In a campaign finance report filed on the day of the Nov. 6 election by the campaign of governor candidate Billie Sutton, there was something peculiar.
It was a $10,000 contribution received from an individual on Nov. 5.
The peculiarity was the amount. By state law, the maximum allowable contribution from any individual to a statewide candidate is $4,000 per calendar year.
But the $10,000 contribution to Sutton’s campaign did not violate the $4,000 limit. Why? Because the contribution came from Sutton’s father-in-law, George Kenzy.
In South Dakota, state law exempts members of a candidate's immediate family from the contribution limits that apply to all other individual contributors.
The definition of “immediate family” in the law includes a candidate’s spouse; a child younger than 18 who is claimed by the candidate or the candidate’s spouse as a dependent; and, in the words of the law, “any relative within the third degree of kinship of the candidate or the candidate’s spouse, and the spouses of such relatives.”
“Third degree of kinship” is not defined in the law but is commonly considered to include uncles, aunts, nephews, nieces, great-grandparents and great-grandchildren.
In other words, South Dakota’s campaign finance laws could be interpreted to allow unlimited campaign contributions to candidates from a candidate’s spouse; from the children, parents, siblings, grandparents, great-grandparents, grandchildren, great-grandchildren, uncles, aunts, nephews and nieces of the candidate or the candidate’s spouse; and from the spouses of any of those relatives.
It is unknown exactly how often the exemption is used, because the South Dakota Secretary of State’s Office publishes only scanned copies of campaign finance reports, rather than a database that could be searched for contributor names or individual contributions greater than $4,000.
Secretary of State Shantel Krebs, the state’s top elections official, said the exemption is probably not common knowledge among the general public, but is well known among candidates.
“It gets used quite a bit,” Krebs said.
Enacted, repealed, reinstated
A former secretary of state, Chris Nelson, who is now a public utilities commissioner, said he thinks the exemption dates to the 1970s. He remembers the exemption being in the state’s campaign finance laws when the Legislature and governor overhauled the laws in 2007.
Nelson said he does not recall the exemption being discussed when the 2007 overhaul of campaign finance laws was adopted. But legislative records show there was some tinkering with the exemption that year.
In the original draft of the campaign-finance overhaul bill, “immediate family” was defined only as a candidate’s spouse or the legally dependent children of the candidate or the candidate's spouse. The bill was subsequently amended, and the definition of immediate family was broadened to include relatives within the third degree of kinship.
The exemption remained in effect until it was briefly repealed by Initiated Measure 22, which voters approved in 2016. The repeal of the exemption was one of many provisions in the lengthy measure, which revised campaign finance and lobbying laws and also created a publicly funded campaign finance program and ethics commission.
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South Dakota’s Republican-dominated Legislature and Republican governor repealed and partially replaced Initiated Measure 22 during the 2017 legislative session, and the replacement legislation included a reinstatement of the exemption.
Doug Kronaizl, field director for the Represent South Dakota political action committee, which supported IM 22 and Amendment W, would still like to see the exemption repealed or narrowed.
“Because every exemption, every crack you put into campaign finance laws or government ethics laws is potentially a loophole that can be exploited at the expense of the voters,” Kronaizl said.
The exemption is not unique to South Dakota. Austin Graham, legal counsel for the State & Local Program of the nonprofit Campaign Legal Center in Washington, D.C. — which was involved in the drafting of IM 22 — said there are similar exemptions in other states.
Illinois, for example, has no limits on contributions from a candidate's spouse, parents or children, Graham said. However, once a statewide candidate in Illinois surpasses $250,000 in self-funded contributions or contributions from family members, the normal contribution limits for all candidates in that race are removed.
In New York, there are no limits on contributions from candidates' spouses, Graham said, but there are formulas for maximum contributions from other immediate family members (including children, parents, grandparents and siblings of the candidate, plus the spouses of those relatives). For a statewide race in a general election, the maximum aggregate contribution from immediate family members is calculated by multiplying the total number of registered voters in the state by $0.025.
At the federal level, Graham said, a candidate may receive unlimited contributions from the candidate's own funds, and from a candidate's portion of any assets that are jointly owned with a spouse. But any further contributions from a spouse or other family members are subject to a standard individual contribution limit of $2,700 per election.
Where to draw the line
Graham said governments may justifiably limit individual campaign contributions to prevent corruption and the appearance of corruption. But he said the U.S. Supreme Court ruled in a 1976 case, Buckley v. Valeo, that limits cannot be placed on candidates' contributions to their own campaigns.
"Candidates have a right to advocate for their own election, and there's not a risk of candidates corrupting themselves," Graham said, describing the court's logic.
That does not mean states have to extend contribution-limit exemptions all the way to the third degree of kinship, as South Dakota does. Graham said states could follow the federal government's example of exempting only the candidate's personal contributions, along with contributions from the candidate's portion of any assets that are jointly owned with a spouse.
The key to a reasonable exemption, Graham said, could be determining an appropriate cutoff for the definition of "immediate family." He said the corrupting potential of contributions from a candidate's spouse, parents or children is low, but the potential may increase with each additional layer of kinship.
"I think South Dakota’s exemption is probably a little broader than would be ideal," Graham said.