IN A NEW ERA OF ‘GIFT’ DISCLOSURE, WILL LAWMAKERS STILL ENJOY LOBBYIST FREEBIES?
It looks like a whole new ballgame.
Secretary of State Jocelyn Benson issued an interpretive statement on Thursday which holds that the statutorily imposed $76 per month limit on ‘gifts’ by lobbyists to elected officials means exactly that — the limit is $76. Supposed ‘reimbursement’ by a public official to a lobbyist for ‘gifts’ above $76 does not modify that limit.
Benson’s ruling came in response to a request by Bob LaBrant, a retired attorney living in tiny Perry northeast of Lansing. Her ruling was preceded by a July 19 draft of what turned out to be her final edict on the subject. She gave anyone a chance over two weeks to dispute her preliminary assessment of the law, or to offer amendments. Only one party did, but it was inconsequential.
However, in the run-up to Benson’s preliminary July 19 draft, comments were offered by three lawyers from the prominent Detroit-based Honigman law firm saying that the regulated community of lobbyists, lobbyist agents, and lawmakers have relied on a certain kind of regulatory framework for more than 40 years (The lobby law went into effect in 1983 after the well-known Pletz v Austin case was decided by the Michigan Court of Appeals).
LaBrant agrees that gift limits have been a part of the lobby law since it was first enacted in 1978. He also observes that, in 1989, the lobby law was amended to provide that the $25 gift limit would be adjusted to reflect changes in the consumer price index (CPI). The original $25 gift limit is today $76.
The Detroit News investigated this issue. The newspaper examined legislator personal financial disclosure reports filed in May of this year and reported that a lobbyist agent from Governmental Consultant Services (GCSI) told DN reporters that it had been following a theory of reimbursement which permits her to give a legislator a ticket to a sporting event whose face value exceeds the gift limit. The lobbyist agent indicated to the News that her firm invoices the legislator for the amount over the gift limit.
Again, did GCSI, Honigman or any other lobby firm, association, or company in Michigan over the past four decades ever submit a request to the Secretary of State asking about the legality of a reimbursement practice? No.
- If the person in disagreement has standing, i.e., is an “interested person,” he or she or they can ask for a declaratory ruling on this issue from the SoS.2. If the requestor disagrees with whatever the SoS response turns out to be, they can challenge the ruling in court.3. OR they can go to the legislature, where they might find some sympathetic ears, and lobby for a bill to be enacted that legitimizes their theory of reimbursement overruling gift limits.
Benson’s ruling addresses three scenarios:
- Whether a lobbyist or lobbyist agent may provide a public official a ‘gift’ (ticket or otherwise) worth more than $76 with the understanding that the public official will reimburse them later for the difference.Benson’s interpretive statement makes it clear that the promise of future payment falls within the definition of ‘loan’ in the lobby law. Loans in the lobby law apply only in the normal course of business by a banking institution. The lobby law does not provide any ordinary course of business exception for lobbyists and lobbyist agents. Such a ticket exchange must be categorized as a loan and is therefore impermissible.2.Whether such a gift to a public official is allowable if the public official pays the differential cost of the ticket and the gift limit at or before the time the gift is accepted.Benson’s statement says that allowing the cost of a gift to be allocated across multiple parties, be they lobbyists or public officials, cannot circumvent the gift limit and in doing so will frustrate the purposes of the lobby law.
3. Is an offering of tickets allowable under lobby law, if the public official reimburses the lobbyist or lobbyist agent for the full price of the ticket prior to taking possession of the ticket?
Benson’s statement says that, under the plain language of the Act, a gift shall be considered a gift “unless consideration of equal or greater value is received therefor.” Once payment is received under this scenario, the transaction becomes a “purchase,” not a gift, and is no longer regulated by the lobby law. However, since lawmakers would be paying full price, it is unlikely there will be many takers since legislators have become accustomed to getting their gifts for free. In determining whether consideration of equal or greater value has been received, the Department looks to a ticket’s fair market value, not its face value. For example, a Detroit Lions ticket last season for a playoff game had a fair market value far higher than its face value. Since playoff tickets were and are so scarce, this option might be considered by those fanatical lawmakers with sufficient disposable income to ask a lobbyist to procure one for them.
This past June 5, Michigan Attorney General Dana Nessel, in response to a request from Benson, issued an Attorney General Opinion holding that public officials must report the date and size of a gift, and the name of the lobbyist or lobbyist agent providing the gift, on the public official’s personal financial disclosure filing, regardless of whether the gift was reported by the lobbyist or lobbyist agent on their required lobby disclosure statements.
This came after voters on November 8, 2022, with a 66% YES majority approved Proposal 1, a constitutional amendment to modify legislative term limits. But also in Prop 1 was language requiring the Legislature, for the first time in Michigan history, to enact during the 2023 session a personal financial disclosure law for public officials. In response to this requirement, the Legislature, in what many deemed a demonstration of supreme arrogance, cynically passed a bill that said gifts had to be reported by a public official ONLY if the gift was also disclosed by the lobbyist or lobbyist agent on their lobby disclosure statement. If the lobbyist did not report the gift, neither would the public official.
But Nessel’s opinion said the legislature’s personal financial law conflicted with the plain language of the 2022 constitutional amendment. Therefore, she said, that portion of the 2023 law implementing Proposal 1 was invalid. That means the public will now get to see which lobbyists have been giving which legislators gifts. Benson’s interpretive statement is unequivocal that the $76 gift limit means $76. Benson’s edict will be binding on the Department of State, unless overturned in court.
The interpretive statement could profoundly impact the Legislature’s culture. Lobbyists and lobbyist agents have operated in a culture where rules are ignored. Gifts have too often been distributed without adherence to gift limits.
Some lobbying firms over the years assign their lobbyist agents to distribute tickets to legislators and accompany those public officials to sporting events, concerts, theatre performances, or on the golf course. Entertainment is a key component used by some lobbyists to build relationships with legislators, especially those in their first term. Those interactions translate into more effective lobbying outcomes for their clients. Legislators respond to their calls, legislators meet with them, legislators come out to the lobby outside the legislative chamber to meet with them during session to discuss a bill, an amendment, or a strategy.
Legislators find in Lansing numerous opportunities to accept campaign donations, eat, drink, and be entertained by lobbyists. This may create over time a culture of entitlement by some lawmakers, but the new disclosure and enforcement of gift limits may lead to a cultural change at the State Capitol by both legislators and lobbyists.
One last bit of this that bears watching — Not every lobbyist or lobbyist agent enjoys a huge entertainment budget for tickets, concerts, and golf. Therefore, it’s possible that companies and associations NOT connected with a well-heeled multi-client lobbyist may actually have a comparatively better opportunity to have their concerns heard when the Legislature engages in public policy debates as the result of the recent AG opinion on disclosure and Benson’s interpretive statement on gift limits.
For those focused on draining the Lansing swamp, Nessel’s and Benson’s actions represent several small steps in the right direction.
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Section 19(1) of the Michigan Lobby Registration Act allows an interested person to request a “declaratory ruling” from the Department of State. The Department will issue a ruling only if a person has provided an actual statement of facts.
A declaratory ruling is binding ONLY on the Department and the requestor.
If the Department declines to issue a declaratory ruling, it MUST issue an “interpretive statement”. An interpretive statement is an informal response to a question that MAY be relied upon for general guidance but it is not binding on either the Department or the requestor.
Bob LaBrant actually accomplished VERY, VERY LITTLE. It is something that the lobbyists AND legislators in Lansing can laugh at and disregard until a law, court ruling, administrative regulation or declaratory ruling with ACTUAL TEETH is issued.
I have long laughed at the culture of corruption that dominates – and has dominated Lansing legislative politics – and resists actual change to correct their errant ways.
Nice try, Bob, but no cigar.
Thank you for this primer. I agree with you. What about the Minnesota Governor high school football coach, named to be the vice president with Kamala Harris?
Also, what about café standards and tariffs on auto companies moving their plants to Mexico in light of the Warren Truck Plant laying off 2400 employees on Friday ?!?
Nice article, Bill. And spot on. It will be fun to see how the lobbyists try and work their way around that. And which legislator(s) have been “skirting” the explicit language of the law. Too bad we did not have this PRIOR to the August primary. The cynic in me says this is deliberate, but that may just be my 4+ decades in state government influencing me.
Waiting on your evidence. If you’ve spent four decades you must have examples of this corruption, and if so show it to Dana and I’m sure she’ll follow up.
There have been numerous examples where controversies have existed in situations where something of value is bestowed on a legislator and the accusation that follows is that the lobbyist is trying to purchase influence. The authorities have been reluctant to enforce laws on the books when these situations have been complained of.
I was in Lansing in the 1980s when lobbyist Judy Augenstein was charged by the Ingham County Prosecutor with bribery of Representative Ed Giese in connection with her advocacy of the radar detector industry. She was eventually acquitted by a jury of wrongdoing, however the case brought unwanted attention to Michigan lobbyists and their tactics in seeking influence in the Lansing political arena as well as the conduct of legislators in their interactions with such lobbyists.
I believe a blanket ban of gifts to legislators is the best public policy..
When I was an employee of the State of Michigan, I couldn’t accept any gift of any sort from anyone. I have always been appalled at the corruption in Lansing that is winked at and pushed down the memory hole. Why can’t the Third Witch just do that?
Again, where’s the evidence that you claim? If so, go to the AG and she’ll follow up.
Sorry commenters and Bill, but I find your comments and conclusions to not only be factually incorrect but also inflammatory and unsubstantiated. Most lobbyists have abided by the Lobby Law faithfully and legally for forty years. You seldom see any of them charged with a violation even though the reporting requirements are arbitrary and capricious and seldom clear. This issue been talked to near death since 1978 but never really clarified.
Many of the lobbyists in town never assumed that the gift limit was more than whatever number was derived at over the years and it was common practice to seek reimbursement thirty years ago for any Face value over the annual CPI derived number. Lots of lobbyists charged recipients for the difference and required payment. Many years ago, hundreds of lobbyists quit messing with gifts altogether rather than as you suggest cutting corners . It’s a hell of a lot cleaner and simpler to skip gifts altogether and many quit dealing with gifts decades ago.
Never in the last 40+ years has anyone in the various SoS offices said that the so-called “Gift Limit” wasn’t a “Gift Limit” but rather what you now suggest is a overall limit to what ticket could cost, not what a lobbyist could pay for. All this revisionist history is just an insinuation because lobbyists are always the bad guys and gals and people like to ascribe all kinds of perceived evils in the system to them. Not too many people recognize that most lobbyists respect and abide by the values of good government because they are more respectful of the processes of democracy than anyone in the system. The constitutional republic we live in gives us a chance to make a good living only if we follow the laws and the attendant rules (which we do not create) and most do.
I suggest that the problem doesn’t rest with the lobbyists and have long maintained that if a lobbyist spends a dollar on a public official then they should report a dollar spent. That’s far more transparent than any AG or SoS has ever recommended and a hell of a lot simpler for the lobbyists in town. This law is so convoluted because the Interpretive Statements have always been so convoluted.
For instance, why would Food and Beverage be any different than a ticket to a game? We have a categorical difference in the statute that clearly differentiates Food and Beverage from Gifts both in monthly amounts and Annual calculations. Yet, no one says anything about that including Bob LaBrant or at least not that I’m aware of.
Yet, most lobbyists would tell you there’s really no difference. If public officials just reported every receipt under the Act it would change the focus of the Act and put the onus on the officials and take away the ambiguity. I suspect most of the lobbyists in town would be relieved at the change.
You have to grease wheels in Lansing to get anything. Why is hush-money a taboo subject?
Bill, Well Done article on a very esoteric subject., This comes when our Democracy is under attack by
Viscous Political predators who care only for themselves, Not we the People .
Stop being A Polichicken and write about the much more serious issues of our time !
“under attack by
Viscous Political predators who care only for themselves”
–The viscosity of politicians is a disgraceful scandal that just gums up the works of Democracy.
Hey Bill! Once again you put the focus on an issue that has the potential to be serious and game changing . . . assuming AG Nessel and SOS Benson can pull it off.
The companies I worked for while I was active had to live through the reality that the 3 martini and heavy hors d’oeuvre lunches were over with. Now, 40 years later, perhaps the political class may be waking to a brave new world of their own making.
As you say, “Legislators find in Lansing numerous opportunities to accept campaign donations, eat, drink, and be entertained by lobbyists. This may create [I contend, has created] over time a culture of entitlement by some lawmakers, but the new disclosure and enforcement of gift limits may lead to a cultural change at the State Capitol by both legislators and lobbyists.”
And “No one knows how widely that practice has been followed. Were invoices sent? Were reimbursement payments received? There is no evidence. Consequently, some surmise that this reimbursement is a made-up scheme that has no basis in law.”
So, my concluding thought is, why $25/$76? Why $25 in the first place? Why not, $0? Arbitrary? My skeptical cynicism within me says I doubt it. Or was there intent behind it? Tickets worth having, even then, were worth more than $25.
I suspect the creators of the ’78 lobby law (who was governor then?) required some non-zero value in order to,
1) I suspect the administration then, and now, may be licking their chops for an enforcement mechanism. An empire they can staff with patronage cronies so the opposition can’t skirt the threshold
2) Providing a wonderful gift for a prosecutor to persecute their opposition through law-fare
3) I suspect the conservative party has historically used lobbying as a main persuasion method and therefore will be placed at a significant disadvantage to their progressive opposition by this ruling. It would create a target rich environment for picking off more conservatives one by one.
Republicans had better learn to hang together because they are certainly hanging separately