May 20, 2008, Introduced by Senator SCHAUER and referred to the Committee on Campaign and Election Oversight.
A bill to regulate political activity; to regulate certain
candidates and state officials; to require certain financial
statements and reports; to prescribe the powers and duties of
certain state and local governmental officers and agencies; to
impose fees; to prescribe penalties and civil sanctions; and to
provide remedies.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the
"public financial disclosure law".
Sec. 2. As used in this act:
(a) "Broker" means that term as defined in section 3 of
title I of the securities and exchange act of 1934, 15 USC
78c(a)(4).
(b) "Candidate" means that term as defined in section 3 of
the Michigan campaign finance act, 1976 PA 388, MCL 169.203.
(c) "Candidate for state office" means a candidate for any
of the following offices:
(i) Governor.
(ii) Lieutenant governor.
(iii) Secretary of state.
(iv) Attorney general.
(v) State senator.
(vi) State representative.
(vii) Member of the state board of education.
(viii) Justice of the supreme court or judge of a court of
record.
(ix) Regent of the university of Michigan, member of the
board of trustees of Michigan state university, or member of the
board of governors of Wayne state university.
(d) "Charitable organization" means that term as defined
under section 2 of the charitable organizations and
solicitations act, 1975 PA 169, MCL 400.272.
(e) "Gift" means that term as defined in section 4 of 1978
PA 472, MCL 4.414, with the threshold value adjusted as provided
in section 19a of 1978 PA 472, MCL 4.429a.
(f) "Immediate family member" means a child residing in the
individual's household, a spouse of the individual, or a person
claimed by the individual or the individual's spouse as a
dependent for federal income tax purposes.
(g) "Income" means money or any thing of value received, or
to be received as a claim on future services, whether in the
form of a fee, salary, expense, allowance, forbearance,
forgiveness, interest, dividend, royalty, rent, capital gain, or
other form of recompense that is considered income under the
internal revenue code, 26 USC 1 to 9833.
(h) "Interested party" means an individual required to file
a report under this act or an immediate family member of the
individual.
(i) "Investment advisor" includes a person generally
involved as an investment advisor in the management or control
of trusts.
(j) "Principal residence" means that term as defined under
section 7dd of the general property tax act, 1893 PA 206, MCL
211.7dd.
(k) "Qualified blind trust" means either of the following:
(i) A trust as to which an interested party has a beneficial
interest in the principal or income, and that meets all of the
following requirements:
(A) The trustee of the trust and any other entity designated
in the trust instrument to perform fiduciary duties is a
financial institution, an attorney at law, a certified public
accountant, a broker, or an investment advisor who is
independent of and not associated with an interested party so
that the trustee or other person cannot be controlled or
influenced in the administration of the trust by an interested
party, is not and has not been an employee of or affiliated with
an interested party, is not a partner of or involved in a joint
venture or other investment with an interested party, and is not
a relative of an interested party.
(B) Each officer or employee of a trustee or other entity
who is involved in the management or control of the trust is
independent of and not associated with any interested party so
that the officer or employee cannot be controlled or influenced
in the administration of the trust by an interested party, is
not a partner of or involved in a joint venture or other
investment with an interested party, and is not a relative of an
interested party.
(C) Each asset transferred to the trust by an interested
party is free of any restriction with respect to its transfer or
sale.
(D) The instrument that created the trust provides for all
of the following:
(I) Except as provided in (III), the trustee, in exercising
his or her authority and discretion to manage and control the
assets of the trust, shall not consult or notify an interested
party.
(II) The trust shall not contain an asset that an interested
party is prohibited by law or regulation from holding.
(III) The trustee shall promptly notify the individual
required to file a report under this act and the secretary of
state when an asset transferred to the trust by an interested
party is disposed of and when the value of such an asset becomes
less than $1,000.00.
(IV) The trust tax return shall be prepared by the trustee
or a designee of the trustee and the return and any information
relating to the return, other than the trust income summarized
in appropriate categories necessary to complete the interested
party's tax return, shall not be disclosed to an interested
party.
(V) An interested party shall not receive a report on the
holdings and sources of income of the trust, except a report at
the end of each calendar quarter with respect to the total
cash value of the interest of the interested party in the trust
or the net income or loss of the trust and a report necessary to
enable the interested party to complete an individual tax return
required by law or to provide the information required by
section 4(1)(b), and that an allowed report shall not identify
any specific asset or holding of the trust.
(VI) Except for a communication that solely consists of a
request for distribution of cash or other unspecified assets of
the trust, there shall be no direct or indirect communication
between the trustee and an interested party with respect to the
trust unless the communication is in writing and relates only to
the general financial interest and needs of the interested
party, including, but not limited to, an interest in maximizing
income or long-term capital gain; the notification of the
trustee of a law or regulation subsequently applicable to the
individual required to file a report under this act that
prohibits the interested party from holding an asset, which
notification directs that the asset not be held by the trust; or
directions to the trustee to sell all of an asset initially
placed in the trust by an interested party that in the
determination of the individual required to file a report under
this act creates a conflict of interest or the appearance of a
conflict of interest due to the subsequent assumption of duties
by the individual. This provision does not require any
communication between an interested party and a trustee.
(VII) An interested party shall not attempt to obtain
information with respect to the holdings of the trust,
including, but not limited to, obtaining a copy of a trust tax
return or any information relating to the tax return, except as
authorized in this sub-subparagraph.
(ii) A trust that is not a blind trust under subparagraph (i)
if all of the following apply:
(A) The instrument that created the trust is amended to
satisfy the definition of a qualified blind trust under
subparagraph (i), or if the instrument does not permit
amendments, the trustee, the individual required to file a
report under section 3, and every other interested party agree
in writing that the trust shall be administered in accordance
with the requirements for a qualified blind trust under
subparagraph (i) and the trustee of the trust meets the
requirements of subparagraph (i)(A). A parent or guardian of an
interested party who is a dependent child may execute an
agreement under this subparagraph on behalf of the child.
(B) A copy of the instrument that created the trust,
excluding testamentary provisions, a copy of an agreement under
sub-subparagraph (A), and a list of the assets held by the trust
at the time of qualification as a qualified blind trust,
including the category of value of each asset as determined
under section 4(3), are filed with the secretary of state.
(l) "Secretary of state" means the secretary of state or the
designee of the secretary of state.
(m) "State official" means a holder of an office listed in
subdivision (c).
Sec. 3. (1) An individual who was a state official any time
during a calendar year shall file with the secretary of state by
May 1 of the following year a report that meets the requirements
of section 4. This subsection does not apply if the individual
was a state official only on the first day of the calendar year.
(2) An individual who is a candidate for state office and
has not already filed a report under subsection (1) covering the
preceding calendar year shall file with the secretary of state a
report that meets the requirements of section 4 within 30 days
after the earliest of the following dates, but not later than 11
days before the first election at which the individual's name
appears on the ballot as a candidate following that date:
(a) If the individual files a fee, affidavit of incumbency,
or nominating petition for the state office, the deadline for
filing the fee, affidavit of incumbency, or nominating petition
established by the Michigan election law, 1954 PA 116, MCL 168.1
to 168.992.
(b) If the individual is nominated at a political party
caucus or convention, the deadline for holding the caucus or
convention established by the Michigan election law, 1954 PA
116, MCL 168.1 to 168.992.
(c) The date on which the individual first receives a
contribution, makes an expenditure, or gives consent for another
person to receive a contribution or make an expenditure with a
view to bringing about the individual's nomination or election
to a state office.
(d) The date on which the individual forms a candidate
committee as a candidate for state office under section 21 of
the Michigan campaign finance act, 1976 PA 388, MCL 169.221.
(3) An individual who is a candidate for the office of
governor shall file with the secretary of state on June 15 of
the year in which the election for the office of governor will
be held a copy of the individual's federal tax returns for the 3
preceding calendar years. A social security number on a tax
return filed under this subsection may be redacted.
Sec. 4. (1) Except as provided in section 5, a report
required by section 3 shall include a complete statement of all
of the following:
(a) The full name, address, and occupation of, and the state
office held or sought by, the individual filing the report.
(b) Both of the following, as applicable:
(i) Each source, type, and amount or value of income received
during the preceding calendar year aggregating $200.00 or more
in value, excluding both of the following:
(A) Income from the individual's position as a state
officer.
(B) Income described in subdivision (d).
(ii) Each source of income earned by a spouse of the
individual during the preceding calendar year aggregating
$1,000.00 or more in value. If the spouse is self-employed in
business or a profession, only the nature of the business or
profession is required to be reported under this subparagraph.
(c) Both of the following, as applicable:
(i) Each source, recipient, date, and amount of a payment
made to a charitable organization in lieu of honoraria payable
to the individual during the preceding calendar year.
(ii) The source and amount of any honoraria received by the
spouse of the individual during the preceding calendar year.
(d) Both of the following, as applicable:
(i) Each source of dividend, rent, interest, and capital
gains income in an amount or with a value of $200.00 or more
received by the individual during the preceding calendar year,
and the type and category of value of the income.
(ii) Each source of dividend, rent, interest, and capital
gains income in an amount or with a value of $200.00 or more
received by an immediate family member of the individual during
the preceding calendar year and the type and category of value
of the income.
(e) The source, a brief description, and the value of each
gift received by the individual or an immediate family member of
the individual during the previous calendar year. A gift
received when the individual was not a state officer need not be
reported under this subdivision.
(f) Subject to subsection (4), both of the following, as
applicable:
(i) The identity and category of value of any interest in
property held by the individual during the preceding calendar
year in a trade or business, or for investment or the production
of income, with a fair market value of $1,000.00 or more as of
December 31 of the preceding calendar year, excluding both of
the following:
(A) A personal liability owed to the individual by a spouse
or by a parent, brother, sister, or child of the individual or
of the individual's spouse.
(B) A deposit of the individual in a personal savings
account aggregating $5,000.00 or less. As used in this sub-
subparagraph, "personal savings account" includes a certificate
of deposit or any other form of deposit with a bank, savings and
loan association, credit union, or similar financial
institution.
(ii) The identity and category of value of any interest in
property held by an immediate family member of the individual
during the preceding calendar year in a trade or business, or
for investment or the production of income, with a fair market
value of $1,000.00 or more as of December 31 of the preceding
calendar year. The following interests in property are not
required to be reported under this subparagraph:
(A) A personal liability owed to the immediate family member
by a spouse or by a parent, brother, sister, or child of the
immediate family member or of the immediate family member's
spouse.
(B) A deposit of the immediate family member in a personal
savings account aggregating $5,000.00 or less.
(C) An interest as to which the individual certifies that
all of the following are true:
(I) The interest of the immediate family member is the sole
financial interest or responsibility of the immediate family
member.
(II) The interest was and is not in any way derived from the
income, assets, or activities of the individual.
(III) The individual neither derives nor expects to derive
any financial or economic benefit from the interest.
(IV) Other than as stated in this sub-subparagraph, the
individual has no knowledge of the interest.
(g) Both of the following, as applicable:
(i) The identity and category of value of the total
liabilities owed by the individual to a creditor other than a
spouse or a parent, brother, sister, or child of the individual
or of the individual's spouse if the liabilities totaled
$10,000.00 or more at any time during the preceding calendar
year. The following liabilities are not required to be reported
under this subparagraph:
(A) A mortgage secured by real property that is the
principal residence of the individual or the individual's
spouse.
(B) A loan secured by a personal motor vehicle, household
furniture, or appliance that does not exceed the purchase price
of the security.
(C) A revolving charge account with an outstanding liability
of less than $10,000.00 at the end of the preceding calendar
year.
(ii) The identity and category of value of the total
liabilities owed by an immediate family member of the individual
to a creditor other than a spouse or a parent, brother, sister,
or child of the immediate family member or of the immediate
family member's spouse, if the liabilities totaled $10,000.00 or
more at any time during the preceding calendar year. The
following liabilities are not required to be reported under this
subparagraph:
(A) A mortgage secured by real property that is the
principal residence of the immediate family member or the
immediate family member's spouse.
(B) A loan secured by a personal motor vehicle, household
furniture, or appliance that does not exceed the purchase price
of the security.
(C) A revolving charge account with an outstanding liability
of less than $10,000.00 at the end of the preceding calendar
year.
(D) A liability as to which the individual certifies that
all of the following are true:
(I) The liability of the immediate family member is the sole
financial interest or responsibility of the immediate family
member.
(II) The liability was and is not in any way derived from
the income, assets, or activities of the individual.
(III) The individual neither derives nor expects to derive
any financial or economic benefit from the liability.
(IV) Other than as stated in this sub-subparagraph, the
individual has no knowledge of the liability.
(h) Both of the following as applicable:
(i) A brief description, the date, and the category of value
of any purchase, sale, or exchange by the individual of real
property, other than property used solely as a principal
residence, with a value of $1,000.00 or more during the
preceding calendar year. This subparagraph does not require the
reporting of a transaction that is solely between the individual
and his or her spouse or dependent children.
(ii) A brief description, the date, and the category of value
of any purchase, sale, or exchange by an immediate family member
of the individual of real property, other than property used
solely as a principal residence, with a value of $1,000.00 or
more during the preceding calendar year. This subparagraph does
not require the reporting of the following transactions:
(A) A transaction that is solely between the immediate
family member and his or her spouse or dependent children.
(B) A transaction as to which the individual certifies that
all of the following are true:
(I) The property interest of the immediate family member is
the sole financial interest or responsibility of the immediate
family member.
(II) The property interest was and is not in any way derived
from the income, assets, or activities of the individual.
(III) The individual neither derives nor expects to derive
any financial or economic benefit from the property interest.
(IV) Other than as stated in this sub-subparagraph, the
individual has no knowledge of the property interest.
(i) A brief description, the date, and the category of value
of any purchase, sale, or exchange of stocks, bonds, commodities
futures, or other form of securities of $1,000.00 or more during
the preceding calendar year. This subdivision does not require
the reporting of a transaction that is solely between the
reporting individual and his or her spouse or dependent
children.
(j) The identity of all positions held by the individual as
an officer, director, member, trustee, partner, proprietor,
representative, employee, or consultant of a corporation,
limited liability company, partnership, limited partnership,
limited liability partnership, or other business enterprise,
nonprofit organization, labor organization, or educational or
other institution other than the United States held during the
preceding calendar year, or, for the first report filed by an
individual, during the 2 preceding calendar years, or held on or
before the date of filing during the current calendar year. This
subdivision does not require the reporting of a position held in
a religious, social, fraternal, or political entity or a
position that is solely honorary.
(k) If the report is the individual's first report under
this act and if a person, other than this state, paid the
individual compensation of $5,000.00 or more in either of the 2
preceding calendar years, all of the following:
(i) Each source of the compensation.
(ii) A brief description of the nature of the duties
performed or services rendered by the individual for each source
of compensation. This subparagraph does not require the
reporting of information that is confidential as a result of a
privileged relationship, established by law, between the
individual and another person. This subparagraph also does not
require the reporting of information with respect to a person
for whom services were provided by a firm or association of
which the individual was a member, partner, or employee unless
the individual was directly involved in providing the services.
(l) The date of, parties to, and a description of the terms
of any agreement or arrangement with respect to any of the
following:
(i) Future employment of the individual by a person other
than this state.
(ii) A leave of absence during the individual's term of
office.
(iii) Continuation of payments by a former employer other than
this state.
(iv) Continued participation in an employee welfare plan
maintained by a former employer other than this state.
(m) The category of value of the total interest of the
individual in a qualified blind trust.
(2) Except as provided in subsections (5) and (6), an amount
or value reported under subsection (1)(d) shall be reported by
category as follows:
(a) $1,000.00 or less.
(b) More than $1,000.00 but not more than $2,500.00.
(c) More than $2,500.00 but not more than $5,000.00.
(d) More than $5,000.00 but not more than $15,000.00.
(e) More than $15,000.00 but not more than $50,000.00.
(f) More than $50,000.00 but not more than $100,000.00.
(g) More than $100,000.00 but not more than $1,000,000.00.
(h) More than $l,000,000.00 but not more than $5,000,000.00.
(i) More than $5,000,000.00.
(3) Except as provided in subsections (4), (5), and (6), an
amount or value reported under subsection (1)(f), (g), (h), (i),
and (m) shall be reported by category as follows:
(a) $15,000.00 or less.
(b) More than $15,000.00 but not more than $50,000.00.
(c) More than $50,000.00 but not more than $100,000.00.
(d) More than $100,000.00 but not more than $250,000.00.
(e) More than $250,000.00 but not more than $500,000.00.
(f) More than $500,000.00 but not more than $1,000,000.00.
(g) More than $1,000,000.00 but not more than $5,000,000.00.
(h) More than $5,000,000.00 but not more than
$25,000,000.00.
(i) More than $25,000,000.00 but not more than
$50,000,000.00.
(j) More than $50,000,000.00.
(4) For purposes of subsection (1)(f), if the current value
of an interest in real property or an interest in a real estate
partnership is not ascertainable without an appraisal, an
individual may report either the date of purchase and the
purchase price of the interest in real property or the state
equalized value of the real property. If the current value of
any other item required to be reported under subsection (1)(f)
is not ascertainable without an appraisal, the individual may
list the book value of a corporation whose stock is not publicly
traded, the net worth of a business partnership, the equity
value of an individually owned business, or, with respect to
other holdings, any recognized indication of value. If an
individual reports a value in a manner allowed by this
subsection, the individual shall include in the report a full
and complete description of the method used to determine the
value instead of specifying a category of value under subsection
(3).
(5) If income, an asset, or a liability of an immediate
family member of a reporting individual that is required to be
reported under this section has an amount or value greater than
$1,000,000.00, the categories under subsections (2) and (3) for
amounts or values greater than $1,000,000.00 need not be used.
The income, assets, and liabilities need only be categorized as
having an amount or value greater than $1,000,000.00. This
subsection does not apply to income, assets, or liabilities that
are held jointly with the reporting individual.
(6) Instead of specifying the category of the amount or
value of an item in a report under this section, an individual
may indicate the exact amount or value of the item.
(7) Information required to be reported under this section
shall include information with respect to the holdings of and
the income from a trust or other financial arrangement from
which income is received by, or with respect to which a
beneficial interest in principal or income is held by, an
individual required to file a report under section 3 or an
immediate family member of the individual.
Sec. 5. A report under section 4 may omit any of the
following:
(a) Information required to be reported under the Michigan
campaign finance act, 1976 PA 388, MCL 169.201 to 169.282.
(b) An item that concerns a spouse who is living separately
and apart from the reporting individual with the intention of
terminating the marriage or maintaining a legal separation.
(c) An item that concerns income or obligations of the
reporting individual arising from dissolution of the
individual's marriage or a permanent legal separation from the
individual's spouse.
(d) The holdings of or the source of income from the
holdings of a qualified blind trust.
(e) The holdings of or the source of income from the
holdings of a trust that was not created directly by the
reporting individual or an immediate family member of the
individual, if the individual and the individual's immediate
family member have no knowledge of the holdings or source of
income.
(f) Financial interests held by a widely held investment
fund, whether the investment fund is a mutual fund, regulated
investment company, pension or deferred compensation plan, or
other investment fund, if both of the following apply:
(i) The investment fund is publicly traded or the assets of
the fund are widely diversified.
(ii) The reporting individual neither exercises control over
nor has the ability to exercise control over the financial
interests held by the investment fund.
(g) Financial interests in or income derived from a
retirement system under title 5 of the United States Code,
including, but not limited to, a thrift savings plan under 5 USC
8431 to 8440f, or a retirement system maintained by this state
for officers or employees of this state.
(h) Benefits received under the social security act, chapter
531, 49 Stat. 620.
Sec. 6. (1) An individual required to file a report under
section 3 shall file both of the following with the secretary of
state within 30 days after a qualified blind trust is
established:
(a) A copy of the executed instrument that created the
qualified blind trust, not including provisions that relate to
the testamentary disposition of the assets of the qualified
blind trust.
(b) A list of the assets that were transferred to the
qualified blind trust, including the category of value of each
asset as determined under section 4.
(2) An individual required to file a report under section 3
shall, within 30 days of transferring an asset other than cash
to a previously created qualified blind trust, notify the
secretary of state of the identity of each asset transferred and
the category of value of each asset as determined under section
4.
(3) Within 30 days of the dissolution of a qualified blind
trust, an individual required to file a report under section 3
shall file with the secretary of state a list of the assets of
the qualified blind trust at the time of the dissolution and the
category of value of each asset as determined under section 4.
(4) A trustee of a qualified blind trust shall not knowingly
and willfully, or negligently, do any of the following:
(a) Disclose to an interested party any information with
respect to the qualified blind trust that may not be disclosed
under this act.
(b) Acquire any asset the ownership of which is prohibited
by the instrument that created the qualified blind trust.
(c) Solicit advice from an interested party with respect to
the qualified blind trust if the solicitation is prohibited by
this act or the instrument that created the qualified blind
trust.
(5) An individual required to file a report under section 3
shall not knowingly and willfully, or negligently, do any of the
following:
(a) Solicit or receive information with respect to a
qualified blind trust of which he or she is an interested party
that may not be disclosed under this act.
(b) Fail to file information required to be filed by this
section.
Sec. 7. The secretary of state shall do all of the
following:
(a) Prepare and make available appropriate forms and
instructions for the reports and filings required by this act.
(b) Receive reports and filings required by this act.
(c) Do both of the following with respect to a report or
filing required to be filed under this act:
(i) As soon as practicable, but not later than the end of the
business day on which the report or filing is received, make the
report or filing or all of the contents of the report available
without charge to the public on the internet at a single website
established and maintained by the secretary of state.
(ii) Not later than the third business day following the day
on which the report or filing is received, make the report or
filing available for public inspection and reproduction during
regular business hours.
(d) Promulgate rules and issue declaratory rulings to
implement this act pursuant to the administrative procedures act
of 1969, 1969 PA 306, MCL 24.201 to 24.328.
(e) Conduct investigations as necessary to determine if
there is reason to believe a violation of this act occurred.
Investigations shall be conducted pursuant to the administrative
procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328.
Sec. 8. (1) A citizen of this state may file a complaint
with the secretary of state alleging a violation of this act.
The secretary of state, upon receipt of a complaint under this
subsection, shall investigate the allegations as provided in
section 7.
(2) If the secretary of state believes a violation of this
act has occurred, the secretary of state shall initiate an
investigation of the potential violation.
(3) Unless the violation was by the attorney general, if the
secretary of state, upon investigation, determines that there is
reason to believe a violation of this act occurred, the
secretary of state shall forward the results of the
investigation to the attorney general for enforcement of this
act. If the secretary of state, upon investigation, determines
that there is reason to believe that the attorney general
violated this act, the secretary of state shall forward the
results of the investigation to the prosecuting attorney for
Ingham county for enforcement of this act.
(4) The attorney general or, if the attorney general is the
individual who is alleged to have violated this act, the
prosecuting attorney for Ingham county shall enforce this act
against an individual who violates this act.
Sec. 9. (1) An individual who fails to file a report as
required under this act shall pay a late filing fee not to
exceed $10,000.00, determined as follows:
(a) Fifty dollars for each of the first 3 business days that
the report remains unfiled.
(b) One hundred dollars for each of the next 7 business days
after the first 3 business days that the report remains unfiled.
(c) Two hundred fifty dollars for each business day after
the first 10 business days that the report remains unfiled.
(2) An individual required to file a report under this act
who knowingly files an incomplete or inaccurate report is guilty
of a misdemeanor punishable by imprisonment for not more than 90
days or a fine of not more than $1,000.00, or both.
(3) An individual required to file a report under this act
who fails to file 2 reports, if both of the reports remain
unfiled for more than 30 days, is guilty of a misdemeanor
punishable by imprisonment for not more than 90 days or a fine
of not more than $1,000.00, or both.
(4) A default in the payment of a fee or civil fine due or
ordered under this act, or an installment of the fee or fine,
may be remedied by any means available under the revised
judicature act of 1961, 1961 PA 236, MCL 600.101 to 600.9947.
Enacting section 1. This act takes effect June 1, 2009.