PHOENIX — A Republican lawmaker wants Attorney General Kris Mayes to investigate whether Katie Hobbs illegally used state resources to raise money in the name of paying inaugural expenses when most of the cash actually went into a fund that can be used for political campaigns.
Rep. David Livingston said research he already did during the session while exploring potential legislation to restrict the use of inaugural funds shows evidence that Hobbs, while still governor-elect, used a state website to raise money for both the inaugural ceremony at the Capitol on Jan. 5 and a separate inaugural ball two days later at Talking Stick Resort.
But the Peoria lawmaker said that the records he has been able to obtain show that not all the money raised went to pay for expenses. In fact, he said, the most recent information he has been able to get shows that the committee that collected the money still has more than $868,000.
The committee that collected most of the dollars was organized under the Internal Revenue Code as a “social welfare” corporation fund run by Nicole DeMont, who ran Hobbs’ successful gubernatorial campaign. And IRS rules allow such organizations to engage in issues advocacy that could affect the outcome of an election, spending money on things like educating voters about a particular lawmaker’s record.
Livingston said efforts to get more information about the fund have largely proven fruitless. And attorney Jonathan Berkon who said he is representing the Katie Hobbs Inaugural Fund, specifically rejected Livingston’s request for a full accounting of all deposits to and withdrawal from the account, including the date, amount and purpose of each transaction.
In a letter to Livingston, Berkon cited that “social welfare” status of the account and said that nothing in either Internal Revenue Service rules or state law require public disclosure of donors or information about expenditures beyond what must be included on its tax return.
Berkon also said it was “improper” for Livingston to request all emails, documents and other records associated with soliciting donations to the inaugural fund. He said what is being sought includes emails that are private and internal to the organization.
And Berkon said the U.S. Constitution protects the documents and communications from disclosure, saying that making that information public could have a “chilling effect” on the fund’s exercise of its First Amendment rights.
Livingston, however, is raising questions about more than $17,000 he has been able to determine from documents already produced that has gone to Berkon’s employer, Elias Law Group. That is the firm that has represented Hobbs in the ongoing lawsuit by failed gubernatorial hopeful Kari Lake in her bid to overturn the election results.
He told Mayes she should request records from Elias Law to determine “whether the Inaugural Fund paid those legal fees to fund a legitimate inaugural purpose, or instead to influence the governor’s election after procuring those funds through the state website,” which Livingston said would violate state law.
The Hobbs campaign, under public pressure, did an initial disclosure in January to Capitol Media Services listing $1.5 million in donations from corporations and other special interests to cover the cost of her inauguration. But those same records said the event cost only about $207,000 to put on.
That report also showed that Arizona Public Service, the state’s largest electric utility, was the biggest donor at $250,000 — an amount that itself exceeded the price tag of the event.
And that left the balance in that “social welfare” account.
Livingston acknowledged he was able to get some additional records in February which said the inaugural fund has a balance of more than $868,000. But he said in his letter to Mayes that the fund, though its attorney, said it does not intend to provide information about future donors or expenditures.
Livingston said there there’s a separate question of Hobbs, as governor-elect, raising money for the Arizona Democratic Party through sale of $150 tickets to the inaugural ball “advertised on the state website.”
“These lingering questions concerning the legality of the governor’s unprecedented use of state resources must be promptly investigated,” Livingston wrote to Mayes.
He also told the attorney general it is irrelevant whether cash already has been spent from the fund for political purposes.
“Even assuming your investigation reveals that no funds have yet been used to influence elections, it may be necessary to seek injunctive relief to determine who controls the remaining fund and to prohibit the governor and/or third parties from using those funds to influence elections in violation of (state law),” he wrote.
A spokesman for the inaugural campaign declined to comment. And an aide to Mayes said her office has received Livingston’s request for an investigation but said he could not say anything beyond that.
Earlier this year lawmakers approved — and Hobbs signed — legislation that requires all inaugural donations to be deposited into a special state protocol account.
Under state law, proceeds from that fund 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 cash for other purposes, ranging from new office carpeting to gifts for foreign dignitaries.
But those dollars cannot be used for political purposes. And how the cash is spent is a public record.
Only thing is, Livingston told Mayes, none of that has any effect on what the Hobbs fund collected because that measure is not retroactive.
