Committee hears testimony on bill to require state agencies to accept cash

Lansing — The House Committee on Government Operations on Feb. 19 heard testimony on House Bill 5340, which would amend the Management and Budget Act to require state agencies that accept payment to accept cash and prohibit charging additional fees for cash.

May, staff for Representative Paquette and the bill presenter, told the committee the measure is meant to prevent a future 'cashless society' and to ensure state agencies model acceptance of legal tender. "This bill would have no fiscal impact on the state or local units of government," she said. May cited national and state figures, saying "Swipe fees have risen 70% since the pandemic and reached a record of a hun $187,200,000,000 last year, costing the average family nearly, $1,200," and that an estimated "3.2 resident percent of residents do not have a bank account ... around 324,000 Michiganders," attributing that data to the FDIC and a Merchants Pay Coalition figure.

Kyle Zawake, legislative director for the American Civil Liberties Union, urged the committee to advance the bill. "Cash payments are inherently private," he said, and he warned that digital payment systems collect transaction data that can be breached and create centralized points of failure that leave people unable to access money during outages. He said requiring state agencies to accept cash would help ensure that "all Michiganders, regardless of their financial status, race or background, have access to essential services."

Committee members raised operational, security and fraud questions. Representative Vanderwall asked where agencies would process cash and whether the bill would force new processing centers and additional costs, and he warned about mailed payments: "if we're throwing a couple $100 in a mail envelope ... how do we ensure that it's tracked and fully there?" Zawake said agencies have historically accepted cash and are capable of implementing secure processes but acknowledged implementation details would need further consideration.

Representative Fitzgerald said she shared concerns about system integrity but emphasized fraud risk, pointing to scams that move cash through cryptocurrency machines and saying continued cash handling could create new avenues for scammers. Representative Harris noted the long-standing legal status of cash, reading from a bill that "this note is legal tender for all debts, public and private," and expressed support for the bill's premise.

No vote was recorded on HB 5340 during the hearing. Committee members said the operational details — thresholds for cash transactions, agency procedures for secure handling, and potential amendments — would require additional work before the measure is ready for a final committee vote.

The committee adjourned with no further business.