AG’s Objections to Amending Ann Arbor Charter to Establish Fair Elections Fund Are Legally Misguided

Correction: The text of the proposal says “an annual allocation of three-tenths of one percent of the City’s general fund budget,” which should be written  as “0.3 percent.”

Editor: On Sept. 6, 2024, Michigan AG Dana Nessel’s State Operations Division sent a letter to the Coalition for Ann Arbor’s Future, a group that has succeeded in gathering enough signatures to put two ballot proposals to amend Ann Arbor’s charter on the Nov. 2024 ballot. The first ballot proposal will give Ann Arbor voters the opportunity to decide whether the City should join 99 percent of Michigan’s other cities and move from partisan to non-partisan elections. The second charter amendment proposal that the Ann Arbor group Voters Not Money wants to have Ann Arbor voters decide is whether to have the City establish and fund the Fair Elections Fund. It is the Fair Election Fund ballot proposal that the Michigan AG, in her Sept. 6, 2024 letter, informed the Coalition allegedly conflicts with Michigan’s Budget and Home Rule Acts.

The Fair Elections Fund charter amendment, if passed, would give candidates for local office who agree to lower campaign fundraising limits access to a new City of Ann Arbor Fair Elections Fund. The Fair Elections Fund would be allocated no more than 0.3 percent ($391,200) of Ann Arbor’s $130.4 million General Fund. The Fair Elections Fund would provide 900 percent matching funds for documented small donor contributions ($50 or less) to individual candidates within ten business days of receiving documentation from a candidate.

If a City Council candidate, for example, raised $5,000 from small donations, the Fair Election Fund would not pay out $45,000, but rather $40,000, the maximum allowed for a City Council candidate. The maximum Fair Election Fund payout for a mayoral candidate would be $90,000.

In response to the AG’s letter, the Coalition’s legal firm shot back with the following:

by Christopher Patterson

The Coalition respectfully disagrees with the Attorney General’s conclusion regarding its Fair Election Fund proposal. Matching funds in local council races is an issue of local concern that is fully within the discretion and authority of the voters of the City of Ann Arbor.

The Coalition for Ann Arbor’s Future has received the Michigan Attorney General’s State Operations Division letter dated September 6, 2024 (“AG Letter”) regarding its petition to add Section 13.17-the Fair Election Fund-to the City of Ann Arbor’s City Charter. In that letter, the Attorney General’s Office concludes that the proposed Charter Amendment would be at odds with Section 16 of the Uniform Budgeting and Accounting Act (“Budget Act”). The dispute allegedly arises because the City Council annually appropriates funds for City government. The Budget Act, however, simply requires that the City Council consider the funds available and then decide the amount of property taxes to be levied in the City each year. Regardless of the position taken in the State Operations Division, state law is clear-and the AG Letter acknowledges-that the proposal must “be submitted for voter approval” and placed on the ballot this November.

First, the Budget Act does not prohibit initiatory petitions from addressing City appropriations. Indeed, local communities often present, pass, and adopt petitions, ordinances, and charter amendments for local priorities such as road funding. The AG Letter states that “this amendment would be consistent with section 4j of the Home Rule City Act” which allows for charters to advance “the good government” of the City consistent with state law. The amendment is consistent with the Home Rule City Act, the Budget Act, and advances good governance.

State law does not prohibit allocating City funds by initiatory petition. In this matter of local concern, the City itself does not limit the implementation of this funding. Implementation of the proposal would occur as part of the normal budget and amendment process. We look forward to the statement of the voters at the ballot box in November.

The Budget Act simply requires the City Council to pass a “general appropriations act for all funds except trust or agency, internal service, enterprise, debt service or capital project funds for which the legislative body may pass a special appropriation act.” MCL 141.436(I). Moreover, the Home Rule City Act-which governs initiatory petitions for charter amendments-does not prohibit initiatory petitions from addressing city appropriations. In fact, the applicable section (Section 25 of the Home Rule City Act) addresses a “proposal adopted by the electors that contemplates increased expenditure of funds” by the City. MCL 117.25(5). Lastly, this is an issue exclusively of local concern.1 Proposals may contemplate expenditure of funds.

Second, the proposal is essentially a minor budget amendment. Following adoption of the Charter Amendment by Ann Arbor voters, the City Council would simply add the Fair Election Fund to its budget. Indeed, Section 17 of the Budget Act specifically addresses amendments to the general appropriations act. MCL 141.437(1). Further, under the Budget Act, the Fair Election Fund could alternatively be considered a special appropriation act. In short, the City Council will comply with state law by either amending its budget to allocate the Fair Election Fund appropriations or pass a special appropriation act to implement these appropriations.

Third, voters directing that 0.3% of local, City funds promote equality in elections is permitted— and should be—in Ann Arbor. While some state laws and possibly charters in other cities2 may attach appropriations to pet projects for political purposes, that language is not found in Ann Arbor’s Charter. Small-donor matching funds consistent with the proposal enable everyone to participate in democracy.

State law does not prohibit allocating City funds by initiatory petition. In this matter of local concern, the City itself does not limit the implementation of this funding. Implementation of the proposal would occur as part of the normal budget and amendment process. We look forward to the statement of the voters at the ballot box in November.

1 See SettlesvBradley, 169 Mich App 797 (1988) (municipality controls local initiatory petition procedure).

2 See, e.g., Detroit Coalition v Detroit City Clerk & Detroit, unpublished per curiam opinion of the Court of Appeals, issued on October 22, 2002 (Docket No. 241648) at p 3 (Detroit charter provides that “the power of initiative does not extend to the budget or any ordinance for the appropriation of money.”).

Christopher S. Patterson is an attorney with Fahey Schultz Burzych Rhodes PLC. Patterson’s firm represents the Coalition for Ann Arbor’s Future.