House votes to end NDAs on public spending projects

Michigan is one step closer to ending secret, taxpayer-funded deals protected by gag orders after the state House on Feb. 25 approved two bills that aim to ban lawmakers from signing nondisclosure agreements related to taxpayer-funded projects.

Michigan Capitol Confidential reported in August 2022 that the state was ranked last nationwide for government transparency.

House Bill 4052, introduced by Rep. Steve Carra, R-Three Rivers, passed the House with 80 representatives in support and 28 opposed. House Bill 4053, introduced by Rep. Dylan Wegela, D-Garden City, also passed, with a vote of 91 in support and 28 opposed. All Republicans voted yes.

“Corporate elitists who want special taxpayer-funded handouts oppose this legislation,” said Carra in an email to CapCon.

“I’d like to see this get signed into law to ensure transparency and openness from public officials."

Wegela told CapCon in an email that it is vital to hold lawmakers accountable for spending taxpayer money.

“Over the last several years, we have seen the increasing use of NDAs around projects that give millions of public tax dollars to multi-million and billion-dollar corporations,” said Wegela.

Legislators have, over the years, signed secret agreements to give taxpayer dollars to companies without public knowledge. The nondisclosure agreements were usually brokered with the Michigan Economic Development Corporation acting as the middleman.

The issue gained traction when David Sole, a Detroit activist, sued the MEDC, which brokered an agreement between General Motors and the Legislature to provide $3.8 billion in taxpayer funding to the company under cover of a nondisclosure agreement.

The Legislature created a $5,000 fine for lawmakers who violate agreements like the one between GM and select legislators.

The state Supreme Court asked the Mackinac Center Legal Foundation to file an a amicus brief on the lawsuit.

CapCon reported in July 2022 that the Michigan Supreme Court sided with Sole. The court ordered the company to divulge that the state agreed to pay $3.8 billion in tax credits over the agreement, which ends in 2030.

If enacted into law, the bills will help Michiganders monitor subsidy deals and hold lawmakers accountable for entering into bad deals, said Steve Delie, an expert on government transparency at the Mackinac Center for Public Policy.

“For years, Michiganders have been left in the dark about how the Legislature spends taxpayer dollars to support private industry,” Delie wrote in an email to CapCon.

A recent study by the Mackinac Center found that only one of every 11 jobs promised by Michigan politicians when announcing subsidy deals actually gets created.