Dustin McDaniel to give up car | Arkansas Blog

Dustin McDaniel to give up car

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Attorney General Dustin McDaniel announced today that he wants to clear up any doubt about tax questions related to his use of a hybrid Chevy Tahoe provided by the state. He's giving it up. He'll use a personal vehicle for office travel and he won't seek state reimbursement. If he attends an official function, he might accept a ride from one of the law officers in his office who has a state car.

McDaniel said he'd concluded there were "irreconcilable differences" between tax opinions and the state Constitution, which sets a firm limit on pay of state constitutional officers. It has been the opinion of McDaniel's accountant that the state car was not a salary supplement and thus not taxable (and thus not in violation of the constitutional limit on statewide officers' pay.) Others aren't so sure. Lt. Gov. Bill Halter says he's considered some of the use of his state car taxable and has reported an amount to the IRS. Gov. Mike Beebe apparently followed a similar pattern when he was attorney general.

If Halter's right, though, doesn't it mean that those who consider cars taxable income have been receiving pay in excess of constitutional limits and thus owe the state a refund? Constitutional officers have been provided cars since the constitutional amendment ending public relations accounts (thinly veiled salary supplements) were outlawed. But for one reason or another, nobody has given hard thought until a recent Arkansas Democrat-Gazette article on the subject to the potential taxable nature of cars used for personal purposes.

In fact, though, some jurisdictions have considered the issue. After The Times of North Little Rock reported that the IRS considered mayoral vehicles salary supplements, Mayor Pat Hays stopped using a city car and went to an expense allowance for official travels, I was told by a reporter who worked on the story. I also recall that Little Rock municipal court judges once received autos on top of pay in Little Rock, but that practice was ended after a legal interpretation found that it amounted to an illegal pay supplement.

McDaniel's cleanup will raise anew questions of propriety about others' use of cars. Gov. Mike Beebe contends he's in the clear because he never drives the state vehicle used by the State Police for his security detail. Is he saying he's never driven on personal errands in that car? Is he saying that the governor is always on duty and thus always on official business? A fellow named Steve Clark once famously made such a claim about attorney general expenses — unsuccessfully, I'd add.

Land Commissioner Mark Wilcox, who the Democrat-Gazette reported had the benefit of TWO state vehicles, including one kept on his farm, is a special category. There are laws about taking state property for personal use.

PS — McDaniel also mentioned to me than his office would be turning $3.2 milllion in fund balances over to the treasury. And he said, in response to D-G reporting on his use of money from a lawsuit settlement to contribute to a firefighters memorial at the Capitol, that all spending from lawsuit settlements came under limits specified by court orders. But he also said he was open to a procedure where there'd be a regular reporting to the legislature on the spending of these cash funds and ample opportunity for legislators to object. I and others had wondered about executive spending of significant funds outside the appropriation process.

MCDANIEL'S STATEMENT

LITTLE ROCK — Attorney General Dustin McDaniel issued the following statement today:

"As Attorney General, I have been a strong advocate for public transparency and accountability. I proposed ethics legislation and fought to see it pass. I make sure my office operates ethically and is accountable to the public, and must always lead by example.

"Recently, questions have been raised about the use of State vehicles by constitutional officers. I currently have a 2009 Hybrid Chevy Tahoe assigned to me for my use by the Attorney General’s Office. The central question raised recently is about personal mileage. I have not tallied personal mileage nor have I paid taxes on personal mileage as a salary supplement. I relied upon the advice of my accountant, and I still trust that advice.

"My accountant still believes that constitutional officers are not conferred upon them personal taxable income through the use of state vehicles. That advice is consistent with past Attorney General’s opinions (see, 93-029 and 95-253), as well as the advice given to other constitutional officers by their accountants. Still, based on recent media statements by the IRS and state tax officials, it appears that there may be some gray area in the tax code.

"At least one constitutional officer has attempted to reconcile this issue by reporting personal miles as income and paying taxes on that income. Although that may satisfy the IRS, I do not believe that is a proper, legal approach under state law. Either the personal use is income or it is not. If it is income reported on one’s tax returns, then I believe that to be in violation of Amendment 70 to the Arkansas Constitution. That is to say that the salaries for constitutional officers are fixed to the penny. Any additional income for serving in such an office, including in the form of personal use of a vehicle, would mean that the elected official has collected more from the state than the constitution allows.

"I believe I have fully complied with the law regarding my tax liability for personal use of a state vehicle. I also believe that it is appropriate for constitutional officers to continue using their state cars in accordance with the advice of their accountants (unless that advice violates Amendment 70, as noted above.) However, to the extent that there is any gray area in this matter, I have decided to no longer drive a state vehicle.

"The vehicle will be reassigned to the Special Investigations Division of the Attorney General’s Office for its use. Office personnel will continue to transport me to and from official events and whenever security policy dictates. Otherwise, I will drive my own vehicle at all times. I have never driven a state vehicle outside the state of Arkansas for personal use. I will never submit a single mileage reimbursement for the use of my own vehicle, even if it is for state business. I regret that this question arose at all, and I will continue to strive to ensure the public’s confidence in the integrity of my office."

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