PHOENIX — The state House gave final approval Tuesday to a major overhaul of campaign finance laws, including allowing individuals to spend unlimited amounts of money to help raise funds for candidates they support without having to disclose it to the public.
On a 31-27 vote largely along party lines, lawmakers agreed to scrap the $100 cap on what people can spend in tickets, food and liquor for fundraisers for candidates.
SB 1516 also eliminates existing law that requires groups spending money to influence elections to register first with the state. Those groups also could refuse to disclose donors if they have registered with the Internal Revenue Service as a “social welfare” organization.
It also would allow candidates with large campaign war chests to transfer money to others.
The measure, which now goes to the governor, also allows groups to spend unlimited amounts, including corporate dollars, to try to change state law while leaving voters in the dark about who is behind the campaign.
“I think transparency is a good principle,” said Rep. J.D. Mesnard, R-Chandler, the prime proponent of the legislation. “But it is not the overarching principle.”
He cited a 1950s case where the U.S. Supreme Court ruled the state of Alabama could not force the NAACP to disclose its members in order to do business in the state because it could lead to harassment of those members. Mesnard said donors to “dark-money” groups are entitled to the same protection, suggesting the government would go after those whose views it does not like.
“We have a right to speech, which our money is speech,” Mesnard said. “We have a right to privacy in those associations.”
But Rep. Ken Clark, D-Phoenix, noted that Supreme Court Justice Antonin Scalia, in the 2010 Citizens United ruling opening the door to corporate donations, said nothing in that decision precludes states from forcing groups seeking to influence elections to disclose their donors.
“Requiring people to stand up in public for their political acts fosters civic courage, without which democracy is doomed,” Scalia wrote. “For my part, I do not look forward to a society which, thanks to the Supreme Court, campaigns anonymously and even exercises the direct democracy of initiative and referendum hidden from public scrutiny and protected from the accountability of criticism.”
Clark, who led the opposition, focused much of his concern on what he called the “kingmaker” provision allowing inter-candidate transfers. Clark said that permits the person with the money — especially a party leader or other elected official — to exercise undue influence over other legislators.
Those transfers were made illegal as part of a 1986 voter-approved rewrite of campaign finance laws. And Rep. Debbie McCune Davis, D-Phoenix, who was in the Legislature before the change, said she saw how that worked.
She said rank-and-file Republican lawmakers were called into the office of Burton Barr, who was the House majority leader and who also had one of the largest campaign finance treasuries in the state. McCune Davis said those lawmakers said they were told that funding for their re-election campaigns was linked to voting for a particular piece of legislation that GOP leadership wanted.
Mesnard said he didn’t see the big deal. He said the recipients of the money would still have to disclose who gave them the money.
But McCune Davis pointed out that campaign finance reports would contain only the name of the other politician who provided the money.
What it would not show, she said, is where that politician got his or her money.
That inter-candidate transfer provision also bothered Rep. Noel Campbell, R-Prescott, enough for him to break party ranks and oppose the measure along with fellow Republicans Reps. Chris Ackerley of Sahuarita, Kate Brophy McGee of Phoenix and Michelle Ugenti-Rita of Scottsdale.
That question of what the public will no longer know is at the heart of the debate over SB 1516.
For example, current law allows people to host a fundraiser for a candidate. But the law limits those expenses to no more than $100.
SB 1516 removes all limits, permitting someone with resources to put on a $5,000-a-plate fundraiser for legislators and absorb all the costs. So the cost of the affair — and even who paid for it — would never be reported to the public even though the candidate would know the benefactor.
The measure also makes other significant changes.
Current law requires those who seek to influence campaigns to first register with the state and then disclose expenditures. And if they spend at least half their money on campaigns, they also are required to publicly list their donors.
SB 1516 sets out a presumption that if the IRS recognizes the group as a social welfare group, there need be no reporting at all.
Clark said a group could register with the IRS and it could take a year or more — long after the election was over — to figure out whether it really qualified for that social welfare status.
Rep. Randall Friese, D-Tucson, said Arizonans don’t need to look far for examples of hidden donations.
Campaign finance records show that Save Our Future Now and the Arizona Free Enterprise Club together spent more than $3 million on the 2014 Arizona Corporation Commission campaign.
Both groups disclosed their expenditures but have refused to reveal their donors because of the social welfare status. And Friese pointed out that Arizona Public Service Co. has refused to confirm or deny it gave hundreds of thousands of dollars to either group.
“This has nothing to do with benefiting the voters,” Rep. Juan Mendez, D-Tempe, said of the measure.