Arizona AG asked to rule on legality of Tempe law against ‘dark money’ in campaigns

PHOENIX — Attorney General Mark Brnovich is going to rule whether cities can impose their own prohibitions on “dark money” in local campaigns.

The move comes because Sen. Vince Leach, R-Tucson, has invoked a state law that requires the attorney general to investigate allegations by lawmakers of violations of state laws by local officials.

In this case, Leach contends a Tempe initiative approved by voters in 2017, requiring public disclosure of the true source of campaign donations, is illegal.

What Brnovich decides — and he is required to issue a ruling — could affect the ability of cities and towns throughout the state to enact similar laws.

Meanwhile, former Attorney General Terry Goddard — citing dark money spent in the just completed Phoenix mayoral race — is crafting a new initiative asking voters statewide to put a “right to know” provision into the Arizona Constitution.

That measure, if it makes it onto the ballot and is approved in 2020, would most immediately overrule existing laws enacted by Republican lawmakers that now shield anonymous donors who finance high-dollar independent campaigns for and against candidates and ballot measures.

It also would remove any legal doubt that local governments can also enact disclosure requirements.

At issue most immediately is the Tempe ordinance.

It says that any group that spends more than $1,000 during any election cycle must “disclose the original source … of all major contributions.” That includes the name, address and employer of anyone donating more than $1,000.

The measure was approved at the ballot by a margin of 91-1 and formally enacted by the city council.

Leach contends the ordinance is in violation of a 2018 state law he pushed through the Republican-controlled Legislature which prohibits local governments from requiring organizations declared to be tax-exempt by the Internal Revenue Service from registering as political committees, even if they are putting money into races.

More to the point, it precludes any requirement that these so-called “dark money” groups identify donors. And it bars local governments from auditing the books of these groups or responding to subpoenas, even if there are allegations they are violating campaign finance laws.

That law mirrors a 2015 measure, also approved by lawmakers, granting more anonymity to donors who put money into independent campaigns for statewide and local races.

In signing the 2017 law, Republican Gov. Doug Ducey, who has been the beneficiary of anonymous campaign donations, said he believes in transparency. But he also said there’s a valid reason to allow people to contribute anonymously to campaigns.

“People have a First Amendment right as well to participate and not be bullied,” he said.

Leach, in his complaint to Brnovich, echoed those sentiments in arguing that the 2017 law trumps Tempe’s ordinance.

“The state of Arizona always has the authority to protect the constitutional rights of its citizens, and no local ordinance may violate those rights,” he said. Leach also cited a 1958 U.S. Supreme Court decision that nonprofit groups seeking to affect the political process can shield the names of donors.

“Tempe can no more violate this right than it could require voters to allow city officials to inspected their filled-out ballots,” he wrote. “Local control ends where constitutional rights begin.”

That question of local control could affect what Brnovich decides.

The Arizona Supreme Court has ruled that the state’s 19 charter cities — Tempe is one of them — have certain rights under the state constitution to decide matters of strictly local concern. For example, the justices rebuffed a bid to force Tucson to scrap its modified ward system of electing council members.

But Leach argues that right is not absolute.

The question of local control of campaign finance came into sharp focus in Tuesday’s Phoenix mayoral election.

Last year about 87 percent of Phoenix voters voted to adopt an ordinance similar to Tempe’s. But Ducey, who is required to review all city charter changes, has so far refused to give his approval.

The result was a flood of dark money campaigns both for and against candidates Kate Gallego and Daniel Valenzuela. That included a group operating under the banner of Advancing Freedom Inc., based out of Oklahoma City but not disclosing its donors, buying newspaper ads urging voters to support Valenzuela. Gallego won Tuesday’s election.

Gubernatorial press aide Patrick Ptak would say only that the Phoenix ordinance “is currently under review by our legal division.” He did not explain why that has taken months.

Brnovich, for his part, won’t get that much time: The law Leach has triggered requires him to provide an answer within 30 days.

If Brnovich finds there is a violation he has to order the state treasurer to withhold half of the community’s state aid. If he thinks there might be a violation, however, he can seek to have the question resolved by the state Supreme Court.

Goddard said this underlines the need for a constitutional provision that would force disclosure of spending on all races, state and local.

As his initiative is envisioned, any organization that puts at least $20,000 into a statewide race or $10,000 into a local race would have to identify any individual or business that is the source of at least $5,000. Goddard said that ensures major donors are identified without imposing a burden on groups and still allowing smaller donors to keep identities confidential.

“I think a lot of people who had not quite focused on the problems inherent in anonymous contributions had a wake-up call in the Phoenix mayoral election,” he said, citing the last-minute ads run in the race. “Somebody in Oklahoma City suddenly cared about who got elected in Phoenix.”

Goddard would need 237,645 valid signatures on petitions by July 2, 2020 to put the issue on the ballot that year.

A similar measure did not qualify for the 2018 ballot when the number of petition signatures came up short.

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