While They Make Our Laws, How Much Should We Know About Their Financial Interests?

An Analysis Of Other States’ Financial Disclosure Requirements For Elected Officeholders Finds That A New Proposal Would Leave Michigan Toward The Back Of The Pack When It Comes To The Amount Of Information Released.


Michigan Campaign Finance Network

LANSING (June 20, 2019) — If Michigan lawmakers reject a new proposal to shine light on their  financial interests, they’ll be nixing a plan that’s less strict than what their colleagues in most other states already face.

Currently, Michigan is one of only two states that don’t require state officeholders to file any type of public financial disclosure to screen against conflicts of interest. The other state is Idaho.

However, Michigan’s House Elections and Ethics Committee began taking public comments last week on an eight-bill package that would create a financial disclosure reporting system for candidates for state offices. The proposal has already faced some criticism, including negative comments from Senate Majority Leader Mike Shirkey, a Republican from Clarklake, who believes the requirements could keep some people from running for office.

To determine how the bills compare to what’s already happening in 48 states, the Michigan Campaign Finance Network (MCFN) analyzed the disclosure forms from the 48 other states and set up metrics to compare the requirements. The analysis found that the Michigan bills would provide less information to the public than most other states’ laws in three of four areas examined.

For example, the Michigan bills ask lawmakers to list sources of income of $5,000 or more. Most states have a lower threshold. The Michigan bills set no requirements for reporting outside perks, like gifts or free trips, accepted by lawmakers. Most other states use their disclosure forms to reveal at least some of this information.

The finding that Michigan’s proposal was less strict than most other states’ laws was not surprising to Rep. David LaGrand, a Democrat from Grand Rapids. LaGrand is the lead sponsor of the bills before the House committee. LaGrand, an attorney and businessman, said he’s working to take something that was a “fringe issue” in Michigan and pass it in the Legislature.

He added that while the bills may not go as far as he would want them to, “Politics is the art of making consensus,” he said.

How The Michigan Proposal Compares?

As of now, Michigan residents know little about the financial interests of the 148 state lawmakers making decisions for them. In 2016, MCFN partnered with Bridge Magazine to examine some of of the ways lawmakers' personal interests have overlapped with their legislative actions.

A House member who drove for the ride-sharing service Uber on the side once proposed an amendment that would have benefited Uber. In another case, a senator abstained from voting on a bill citing a potential conflict, but when the bill returned to the Senate for a follow-up vote, he voted on it.

As it stands, the bill package — House Bill 4642-House Bill 4649 — would require lawmakers and candidates for states offices to disclose the following:

— Sources of income in excess of $5,000 in the previous year;
— property they own, other than their primary residences, valued at $50,000 or more;
— stocks and other financial investments they have worth $10,000 or more;
— nonprofit board positions they hold if they are paid at least $1,000 in compensation;
— and immediate family members who are lobbyists.

These types of disclosure criteria are common among the 48 states that already require disclosures from lawmakers. Below is a sample of what Michigan's disclosure form could look like under the proposal. The disclosure is from LaGrand and shows LaGrand's information (click on the image to download it).



MCFN’s analysis found that most states, especially those that are similar in size to Michigan, require lawmakers to divulge more information than what's proposed for Michigan.

For instance, 39 of the 48 states with disclosures have a stricter threshold for income sources than $5,000:

Alabama; Alaska; Arizona; Arkansas; California; Colorado; Connecticut; Delaware; Florida; Hawaii; Illinois; Iowa; Kansas; Kentucky; Maine; Maryland; Massachusetts; Minnesota; Mississippi; Missouri; Montana; Nebraska; Nevada; New Jersey; New York; North Carolina; North Dakota; Ohio; Oregon; Pennsylvania; Rhode Island; South Carolina; South Dakota; Tennessee; Texas; Washington; West Virginia; Wisconsin; and Wyoming.

California requires reporting on all on levels of outside income. Many states, including Nebraska, New York, Missouri, Arizona and Alaska, use a $1,000 threshold. Illinois uses a $1,200 threshold. Kansas and Maine use a $2,000 threshold (click on the image below to see the full disclosure form for Kansas).



When it comes to connections to nonprofit organizations that could be raising money from donors with interests in public policy decisions, Michigan lawmakers would only have to disclose their positions on nonprofit boards if they make at least $1,000 in compensation through the position. Twenty-nine states require more general reporting of connections to outside groups, including nonprofits.

Indiana requires candidates for statewide offices to disclose any corporation, including nonprofits, for which the candidates or their spouses serve as officers. Massachusetts, New Jersey and West Virginia are examples of states that require their lawmakers to disclose any groups for which they serve as directors (click on the below image to see the West Virginia form).



Another area where Michigan’s proposal was much different than most other states’ laws was the disclosure of outside perks received by lawmakers.

The Michigan proposal doesn’t require any type of disclosure of gifts or travel reimbursements received by lawmakers. Twenty-nine states require some level of gift or travel reporting on their financial disclosures. Additional states, including Florida and Connecticut, require such disclosures on other forms.

The 29 states that require some level of reporting of gifts or travel reimbursements are:

Alaska; Arizona; Arkansas; California; Delaware; Georgia; Illinois; Indiana; Kansas; Kentucky; Maine; Maryland; Massachusetts; Missouri; Nebraska; Nevada; New Jersey; New York; North Carolina; Ohio; Oregon; Pennsylvania; Rhode Island; South Carolina; Tennessee; Texas; Virginia; West Virginia; and Wisconsin (click the below image to see the Texas disclosure form).



These disclosures are in addition to filings made by registered lobbyists about the perks they hand out. Often, groups that aren’t officially lobbyists fund trips for “educational” events for lawmakers. In Michigan, those trips currently go undisclosed (click the below image for the Pennsylvania dsclosure form).



However, MCFN has documented a group of Michigan lawmakers who were offered reimbursements for trips to a gaming conference in New Orleans in January 2019. Other groups of Michigan lawmakers were offered reimbursements for events in Hawaii and Puerto Rico to learn about the Electoral College. The sponsoring organization was connected to another organization that was lobbying for selecting the president by national popular vote.

Arkansas requires its lawmakers list all payments for food, lodging and travel that bear “a relationship” to their elected offices and exceed $250. Wisconsin requires disclosure of gifts that cost more than $50 and reimbursed expenses related to state government duties that exceed $50 (click the below image to see the full Wisconsin disclosure form).



LaGrand has been sharing an example of what a Michigan financial disclosure would look like under his proposal. The document looks similar to Missouri’s disclosure but doesn’t include Missouri’s requirement that lawmakers disclose lodging and travel expenses incurred outside the state and paid for by others.



LaGrand said the idea of requiring travel disclosures was “totally valid” but he wanted to focus the proposal on areas where lawmakers could be using their legislative actions to benefit their businesses or financial interests.

On the subject of disclosing investments, Michigan’s proposal was on par with or more stringent than most other states. Michigan’s proposal would require the disclosure of investments of $10,000 or more. Only 22 of the 48 states had a stricter threshold. Eight also used $10,000. Some states used a percentage of the ownership interest to determine whether the investment had to be disclosure so those standards weren’t comparable.

The 48 states with financial disclosure requirements have major differences in how much information they seek. For instance, the form in South Dakota is one-page. The form in Massachusetts is 42 pages.


What’s Ahead?

The House Elections and Ethics Committee held its hearing on the financial disclosure bills on June 12.

Currently, revisions are being made to the initial bills, LaGrand said, and he’s hopeful the committee will vote to send the bills to the full House in the coming weeks. LaGrand said he’s optimistic about the bills’ chances in the House, where a majority of the 110 House members signed on as co-sponsors.

In the Senate, things could be more difficult. There, Senate Majority Leader Mike Shirkey, a Republican from Clarklake, has said the disclosure bills could prevent some candidates from running for office and has described the bills as “a kabuki theater,” according to media reports.

LaGrand said while Shirkey has a sense of humor, he doesn’t believe Shirkey has been completely dismissive of the idea.

For now, LaGrand is focused on his arguments for the package: Lawmakers need to take action to restore the public’s faith in government; and 48 other states already require disclosures.

“The heart of the argument is the fact that 75 percent of voters think politicians are in the business of self-enrichment,” LaGrand said. “That’s the problem.”

* NOTE: As a nonprofit organization that works to inform the people of Michigan, we invite other publications to use our work as long as they credit the Michigan Campaign Finance Network.


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