PHOENIX — Two groups involved in Arizona politics want a court to void a new voter-approved law designed to prohibit “dark money’’ in political races.
The Center for Arizona Policy and the Arizona Free Enterprise Club contend Proposition 211 runs afoul of a provision in the Arizona Constitution saying every person “may speak freely ... on all subjects.’’ That includes the right not to be forced to speak, their lawsuit says.
“The act violates Arizonans’ right to speak freely by chilling donors from supporting causes they believe in and wish to support, lest their charitable giving become public knowledge,’’ wrote attorney Scott Freeman of the Goldwater Institute.
He represents the two organizations, which urged voters to reject the measure in the Nov. 8 election. That effort was unsuccessful as it was approved by a margin of close to 3-1.
Freeman also said the law impairs the ability of nonprofit groups to engage in dialogue on public issues without having to disclose the names of their donors.
In the lawsuit filed in Maricopa County Superior Court, Freeman also argues the initiative violates another state constitutional provision that says no individual “shall be disturbed in his private affairs ... without authority of law.’’
That includes financial information, political choices, and giving to “charities engaging in campaign media spending,” he said. Freeman said it also protects the financial dealings of private organizations.
Charities involved in partisan politics
The “charities’’ the new law affects include what the Internal Revenue Service classifies as “social welfare organizations.’’ And while they are nonprofit entities, they can use up to half the money they raise for partisan political activities, including spending money for and against candidates and ballot measures.
Scot Mussi, president of the Free Enterprise Club, said his organization fits the IRS definition because it is “doing work that helps out others,’’ even if it does try to influence elections.
The Free Enterprise Club lobbies on behalf of business issues, including lower taxes and less regulation. It was one of the sponsors of an unsuccessful ballot measure to require more identification on early ballots and from voters going to the polls.
The Center for Arizona Policy lobbies for greater regulation of abortion, more money for school vouchers, and against nontraditional forms of marriage.
The initiative was aimed at what former Attorney General Terry Goddard, who helped write it, considers a loophole in the law.
Arizona law for years has required the names of those who give at least $50 to political campaigns or to support or oppose ballot measures to be made public. That includes “in-kind’’ contributions, where some organization, rather than give money to a cause, runs its own commercials.
But the law until now has been that only the name of the organization need be made public, not the individuals or corporations that donated to the group. That is why the sponsors of so many of the political commercials run during the campaign were identified only by names that gave viewers no clue as to who really was financing them, Goddard said.
The Free Enterprise Club itself reported spending money this year on several legislative races, both for candidates it supported and against those it opposed. But those reports gave no indication of the sources of the group’s money.
Goddard said Proposition 211 addresses that by requiring public disclosure of anyone who has given at least $5,000 to one of these groups. Potentially more significant, it requires any group making political expenditures to trace the money back to its original source, no matter how many hands it has passed through.
And while campaign commercials can’t list all major donors, the law says they must include at least the names of the three contributors who made the largest contributions.
Mussi said the initiative is built on the premise that money is being deliberately funneled through organizations like his to hide the source. He said it’s not that simple.
“You’re operating under the assumption that giving to the Free Enterprise Club or any other organization, that was the impetus for the giving,’’ Mussi said. “It could have been that, whatever that issue was, it was being debated at the Legislature and then turned into a ballot fight. But that’s just part of the larger mission of what that organization was doing.’’
He said some people fear harassment and intimidation if it is known they have contributed money to a certain ballot cause. Mussi said that could include people who might oppose same-sex marriage, an issue that was on the ballot in Arizona in 2008.
Goddard, however, said there’s no reason for state law to allow a special carve-out from disclosure requirements.
“Ninety-nine percent of all people that participate in political contributions in Arizona disclose fully their name, their home address and their employer,’’ he said. “All we’re asking for is that the same rules apply to everybody.’’
Shielding corporations
Mussi acknowledged this isn’t about just protecting the names of individuals. As the law stands — and would remain if his lawsuit succeeds — those shields are available to corporations.
In 2014, for example, outside groups including the Free Enterprise Club and Save Our Future Now put $10.7 million into successful campaigns to elect Republicans Tom Forese and Doug Little to the Arizona Corporation Commission.
But it was not until 2019, under a commission subpoena, that it was disclosed those funds came from Arizona Public Service, the same company which in 2017 had gotten approval from the Corporation Commission regulators for a 4.5% rate hike.
Mussi responded that his organization was not alone, noting that outsiders, including groups supporting a solar energy mandate, backed Democrats.
There are some legal precedents.
The U.S. Supreme Court, in the landmark 2010 case of Citizens United, prohibited the government from restricting independent expenditures for political campaigns by corporations, labor unions and other organizations. But Goddard said the justices specifically did not bar disclosure requirements.
But Mussi cited a 2021 ruling by the nation’s high court that voided a California requirement for charities and nonprofit organizations operating in the state to provide the attorney general with the names and addresses of their largest donors. He contends that precedent applies to groups formed to influence elections.
Declaring that "dark money erodes public trust," President Joe Biden called on Congress to support an election transparency bill now before the Senate that would require Super PACS and other groups spending money in elections to disclose donors who give at least $10,000 during an election cycle. The legislation, called the Disclose Act, would also ban domestic corporations with significant foreign control from spending money in U.S. elections. Speaking from the White House Roosevelt Room, Biden urged Senators to support the bill, warning, "there's much too much money that flows in the shadows to influence our elections," including foreign money. "Dark money has become so common in our politics. I believe sunlight is the best disinfectant," he added. The House has already passed the legislation and a Senate vote is expected this week. But Republicans have threatened to block the measure from passing. "And I acknowledge, it's an issue for both parties, but here's the key difference. Democrats in the Congress support more openness and accountability. Republicans in Congress so far don't. So far don't. I hope they'll come around," Biden said.
