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Watchdog: Snyder funds 'disturbing'

Date: 09/09/2011
Source: The Detroit News

Paul Egan/ Detroit News Lansing Bureau

Lansing— Gov. Rick Snyder, who refuses to accept PAC money as a way of showing he is not beholden to special interests, has set up three new funds that can accept unlimited corporate donations.

The funds are in addition to the political action committee Snyder recently established, first reported in The Detroit News Aug. 25.

One of the funds, called the Governor's Club, was set up under Section 527 of the Internal Revenue Code to pay certain expenses Snyder incurs as a result of being governor, records obtained by The News show.

A second, called the New Energy to Reinvent and Diversify Fund, is a "civic action and social welfare" fund set up under the same section of the code as the Kilpatrick Civic Fund created by former Detroit Mayor Kwame Kilpatrick. Unlike donors to the Governor's Club, those who give to the NERD Fund don't have to publicly disclose their identities or how much they give.

"That's very disturbing," said Rich Robinson, executive director of the Michigan Campaign Finance Network, which monitors political giving and pushes for campaign finance reform. "For someone who has expressed a concern about transparency, that's absolutely the wrong thing to do."

Snyder spokeswoman Sara Wurfel, who confirmed the funds are controlled by Snyder, said "there are lots of Michiganders across the state who are interested in supporting the governor, his commitment to tackling the tough challenges and the work to turn around Michigan."

Asked if Snyder, a Republican businessman who took office Jan. 1, will release donors' names and how much they give in the case of the two funds for which such disclosures are not required, Wurfel said: "We will follow all provisions of the law."

Snyder's third new fund, the Foundation to Reinvent Michigan, is a charity set up to pay for repair and maintenance to the governor's official residences. Donors to that fund also don't have to be publicly disclosed.

Snyder's predecessor, Democratic Gov. Jennifer Granholm, had both a foundation to support the official residences and a 527 fund similar to Snyder's Governor's Club. But Granholm did not have a fund similar to the NERD Fund, which is set up under Section 501(c)(4) of the Internal Revenue Code, spokeswoman Liz Boyd said Thursday.

Funds not uncommon

Wurfel said donations to the NERD Fund will pay for items for which state dollars are no longer available and to pay expenses that come with the governor's job but should not burden taxpayers. Examples include travel to meetings of the National Governors Association and the Mackinac Policy Conference, working lunches in the office, and renovations to the governor's press auditorium in the Romney Building, she said.

The NERD Fund is the same type of fund as the Kilpatrick Civic Fund. The former mayor awaits trial on a federal indictment alleging he illegally used the fund to pay for personal travel, a Cadillac and summer camp for his children, among other items. But many elected officials and organizations make legal use of such funds.

Snyder's ban on accepting PAC donations will apply to the three new funds as well, Wurfel said.

However, PACs are sometimes formed to facilitate giving by corporations, which can donate directly to the new Snyder funds.

"The whole notion that he would set up a vehicle for taking unlimited contributions from unknown sources and exclude PACs from that is not much of a statement of transparency," Robinson said.

Dems quick to criticize

Money donated to the Governor's Club will be used to pay for job-related expenses that are more political. Examples include travel to meetings of the Republican Governors Association, the Republican National Convention and the Michigan Republican Leadership Conference on Mackinac Island.

The Governor's Club, formed in March, disclosed $117,500 in receipts in its first report to the IRS on Aug. 1. Donations included $25,000 each from AT&T of Michigan; the Michigan Health and Hospital Association; former U-M athletic director Bill Martin; and Credit Bureau of Ypsilanti President Peter Fletcher; and $10,000 from the Michigan Beer and Wine Wholesalers. Paid expenses included $25,000 to De Witt Communications, an East Lansing consulting firm headed by Chris De Witt.

Michigan Democratic Party Chairman Mark Brewer said Snyder's creation of the funds "demonstrates that he is a typical politician."

"We are now going to have a lot of donors seeking favor with the governor, making contributions to the governor, and many of those contributions will never be disclosed," Brewer said.

Snyder recently set up a leadership PAC called One Tough Nerd. Such funds are commonly used by governors to make donations to state lawmakers, stirring speculation Snyder will use the fund to bolster legislative support for a proposed public bridge across the Detroit River to Canada. Snyder's PAC can accept unlimited donations from individuals, but can't accept corporate money if he intends to make donations to lawmakers.

(c) 2011, The Detroit News