Posted: September 20, 2024 3:14 PM

The Bureau of Elections earlier this summer sent letters to former House Speaker Lee Chatfield's campaign and political action committees with hundreds of potential problems with past filings.

In the letters, the bureau said it reviewed every report filed with the Department of State by committees associated with Chatfield, who served from 2015-20, and compared reports line-by-line with bank records obtained by the Department of Attorney General.

Attorney General Dana Nessel earlier this year charged Chatfield, a Republican of Levering, who was House speaker during the 2019-20 term, with 13 felonies related to the misuse of nonprofit and campaign finance funds.

The bureau's review "revealed significant discrepancies that impacted all of the committees associated with Lee Chatfield for State Representative," a letter said.

Chatfield had a candidate committee and four independent political action committees registered with the Department of State.

The letters, sent on July 3, 2024, give Chatfield 15 business days to respond to the hundreds of discrepancies found by the bureau. The department will then determine if there is reason to believe a violation of the Michigan Campaign Finance Act occurred, the letters said.

Chatfield's attorney did not immediately return a request for comment. Chatfield has pleaded not guilty to the charges filed against him.

The errors and omissions flagged by the bureau include thousands in undisclosed contributions and expenditures, prohibited expenditures, missing expenditures, undisclosed fundraising events and more.

Specifically, some of the flagged items include payments to Chatfield family members that the bureau found to clear the bank account but not included in campaign finance reports. Others included payments to Victor Strategies, owned by Rob and Anne Minard, who worked for Chatfield's campaign and in his official office. The bureau said they were improperly reported as incidental office expenses.

Cash withdrawals from ATMs in Las Vegas, Neveda, were also flagged as undisclosed and prohibited expenditures.

During his time in office, Chatfield was a prolific fundraiser using his official state campaign finance accounts.

Chatfield operated a traditional candidate committee but then multiple leadership committees, which allowed him to send more money to the House Republican Campaign Committee and his GOP colleagues.

The former speaker also started the trend of operating multiple leadership PACs, which allowed him to contribute more funds to the HRCC than would have been allowed if only operated one (See Gongwer Michigan Report, July 29, 2019).

At one point in 2020, Chatfield amassed more than $800,000 across his committees, which he spent down considerably leading up to the election that year.

Chatfield also reported several instances of using campaign funds to pay wages to members of his family. In 2019, a Chatfield spokesperson said members of Chatfield's family did part-time work to help the team.

Chatfield's wife, Stephanie Chatfield, has also been charged – and pleaded not guilty – to two felonies related to the misuse of political funds. The charges allege that she was aware of and monitored improper transfers with the aim of assisting the conspiracy.

Posted: August 8, 2024 11:27 AM

The potential for the federal government to reschedule marijuana presents a host of opportunities for improvements in state industries across the country, but it will do little good if there isn't a clear, whole-of-government approach to implementation and enforcement, the Cannabis Regulatory Agency said last month.

In May, President Joe Biden announced his administration planned to move marijuana from a Schedule I substance to a Schedule III substance, a less restrictive category. Cannabis being classified as a Schedule I substance has long been criticized by advocates, particularly as states have allowed the use of the drug both medically and recreationally.

If the drug is reclassified, it will potentially allow the federal government to standardize some regulations and allow for marijuana businesses to access things like traditional banking and bankruptcy protections.

However, several federal agencies would have hands in a federally recognized cannabis market and would need to agree on the approach if the drug is rescheduled, otherwise it could do more harm than good, the Cannabis Regulatory Agency said in comments filed in July.

"The licensees, caregivers, patients, and advocates here in the state of Michigan have invested a tremendous amount of time and energy in developing the best cannabis industry in the country," CRA Executive Director Brian Hanna said in a statement. "As we stand at an important crossroads with the possibility of a federal rescheduling of marijuana, the CRA wanted to make it very clear in our public comment that rescheduling will do little good if the federal government fails to provide clear and robust whole-of-government guidance on the implications of the rescheduling. I stand ready to testify at the federal level, as needed, to share the progress we have made in building a robust regulatory program that has made Michigan the national model for stimulating business growth while preserving safe consumer access to cannabis."

In its comments, the CRA said rescheduling the drug could better serve both consumers and businesses by standardizing things like the packaging of products and allowing for "proper" taxation of businesses and products.

"Without clear guidance from the federal government, the tax system would remain convoluted and businesses would continue to face obstacles in claiming deductions and credits that are standard for other industries," the comments said. "By aligning federal and state laws through rescheduling and clear communication, the federal government can ensure transparency in financial reporting and maximize revenue generation from the burgeoning marijuana industry, benefiting both businesses and the broader economy. If marijuana is rescheduled, the U.S. Department of the Treasury should issue clear guidance about the implications of the rescheduling on commercial medical and adult-use marijuana businesses with respect to banking services and taxation."

The federal government should also clearly communicate what requirements it would have for medical marijuana if it were a Schedule III drug, the CRA said. Currently, medications that are in the same class have restrictions on the number of prescriptions allowed during a set time period and require increased paperwork. Other drugs in the same class also don't have adult-use programs like marijuana does, the agency noted.

"A whole-of-government approach will be critical to successfully communicating with state

regulators, marijuana businesses, patients, and consumers the expectations for how

rescheduling will impact the market," the CRA said. "The decisions made on this point will have far-reaching implications for the many other sectors that are impacted by marijuana's current status as a schedule I drug."

Given the widespread implications of rescheduling, the federal government should seek out advice from state regulators when determining how a rescheduling should be implemented if it moves forward.

"For more than half a century, efforts to change how the federal government views marijuana and treats those who grow and consume it fell on deaf ears," the CRA comments said. "In the absence of federal action, states took it upon themselves to gain knowledge and expertise and to build robust regulatory programs that ensure consumers have access to safe products. The federal government now has a once in a generation opportunity to make a meaningful, paradigm altering change in how marijuana is viewed in this country. The CRA urges the DEA to act wisely and responsibly to ensure this opportunity is not lost."

Posted: July 11, 2024 3:58 PM

The distributors administering the 10-cent deposit for cans and bottles would be eligible for a tax credit that is estimated to total $20 million across all distributors under a bill discussed in a House panel on Tuesday.

HB 5546 would create an individual and corporate tax credit for distributors that originate deposits on beverage containers. A similar tax credit has existed in the past with its most recent demise coming in 2011 through the wholesale tax changes made under then Governor Rick Snyder.

The refundable tax credit under the bill would equal a half-cent per returnable container sold during the tax year. The amount would be automatically adjusted for inflation. The estimated cost, according to the House Fiscal Agency, is $20 million annually, which would come from the General Fund.

Rep. Will Snyder (D-Muskegon), the bill sponsor, said the task distributors undergo to make the bottle deposit system work is complex and expensive.

"The amount of containers a year sold is somewhere around 4 billion containers a year. When the bottle bill was originally enacted, distributors received the dimes for containers that were not returned, known as unclaimed deposits," he said. "This funding allowed distributors to invest in infrastructure and helped offset operating costs. Over time, this money has been diverted to other areas."

Snyder said the bill, which has 50 co-sponsors, would allow reinvestment to maintain infrastructure and ensure the system operates efficiently.

Brett Visner, with the Michigan Beer and Wine Wholesalers Association, also supported the bills.

Visner said the total cost of the deposit system for distributors is about $60 million, so the $20 million tax credit doesn't offset all of the costs.

"Distributors do an excellent job and we're really proud of our members for how they run the system," Visner said. "It is efficient, effective. But it's expensive. It's expensive and investment is needed. And that's what this legislation is all about. It's about sustained investment in the bottle bill operations to make sure that it continues to function."

The Department of Treasury opposes the bill.

Posted: June 14, 2024 1:09 PM

The reason the other post-employment benefits portion of teacher retirement fund is fully funded is because of sacrifices educators have made and the funds should be put toward reducing their costs, school groups said during a press conference on Wednesday.

A coalition of school groups continues to hammer the Legislature and Governor Gretchen Whitmer about a budget proposal that would divert $670 million from the state's contribution to the other post-employment benefits in the Michigan Public School Employees' Retirement System toward other School Aid Fund priorities.

The groups instead want to see that $670 million used to reduce its payroll contribution toward MPSERS and eliminate the requirement for some teachers to pay 3 percent of health care costs.

This week, the pressure has intensified as the groups are tying their opposition to an economic development package that would set a dedicated funding stream toward corporate incentives, housing, transit and other community improvements for the next decade.

The coalition of groups that supports traditional public schools traditionally aligns with Whitmer and Democrats, making for a showdown between allies, particularly considering the Michigan Education Association – long a top supporter of Whitmer and the Democratic caucuses – is part of the coalition.

House Appropriations Committee Chair Rep. Angela Witwer (D-Delta Township) told reporters Wednesday that lawmakers "will always work with our teachers."

A Whitmer spokesperson on Tuesday panned the school group's opposition as "misinformation," and said the governor has been a staunch ally for students and teachers.

"The fact is every penny remains in the School Aid Fund, and we are re-investing the additional $670 million in supporting children's education and boosting teacher paychecks, which remains one of our top priorities," Stacey LaRouche said.

The complaint from school groups is that while the money would remain in the School Aid Fund, it could go toward categoricals like preschool, community college tuition aid, projects at specific districts and many other programs instead of going directly into K-12 school operations.

MEA President Chandra Madafferi referenced a recent report that said the state's inflation-adjusted teacher salary fell by 20.6 percent from 1999 through 2021, much larger than the national average of a drop of 4.2 percent.

Madafferi and the other groups are asking the Legislature to continue paying the $670 million and reduce what the schools pay to MPSERS so they can reduce the payroll costs they send to the fund by roughly 7 percent.

"Using the $670 million previously earmarked for paying down the now cleared debt to instead support student learning and educator compensation would return an average of $500 per pupil to school districts," she said. "And educators would no longer be required to pay the 3 percent health care contribution."

Peter Spadafore, executive director of the Michigan Alliance for Student Opportunity, said for too long the School Aid Fund has been used as a "supplemental piggy bank" for the General Fund.

The Legislature is considering legislation that would continue funding the Strategic Outreach and Attraction Reserve Fund for a decade though the school groups are calling for a pause on those conversations.

Referencing the Tuesday letter, he said the school groups are "agnostic" on the economic development policy being suggested by the Legislature.

"We are urging the Legislature not to adopt any long-term spending plans, particularly multibillion dollar ones, that would put undue pressure on the General Fund and squeeze more School Aid Fund dollars into General Fund programs," he said. "So it's a link that is there because of the fungibility of the School Aid Fund to the General Fund. And if we could fix that fungibility issue, I think that that creates a different conversation. But right now, we're urging caution on any major spending plan, regardless of funding source, until we're sure those dollars are going back to the classroom."

Witwer, referencing the long-term spending of the current economic development proposal, said she hasn't read the bills yet and she assumes changes will be made.

On the budget proposal being considered, Witwer said she isn't sure if it will be a problem in the Senate. But Senate Minority Leader Aric Nesbitt (R-Porter Township) in a statement Wednesday indicated the Senate GOP is considering withholding immediate effect based on the retirement fund shift.

Republicans have also been critical of SOAR and the broader economic development policy under Democratic control.

"We can protect teacher retirements by paying down MPSERS debt by an additional $670 million and we can invest $600 million more directly into classrooms by reducing schools' MPSERS contribution rate as education groups have called for if Democrats abandon their latest corporate welfare scheme," Nesbitt said. "Senate Republicans are ready to provide immediate effect to an education budget that puts tax dollars into improving Michigan's woeful educational outcomes rather than the stock dividends of Fortune 500 companies. Let's put classrooms over corporations."

Posted: April 25, 2024 11:00 AM

Two of Rep. Lee Chatfield's brothers have been hired into the House of Representatives to work in member offices and caucus services.

Paul and Aaron Chatfield, two younger brothers of Lee Chatfield (R-Levering), a top ranking member of the House Republican caucus as speaker pro tempore, key committee chair and close ally of House Speaker Tom Leonard, were hired into the offices of Rep. Sue Allor (R-Wolverine) and Rep. Aaron Miller (R-Sturgis), respectively, at the beginning of the term.

Friday is Paul Chatfield's last day in Ms. Allor's office as he heads to Caucus Services, a team led by Robert Minard and former Rep. Pat Somerville. Mr. Minard formerly worked in Lee Chatfield's legislative office as well.

Ms. Allor said she was not approached by Lee Chatfield before hiring Paul Chatfield. She said she met him while campaigning and he expressed an interest to her about working in a legislative office. Ms. Allor said there was no contact between her and Lee Chatfield regarding the hiring decision.

Lee Chatfield did not return a request for comment on this story.

Mr. Miller also said he knew Aaron Chatfield from campaigning, and Lee Chatfield mentioned to him that Aaron was interested in working in a legislative office at the start of the term.

Mr. Miller said Aaron Chatfield submitted an application and went through the interview process normally.

"Lee and I are obviously very close. I will admit that to anybody," Mr. Miller said. "But (the hiring) has not led to any uncomfortable situations."

Mr. Miller said he and Aaron Chatfield do not discuss policy and "inside baseball."

In the House and Senate, members cannot hire their own relatives, though the Senate rules include the caveat that the majority leader can make exceptions. The human resources policy in the House also stipulates that applicants cannot be discriminated against because of a familiarity with members or other staff.

Nonetheless, it is rare for immediate family members of a legislator who have no prior experience working in the Legislature or state government to become legislative staffers.

Gideon D'Assandro, spokesperson for House Republicans, said Paul Chatfield is qualified and will be an asset to caucus services.

"He's done a great job," Mr. D'Assandro said. "We are excited to have him."

According to salary information available online, Paul Chatfield makes $40,000 and will continue at that rate while in Caucus Services, Mr. D'Assandro said. Aaron Chatfield makes $36,247 annually in Mr. Miller's office.

Amber McCann, spokesperson for Senate Republicans, said there are no senators' relatives working for other members or central staff in the chamber.