State AG’s Office OK with Tempe’s ‘dark money’ ordinance
PHOENIX – Tempe can enforce its voter-approved ordinance aimed at shedding light on “dark money’’ spending in local elections despite a state law that appears to be to the contrary, the Attorney General’s Office has concluded.
But whether city residents can get some of the information they want on the political spending by certain charities remains unclear.
And Thursday’s decision also does not necessarily mean that other Arizona cities and towns are now free to enact their own disclosure rules.
Such moves might have to wait to see whether voters adopt a statewide ballot initiative in 2020. That proposal, if passed, would not only put a specific “right to know’’ provision in the state constitution but specifically overrule any state laws limiting disclosure.
The legal fight is over a 2017 Tempe law that establishes certain disclosure requirements on any individual or group that spends at least $1,000 to influence local elections.
What the ordinance seeks to find is what it calls the “original source’’ of funds. That means who actually put money into any organization rather than just the name of the group that spent the cash.
Violators can be fined up to three times the amount spent in violation of the disclosure.
It was adopted by voters by a margin of more than 90 percent.
One goal has been to find out who is behind groups classified by the Internal Revenue Services as “social welfare’’ organizations. That makes them nonprofit charities, but with the ability to spend up to half of what they raise on political races.
Those also are the groups that in recent years have been spending large amounts of cash – often more than candidates themselves – to promote or criticize candidates and ballot issues.
Last year, however, the Republican-controlled Legislature voted to block local governments from demanding the disclosure of the names of donors to such charities. That mirrors an already existing state law designed to shield the names of donors in statewide campaigns.
Based on that, Sen. Vince Leach, R-Tucson, asked Attorney General Mark Brnovich to investigate to see if the Tempe code was preempted by state law.
In a formal report released Thursday, Evan Daniels, chief counsel of the agency’s government accountability unit, said the answer is “no.’’ Daniels said that, strictly speaking, there is no conflict between what Tempe voters approved and what the Legislature approved.
“The Legislature exercised its power to carve out exceptions to any generally applicable disclosure requirements that the state or a political subdivision may decide to impose,’’ he said. More significant, he said there is no evidence that Tempe voters acted in defiance of or in conflict with state law.
“Indeed, it was adopted and took effect before the state law at issue here became effective,’’ Daniels wrote. And he said the Tempe ordinance doesn’t specifically mention nonprofits but simply requires creation of a system of financial disclosure for city elections.
What all that means, said Daniels, is the city might run afoul of the state law if it decides to try to get information on original donors from nonprofit charities.
But even if that is the case, Daniels said, the Tempe ordinance might still be valid. He said there would need to be a separate legal evaluation of whether the city, claiming it has a right to decide issues of “purely local concern,’’ has the right to ignore the 2018 state law outright.
Daniels’ report does not address a similar ordinance adopted last year by Phoenix voters.
That ordinance has been in legal limbo as state law requires the governor to approve any city’s amendments to local charters. In fact, Gov. Doug Ducey sent a letter to Brnovich last month noting the attorney general was reviewing the Tempe code and asking for legal advice.
The governor won’t be getting any specific direction. Instead, Brnovich’s office sent Ducey’s attorney a copy of Daniels’ report “which we hope will assist you in advising the governor.’’
But Daniels’ conclusions could suggest the Phoenix law could be struck down as conflicting with state statute, at least in part because it was adopted after – and in the face of – the 2018 state preemption.
Those same considerations also could doom efforts being weighed now in other Arizona cities to adopt their own ordinances aimed at finding the sources of “dark money’’ groups involved in political races.
That’s what could make the 2020 initiative so crucial.
That statewide initiative would require any organization that puts at least $20,000 into a statewide race or $10,000 into a local race to identify any individual or business that is the source of at least $5,000. And local government would be allowed to enact even more stringent requirements.
The measure needs 237,645 valid signatures on petitions by July 2, 2020 to put the issue on the ballot that year. A similar proposal did not qualify for the 2018 ballot when the number of petition signatures came up short.