DARK MONEY: Arizona bill quietly loosens dark money rules

March 5, 2016

Submitted by:  Veronica Coffin

Michele Reagan

 

By RYAN VAN VELZER Associated Press

A campaign finance bill moving through the Arizona Legislature was touted as a routine housecleaning measure to simplify the state’s complicated election regulations.

Not mentioned by the bill’s backers is a provision buried in the 54-page proposal that could have major ramifications for future elections.

The measure by Sen. Adam Driggs, R-Phoenix, allows dark money groups to double the amount they spend on ballot measures. Dark money is generally defined as political groups that do not report their donors.

It would also let nonprofit groups spend more money influencing elections without having to reveal donors.

The dark money changes were not mentioned by lawmakers or the chief backer of the bill — the office of Republican Secretary of State Michele Reagan — during committee hearings last month, where the bill passed along party lines.

The Arizona chapter of Americans for Prosperity, the group backed by the conservative billionaire Koch brothers, was among the organizations that supported the legislation.

Reagan’s elections director, Eric Spencer, later confirmed the changes after The Associated Press inquired about the bill’s impact on dark money.

Critics cite it as a back-door attempt to quietly sneak the dark money provisions through the Legislature by attaching the changes to a broader campaign finance bill.

“That was really disingenuous to market this as a technical fix, cleanup bill,” said Sen. Martin Quezada, D-Phoenix. “There are major policy-level changes being proposed in this bill.”

Dark money has become a hotly debated topic around the country ever since the Citizens United Supreme Court decision in 2010 made it possible for groups to spend unlimited amounts of money on campaigns and keep the identities of the contributors a mystery. Some states have attempted to rein in the practice by requiring more transparency in the process.

The Arizona Center for Investigative Reporting previously reported that dark money groups spent more than $18 million during the 2014 election cycle in the state.

Reagan’s office helped craft the bill, despite her repeatedly vowing to clamp down on dark money during her 2014 campaign.

Spencer said he spent much of the past year working with interested parties to craft the new system that also would make it easier for candidates to run for office, increase the frequency of campaign finance reports and add key enforcement tools. Spencer said he believes changes in the law to keep donors secret are important for the democratic process.

“Political participation is depressed through disclosure,” he said, adding later, “We think the draft in the bill provides the right balance between disclosure and accountability.”

Dark money groups typically register as social welfare organizations and are not allowed to have political advocacy as their primary purpose. That means they can spend 49 percent of their money directly on elections, and 51 percent on social welfare advocacy, which is broadly defined.

The Arizona bill would change the law to allow these groups to spend unlimited amounts on ballot measures. In addition, social welfare organizations may not have to disclose how much they spend on ballot measures in the bill’s current form.

The changes could have high stakes in Arizona as the state regularly is home to hot-button ballot measures. For example, Americans for Responsible Leadership, which is linked to the Koch brothers, spent about $1.5 million trying to kill a sales-tax increase and a “top-two” primary system in the 2012 election. The current legislation could pave the way for more organizations to form in Arizona and influence elections without revealing donors or even how they spend their money.

“Like water flows downward, the money will flow to those entities that take advantage of the new framework or loophole,” said Tom Collins, executive director of the state’s Citizens Clean Elections Commission.

The provision also changes the reporting requirements for tax-exempt organizations that spend money on state elections. Current rules require those organizations like the Arizona Chamber of Commerce and the Arizona Cattlemen’s Association to disclose their donors if they are spending more than 50 percent of their funds on an election.

While these entities don’t spend as much on elections as social welfare organizations, the proposed legislation would let them spend freely on ballot measures and candidates without revealing their donors.

Spencer dismisses the notion that the legislation expands dark money because he disagrees with the definition of what constitutes dark money.

He said dark money only involves completely anonymous speech. Under his definition, organizations in the Koch brothers’ network like Americans for Prosperity that spend millions of dollars on campaigns are not dark money groups as long as they identify themselves in political ads.

“I would define dark money as completely anonymous political speech,” he said. “It’s not ‘dark’ because the identity of the speaker is being disclosed.”

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