second, the Ethics Commission values gifts at their fair market value which is normally the face value of the gifts. Using sporting event tickets as an example: if you are given eight $50 tickets there is not a reduction in value of the gift merely because you can only occupy one seat. (See Ethics Commission Rule on valuation of gifts in the notes below)[iii] - Since the definition of “gift” has an exemption for “campaign contributions”, shouldn’t contributions to Asa PAC also be exempt?
First, the constitution does not provide an exemption for contributions to officeholder PACs! (See the full list of exemptions in the notes at the end of this article)[iv]
Second, Campaign contributions are very different from contributions to a PAC. A campaign contribution is made to the campaign of a specific candidate to promote the election of that candidate. A contribution to Asa PAC is not made to support the election of a candidate, and is instead made to further the interests of the Governor.
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Lobbyist donations to Asa PAC is not a partisan issue. It is not a Political Action Committee (PAC) issue. The Constitution makes it an issue, specifically an issue of enforcement of the Constitution’s prohibited gift law.
All contributions made by lobbyists or the employers of lobbyists to Asa PAC or to other officeholder PACs must be returned.
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In an upcoming article, Conduit for Action will examine additional prohibited gifts to PACs of both Democrats and Republicans.
[i] Prohibited gifts law – Ark. Const. Art. 19, § 30 (a)
(a) Persons elected or appointed to the following offices shall not knowingly or willfully solicit or accept a gift from a lobbyist, a person acting on behalf of a lobbyist, or a person employing or contracting with a lobbyist:
(1) Governor;
(2) Lieutenant Governor;
(3) Secretary of State;
(4) Treasurer of State;
(5) Auditor of State;
(6) Attorney General;
(7) Commissioner of State Lands;
(8) Member of the General Assembly;
(9) Chief Justice of the Supreme Court;
(10) Justice of the Supreme Court;
(11) Chief Judge of the Court of Appeals;
(12) Judge of the Court of Appeals;
(13) Circuit court judge;
(14) District court judge;
(15) Prosecuting attorney; and
(16) Member of the independent citizens commission for the purpose of setting salaries of elected constitutional officers of the executive department, members of the General Assembly, justices, and judges under Article 19, § 31, of this Constitution.
[ii] “The governor said he has financially supported his endorsed candidates through his political action committee — called the ASA PAC.” “Hutchinson said he had a previous political action committee called A Secure America that had a broader purpose, and ‘we reformed it since I became governor just to refocus its efforts on Arkansas agendas and legislative races in this state.’” “ASA PAC ‘was formed because a lot of people really care about effective legislators, and those that have worked hard to support my agenda of lowering taxes and growing business in this state, I wanted to be able to support [them], and the PAC serves that function,’ Hutchinson said.” In GOP civil war over private option, Asa Hutchinson takes sides in primary battles, Arkansas Democrat-Gazette 2/28/2016
[iii] Arkansas Ethics Commission Rules on Gifts
§ 310 Valuation of Gifts
(a) Except as otherwise provided below, the value of a gift for purposes of these rules shall be its fair market value at the time the gift was conferred. Fair market value means the price the good or service would bring between a willing seller and a willing buyer in the open market after negotiations. In determining fair market value, the actual price paid for the gift will be given strong consideration. It is recognized, however, that in many instances, e.g., the giving of handmade items, no purchase price will have been paid.
(b) When multiple items, each individually worth less than $100 but in the aggregate worth more than $100, are simultaneously offered by a donor to a public servant, the gift being offered is deemed to be the aggregate of all the items. Food and beverages offered to a public servant’s spouse do not count toward the $100 aggregate.
(EXAMPLE: If a public servant is given eight (8) tickets worth $20/each, the value of the gift to the public servant would be $160.)
(c) The value of an item shall be considered to be less than $100 if the public servant reimburses the person from whom the item was received any amount over $100 and the reimbursement occurs within ten (10) days from the date the item was received.
(d) Tickets to sporting events and shows are valued at their face price except for tickets that the donor obtains pursuant to a lease (such as tickets for an “executive suite” or a “skybox”). The value of a ticket obtained pursuant to a lease shall be the price of the highest individually priced ticket for the event. The fair market value of benefits accepted by the public servant from the donor in connection with the event, including food and beverages, must be added to the value of a ticket to determine the overall value of the gift.
(EXAMPLE: If a public servant is given two (2) skybox tickets to an event, and takes a guest, the value of the gift to the public servant is twice the price of the highest individually priced ticket for the event plus the value of any food or beverages consumed by the public servant, but not his or her guest.)
(e) Transportation on a private aircraft shall be valued by dividing the total cost of the aircraft trip by the number of passengers (excluding crew). The total cost of the aircraft trip includes the expenses for the crew on board the plane (and for the crew to stay overnight, if applicable), the cost of fuel to operate the aircraft, repairs to the aircraft, depreciation, landing fees, and any applicable catering. Normally, these costs are expressed in terms of a per hour operational expense. In other words, what it actually costs to operate the particular aircraft on an hourly basis.
(EXAMPLE: A corporation owns a jet which it has determined costs $900/hour to operate, given historical expenses for crew, fuel, repairs, depreciation, fees and catering. The corporation takes six (6) passengers (excluding crew) on a trip with actual flight time of four (4) hours. The total cost of the aircraft trip is computed by multiplying $900/hour times four (4) hours. This computation ($3,600) is then divided by the number of passengers (6) which yields a value of $600/per passenger.)
(f) For purposes of these rules, the value of a ticket to a charitable event shall not include the tax deductible portion of the ticket.
[iv] Definition of Gift
Ark. Const. Art. 19, § 30 (b)(2)
(2) (A) “Gift” means any payment, entertainment, advance, services, or anything of value, unless consideration of equal or greater value has been given therefor.
(B) “Gift” does not include:
(i) (a) Informational material such as books, reports, pamphlets, calendars, or periodicals informing a person elected or appointed to an office under subsection (a) of this section regarding his or her official duties.
(b) Payments for travel or reimbursement for any expenses are not informational material;
(ii) Gifts that are not used and which, within thirty (30) days after receipt, are returned to the donor;
(iii) Gifts from the spouse, child, parent, grandparent, grandchild, brother, sister, parent-in-law, brother-in-law, sister-in-law, nephew, niece, aunt, uncle, or first cousin of a person elected or appointed to an office under subsection (a) of this section, or the spouse of any of these persons, unless the person is acting as an agent or intermediary for any person not covered by this subdivision (b)(2)(B)(iii);
(iv) Anything of value that is readily available to the general public at no cost;
(v) (a) (1) Food or drink available at a planned activity to which a specific governmental body is invited, including without limitation a governmental body to which a person elected or appointed to an office under subsection (a) of this section is not a member.
(2) If a committee of the General Assembly is invited to a planned activity under subdivision (b)(2)(B)(v)(a)(1) of this section, only members of the committee of the General Assembly may accept food or drink at the planned activity.
(b) (1) As used in this subdivision (b)(2)(B)(v), “planned activity” means an event for which a written invitation is distributed electronically or by other means by the lobbyist, person acting on behalf of a lobbyist, or a person employing or contracting with a lobbyist to the members of the specific governmental body at least twenty-four (24) hours before the event.
(2) As used in this subdivision (b)(2)(B)(v), “planned activity” does not include food or drink available at a meeting of a specific governmental body for which the person elected or appointed to an office under subsection (a) of this section is entitled to receive per diem for attendance at the meeting.
(c) A lobbyist, a person acting on behalf of a lobbyist, or a person employing or contracting with a lobbyist shall not offer or pay for food or drink at more than one (1) planned activity in a seven-day period;
(vi) (a) Payments by regional or national organizations for travel to regional or national conferences at which the State of Arkansas is requested to be represented by a person or persons elected or appointed to an office under subsection (a) of this section.
(b) As used in this subdivision (b)(2)(B)(vi), “travel” means transportation, lodging, and conference registration fees.
(c) This section does not prohibit the acceptance of:
(1) Food, drink, informational materials, or other items included in the conference registration fee; and
(2) Food and drink at events coordinated through the regional or national conference and provided to persons registered to attend the regional or national conference;
(vii) Campaign contributions;
(viii) Any devise or inheritance;
(ix) Salaries, benefits, services, fees, commissions, expenses, or anything of value in connection with:
(a) The employment or occupation of a person elected or appointed to an office under subsection (a) of this section or his or her spouse so long as the salary, benefit, service, fee, commission, expense, or anything of value is solely connected with the person’s employment or occupation and is unrelated to and does not arise from the duties or responsibilities of the office to which the person has been elected or appointed; or
(b) Service as an officer, director, or board member of a corporation, a firm registered to do business in the state, or other organization that files a state and federal tax return or is an affiliate of an organization that files a state and federal tax return by a person elected or appointed to an office under subsection (a) of this section or his or her spouse so long as the salary, benefit, service, fee, commission, expense, or anything of value is solely connected with the person’s service as an officer, director, or board member and is unrelated to and does not arise from the duties or responsibilities of the office to which the person has been elected or appointed; and
(x) A personalized award, plaque, or trophy with a value of one hundred fifty dollars ($150) or less;