Money meant for conference lands in mayor's biz account
September 29, 2009 • From Lansing State Journal

By Derek Melot

How did a $2,500 check from the Lansing Board of Water and Light end up in an account that pays for some of Mayor Virg Bernero's travel around the country?

It's all a matter of good intentions, says BWL, the municipal utility.

It was all a mix-up, says Mayor Bernero, who added that the money was spent on a sister cities conference last year. Nevertheless, the mayor plans to refund the $2,500 to BWL from the so-called "527" account he controls.

"It doesn't look right for BWL to contribute (to the account)," Bernero said by phone Monday.

This fund, called a 527 for the section of the federal tax code that governs it, was created "to be a tool to help cover city-related business expenses and save taxpayer money," Bernero explained. "The immediate need was mayoral transition costs, inaugural costs. Then I figured down the road (it would) be useful for covering business-related expenses."

Since its creation in late 2005, the account has housed about $194,000 in contributions from an array of corporate leaders, attorneys and others. And unlike a regular re-election campaign account, the "City Administrative Account" does not have a contribution limit, according to Rich Robinson of the Michigan Campaign Finance Network.

Under Bernero's direction, about $150,000 has been spent. Much of the spending in recent years has gone to travel, dining, entertainment, florists and maintenance of the account.

Bernero emphasized that everything was done according to the law. He noted that he's not the only Michigan political official with such an account. That's true - Gov. Jennifer Granholm and Attorney General Mike Cox also have 527 accounts.

None of that, though, explains how the BWL's money ended up in there.

BWL spokesman Mark Nixon expressed surprise last week when shown the contribution. On Monday, Nixon explained that the utility had been asked to make a contribution to the U.S.-Africa Sister Cities Conference held in Lansing last July. A BWL committee authorized a $2,500 check and it was made out to "City Administrative Offices," as requested.

Bernero said an "honest mistake" led to this money being placed in his account. And while the money was spent on the Africa conference, the mayor said the "appearance is not good" and he will be returning the utility's check.

This tale still has an odd twist unresolved, though: Bernero's reports to the IRS covering July-December 2008 don't show any expenditure from the account to the sister cities conference, or to the Radisson Hotel where it was held, or to any entity that would appear connected to the event.

The mayor's staff was looking into that issue at deadline.

What do you think? Write Derek Melot, Lansing State Journal, 120 E. Lenawee St., Lansing, MI 48919. For past columns, visit www.lsj.com/columnists.