Hobbs won't surrender excess inaugural donations to state fund

In a hand-delivered letter Thursday, House Speaker Ben Toma and Senate President Warren Petersen called on the Democratic governor to surrender control of what’s left from the more than $1.5 million she collected, as first reported by Capitol Media Services, for the Jan. 5 celebration. The listed costs for the celebration totaled about $207,000.

The excess is controlled by a corporation set up under the Internal Revenue Code as a “social welfare’’ organization. Under federal law, such proceeds can be used for political purposes.

That alarmed the two Republican leaders, who said it isn’t right.

Nicole DeMont, who was Hobbs’ campaign manager — and now runs that social welfare organization — refused to comment on the request. So the money remains where it is and can potentially be used to buy campaign ads in 2024 to elect Democrats and defeat Republicans.

In asking Hobbs to surrender the money, Toma and Petersen said she should put any excess into a state Protocol Fund.

Under state law, Protocol Fund money can be used for “promoting the interests of the state or to promote and encourage citizen public service to this state.’’ Governors also have used it for other purposes, ranging from new office carpeting to gifts for foreign dignitaries.

Previous Gov. Doug Ducey, a Republican, used some of the proceeds of his first inaugural to pay the costs of hiring a transition team, an aide has said.

Significantly, any expenditures from the Protocol Fund must be disclosed in an annual public report.

Nothing in state law appears to require Hobbs to surrender control of what’s left of her inaugural collections. But Toma and Petersen told her she should “follow in your predecessors’ footsteps’’ and transfer the excess to the Protocol Fund.

“Given this historical practice, as well as the Inaugural Fund’s own descriptive title, Arizonans would have reasonably anticipated that any excess funds would be used for state interests,’’ they told her.

They also hinted that failure to do so could lead to legal challenges. That’s because there was a link on the governor’s state-run web page where people were given a number they could call if they wanted to become paying sponsors.

That, the GOP lawmakers argue, means “public resources ... were used to solicit funds for the Inaugural Fund,’’ the leftovers of which, if kept in the “social welfare’’ account, could be used in the 2024 election to try to get a Democratic majority at the Arizona Capitol.

“It would be inappropriate to utilize any monies in the Inaugural Fund to influence an election,’’ Toma and Petersen said, citing state statutes that prohibit public resources to affect the outcome of any vote.

There is no evidence that in seeking donations, members of Hobbs’ inaugural committee made specific promises, either to donors or others, of how any leftover funds would be used.

Arizona Public Service, the state’s largest electric utility, was the biggest donor at $250,000.

Company spokesman Mike Philipsen would say only that the company was “joining Arizona businesses to support the governor’s inauguration.’’ He also said the donation is “directed specifically to the 2023 gubernatorial inauguration committee,” meaning it can be “used in support of all inauguration functions.’’

Philipsen did not respond to follow-up questions about how APS felt about the possibility of having some of its donations used to elect Democrats.

The rest of the list of donors is made up largely of other special interests and lobbyists with business at the Capitol.

Hobbs’ office said, however, she will surrender what’s left in a separate State Inaugural Fund, distinct from the social welfare organization, that received direct donations and pledges of about $85,000. The largest of those was $25,000 from food giant conglomerate Pepsico. Any money left over from that fund after all vendors are paid will be transferred to the Protocol Fund, said Hobbs’ press aide Josselyn Berry.