With New Holes, Financial Disclosure and Term Limits Proposal Heads To November Ballot

For the first time some state officeholders would have to disclosure aspects of their finances. Legislators could serve longer in a single chamber of the body in exchange for 2 years off the overall limit.

By SIMON D. SCHUSTER

Michigan Campaign Finance Network

LANSING (May 11, 2022) — A proposal to require public financial disclosures from state elected officials and augment Michigan’s legislative term limits will be appearing before voters on the November ballot — albeit with weaker requirements than the original.

Michigan and Idaho are the only states with no financial disclosure requirements for elected officials. Without disclosures, it is more difficult watchdogs have little ability to scrutinize if an officeholder would personally benefit from legislation or a policy decision they make. 

This proposal seeks to change that. It would also allow legislators to serve a lifetime maximum of 12 years combined in either chamber of the legislature. That’s a longer limit in a single chamber but an overall reduction of the current 6 and 8-year maximums for the state House and Senate, respectively.

The proposed constitutional amendment the legislature approved largely reflects the petition a coalition called Voters For Transparency And Term Limits had been poised to circulate. That group cheered the development; the day before they held a press conference calling on the legislature to take action. It’s the closest Lansing has come to establishing financial disclosure requirements after decades of failed attempts.

There are significant differences between what the group proposed and what the legislature is sending to the ballot. In both, legislators and the state's executive branch officeholders must still publicly disclose their assets, sources of income, liabilities, positions held in companies and certain business arrangements. 

But this version of the proposal gives the legislature more control over what the final financial disclosure requirements will look like. That’s largely because it removed a requirement that the reports be at least as strict as congressional disclosures were removed, and leaves much unknown about how insightful the disclosures would actually be.

Rich Studley, one of the co-chairs of Voters For Transparency And Term Limits, said he approved of the legislature’s version, characterizing his own group’s initial proposal as onerous.

“Financial disclosure requirements for Congress are appropriately far more detailed,“ Studley said. “Other states that require financial disclosure tailor their reporting requirements to the more limited role of state government and have taken a similar approach to what was approved by the State House.”

Under the original petition, gifts or travel paid for by others would have to be reported. The version passed Tuesday limits the disclosure to what officeholders receive from lobbyists — and only if the lobbyist would have to report it under michigan’s lobbying law — a notoriously lax standard much of the paid-for travel in Lansing easily evades.

“Assuming the law is followed, there is no additional public information garnered by these two sections,” Eric Doster, an attorney deeply involved in Michigan politics, said.

Doster said he could see the benefit of public officials’ disclosures ”cross-checking” what lobbyists report, but noted it’s outright illegal for a lobbyist to give an officeholder a gift as defined under the law, making it unclear exactly what would be reported.

Steve Liedel, an attorney for Voters For Transparency And Term Limits, conceded the altered language means “unless the legislature broadens the enactment statute, there could be gifts from a non-registered entity that has no obligation to register that would not be reported.”

MCFN has documented numerous instances of legislators taking trips paid for by outside sources that were never reported under Michigan's lobbying disclosure law.

Sixteen payments for travel and lodging were disclosed in 2021 by three lobbyists. Michigan has more than 3,000 lobbyists actively registered in its system.

In 2020, just two payments by one interest group were reported. At the same time, a nonprofit controlled by then-House Speaker Lee Chatfield reported on a federal tax form spending more than $140,000 on travel for public officials. That disclosure doesn’t specify who funded the travel or who benefitted from the expenses. If Chatfield flew on the nonprofit’s dollar, it would have had to have been disclosed under the original ballot language, but not the version passed by the legislature Tuesday — the nonprofit isn’t registered under Michigan’s lobbying law.

Many legislators are connected to similar nonprofit accounts, which can accept unlimited amounts of money from any source and have broad latitude in how it’s spent.

Liedel characterized the proposal's requirements as a “floor” which the legislature could build upon through the legislation that’d be required to implement the amendment. A requirement to periodically disclose stock trades has also been removed.

In the House, the joint resolution squeaked by with the necessary two-thirds majority, getting 76 votes, three over the necessary two-thirds majority, with 28 representatives from both parties voting no. It later passed the House 26-6, one vote over two-thirds.

Rep. Abraham Aiyash (D-Hamtramck) was among the minority in the House voting against the proposal. He characterized the financial disclosure provisions “as a way to lure voters” to change term limits, which he opposes.

He said the financial disclosure requirements didn’t go far enough and that “the urgency in which this moved without much debate has also been concerning.”

“A lot of this is based on some handshake deals that we're gonna strengthen some of these proposals, but there's no guarantee that’s gonna happen,” Aiyash said in an interview. “That was the same argument that was made with auto insurance reform, and look at where we're at now.”

Still, Liedel found the amount of requirements preserved from the original initiative in the legislature’s version “surprising.” Even in this legislative session, packages of bills were introduced requiring public financial disclosure from most state officeholders. When those failed to gain traction, another package was introduced making the disclosures private, to be reviewed and policed for misconduct only by a committee of other legislators. That cleared the House but has been motionless in the Senate.

This proposal also has some requirements that go beyond what’s required at the federal level. State legislators would have to disclose the value of their home and how much credit card debt they have — something not required of members of Congress, Liedel said.

The legislature’s passage of the proposal is also a monetary boon to Voters For Transparency And Term Limits. They’ll no longer have to undertake a massive and costly signature collection effort to get on the ballot. The coalition ballot committee only reported raising about $150,000 as of the last filing deadline.

That money will instead be used to ward off attacks from the half of the proposal addressing term limits. U.S. Term Limits, a national nonprofit that aggressively attacks any attempts to loosen those restrictions on officholder released a statement denouncing the legislature’s actions.

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