Last week Michigan followed several states by increasing both contribution limits and frequency of disclosure from candidates. The bill, which took effect immediately, also includes new identification requirements for persons or groups paying for robocalls while exempting so-called “issue-ads” and their donors from being disclosed in campaign finance reports.  

Contribution Limits and Disclosure

The new law doubles contribution limits from individuals and PACs to candidates and political party caucus committees during an election cycle:

  • From $3,400 to $6,800 to a candidate for statewide office;
  • From $1,000 to $2,000 to a candidate for state Senate;
  • From $500 to $1,000 to a candidate for state House;
  • From $20,000 to $40,000 to political party caucus committees.

The Secretary of State will adjust the limits every four years based on the consumer price index.

Candidates must now file disclosure reports at two different times (instead of just one) in non-election years. The law does not change election-year reporting.

Identifying Information and Robocalls

In an announcement upon signing the bill, the Michigan Governor emphasized a provision regulating automated phone calls, commonly known as robocalls. Under the law, if a robocall expressly advocates for the election or defeat of a candidate or ballot question, the call must Robocallidentify the name, address, and telephone number of the person or organization paying for it. This applies to both candidates and third-party groups.   

Issue Ads and Disclosure

The new law also thwarts an effort by the Secretary of State to increase disclosure of those financing “issue ads” (i.e., ads that do not include words such as “vote for” or “vote against,” but that are related to candidates). In November, the Secretary of State had proposed changes to the definition of what constitutes an “expenditure” to reach not only advertisements that include words of express advocacy (such as “vote for,” “support,” or “oppose”), but also those that are the “functional equivalent” of express advocacy. Notably, the proposed rule would have used a very broad definition of what constitutes the functional equivalent of express advocacy to reach ads that (within certain periods before an election):

  • Refer to the personal qualities, character, and fitness of a candidate;
  • Endorse or condemn a candidate’s position or stance on an issue; or
  • Endorse or condemn a candidate’s public record.

By defining expenditure in such a broad way, those sponsoring such messages would have to report not only what they spent on the ads, but also who made contributions to fund the ads.

The new law undoes this proposed rule by stating that a communication is not an expenditure “if the communication does not in express terms advocate the election or defeat of a clearly identified candidate.” To avoid any doubt about the legislature’s intent, the new law then says that it “restrict[s] the application of this act to communications containing express words of advocacy of election or defeat, such as ‘vote for’, ‘elect’, ‘support’, ‘cast your ballot for’, ‘Smith for governor’, ‘vote against’, ‘defeat’, or ‘reject’.” By limiting the scope of the law to these words of express advocacy, issue ads are not considered expenditures, and therefore no information must be disclosed about the amount spent on the ads or who financed them.

Although campaign finance reports will not reveal information about issue ads and their donors, the law does require issue ads themselves to identify the name, address, and telephone number of the person or organization that paid for the communication when: (1) the communication refers to a clearly identified candidate or ballot question within 60 days before a general election, or 30 days before a primary election in which the candidate or ballot question appear on the ballot, and (2) the communication is targeted to the relevant electorate by television, radio, mass mailing, or robocall.

Looking Ahead in the States

Michigan followed the trend in several other states by increasing contribution limits and disclosure frequency, but it also departed from the recent changes in states like Maryland, Utah, and California that mandate disclosure of donors to 501(c) groups and other organizations that are involved in elections. We expect that in 2014, states will continue to look for ways to adapt to heavy spending by outside groups, including mandatory disclosure of donors and increasing limits on contributions to candidates.