PHOENIX — The Citizens Clean Elections Commission has voted to try to find the sources of “dark money” in Arizona’s political campaigns, something the Secretary of State’s Office says it can’t — or won’t — do.
Without dissent, the panel adopted a rule that spells out what will be considered to be a “political committee.” That designation is crucial because only political committees are required to report both contributions and expenditures.
Put simply, it lays out a test: The reporting requirement applies when any organization spends at least half of its overall communications expenses on Arizona political races.
Tom Collins, the commission’s executive director, said the rule is a direct result of heavy spending last election by groups that refused to disclose the source of their cash. Those outside expenditures have overwhelmed the system.
In last year’s gubernatorial race, for example, the $5 million spent on the general election directly by Republican Doug Ducey and Democrat Fred DuVal was eclipsed by the $9 million others spent trying to influence the race.
And two Republicans got elected to the Arizona Corporation Commission with $3 million spent by outside groups, raising questions about how much came from the Arizona Public Service Co.
Friday’s vote came over the objections of Lee Miller, the deputy secretary of state. He asked the commission to delay the move to allow for further talks with his office.
But several commissioners noted that there have been months of such negotiations, all without any sort of deal.
More to the point, even Miller admitted there was no way he and his boss would agree to any regulation that would require certain groups to report.
Federal tax law allows some groups to seek tax-exempt status as “social welfare” organizations. And they are permitted under the tax code to spend money influencing elections.
Miller’s position is that once a group gets that federal tax status, the state’s hands are tied.
“The federal tax code and federal law trumps state law,” he said. And that tax code, said Miller, says such groups are not required to disclose donors.
Collins scoffed at that explanation.
“Federal tax law is not relevant to state campaign finance law,” he said.
Tax code aside, Miller said the commission should not act on its own, leaving it up to the Legislature to decide who should report.
But Commissioner Mark Kimble said there’s no guarantee lawmakers would actually move to crack down on dark money.
“And they’re free to do that even if we adopt this rule,” he said.
Collins said while the rule is new, the efforts by the commission to crack down on dark money is not.
Current law already says that reporting of donors is required from any group whose “primary purpose” is “the result of any election in this state or in any county, city, town or other political subdivision in this state, including a judicial retention election.”
The problem has been that there is no specific definition of what constitutes “primary purpose.” Collins said that leaves both groups and individuals unsure of when they have to comply with the law.
What it also has done is force the commission to decide who is and is not subject to the law on a case-by-case basis, with no hard-and-fast test. The 50 percent standard makes it a simple math equation.
There are indications the commission will have to defend the new rule in court.
State Elections Director Eric Spencer testified at a prior commission meeting that his boss, Secretary of State Michele Reagan, is the only one authorized to enforce campaign finance laws.
He told panel members that if they approve the measure “you’ve just bought yourself a lawsuit.”
A similar threat came from Glenn Hamer, president of the Arizona Chamber of Commerce.
“We’re going to vigorously defend our right to participate in the process,” he told the commission. “There is absolutely no question that the rules as proposed will lead to litigation.”