Secretary of State
Easier for Voters. Better for Michigan.
Campaign Finance Reform
Secretary of State Terri Lynn Land
April 24, 2006
Michigan Campaign Finance: FULL, TIMELY DISCLOSURE
Putting public information where it belongs – at the voters’ fingertips.
Michigan’s efforts to promote timely, complete and effective disclosure have paid off. According to the Campaign Disclosure Project’s annual report "Grading State Disclosure," Michigan has ranked in the top 10 in campaign finance disclosure for the last three years. Michigan is second in the nation (tied with Rhode Island) for accessibility of campaign finance records, and is one of few states with searchable contribution and expenditure databases.
However, the 2004 presidential election sparked an upswing in voter participation and increased citizen demand for more information. In response, Secretary of State Terri Lynn Land is proposing a 10-point strategy that offers voters more access to the information needed to cast an informed vote. Her proposal brings greater transparency to Michigan’s campaign finance process and fortifies compliance efforts through additional enforcement tools.
Land’s initiative would build on the steps already taken to improve Michigan’s campaign finance process. These recent accomplishments include:
Mandatory electronic filing: Since January 2004, all campaigns and committees with contributions or expenditures of $20,000 or more are required to submit their campaign finance reports electronically. This information is immediately made available to the public. Prior to this, only 15 percent of filings were voluntarily filed electronically.
Improved electronic filing program: The Michigan Electronic Reporting and Tracking System (MERTS), an electronic filing program that committees use to report financial data, has been enhanced. It now easily pre-screens for missing or incomplete information, prompts the user through the filing process and improves the accuracy of the records.
Timely technical assistance: In the last presidential election, approximately 3,379 calls and e-mails were handled through the Bureau of Elections’ technical assistance helpdesk. In addition, departmental analysts fielded roughly 2,380 calls from candidates and committees requiring more in-depth assistance.
Easier for Voters. Better for Michigan.
A 10-Point Plan to Improve Campaign Finance in Michigan.
The following proposals put forth by Secretary of State Terri Lynn Land will make Michigan’s campaign finance process more open by requiring that contribution and expenditure disclosure is immediate and comprehensive. These wide-ranging reforms will simplify Michigan’s campaign finance laws and ensure even greater integrity and efficiency. Land believes it should be easier for voters to obtain information about the money that fuels campaigns and to determine which individuals and organizations are funding campaigns. This helps voters make truly informed decisions in the election process.
1 – Real-Time Disclosure
Create a "Real-Time" Reporting Structure. An effective campaign finance reporting system depends on the complete, accurate and timely disclosure of campaign finance activity. Current law requires campaign committees to periodically disclose the source and amount of contributions and expenditures. Land wants to improve the transparency of campaign financing by creating a "real-time" Internet reporting system. The Land proposal would use technology to display campaign finance information in a format that is readily accessible to voters. In particular, Land calls for:
2 – Stop Passing the Buck
Prohibit the Transfer of Funds between Committees. In the era of term limits, more candidates are transferring money raised for their current office to new committees created for seeking higher office, taking advantage of a special allowance in contribution limits. Existing law essentially allows savvy candidates to deposit the maximum campaign contribution from donors into their existing campaign committees, transfer those funds to new candidate committees, and solicit the same donors for additional contributions to the new committee. Land wants to prohibit fund transfers and require candidates to deposit money raised for their next campaign into a committee formed solely for that purpose. Incumbents who are term-limited or become candidates for different offices would be restricted to soliciting contributions for debt retirement and incidental expenses related to the office they hold.
3 – Eliminate Anonymous Underwriters
Require the Sponsors Of Issue Ads To Disclose. Land is concerned about the growing influence of "issue ads" that are not subject to disclosure under the Michigan Campaign Finance Act. Land believes the sponsors of these ads should identify themselves and reveal the sources of their funding. Her proposal includes new disclosure requirements for issue ads that are broadcast or disseminated within 60 days of an election. Ad sponsors would be required to submit an electronic report within 48 hours of the date on which the ad is first broadcast, published or otherwise disseminated–disclosing the name and address of the organization that paid for the advertising, the cost of the ad, and the name of the candidate or candidates targeted by the ad.
Most significantly, ad sponsors must report the source and amount of contributions used to finance issue ads. The penalty for failing to properly disclose an issue ad may include a maximum fine of $10,000 or the amount of the expenditure, whichever is greater.
4 – Update Laws to Reveal who is Responsible
Require Identifiers on All Communications Media. A basic objective of the Michigan Campaign Finance Act is the disclosure of who is paying for political advertisements and communications. Michigan law addresses conventional methods of advertising like newspaper and television by requiring identifiers and disclaimers that tell who is paying for the messaging. However, technology is emerging that allows for less conventional ways of advertising that Michigan law did not anticipate. These less conventional methods include the Internet, robotic calls and satellite media. To close possible loopholes, Land recommends that the Act be amended to include language that encompasses current and future media.
5 –End Confusion about PACs
Simplify the Definitions of Political Committees and Independent Committees. The terminology used to describe campaign finance activities confuses some voters. Currently, the terms Political Committee and Independent Committee are used in the Campaign Finance Act to mean Political Action Committees with different contribution limits. To minimize this confusion, Land recommends removing the terms Political Committee and Independent Committees from the Act and replacing them with "Political Action Committee" or PAC. If a committee meets certain requirements, it would be designated as a "Qualified PAC" and would be allowed to contribute at a higher limit.
The following are proposed requirements for committees seeking to be Qualified PACs:
Once notified by the committee that it has satisfied the "Qualified PAC" qualifications, the Bureau of Elections would add the designation "Qualified PAC" to the end of the committee’s name.
6 – One-Stop Shopping for Campaign Finance Info
Require All PACs to File with the Secretary of State. In Michigan, the majority of PACs file their campaign finance reports with the Secretary of State. Exceptions include independent and political committees that file with the county clerk’s office – as they only operate in a single county and support candidates whose districts are wholly contained within that county. This is an unnecessary separation that can hinder disclosure and lead to confusion. Land recommends that all PACs file with the state. This will provide one source for parties interested in following PAC spending and eliminate confusion as to what role PACs are playing in Michigan’s elections.
7 – Checks and Balances
Provide For Audit Authority. Under current law, it is possible for a committee to evade disclosure requirements by failing to fully reveal the amount of contributions received and expenditures incurred. Auditing – coupled with new committee identification requirements – would assist the department in determining whether committees are properly reporting all financial activity. Land’s proposal would give the department the authority to audit committee records "for cause" when enforcement action is contemplated or in progress, and allows a limited number of random audits each year.
8 – Provide the Tools for Effective Enforcement
Provide for Subpoena Power. To strengthen the department’s limited enforcement powers, Land recommends legislation allowing the department to issue subpoenas in appropriate cases to compel the production of records or testimony in connection with the investigation of campaign finance violations. Under Land’s proposal, investigators would obtain a subpoena from a circuit court. Failure to comply with a subpoena would result in a contempt charge.
9 – Ensure Compliance, Full Understanding
Candidates Should Attest They Know, Understand & Will Comply with Michigan’s Campaign Finance Act. One of the criticisms of our campaign finance laws is that violators rarely suffer any real penalties. It is true that some first-time violators of the statute are not prosecuted, as they have not "knowingly" violated the law. However, all violations of our laws must be taken seriously and all violators must be held accountable. To strengthen the Michigan Campaign Finance Act and allow for better enforcement, Land proposes amending the Act to include a declaration with the Statement of Organization certifying that the committee members are aware of the legal requirements and that any violations are knowing violations.
For effective enforcement, official notifications from the Bureau of Elections to the committees must be legally served on the committees. This can often be difficult when committees do not update the committee address information. Therefore, Land proposes to amend the Michigan Campaign Finance Act to require that committees provide an official mailing address and acknowledge that notifications sent to this address would be considered served regardless of the actual receipt by the committee.
10 – Fair Penalties for the Giver & Receiver
Prohibit Giving and Receiving of a Prohibited Contribution. A violation of Michigan’s Campaign Finance Act must be taken seriously. Some sections allow for only one-sided penalties. For example, corporations are prohibited from making contributions, but committees are not prohibited from receiving corporate contributions. It is important that all parties to an illegal transaction be held accountable. Therefore, Land recommends that all prohibitions and penalties apply to both the giver and the receiver of the illegal contribution. The violators – once notified by the Bureau of Elections of the illegal contribution – would be given 10 business days to return it.