Welcome back to this special Correspondents edition of Off the Record as Michigan lawmaker leave town with no budget deal.

Chuck Stokes, Clara Hendrickson, Chad Livengood, and Bill Ballenger on deck with the story behind the stories.

So sit in with us as we get the inside out.

Off the Record.

Production of Off the Record is made possible in part by Bellwethe Public Relations, a full service strategic communications agenc partnering with clients through public relations, digital marketing and issue advocacy.

Learn more at bellwetherpr dot com.

And now this edition of Off the Record with Tim Skubick.

And thank you very muc welcome to our holiday edition off the record as we're taping on Thursday morning.

So can everybody get out of here and do you do fireworks?

No, no.

Do you?

Yeah, sometimes.

Yeah.

Okay.

All right.

Our lead story is not fireworks because there were none.

There were none So what happened on the budget?

They left town without one.

Nothing.

Nothing happened on the budget.

I mean, the two chambers remain really far apart.

I don't think this should really come as a surprise to anyone.

We have divided state government that has been quite unproductive.

And, you know, it was only until last wee that the two legislative leaders really got down to the table to try and negotiate a budget deal.

Speaker Hall wanted to take this kind of piecemeal approach with K 12 and roads and then deal with the rest of the budget later.

Senate majority leader when he brings has wanted to do the whole thing all at once.

And she has sort of taken the position, I'd rather get this right then get it done fast.

Of course, you have schools that, you know, they've already put together their budget and they're sort of in the dark about what the state budget is going to look like.

So probably a little bit longer until this whole thing wraps up.

Full confession I said on this show from this seat last week that they would get a deal.

So much for my insight.

How about yours?

I didn't know I was going to bring that up.

Down.

But yeah.

You know, the best defense is a good So, yes, I mean, thi this was as Clara said this is this is predictable that we're going to see this kind of stalemate.

Now, how long are we going to drag this out?

Is kind of the key question.

No, they didn't.

Legislature did.

The Senate added some days of session in the summer.

You know they don't really like to work too much in the summer between basically between the 4th of July holiday and and Labor Day.

So we'll see if they feel the pressure to do this because the school districts I mean, right now, universities, including Michigan State University, where we're sitting, are starting to cut jobs and lay people off.

And so that's going to start, you know, resonating a little bit out in in some districts.

But those districts are almost represented by Democrats.

And and so whether they whether the Republican House members feel anything at home on the impact is kind of, you know, remains to be seen.

I remember passing parts of the budget as late as three day before Christmas, 40 years ago.

I mean, look, I've seen this many times.

You've seen this movie before?

Many, many times.

I mean, things changed when they moved the start of the fiscal year from July 1st to October 1st, way back 40 years ago under Milliken.

And it stayed there.

But the schools always said, we don't want to wait until October 1st.

We got to, you know, got to know by July 1st.

So they put in this phony Jul 1st deadline with no penalties if they don't pass the school aid bill.

So, yeah, I think it' going to drag on and on and on.

And I think you saw this from Matt Hall in the spring.

He was always equivocal abou whether they were going to meet this July 1st deadline.

Mr. Stokes.

I agree with all that.

You said Th if there's a good news in all of this is the fact that they aren't really quarreling over the amount of money we're talking about, roughly $22 billion that's going to go to schools, 10,000 plus per pupil.

So they aren't arguing over that.

And we've seen times in which they were far apart on just the amount of money.

What we're talking about now and arguing about, they are priorities, how the money is going to be divvied up and as Clara said whether or not it' going to be one great big bill or whether or not they're going to split all this stuff up.

And there is time.

Yes, the July 1st is important for the superintendents, but it's not a death sentence.

October one, that's the date that everybody does not want to hit because then you start talking about shutdowns and stuff.

But there's a lot of jockeying or political jockeying here.

I get the impression, though, that that they'r going to come up with something I think is going to be probably late July, maybe drags into August.

And as Bill said, they might even get close to that shutdown date of October.

Maybe we'll have our own one big beautiful bill right here in Michigan.

Well, I guess I get the impression that we're going to get status quo.

At the end of the day, this is going to this is going to en in almost a status quo budget.

No big deal on roads.

No, no big deal on no no major cut in universities, no major cuts or shifting of money around, no goring of the ox of the corporate subsidies.

They're just going t to battle this down to nothing.

What about the foundation grant?

They can get rid of categoricals.

I mean, the Republicans have done that before.

When they were they were in charge.

They might be a few things like that.

But but at the end of the day, like there is no pressure right now for roads.

There's no one out there standing in potholes talking about how bad things are.

Brooks Patterson style and and I mean and if anything, people are just tired of of massive freeway projects which have been funded by Governor Whitmer's credit card, you know, purchase of three and a half billion dollars, you know, and otherwise they're just not interested.

And there's just not a lot of people out there clamoring for either higher revenu to pay for roads or for or for, you know, a major diversion of money including their schools, money for roads.

But one thing that is complicating a little bit on the education side and the superintendent are feeling pressure is because the amount of federal dollars that have been cut and that's a big hit.

And now they've got to figure out, okay, we've got this giganti hit that's come from Washington.

We don't know exactly where they're going to settle in on the state money, even though they've got a really good feel for it.

They're going to hav X amount of money to work with.

But is still where's it going?

How's it going to be divvied up?

Democrat want it for special education.

Things that they feel are programs that helpe to enrich education experience.

And the Republicans feel like they want their dollars to go more directly guided to academic and performance.

So you guys know that every political story has a winner and a loser.

All right.

So we got the good work here and say the losers are the schools politically.

Who is sitting back watching this dysfunctional effort going on in Lansing and going "caching".

What's his name?

Panel.

Matt Hall.

Wrong.

Mike Duggan.

Yeah, that's probably Mike Duggan.

Correct.

This is this is in his wheelhouse.

He is sitting at home setting off fireworks.

Thank you, Lansing.

Yeah They just served up a fat one.

Would be would be a great messaging for Mike Duggan.

He can say only I can fix.

This is the commercial is waiting to be made.

Yes.

On the day that lawmakers were supposed to give th schools money, what did they do?

They left town.

It is time for a different approach in Lansing.

And I'm it.

No, I think you're right.

I think it's right in his wheelhouse.

Right in his wheelhouse?

Yeah.

Does that make up fo getting the other story wrong?

I'm trying to do a make good here, guys.

Help me out.

It might not even get to that point.

I mean, just to be fair, like, there has been some movement this week.

It's not like they went into negotiations last week, and..

Doesn't matter.

It doesn't matter.

Obviously that resulted in materialize.

But we did see, you know, Speaker Hall make some moves towards maybe accommodating Democratic demands on universal school meals and rural transportation.

Obviously, there's still a lot of sticking points to these negotiations.

It's just not totally clear what those are.

The leaders don't want to talk about it for fear of, you know, derailing the whole conversation.

And that rule transportation thing is a big deal.

I mean, the rural farmers in outstate Michigan, you're you're a Republican lawmaker.

There's two people you're scared of.

It's the hospital CEO from the local hospital and the superintendent who's calling him saying, I can't get my busses out to, you know, at 6:45 to pick up these kids.

And you've just cut our bus funding.

And so, I mean, you know, if the Democrats want to go message something right now, it'd be like, you know, Matt Hall is going to bus funding and and put the pressure points there and that that's that's what they when we talk about categoricals, these these line items of mone that some conservatives think is just is just like special pork for just for certain schools.

So I'm it's very critical if you are running the school district you know in some in some rural in Tuscola County that in a rural area of Tuscola County.

And so that's that's why some of this the turn into a summer of messaging, just like we saw go back to 2013 when everybody left town because they couldn't get a deal on Medicaid.

And then in the bill, the bill's going up, come on back.

And certain senators were just just absolutely, you know.

That was Rick Snyder that put up the billboard and took on the legislature.

And Randy Richardville, the Republican leader, went ballistic.

Gretchen Whitmer has got a huge 501c4 She can go spend money on a billboard campaigning for trying to pressure Matt Hall and Republican House members.

Yeah, we'll see if she wants to actually play that kind of ball, though.

All right.

We've never before in this town had a state police director sit before an oversight committee wanting to know why 98% of his troops don't have confidence in him.

What did you make of that hearing?

I mean, it was pretty fascinating.

This wasn't a pretty picture, some tough questioning.

He did moments and they basically said you're welcome to come back in six months and give us a progress report.

So it seems like there's going to be some serious follow up here.

If he lasts that long.

Sure.

Yeah.

You think he's toast?

He could be, I think, sooner rather than later.

Well, he said, look at the people I'm talking to are happy.

Yeah.

Who is he talking to?

Obviously, the people that weren't in the survey.

I mean, James Gray is the, you know, career for servant in this position.

And he's he's, he's he's not the first state police director who is who' been embroiled in some kind of controvers to personnel matters, lawsuits.

I mean, this is kind of par for the course.

Saying things about football players putting down their knees.

Yeah, this is kind of par for the course for being in for running this department, this expansive you know, agency that you know, has a central headquarters but then has like 50 outposts and try to manage all those people.

It's not an easy job.

And and people do burn out of this top jobs, you know, fairly quickly.

There has never in recent memory been a long term state police director.

And so, you know I think it's kind of we'll see.

I mean, inevitably he's got 18 months left on it on the shot clock with with with this administration anyways.

And they only usually you know, carry over as well so.

Then you got to wonder how much of this pushback is because he's been pretty ou front in terms of making changes within the department as an administrative level with a rank and file that's used to doing things the way they want to do it.

And he's been very outspoken on bringing more diversity into the Michigan State Police.

There was a time when that was very popular this is not the time in which that's popular given the current administration.

And so his timing may be bad in terms of that, even though it may be a lofty goa for that particular workforce.

The deputy superintendent, she's not popular either.

They hate both of them.

I think where this is headed, a political commission of civilians overseeing the state police.

Yeah.

Yeah.

Is that not a possibility?

I mean, we'd have to get the Senate to agree to that.

I don't see I don't see them going along with that.

I could see the Hous Republicans wanting to try that.

Yeah, but but also there' a Republican the next Republican governor want to deal with some commission that dictates who is in there, who's in their state police?

I doubt it.

And so if you're like one of the, you know, nine people running for governor on the Republican side, you might be calling up the legislature saying, don't do this.

All right.

So we got the attorney general alleging that the MEDC was stonewalling the investigation that's going on and it got kind of ugly.

This is fascinating.

I mean, so we saw the search warrant that was executed by the attorney general's office at the MEDC headquarters in Lansing last month.

We now know kin of what led up to that through new court filings that have been released and first reported by the Detroit News.

Pretty dramatic depiction of stonewalling that the attorney general's office is asserting that the MEDC basically delayed providing receipts and invoices and documents, witness names, which is why they fel the search warrant was necessary and then we're seeing thi depiction of the search warrant with the chief general counsel of the MEDC, raising serious objections to the agent, saying she'd rather be she'd be arrested firs before they search her office.

So looking into a controversy, it's a $20 million contrac a gimmie me that was given out.

To a businesswoman named Fa Beydoun, who used to be the head of the American Arab Chamber of Commerce.

And she had lobbied for this $20 million to start a business accelerator organization.

She has connections.

She has connections.

She used to be a leaders in the Michigan Democratic Party.

She was a bundler for Gretchen Whitmer's 2018 gubernatorial campaign, and she was at the time appointed by Whitme to two different state boards, including the Executive committee of the Michigan Economic Development Corporation that we're talking about which made this very incredible to have someone on the governing board of the agency going to the agency and asking them for money.

And then again, as we found out, getting some support of some sort from the governor's office to then go to the legislature and secure it in the $1 billion late night spending spree they did here on June 30 of 2022.

And and so now we are here three years later.

The MEDC has canceled the gran after they discovered that one besides the $4500 coffeemaker she bought an $11,000 first class ticket to Budapest.

She also was paying herself $550,000, which is the equivalent of three times what the governor is paid to run this state.

And and the MEDC's chief general counsel this, Linda Asciutto, accused Beydoun of misusing the money and and made an inappropriate high amount o money going towards her salary.

This is one of the few times Republicans are cheering on Dana Nessel Because if there's any entity that they hate more than Dana Nessel, it's the MEDC.

And this is the job that.. John Engler created, the MEDC.

But they've now.

Not any more.

Not any more.

This Republican Party does not like the MEDC..

They think it's they think it's corrupt.

Now the MEDC, in its defense, is literally just the administrative agenc that this money flows through.

It's a pass through.

So at the end the day that a Republican legislature passed a bil that that authorizes this money.

Now, now there's some disput about whether Jason Wentworth, the speaker of the House a the time, actually asked for it.

He claims he didn't.

And the governor's offic is trying to pin the tail on him and say that he did it.

But now we're finding we're finding evidence in the emails that the attorney general just dropped in the court and this whole court fight this is the most incredible part about this.

The Farmington, there was a search warrant for a Fay Beydoun's house in Farmington Hills.

And there the MEDC goes out and hires big time criminal defense attorney from from Miller Canfield to file a motion to quash the the findings of the subpoena in Lansing, in the MEDC headquarters.

They go to the district court in Farmington Hills because it's two different jurisdictions.

It clearly looks like a little bit of a judge shop.

And the at the Farmington Hills 47th District Court, they don't get big fight between the AG and the governor very often like we do in her in Ingham County District Court.

And so this they went and fought this.

This judge looked at it and said, nah MEDC can or the AG's office can haul these documents, they use what it's called a team.

They're going to go through and see if there's anything that's privileged.

Attorney client privilege.

As Linda Asciutto, this this life life lifer over and MEDC attorney was asserting and they're going to then sort those ou and then Dana Nessel will carry on with her investigation, which by the way, she has now disclose it has to do with embezzlement.

And and we know from the reporting that that that they doing was still sitting on at least $5 million of this grant when they canceled it.

She already had the money in the in the bank which is just exposing a whole raft of a raft of different issues with these earmarks.

Now that, you know, people just basically were able to this walk in the legislature, politicall connected people and get money with one piece of paper and then go cash it in the Treasury and and Nessel, Nessel's digging into this.

And I think there's going to be more a problems for other people in this town who who went on you know, got in on the the spending spree.

You got to wonder if Nessel is getting any sleep these days between what's going on in the state, between all the lawsuits that she's doing against the Trump administration and the federal government.

She is one busy person in Lansing.

What has the governor said about all of this stuff?

Well, she better say something pretty soon because it's going to come down on her.

There's too much smoke for there not to be fire somewhere that people are going to say the governor should be on top of this.

And guess who will profit from all this debate?

Mike Duggan.

Back to Duggan again?

But one thin about the governor's office.

So.

Gerald Gleeson This Miller Canfield attorne who was hired to represent both MEDC executives and JoAnne Huls the chief of staff.

For the governor.

Highly unusual that you woul have a lawyer representing just one member of the governor's inner circle and and executives over the MEDC, whom she as the chief of staff supervises.

So and then she and Gleeson said in cour that I'm representing witnesses.

And so the implication is that JoAnne Huls' chief of staff of the governor is a witness to some something that involving this investigation or this potential crime or embezzlement.

Yeah.

Again, no one has been charge yet, but just be clear by that.

And then the other aspect of this that came out is that Fay Beydoun,, before she got the grant sometime in 2021, sent an email to Trish Foster, chief operating officer of the state, one of Whitmer's closest advisors, long time friend from East Lansing, that she brought in originally, Randy Temby.

So another top member of the governor's inner circle is also was aware of this.

And the way this email is structured is a way that we think lobbyists talk to principals in this town, Hey, I'll send over the language for the bill to get my money into the next supplemental.

That's literally what Fay Beydoun said in an email to Trish Foster, the chief operating officer who was involved at times in negotiating on supplemental budget bills during this 2021, 2022 spending spree when there was all this money sitting around.

Story not over yet.

No, definitely not.

I mean, as Chad mentioned, the sort of connections to the Whitmer inner circl here, but I mean, you have MEDC, which is saying we've been cooperative, the AG's office, which is really disputing that pretty strongly here.

And this is a serious escalation.

And you have to wonder, you know, how is this playing out in this ongoing rift between the relationship between Governor Whitmer and Attorney General Dana Nessel, two top Democrats.

I mean I've been saying this for a while.

But this this raid in thi and this revelation in this 137 page court filing that the Nessel's office filed over this search warrant flight.

I mean, Nessel has in the next 18 months the ability to to set this town on fire.

And and it's very clear she just might.

She's got the matches.

All right, let's talk about a petition drive to make sure the DTE energy and consumer energy can't exercise their democratic right to contribute to politicians.

You're absolutely right.

And this is just another potential petition drive... That's their argument by the way.

It adds on to what I think we're up to, like about six or seven now, that may end up on the 2026 ballot and basically what they're saying is a group of nonprofits in ther saying if you're getting over, I think $250,000 worth of grants, then you shouldn't be able to donat to the campaigns or politicians for DTE and Consumers and other utilities, that's a scary thing because they are used to donating a whole lot of money and spreading their money around to both Democrats and Republicans to make sure that when issues come before the legislature that are important to their industry, that they have gotten into everybody's ears and they have been pretty successful.

The late state representative, Gary Glenn, would certainly applaud this petition drive.

He was a conservative Republican who was after actually went after the utilities on this stuff.

Right.

Look.

He called them terrorists.

And and they.

And they returned the favor.

And they came and terrorized his primary with their with their dark money.

This will be popula with the Average Joe out there who pays their utility bills.

And the same every time we look around, one of these utilities are coming asking for a rate increase.

So do they get the names to get this on the ballot?

They have the power of voters, not politicians, which is... Gerrymandering.

Exactly.

We've got 600,000 names.

So, I mean, that's you know, a positive indication that they'll be able to pull this off.

I mean, we've certainly seen legislative proposals in a similar vein in the past on this front to try and crack down on corporate PAC spending for lawmakers.

I don't I can imagine a lot of politician aren't going to want to cut off a sourc of funding for their campaigns.

But what's interesting about this is that this is an initiative petition which means lawmakers are going to have the chance to take it up first, get on the record before it would get on the ballot.

And why why did they go the initiative route?

Lower threshold of Signatures.

Okay.

Not as many signatures required.

Remember, there are a bunch of other ballot proposal petition drives out there right now.

And every cycle there are a huge number out there.

And the question is how many are actually going to qualify for the ballot next year?

And then when they do, what happen when the voters face the ballot, like in 2012, six.

And remember the opposition should just vote no on everything.

All of them went down, all of them lost.

So this thing is going to get caught up in other ballot proposals that might make it to the ballot in November of 2026 in the ballot palooza.

Two.

Yes.

And while one thing to note the contracts part of this, this is not just catching DTE and Consumers, they're the ones that are names running on contracts.

This catch catches Blue Cross Blue Shield.

Yeah.

And other big insurers that have they get big money through Medicaid deals with the state or health care contracts and whatnot.

So this is going to catc a whole lot of special interests in this town and and make them make them disclose their spending and come out from underneath the darkness here that's been going on in thi two tier campaign finance system where some campaign donations get disclosed and the rest get got to be spent, you know, behind the scenes.

And we have no access understanding just how extent, how how big o an extent of their spending is.

The only people that are benefiting on all these petition drives are all the TV executives.

You know.

We're sitting her just about to say the exact same thing are TV executives, of which I work for a corporation that makes money off these type of things.

They're looking at this and they're saying, yeah, this would be good for election year because that's a lot of commercials and a lot of spending.

And we're talking about organizations that have the wherewitha to be able to run big campaigns.

Young men and lady, thank you for a great show.

See more of Off the Record right here next week.

Have a safe, quiet weekend.

See you then.

Production of Off th Record is made possible in part by Bellwether public relations, a full service strategic communications agency partnering with clients through public relations, digital marketing and issue advocacy.

Learn more at bellwetherpr dot com.

For more Off the Record, visit wkar.org.

Michigan public television stations have contributed to the production costs of Off the Record.