Honigman Capitol Report

Governor's Office

Nesbitt Demands Investigation into MEDC Grant tied to Governor’s Office

Senate Republican Leader Aric Nesbitt has called for a federal investigation into the Michigan Economic Development Corporation (MEDC) concerning a $20 million grant awarded to Fay Beydoun alleging misuse and concealment of evidence by MEDC officials. The grant, part of a non-competitive legislative enhancement sponsored by former House Speaker Jason Wentworth, was intended for an international business accelerator in Michigan, but Wentworth denied involvement in securing funds for Beydoun's project. The Attorney General's investigation revealed that Beydoun communicated with the governor's office to secure the grant, and MEDC CEO Quentin Messer Jr. was aware of the arrangement. The investigation also uncovered Beydoun's meetings with MEDC while she was on its board, and her alleged misuse of funds, including purchasing a coffee maker. Governor Whitmer distanced herself from Beydoun following media reports and removed her from the MEDC Executive Committee. Additionally, Nesbitt raised concerns about Whitmer's international involvement, including a letter to Qatari officials and her travel to Qatar, suggesting potential foreign influence and calling for a thorough investigation by the U.S. Department of Justice and the FBI.

Committee News

Senate Dems Reintroduce Teach MI History

The 'Teach MI History' legislation, reintroduced by Democratic legislators last week, aims to mandate implicit bias training and incorporate diverse historical perspectives into the education system. The legislation is sponsored by Senators Darrin Camilleri, Erika Geiss, and Stephanie Chang, along with Representatives Jason Hoskins, Veronica Paiz, and Matt Koleszar, through bills SB 453, SB 454, SB 455, HB 4687, HB 4689, and HB 4688. The initiative is supported by Rising Voices, a nonprofit advocating for Asian Americans, Pacific Islanders, and other communities of color. A cultural history advisory board would be established under SB 454, with representation from various minority communities and educational stakeholders, to provide curriculum recommendations to the Michigan Department of Education. The legislation seeks to create an inclusive curriculum to prevent racially charged bullying and address mental health issues among youths. Public support is evident, with statements from legislators emphasizing the importance of reflecting all communities in education to foster cultural understanding and reduce intolerance. However, the legislation faces challenges, particularly in the Republican-controlled House, where there is opposition to diversity, equity, and inclusion programming. Despite previous attempts in 2022 and 2024, the bills did not progress, and current political dynamics may pose further obstacles.

Election News

Board of State Canvassers Act on Ballot Proposals

The Board of State Canvassers rescinded its previous approval of the Invest in MI Kids ballot proposal summary due to complaints about last-minute language changes, while also approving the Americans for Citizen Voting proposal last week. Concerns were raised about the validity of the language approved for Invest in MI Kids, which aims to impose a 5 percent income tax surcharge on Michigan's highest earners to fund public schools. Daniel Ziegler, representing The Coalition to Stop the Business and Family Tax Hike, argued that the petition language had substantive changes that were not subject to public comment, citing a lack of proper analysis and adherence to the Open Meetings Act. Eric Doster, representing Small Businesses for Better Michigan, highlighted a significant change in the summary language, which removed the term "public" from "local public school district classrooms," raising concerns about exclusivity. The board went into a closed session to discuss the matter, and Acting Director of Elections Adam Fracassi confirmed the language change, which was not initially caught because petitions are reviewed for form, not content. Olivia Flower, attorney for Invest in MI Kids, defended the language change, stating it aligned with Michigan law terminology. Despite her arguments, the board unanimously voted to rescind the approval of the summary language. The Americans for Citizen Voting Michigan proposal, which requires proof of citizenship to register to vote and includes penalties for violations, was approved despite criticism for submitting two versions of the proposal. Concerns were raised about the 45-day rebuttal period for removing noncitizens from the voter roll. Language was amended to address these concerns, and the proposal was approved despite criticism from Chair Richard Houskamp.

On Point

Client Alert: Tariffs and Supply Chain Contracts: Key Considerations when Reacting to Tariffs

Looking Ahead

Impacts to Medicaid from the Big Beautiful Bill to state coffers will not be felt until 2027 based on the built in timeline. However, state lawmakers in this budget cycle are likely to cautiously approach funding the Michigan Department of Human and Health Services with built in cuts to optional services among other budget tightening proposals. Due to the federal changes that are now law, appropriators in the legislature and the executive office are going to negotiate a budget with the anticipation of future cuts to a vitally important program to many Michigan residents. Analysts estimate that more than $15 billion will affect Michigan’s rural counties over the next 10 years. This will likely require an entire new approach to budgeting if the state intends to keep funding Medicaid into the long-term future. The fiscal year 2026 budget will be the first test of strategies to fund a large program with less federal support.