By Howard Fischer
Capitol Media Services
PHOENIX -- Two groups involved in politics in Arizona 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 that Proposition 211 runs afoul of a provision in the Arizona Constitution saying every person "may speak freely ... on all subjects.'' And that, the lawsuit said, includes the right not to be forced to speak.
"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. 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 dialog on public issues to avoid having to disclose the names of their donors.
In the lawsuit filed in Maricopa County Superior Court, Freeman also argues that the initiative violates another state constitutional provision which says no individual "shall be disturbed in his private affairs ... without authority of law.''
That, he said, includes financial information, political choices -- and giving to "charities engaging in campaign media spending.''
And Freeman said that also protect the financial dealings of private organizations.
Only thing is, the "charities'' the new law affects includes 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.
But 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 initiative was aimed at what former Attorney General Terry Goddard, who helped craft 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 who donated to the group. That, he said, 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.
And the Free Enterprise Club itself reporting spending money just this year on several legislative races, both for candidates it supported and against those it opposed. But those reports gave no indication from where the group's money came.
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,'' he said.
"It could have been that, whatever that issue was, it was being debated at the legislature and then turned into a ballot fight,'' Mussi said. "But that's just part of the larger mission of what that organization was doing.''
And then, he said, is the fear that 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.''
Mussi acknowledged that this isn't about just protecting the names of individuals. As the law now stands -- and would remain if his lawsuit succeeds -- those shields are available even 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 had come from Arizona Public Service, the same company which in 2017 had gotten approval from the regulators for a 4.5 percent 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 which voided a California requirement that charities and nonprofit organizations operating in the state provide the attorney general's office with the names and addresses of their largest donors. He contends that precedent applies to groups who are formed to influence elections.