A State Of The City Address That Entangles Public Resources, Fundraising And An Endorsement

Warren Mayor Holds State Of The City Address That Doubled As A Fundraiser For A Political Action Committee

By CRAIG MAUGER
Michigan Campaign Finance Network

About an hour into Warren Mayor James Fouts’ 2016 State of the City address, he turned to highlight a member of his city council. This particular council member is also a candidate for the Michigan House.

Councilman Patrick Green “is likely to be one of our more outstanding state representatives,” Fouts told the crowd estimated at 470 people “If that’s an endorsement, so be it. It is an endorsement.”

A bit earlier in the speech, Fouts also instructed the crowd, “We need to renew the police and fire millage.”

How do we know these statements were part of the speech? Well, for weeks, video of the speech has been posted the homepage of Warren’s official website.

That's one example of why Fouts’ 2016 State of the City address is still a topic of conversation in Macomb County a month later. It was an event that raised thousands of dollars for a state political action committee (PAC) while seeming to entangle public resources in the process.

The State of the City address in Warren occurred at noon on April 7 at the Italian restaurant Andiamo.

According to a notice that allegedly ran in city water bills, the cost of a ticket to the event was $40 and those interested in attending were directed to call the mayor’s office at 586-574-4520. The mayor’s office also issued an official city press release about the event that listed the mayor's office as the official contact.

While it may seem like the speech was an official city government event, it was actually put on by the Macomb Business United PAC. Proceeds from tickets and sponsorships went to the PAC, said its treasurer, Gust Ghanam. Ghanam told the Macomb Daily that money raised at the event would go to support efforts to renew the city’s police and fire millage. He stood by that statement in an interview this week with MCFN.

The PAC’s most recent campaign finance filing showed that it raised $20,510 on April 7, the day of the address and spent $8,652 on renting the Andiamo banquet hall. Of that amount fundraised, about $2,640 seemed to come from a handful of corporations — despite the fact that corporations can’t legally give to independent PACs that can directly support political candidates, like Macomb Business United.

Ghanam said he wasn’t aware that the PAC had taken corporate contributions, and he added that he would wait for the Secretary of State to flag them if it did. On a past occasion, in November 2015, the Secretary of State’s Office highlighted more than $8,000 in improper corporate contributions to Macomb Business United.

It also appears that city employees were involved in creating a video presentation to go along with the speech that Fouts gave at the fundraiser. According to emails obtained through the Freedom of Information Act, employees of the city’s communications department worked over a period of weeks to put footage together. The videos included a building demolition and repaired roads in the city.

On Wednesday, April 6, Tracey Perry, communications director of the city, wrote in an email that she had “been really buried with the State of the City.”

On March 16, Perry sent an email to Warren Police Commissioner Jere Green, requesting a ride-along for a cameraperson to get footage for the State of the City. The ride-along would take a “few hours,” she said in one email.

“This is for his State of the City presentation,” she wrote specifically in another email.

On March 30, someone, whose name was redacted from the documents, sent an email to the mayor’s office asking about where to get tickets for the State of the City address.

A day later, the mayor’s office responded, “Please contact Gus at (redacted email address) for ticket information.”

In addition to helping gather footage for the event, the Warren Communications Department recorded the entire address. According to the city’s budget, the department is under the mayor, and the government TV operation is funded by franchise fees received from Comcast, Wide Open West and AT&T. It operates two channels of government access cable television programming, according to the budget.

Ghanam said Warren TV — as the TV operation is known — has always recorded the State of the City address, which he asserted previously occurred at events that benefitted the Macomb County Chamber of Commerce’s PAC. Up until 2016, the Macomb County Chamber had helped put on the annual State of the City in Warren.

But Grace Shore, CEO of the Macomb County Chamber of Commerce, said Ghanam’s statement was false. While in previous years the chamber sold tickets, any money that was made off the event went to the chamber’s general operations, Shore said. On top of that, the chamber’s PAC has been dormant, she said.

“There were several years that we ran a deficit and actually, the event cost us money,” Shore said of previous State of the City addresses.

While there are some exceptions, Michigan law generally prohibits public bodies, like the City of Warren, from making campaign contributions and expenditures that support candidates or ballot proposals.

In 2005, the Michigan Secretary of State’s Office issued an interpretative statement that specifically included in the prohibitions the use of public resources “to create and maintain links to web sites, organizations, commentary or editorials that expressly support or oppose candidates or ballot questions if the public body does so for the purpose of influencing the outcome of an election.”

That could cause problems for the City of Warren, which has maintained footage of the State of the City address, which included an apparent endorsement of a candidate, Patrick Green, on its website for weeks now.

MCFN reached out to Fouts and Perry, the communications director, about the situation. Neither responded to requests for comment.

Ghanam said he believes the law was followed and he labeled criticism of the event as an attempted “political assassination."

“I made sure I followed every rule because I knew it would be scrutinized,” he said.

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Press Release 2016 News