Deregulation of Political Committees in Arizona
by HighGround | March 29, 2016
SB1516 is nothing short of a pure deregulation of political committees in Arizona. Under the false pretences of streamlining our system, this proposal abdicates nearly all responsibility for regulating political committees. If you think dark money rules our current system now, buckle up because it’s about to get a whole lot darker.
Article 7, Section 16 of the Arizona Constitution enacted in 1910 says, “The legislature, at its first session, shall enact a law providing for a general publicity, before and after election, of all campaign contributions to, and expenditures of campaign committees and candidates for public office.”
SB1516 flies directly in the face of this Constitutional provision by creating massive loopholes for contributors, political committees, parties, and ballot measure committees. Basically, they have legitimized the shady business of setting up dark money 501(c)(4) organizations and then written the rules in such a way that it encourages everyone to go that route.
Under current law, all groups whose primary purpose is to influence Arizona elections must register and report. SB 1516 would change the definition of “primary purpose” to exempt any entity that is recognized as a 501(c)(4) social welfare non-profit by the IRS and is in good standing with the Arizona Corporation Commission
This creates a BLACK HOLE sized loophole for any entity has properly filed a form 990 with the IRS – a tax return that does not disclose publically any contributor to the entity. It would essentially require those entities to fall out of standing with either the IRS or Corporation Commission before any committee related reports could be required. Think about that for a moment. Do we really want to turn enforcement powers over to the IRS? We repeat, THE IRS! Whatever happened to state’s rights? Most of our leaders don’t trust the Federal Government to perform any task, but we should count on them for our transparency in our election process?
Moreover, by allowing such non-profits, which do not risk their status with the IRS for their work on ballot measures (because the IRS considers such advocacy “lobbying,” and not campaign activity), we will see the rise of these same groups using their ballot measure campaigning to offset candidate spending for tax purposes. What does that mean? You can expect these shadow organizations to get more involved in local issues, school bonds, overrides, transportation elections, and state and local initiatives because it behooves them to do so. They would be incentivized to meddle in local measures because it just frees up more money to attack whatever candidate is in their cross hairs.
Every local PAC that currently struggles to pass their local school issue year after year should be concerned that they may now face well funded, anonymous opposition looking to launder money into a “No” campaign to free up more ammunition for their candidate races.
Speaking of ballot measures, SB1516 also significantly reduces the transparency on a process that has worked in a rather open manner in the past. Groups formed to support/oppose ballot measures would no longer have to register as political committees and report their contributions/expenditures so long as they organize themselves as a 501(c)(4) social welfare organizations with the IRS. Groups could bankroll ballot measures under the cover of darkness without fear of being discovered or even having to file a campaign finance report.
When it comes to bankrolling, SB1516 also creates colossal loopholes for contributors to throw massive parties with food and beverages, send millions of emails, and use real or personal property to assist the campaign without it being considered a contribution. We repeat – SB1516 allows an individual to spend an unlimited amount on these items to benefit a candidate and those amounts will never be reported.
It also allows one candidate to contribute to another candidate’s committee by repealing a 1986 voter-approved provision that prohibited such transfers – a provision that remains in law today in ARS 16-905 (F) until SB 1516 becomes law.
It also allows a wealthy individual, corporation, or union to pay for a committee's legal or accounting expenses and it wouldn’t even be considered a contribution, and thus not disclosed! The icing on the cake is that it eases the rules on people who donate too much money and allows a candidate who receives a contribution in excess of the limits to “reattribute” the excess contribution to someone else. Could people donate “millions” and just “reattribute” to other smaller donors?
Arizonans are demanding light and transparency, and are being met with darkness and obfuscation. The majority of voters are fed up with the money pouring into our political system. They believe that they have a right to know who is spending money in our elections and how much people are spending. Instead of doing something about it, our legislature appears to be set on making things worse.
Make no mistake, this is not a conservative or a liberal issue. This is not a Republican or a Democrat issue. As we have seen with Trump and Sanders, both sides are fed up with business as usual and insiders using their wealth and trickery to stay in power. This dark money grab is EXACTLY why both movements exist and are gaining power.
If the legislature can’t see it coming, they will be doomed to be consumed by it.