A corporation owned by John Burkhalter, a Democratic candidate for lieutenant governor, cannot provide free office space for his campaign headquarters and stay within the bounds of campaign contribution limits, the Arkansas Ethics Commission said Friday in an advisory opinion.
In the opinion, issued in response to a request by the campaign, commission attorney Todd Elder wrote that Burkhalter’s business, Burkhalter Technologies, was subject to the same contribution limits as any individual.
“Based on the above-cited provisions of the Arkansas campaign finance laws and the commission’s [campaign finance rules], it is the commission’s opinion that a C corporation meets the definition of the term ‘person’ and is therefore subject to the $2,000 campaign contribution limit. Accordingly, the Commission concludes that it is not permissible for a C corporation owed by a candidate to make ‘in-kind’ contributions of more than $2,000 to the candidate’s campaign for office space for each election in which the candidate’s name appears on the ballot,” Elder wrote.
The commission unanimously approved the opinion without discussion.
On Aug. 12, Bryan Griffith wrote to the commission on behalf of Burkhalter’s campaign and asked whether a candidate could make unlimited in-kind contributionsthrough his or her business by providing office space for the campaign. Burkhalter is the sole owner of the corporation, Griffith said.
Elder cited the Internal Revenue Service website in his response, which refers to C corporations as a “separate taxing entity” for federal income taxes.
“Unlike sole proprietorship in which the business and its owner are the same ‘person,’ a corporation is recognized as a legal entity separate from its incorporators,” Elder wrote.
Griffith said in an email Friday that the campaign sought the opinion “to have a clearer understanding” of the law and “for clarity to avoid any questions beforethey might occur.”
Burkhalter’s campaign will pay fair market price for any rent beyond the $2,000 campaign contribution threshold at the Collins Industrial Place address in North Little Rock, Griffith said.
In other business, the commission approved changes to its rules for campaign finance and disclosure and lobbyist registration and reporting.
The commission voted 4-1to approve a definition of family as “an individual’s spouse, children of that individual or his or her spouse, or brothers, sisters or parents of the individual or his or her spouse” in the campaign finance section of the rules.
The change followed a case before the commission in which Rep. John Hutchison, R-Harrisburg, was cautioned and fined $150 for paying $863 in campaign funds for rent and utilities at his mother’s house, where he set up his campaign headquarters.
Doyle Webb, the chairmanof the Republican Party of Arkansas, told the commission that Hutchison would not have used the campaign funds if “family” had been clearly defined.
Bilenda Harris-Ritter of Maumelle, Hutchison’s attorney in the case, said the definition was too broad and asked that the commission consider defining family as “an individual’s spouse, dependent children of the candidate or his or her spouse or any other person who is financially dependent on the candidate or his or her spouse.”
Commissioner Sharon Trusty agreed that the definition should target whether the candidate profits from the expenditure and voted against the rule change.
“We’re supposed to consider whether they benefit personally,” Trusty said.
The commission made other changes to incorporate laws passed by the Legislature this year, including cleaning up language to include prosecutors as nonpartisan, said commission Director Graham Sloan. The other changes were approved unanimously.
Northwest Arkansas, Pages 9 on 09/21/2013