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Michigan financial disclosure bills need teeth, authors admit

Penalties should include high fines, denial of office for non-filers, experts say

A consensus emerged from the Senate Oversight Committee’s meeting Wednesday: Michigan’s financial disclosure bills, as written, lack teeth.

At the outer bounds, a disclosure with known inaccuracies will cost a candidate or officeholder a $1,000 fine. And people who don’t file at all would face a maximum fine of only $500.

That contrasts with the possibility of a $50,000 fine and five-year prison stay for members of Congress, or candidates for Congress, who lie in their disclosures.

At the oversight committee Wednesday, lawmakers, officials and experts revealed other shortcomings in Senate bills 613 and 614.

Read them for yourself: Senate Bill 613 and Senate Bill 614

Secretary of State Jocelyn Benson, testifying via Zoom, said that Michigan is “among the worst states in the nation” when it comes to ethics and transparency in government.

“I hope this is just the beginning,” Benson said of the bills as written. She said the bills lack the “real penalties” of campaign finance laws applying to Congress or in other states.

“Michigan should look at disclosure requirements in other states, including at the federal level, that create real penalties for noncompliance, including fines, candidate disqualification, and even prosecution,” Benson said.

In Michigan, candidates can be disqualified from the ballot for having problems with campaign finance paperwork. Senate bills 613 and 614 carry no such penalties. Only fines.

Sen. Sam Singh, D-East Lansing, chairs the oversight committee. He agreed with Benson that greater penalties are needed for non-filers.

“I know we've had some discussion in regards to — as we do with campaign finance reports — that we would not allow someone to be seated if they’ve not completed their forms,” Singh said.

“Yes, that’s exactly the direction we should be looking at,” Benson responded.

The hearing started with three senators testifying: Jeremy Moss, D-Southfield, Ed McBroom, R-Waucedah Township, and Mark Huizenga, R-Walker.

Moss, who introduced Senate Bill 613, asked critics to “shake off some of your pessimism,” noting that it took years — and a constitutional amendment approved by voters — lawmakers in Lansing to take financial disclosure seriously.

“This is objectively a huge step forward,” Moss testified.

“We have firm deadlines,” Moss added, referring to the Dec. 31 deadline for lawmakers to pass disclosure legislation, as required by Proposal 1 of 2022.

McBroom, one of the bill sponsors, lamented that it took so long for the bills to arrive.

“It’s October. We should have brought these bills in January,” McBroom said. “And now we are confronted with really a lack of time to mature these bills through a legislative process in the rigorous way.”

Afterward, McBroom told Michigan Capitol Confidential that the financial disclosure bills fell victim to priorities more “partisan and political” at the start of the year.

McBroom said he understands the appetite for a more aggressive bill, especially one that would disqualify people who didn’t file disclosures.

“I think there’s some good discussion on that,” McBroom said.

Former State Rep. David LaGrand, D-Grand Rapids, also testified. He warned lawmakers that the bills, as written, have too many holes and loopholes.

“We cannot pass inadequate legislation,” LaGrand testified. “Misleading voters (by passing a watered-down bill) is not a step in the right direction. ... Do not pass this and think you’ll fix it later.”

McBroom disagreed, telling CapCon that “it’s easier to amend” a law than to pass one, and the important thing is passing the law.

LaGrand echoed Benson’s belief that the spousal disclosure requirements in the legislation are too limited. LaGrand said lawmakers or candidates could easily transfer their assets to a spouse to avoid disclosure.

LaGrand called the asset loophole big enough “to drive a Titanic through.”

“The spousal disclosure provision in the bills includes minimal information as to make it relatively ineffective,” Benson testified. “We should include not just the occupation, but also the employer in financial disclosure for spouses. The current language creates too many loopholes. If you're going to include spouses in this additional language in the legislation, then you should do so in a meaningful way or not at all.”

Singh closed the meeting by saying the committee would vote on the bills next week.

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.