Valuing Gifts, and Courtesies to an Office

Update below (Aug. 20, 2009)
Is the value of a gift given to a government official its fair market value or what the official gets out of it? For example, if you give an official a sportscar worth $40,000 and he only drives it ten times a year, is its value $40,000 or the cost of renting a car ten times a year? If you give an official a ticket to a football game and she leaves after the first half, is the value half the ticket or its full price?

This issue arises due to the argument made by a spokesperson for former North Carolina governor Mike Easley, who did not report that a golf club waived his membership for eight years. According to an article in yesterday's News-Observer, the dues waived amount to about $50,000.

A spokesperson for the former governor "said the former governor played 'very few and far between' rounds of golf, and the actual value of what he received from the club 'never amounted to more than $200.'" Gifts valued below $200 a year need not be reported.

The fact is that a gift valued at $6,250 a year was offered to the governor, and he accepted it. If he wasn't going to use the gift, he could have turned it down. If he were to stick a gift in his closet and never use it or wear it, it's still a gift he accepted, and the value he would be required to report is not zero, but the fair market value of the gift.

Another issue raised in the article is when a gift is given to the current governor or to the office of the governor. Confusing the individual and the office is a central issue in government ethics. The former publisher of the very newspaper reporting the situation, who was on the club's board when the waiver was approved, "viewed the gift as a courtesy to the Office of the Governor and protocol for a club such as Old Chatham."

But if the dues were waived, doesn't that mean that the actual governor, not the office, was already a member? In fact, according to the article he is a member still.

Giving a courtesy to the office of the governor is difficult to differentiate from a gift to the current governor, unless such a courtesy is offered to all governors and is approved by, say, the legislature. Perhaps, to be safe, all state golf clubs should be required to offer privileges to the office of the governor. And perhaps all tennis clubs, swim clubs, ethnic clubs, etc. Then there would be no favoritism, no club boards whose members might be favored for making a special offer to the governor, and no appearances of impropriety.

Update (Aug. 20, 2009): Country club memberships are not only given to governors. According to his May 2009 financial disclosure statement, Indianapolis Mayor Gregory Ballard has accepted free memberships from two country clubs and one city club. He notes on his statement (Addendum, p. 3) that he has yet to play golf at either club, as if that matters to the value of the gifts. A blogger guesses the cost of joining one of the clubs is tens of thousands of dollars (no dollar amount is given in the disclosure). He also notes that when the mayor won the election, he said that this would put an end to country-club politics.

Robert Wechsler
Director of Research-Retired, City Ethics

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