Arizona Becomes Ground Zero for Political Dark Money


From The American Prospect:

Arizona’s Republican-controlled legislature voted Tuesday to dismantle the state’s strict campaign-finance disclosure rules, a move critics say will unleash a flood of undisclosed political spending in an election already increasingly dominated by “dark” money.

The fight over the Arizona bill, which could be signed into law as early as this week, has pitted good government activists against deep-pocketed corporate donors and political groups underwritten by the billionaire industrialists Charles and David Koch. It also spotlights a growing national debate over secret political spending, which is on pace to hit record levels in 2016.

Federal enforcement agencies, most notably the Internal Revenue Service and the Federal Election Commission, have done virtually nothing to police politically active tax-exempt groups that operate outside the disclosure rules. That’s prompted some states, including California, Montana, and Delaware, to pursue tougher political disclosure rules on their own.

The fight over the Arizona bill … has pitted good government activists against … billionaire industrialists Charles and David Koch

Arizona, however, is headed in the opposite direction. The state has fought over its political money rules since 1998, when voters approved a sweeping Citizens Clean Elections Act that combines public financing with full disclosure for campaign contributions. The law survived a Supreme Court challenge and at least one legislative attempt to dismantle it.

Now Republican legislators have taken direct aim at the state’s transparency laws, passing a bill—SB 1516—that will take the enforcement of the state’s disclosure rules out of the hands of its Citizens Clean Elections Commission, and hand it over to the Internal Revenue Service. Under fire on Capitol Hill for targeting Tea Party groups, the IRS has essentially stopped policing politically active tax-exempt groups.

“If the folks who wrote SB 1516 intended for it to actually result in effective oversight of politically active nonprofits, they wouldn’t have relied so heavily on the IRS,” says Robert Maguire, who investigates political nonprofits for the nonpartisan Center for Responsive Politics. “The IRS is about as good at effective, timely oversight of politically active nonprofits as a sea cucumber is at chess.”

Republican legislators … will take the enforcement of the state’s disclosure rules out of the hands of its Citizens Clean Elections Commission and hand it over to the Internal Revenue Service

Federal agency enforcement lags far behind elections, explains Maguire, meaning that even when agencies do go after secret spenders, the candidates who had benefited have often already finished at least one term in office. But lately the IRS has essentially signaled that anything goes, granting favorable tax-exempt status to even such blatantly political groups as Crossroads GPS, masterminded by GOP operative Karl Rove, and a conservative Arizona group known as Americans for Responsible Leadership.

“Arizona is essentially looking at how low the bar is set at the federal level and trying to emulate that, rather than improving on that where it can,” Maguire says.

Many of the Arizona officials now pushing the legislation swept into statewide office in 2014 on a wave of undisclosed spending, including the governor, the attorney general, and the secretary of state. They benefited from tens of millions in spending by “dark” money groups associated with the Koch brothers’ network of conservative donors.

The bill reflects, in part, growing GOP frustration with the Citizens Clean Elections Commission, the state regulatory body created by the clean elections law in 1998. In 2014, the commission levied a $95,000 fine against a free-market oriented political nonprofit group, the Legacy Foundation Action Fund, for failing to disclose its donors. Last summer, the commission also approved new rules that would force social welfare groups that met a certain threshold of political spending—$500 over a two-year cycle—to file as political committees and disclose their donors.

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