Michigan Secretary of State Clarifies Guidelines and Places New Limits on Gift Giving to Lawmakers

The Michigan Secretary of State’s Office determined that a strategy used by lobbyists to put sports and concert tickets in the hands of legislators violates the law. In May, the press released an in-depth investigation on Michigan lobbyists, focused on the purported circumventing of the state’s ban on giving gifts valued over the $76 threshold to elected officials. The release of this information prompted a submission of a request for a declaratory ruling from the Secretary of State.

Overview of current law and issue raised:

• • Currently, The Michigan Lobby Registration Act prohibits registered Lobbyists and Lobbyist Agents from providing “gifts” to public officials that exceed the value of $76 in any one-month period.[1]
  • A “gift” is defined as a payment, advance, forbearance, or the rendering or deposit of money, services, or anything of value.
  • According to the evidence provided by the Detroit News, lobbyists have been regularly finding ways to bypass the $76 ban on gifts.[2]
    • • Lobbyists would provide tickets to sports games, concerts, charity events, etc. worth more than $76 and would privately send lawmakers letters asking for the value of the tickets over the threshold to be reimbursed.
      • As many of these arrangements were made in secret, it isn’t clear if the reimbursements were sent by the lawmakers.
      • As noted in our previous alert, elected officials were required to submit the first personal financial disclosure reposts in April of this year. Current officeholders were required to report gifts received from a lobbyist or lobbyist agent. Several lawmakers reported receiving tickets to events from lobbyists in 2023.

• • The new Interpretive Statement from the Secretary of State provides as follows:
    • • If a lobbyist provided a ticket to a lawmaker and asked for a reimbursement of the amount over $76 to come at a later date, the transaction would represent a loan.[3]
      • Such a loan provided by a lobbying firm would not be offered in “the normal course of business” and would be “impermissible.” Likewise, if a lawmaker paid the amount of the price for the ticket over $76 upfront, it would also violate the law.
      • State law provides no method for “changing the value” of an item provided to a lawmaker. “A reimbursement as contemplated for the value exceeding $76 does not in itself reduce the value of the gift but rather changes the value conferred onto the public official.”
      • Lawmakers would still be able to “purchase” tickets from lobbyists at their full fair market value, which might be different from the face value of the ticket.
  • In addition to the request regarding sports tickets, there was another submitted inquiry pertaining to whether a lobbyist or lobbyist agent can provide complimentary admission to an educational conference for a lawmaker to attend as part of his or her duties as a public official for an appearance at an event. The cost of the complimentary registration referenced in the ruling request was roughly $1,000, thus over the current “gift” limit.[4]
  • The Secretary of State provided the following clarification on this request:
    • • “In your request you state the conference admission costs ‘roughly $1,000’ and that a public official would be attending as part of ‘his/her duties.’ You make no reference to what these duties entail or what one might expect to pay to secure the services on the open market.”
      • In order to determine whether an item is an allowable gift under the Act, the Department of State turns to “a plain language analysis of the act.” Within the definition, the Act provides a gift shall be considered a gift: “unless consideration of equal or greater value is received therefore,” MCL 4.414(1).
      • Once the consideration of whether the “gift” is equal or of greater value has been received, the Department determines the value of the item on the open market, rather than by the face value of the item.
      • Based on the scenario presented, the Secretary of State states that “two factors must be known to determine whether the conference registration is considered a gift under the Act—the value of the complementary conference admission and the value of the public official’s appearance at the conference.”
      • If the conference admission costs “roughly $1,000” and a public official would be attending as part of “his/her duties,” “the proposed complimentary admission would be considered a gift under the Act and impermissible as there are no clarification on what these duties entail or what one might expect to pay to secure the services on the open market. Using the framework established above, it is not clear that the services offered by the public official are greater than or equal to the conference admission.”
  • The finalized Interpretive Statements for both requests can be found here. 

Dykema’s Government Policy team is closely monitoring this issue and advising its clients accordingly. The team is available to discuss any questions or concerns you may have in regard to current and future sports tickets, conference fees, disclosure of gifts, or other related interactions between lobbyists and public officials.

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[1] STATE OF MICHIGAN BUREAU OF ELECTIONS. (2023). THE MICHIGAN LOBBY REGISTRATION ACT 2024 Reporting Thresholds, fees and penalties. In STATE OF MICHIGAN BUREAU OF ELECTIONS. https://www.michigan.gov/sos/-/media/Project/Websites/sos/Lobby-Memos/Lobby-Thresholds.pdf?rev=5d603db3e1ec4f54a72680597605c24a&hash=44114B670E8A30157962BE657F069E07

[2] Mauger, C. (2024, July 23). Lawmakers' ticket perks on thin ice. The Detroit News.

[3] Benson, J. L. (2024). Letter from Joce Lyn Benson, Secretary of State, State of Michigan, to Robert LaBrant regarding Michigan Lobby Registration Act. https://www.michigan.gov/sos/-/media/Project/Websites/sos/CFR-DR-and-IS/20240713-LaBrant-DR.pdf?rev=5440f12ef872484a84c61d8459e43428&hash=541A775D0F18DAC9D38DE817B8E2B356

[4] Benson, J. C., Pallone, D., & Michigan Association of Health Plans. (2024). Interpretive Statement on Lobbyist Gift Limitations under the Michigan Lobby Registration Act. In Department of State, Department of State. https://www.michigan.gov/sos/-/media/Project/Websites/sos/CFR-DR-and-IS/20240713-MAHP-Interpretive-Statement-Draft.pdf?rev=847c785124aa4c4d8fce8868921d31f9&hash=065668AF9CC328434A94565913360431