Lawsuit challenges dark money growth

A voter advocacy group, a union and Democrat lawmakers are asking a judge to void a new Arizona law expanding the ability of some groups to make anonymous "dark money" contributions to political campaigns.

Story by Howard Fischer, Capitol Media Services

The lawsuit filed Wednesday in Maricopa County Superior Court charges the Republican-controlled Legislature acted illegally earlier this year in exempting some organizations from laws that require them to register before they can spend money to influence who is elected. More to the point, it also allows them to avoid disclosing to voters who provided that cash in the first place.

But attorney Jim Barton said there are other legal flaws in the measure.

One, he said, is that the exemption lawmakers provided to certain nonprofit organizations applies only to those that also are registered with the Arizona Corporation Commission. But Barton said the legislation denies the same privilege to unions which, while organized as nonprofits, do not register with the commission.

Potentially the most sweeping, Barton said lawmakers violated a constitutional provision that requires the legislature to have laws that tell the public about all of the contributions to and expenditures by campaign committees and candidates for public office.

He said SB 1516 allows nonprofits and similar entities to make unlimited contributions to political parties. Then the parties can spend unlimited amounts of money on behalf of their nominees.

"Since the reporting of these particular contributions are not required, then built-in disclosure safeguards (required by the Arizona Constitution) are broken," Barton wrote.

A spokesman for the Secretary of State's Office, which enforces the campaign finance laws, said the lawsuit is being studied.

The new law, pushed through largely along party line votes earlier this year, was a major overhaul of campaign finance laws.

It allows individuals to spend unlimited amounts of money to help raise funds for candidates they support without having to disclose it to the public.

Another provision scraps the $100 cap on what people can spend in tickets, food and liquor for fundraisers for candidates without having to disclose the source of those dollars.

What makes that important is someone with resources can put on a $5,000-a-plate fundraiser for legislators and absorb all the costs. So the pricetag for the affair -- and even who paid for it – could remain a secret.

Most significant, it eliminates laws that require groups spending money to influence elections to register first with the state. And these same groups also can refuse to disclose donors to the public if they are registered with the Internal Revenue Service as a "social welfare" organization.

The prime architect was Rep. J.D. Mesnard, R-Chandler, who is now speaker of the House.

He cited a 1950s case where the U.S. Supreme Court ruled that 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 could 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."

Barton, in filing suit for the Arizona Advocacy Network, the Brickworkers and Allied Crafterworkers Union Local 3 and more than two dozen Democrat lawmakers, avoids the philosophical question in favor of the legal one.

Most significant is that some of the financial disclosure requirements were enacted initially not by legislators but by voters in approving the Citizens Clean Elections Act in 1998.

That law set up a voluntary system for candidates for statewide and legislative office to get public funds if they do not take private dollars. And it also sets out rules for who has to disclose donations.

More to the point, because the law was enacted by voters, it cannot be amended or repealed by the Legislature without a three-fourths vote -- and only if the change "furthers the purpose" of the underlying law. Barton said it did not get that margin and does not meet the second test.

What that means, he said, is that any provisions in SB 1516 that conflict with the 1998 law are legally void and unenforceable.

One of these, he said, was the decision of lawmakers to say that candidates who do not accept public dollars are not subject to scrutiny -- and punishment -- by the Citizens Clean Elections Commission. Barton said that clearly runs contrary to what voters approved and illegally undermines the power of the commission to enact campaign finance rules.

Mesnard, however, argued that the commission was overstepping its bounds.

The bid to exempt social welfare groups from financial disclosure got a fight from Tom Collins, the commission's executive director.

On paper, a group cannot be a social welfare organization if it spends more than half of its money on political spending. But Collins said the IRS does not police these groups to ensure they are not violating the legal limits on political spending.

With the new law putting these groups' records off limits to state officials, Collins said that pretty much gives them permission to do what they want in secret.