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Arizona Asks Appeals Court to Block Laws That Regulate Campaign Finance

By Howard Fischer
Capitol Media Services

PHOENIX -- An attorney for the state asked the Court of Appeals to block the Citizens Clean Elections Commission from enforcing certain laws that regulate how much candidates and others can spend on campaigns and what the public must be told about it.

Tim Berg told the judges on Wednesday that the Republican-controlled Legislature was within its power in 2016 in crafting exceptions to campaign finance laws. He said the changes were not directly part of the Clean Elections Act which voters enacted in 1998.

But commission attorney Joseph Roth said that the 2016 alterations violated the Voter Protection Act, which bars legislators from tinkering with what voters have enacted, because it effectively nullified what voters had approved because of the way lawmakers crafted the proposal. And that, he said, unconstitutionally undermined the intent of the 1998 law which was designed to reduce the influence of money on politics.

What the appellate court decides ultimately will determine the legality of what foes of the 2016 changes be considered loopholes that legislators put in the law. That includes including one that allows supporters to effectively provide unlimited amounts of cash to get candidates elected without having to disclose who they are.

The 2016 law was championed by then-House Speaker J.D. Mesnard, R-Chandler.
He said that existing laws interfered with the rights of free speech and people to participate in the political process with their dollars without giving up their right of privacy. It was approved on a largely party-line vote and signed into law by Gov. Doug Ducey.

But the flip side of that, according to foes of the law, is that any decrease in disclosure requirements denies voters of at least some indication of who is spending money to try to influence the outcome of campaigns. That, they said, is why voters in 1998 gave broad powers to the commission to police campaign contributions.

That 1998 law set up a voluntary system of public financing for statewide and legislative candidates who agree not to take money from special interests. It also imposed other limits on not just spending, both by candidates and supporters, but also disclosure requirements for those who spend money to influence races.

It is overseen by a five-member bipartisan commission.
Berg argued to the court that the commission's power extends only to those who run with public financing.

Roth disagreed, saying what voters approved also gave the commission authority to police spending by all candidates. And that, he told the judges that the 2016 law effectively undermined that authority.

"This is a surgical removal of part of the commission's enforcement power,'' Roth said. "It cuts at a core purpose of the commission: to serve as a separate, bipartisan appointed entity that can administer the (Clean Elections) Act's campaign finance reforms without undue influence from elected officials.''

This is more than academic.

One of the key provisions of that 1998 law, was that requirement for "independent expenditures'' on behalf of or against candidates to be disclosed.

Since voters approved the law, the commission has pursued several high-profile cases when there have been TV commercials attacking candidates with no disclosure of what group was financing the effort.

But the 2016 law removes some of the commission's oversight in several ways.
One is a provision exempts all reporting by any organization which has received a designation as a non-profit by the Internal Revenue Service.

By contrast, the commission's position is that they have to actually look at how an organization is spending its money. Put simply, if half or more of its cash is actually being used to urge people to support or oppose a candidate, the commission contends the public is entitled to know who is spending that money.

Attorney Jim Barton, representing the Arizona Advocacy Network, which sued to overturn the 2016 law, said it created other problems. One provision specifically allows political parties to take money and then spend unlimited amounts on behalf of their candidates without disclosure.

"It just totally eliminates the limit on this one particular type of in-kind contribution,'' Barton said. And he said that was never the intent of the voters who approved the 1998 law.
There are concrete examples of exactly how that changed played out.

In the 2018 election, for example, the Arizona Republican Party ran TV commercials on behalf of the reelection efforts of Ducey and Attorney General Mark Brnovich. But the exact amount they spent on behalf of each was never reported because of the exemption created in that 2016 law.

This became particularly significant because Ducey raised money not only directly for his own campaign but also took corporate and large-dollar donations -- donations he could not accept personally -- through a separate Ducey Victory Fund committee.

What happened is that any dollars Ducey could not keep himself because they exceeded what he could take from any individual were given to the Arizona Republican Party. And then the party then was free to turn around those dollars to help the governor's reelection, all without detailing how much was spent on his behalf.
This wasn't just a practice of one party.

The Arizona Democratic Party also put $3.3 million into the effort to elect Katie Hobbs as Secretary of State. But that figure became public not through campaign finance laws. It was only because iVote, which promotes the election of Democratic secretaries of state, the group that gave the money to the state party to promote Hobbs, put out a press release detailing the expenditure.

Foes of the 2016 law won the first round of the legal battle when Maricopa County Superior Court Judge David Palmer ruled it conflicts with the Clean Elections Act.
The appellate judges gave no indication when they will rule.