Michigan’s Proposal 2 won’t fix the state’s energy monopoly

Michigan’s energy policy is a mess. But a campaign finance ballot initiative adopted by the state this week won’t solve that problem, and it will impose unconstitutional speech restrictions far beyond what most people realize.

On November 3, over 80 percent of Michigan residents voted in favor of Proposal 2. Citizens should be forgiven for what they thought they were voting for.

Nearly all advertising for Proposal 2 emphasized that it was about getting money out of politics, specifically indicating that the proposal was a way to punch back at the “monopoly” energy and healthcare companies responsible for high costs in Michigan. Very little money was spent opposing Proposal 2, and supporters said it was about “paying the highest energy rates in the Midwest for the worst service.”

Here’s what people saw on the ballot:

The proposal would:

• Prohibit regulated electric and gas utilities, contractors with over $250,000 annually in government contracts, and people and organizations with substantial connections to these utilities/contractors from making direct or indirect campaign contributions to those who run for or hold offices that impact them.
• Expand laws regulating spending on political communications, including those requiring disclosing donor information, to apply to communications clearly identifying candidates or ballot questions, even if they do not expressly advocate voting for/against them.
• Expressly apply the law requiring disclosure of who paid for political communications to internet political communications.

Should this proposal be adopted?

Most of the news coverage in the state was about the first bullet point involving limits on political donations from utility companies.

That issue is legitimate. Michigan law essentially guarantees a monopoly to two companies—Consumers Energy and DTE—to provide electricity to residents. Another law establishes a renewable energy portfolio and essentially mandates that all electricity be provided by wind turbines and solar panels in the next 15 years. These policies increase electricity rates and make the grid and service less reliable.

But this new law is an odd way to go about solving that problem. It would have been better for backers to submit a proposal that allows citizens to have a choice about who provides their electricity. That was previously the policy in Michigan, at a time when the state saw the least expensive electricity in the Midwest.

To see the core problem with Proposal 2, one must read beyond the headlines and first bullet point. In fact, you have to read the entirety of the new statute to understand what a sweeping new law residents just imposed.

Proposal 2 doesn’t just limit political spending by utilities and healthcare companies. It imposes a swath of new rules on hundreds of groups in ways few anticipated. Most notably, the new law subjects anyone who refers to a candidate online or in print within 100 days of an election to new disclosure requirements. Further, it requires the release of private information—name, address, occupation, employer—of anyone who contributes more than $100 to a group that reports on political candidates. Not complying brings substantial fines and criminal penalties, including jail time.

Many groups report on politicians without expressly supporting or opposing them: newspapers and TV reporters, voting guides from nonprofits such as the League of Women Voters, influencers with large social media followers. This new law will subject all of them to new campaign finance laws and require the release of private information for any donors or subscribers.

For that reason, the Mackinac Center for Public Policy and the Institute for Free Speech have filed a federal lawsuit against the law. The new regulations could prevent the center from hosting databases, making legislative scorecards, reporting news, and a host of other nonpartisan activities. We hope the courts will see Proposal 2 as a violation of the First Amendment—and strike it down.