Daugaard Executive Order Exempts $200 Expense Claims from Benda-Bollen Law

Hey, executive-order hawks! Care to shout at Governor Dennis Daugaard a bit this morning?

While browsing the Governor’s recent executive orders, I found that on June 12, 2015, Governor Daugaard unilaterally amended the Benda-Bollen self-dealing law, which the Legislature passed this year to prevent future GOED/EB-5 scandals where state officials write contracts with themselves. The Governor evidently found that the new law was complicating procurement and thus wrote a permission slip to all state employees to charge up to $200 to the state on individual purchases:

I suppose asking the Governor to write 180,000 individual purchase waivers is an impossible administrative burden (although at the average value of $84, the Governor is talking about exempting $15 million dollars in overhead from oversight).

The Governor’s lawyers can drop by and prove me wrong, but I’m not convinced that the Governor needed to issue this order. As he says in his last Whereas, House Bill 1064 did not contemplate mere expense reimbursements of any size. Expenses incurred on behalf of one’s employer are not taxable income; thus, I wouldn’t think that a reimbursement for gas or office supplies would qualify as the “direct benefit” that HB 1064 sought to prohibit.

But Section 3 of HB 1064, now SDCL 5-18A-17.1, defines “direct benefit” as “income, compensation, or commission directly from the contract or from the entity that is a party to the contract.” Maybe compensation is the troublesome word that provoked the Governor’s action.

The Benda-Bollen self-dealing law allows the Governor to authorize exemptions from the law. Those exemptions must be granted case by case, with a review of each specific transaction. An executive order granting blanket exemptions for an entire class of transactions does not fall within the bounds of the written law.

This executive order may be perfectly sensible governing: if the lawyers found that the letter of the law would grind normal government operations to a halt, then the Governor has good cause to look for a way to keep things moving. But if the law is so fatally flawed as to require unilateral gubernatorial action, the Legislature should revisit this issue immediately and amend the law to make clear that it does not apply to expense reimbursements.