By Justin Price for the Arizona Center for Investigative Reporting

PHOENIX — Less than 14 percent of the roughly $333,000 spent to lobby Arizona lawmakers in the first half of 2015 identified who the money was spent on, continuing a trend of scant disclosure going back years.

Since 2010, the portion of lobbying records that include beneficiaries has averaged about 12.5 percent. This is according to data maintained by the Secretary of State’s office and includes lobbying records for the first half of each year, which typically includes Arizona’s annual legislative session.

Lobbyists are required to report their expenditures in quarterly expense reports submitted to the Secretary of State. But loopholes and minimal regulatory oversight leave room for lobbyists to spend without reporting who benefited, ultimately leaving the public in the dark about who’s influencing the people they’ve elected to craft Arizona’s laws, budget and taxes.

For 2015, lobbying records include a beneficiary for $1 out of every $8 spent, an analysis of the Secretary of State’s lobbying database by the Arizona Center for Investigative Reporting shows.

Lobbying by disclosure type

“It shows the public how important it is to uncover the lobbying done by these special interest groups, whether on the right or the left,” said Sam Wercinski, Executive Director of the Arizona Advocacy Network. “They’re kept in the dark about the influence peddling that goes on with our lawmakers.”

A recent report by the Center for Public Integrity gave Arizona’s lobbying disclosure an F grade. The state scored poorly due to weak reporting requirements, a lack of an auditing and penalty regime and for not providing free, online access to the records or database.

Reporting exemptions exist for both large- and small-dollar expenditures and lobbyists face minimal threat of being audited for filing reports incorrectly or incompletely.

For expenditures of $20 or less, which totaled $21,279 in the first half of 2015, lobbyists and the public bodies or private companies they work for only have to report an aggregate figure, rather than report each expense individually, so beneficiaries are left out.

If a principal or public body wants to hold a special event for lawmakers, they are only required to report the total cost of the event. They have to invite all members of the Arizona House of Representatives, Senate, a caucus or some committee from either, so attendees aren’t listed.

Special events might include catering, rented locations, audio and visual systems or any number of services, making them the most expensive form of lobbying, totaling $254,266 in the first half of 2015 — a cost that can’t be broken down by individual beneficiary.

The Secretary of State’s office collects and maintains the lobbying reports, but doesn’t check them for compliance.

“We don’t have audit authority,” said Matt Roberts, a spokesman for the Secretary of State’s office. “We accept lobbyist registrations on their faith.”

Roberts said it’s possible for lobbyists to report incorrectly or inadequately.

“The system is what it is,” Roberts said. “If a lobbyist wanted to, they do it at their own risk.”

Michael Williams, president of Williams & Associates, a lobbying firm that represents more than a dozen clients, says his method for avoiding mistakes in the reporting process is erring on the side of caution by over-reporting expenses.

“I report everything even when the law doesn’t technically require us to,” Williams said.

Lobbyists have little incentive to follow Williams’ footsteps, so Secretary of State Michele Reagan plans to revise the process to broaden and simplify reporting requirements, Roberts said.

Arizona law defines lobbyists in three categories and the bodies they work for in two, which are public and private entities. Lobbyist distinctions are predicated on their employers.

All lobbyists are required to report the same things, as are their employers at the end of each year. But the information required in expense reports varies by the type of expenditure, for which there are 22 definitions. So many categorical distinctions in reporting requirements can make the reporting process confusing.

A lack of understanding may have been the reason why 13 records were incorrectly filed without beneficiaries. Those expense reports totaled $679, but without an explanation for the errors, lobbyists responsible for filing those records didn’t comply with reporting requirements.

The public policy lobbying firm B3 Strategies was responsible for eight of those records, totaling $440.

The firm’s CEO, Russell D. Smoldon, attributed the erroneous filings to a “misunderstanding in the firm,” and amended the reports on Oct. 6.

Roberts said Reagan’s plan to simplify the reporting process by making fewer distinctions among lobbyists and their employers should lead to greater clarity about the reporting on the part of lobbyists.

“The Secretary has indicated that a lobbyist is a lobbyist,” Roberts said.

Whether any prospective changes would affect requirements to include beneficiaries wasn’t clear, as plans wouldn’t be complete for at least a year, he added.

2015 lobbying by the numbers

By lawmaker:

For the first half of 2015, the most lobbied lawmaker in Arizona was not either the Senate or House leadership, but a swing Democrat, whose vote has often been the reason to call a bill’s passage “bipartisan.”

As far as the records indicate, Sen. Carlyle Begay, D-Ganado, was the most lobbied Arizona lawmaker by dollar in the first half of 2015.

Because of the special-event and small-dollar reporting loopholes, the $2,217 spent on Begay’s meals, travel, lodging and other lobbyist-provided amenities, captures only what’s reported with him as the beneficiary. There could be more money that was spent to lobby Begay, or not, and the same is true for all lawmakers.

“The events that are paid for on our behalf should be reported or more accounted for by us, as well,” Begay said. He added that the public is at a loss when such expense go unreported, not only for the lack of transparency, but also because more precise reporting would show how lawmakers spend their time.

Begay said he was flown to New Orleans at the expense of the American Federation for Children to speak about disparities among Native American students in grades K-12. While his travel and lodging totaled $1,394, he wasn’t paid for the speech.

Another expense came from Cox Communications, which paid for Begay’s seat at a dinner event for the Arizona State University Alumni Association.

Michelle Bolton, director of government relations for Cox in the Southwest, said Begay’s seat was worth $500 and was one of 20 the company sponsored.

While Begay was the most lobbied by dollar in 2015, House Speaker David Gowan, R-Sierra Vista, was lobbied more often.

While the $1,598 in lobbying spent on Gowan was less than Begay, Gowan was listed as the beneficiary of 28 expenditures — more than double Begay’s expenditure count.

Gowan’s largest single expenditure came from Barry Aarons, the owner of lobbying firm The Aarons Company. Aarons said he paid the $321 expense hosting a monthly gathering between Gowan and other lobbyists.

Aarons said he wasn’t reimbursed by his firm or any of its clients for the monthly meeting, which he said lobbyists take turns hosting.

The data also show lobbyists spent $1,276 on Gowan for 27 “food and beverage” transactions, more than anyone else for that category of spending.

Most records were filed under that category. Of the records that list beneficiaries, lobbyists reported $30,082 in expenses under food and beverage.

Rep. Rick Gray, R-Sun City, was listed as the beneficiary of $1,713 in lobbying, but in only seven expenditures, ranking him second in spending by dollar amount, but tied for ninth in number of expenditures. A single expenditure of $866 from Steve Trussell of the Arizona Rock Products Association was made after the end of the legislative session and reported under the catchall “combination of categories.”

Rep. Lela Alston, D-Phoenix, was lobbied the most with flowers. Four transactions totaled $312. Alston said most of the flowers she received were sent to her while she was on sick leave. Alston also received flowers on her birthday from lobbyists working for Pinnacle West Capital Corporation, the parent company of Arizona’s largest utility, Arizona Public Service.

Collectively, lobbyists spent $2,234 on flowers for lawmakers, and APS contributes to more than half of that total, sending birthday flowers to almost every lawmaker. Doing so has cost the company $1,410 in the first two quarters of 2015.

By principals and public bodies:

When it comes to expenditures made with beneficiaries listed, the pro-life organization Center for Arizona Policy spent the most in the first two quarters of 2015. Its 37 transactions came out to $9,718, and 35 of those represent the respective cost of each lawmaker and any accompanying guests that attended CAP’s dinner event April 25.

The Eastern Arizona Counties Association spent $5,663 in 15 transactions and Salt River Project spent $2,787 in 56 transactions, ranking No. 2 and No. 3 by dollar amount.

Pinnacle West reported $3,313 with beneficiaries listed out of its $10,772 total lobbying tally.

Most of the $2,644 Apple Inc. spent lobbying in the first two quarters of 2015 – more than the company spent in the previous two years combined – was on City of Mesa officials, placing it among the top-lobbying companies by dollar.

In 2015, the legislature passed a bill approving a $5 million tax-credit for the company’s prospective data center in Mesa. [tabs slidertype=”top tabs”][tabcontainer] [tabtext]Lobbying beneficiary connections by organization[/tabtext] [tabtext]Lobbying beneficiary connections by Lobbyist[/tabtext] [/tabcontainer] [tabcontent] [tab]The network graph below shows relationships between the PPB (public or private body) represented by the lobbying expenditure, and the recipient of expenditures for those expenditures that list a recipient.[/tab] [tab]The network graph below shows relationships between lobbyists and the recipient of expenditures for those expenditures that list a recipient.[/tab] [/tabcontent] [/tabs]

Expenditures without beneficiaries:

Special events cost a combined total of $254,300, and it’s likely some of that benefited top-lobbied lawmakers, along with every other lawmaker. If it were possible to see which events each public official attended, the individual tallies would look different.

The Arizona Association of Realtors spent $50,430 on special events — more than any other principal or public body. The bulk of that total was spent on its annual “Realtor day at the Capitol,” where members of the association eat lunch and socialize with lawmakers at Wesley Bolin Memorial Plaza, across from the Capitol building. The event cost nearly $45,000.

Expenditures that didn’t include a beneficiary because they were aggregate costs of $20 or less made by a reporting principal or public body totaled $21,279. Of that, Michael Williams was responsible for $4,427, the most reported by any lobbyist. The data show two of those expenditures, totaling $3,227, weren’t made on behalf of any client or lobbying firm, while the other aggregate expenditures worth $1,200 combined were made on behalf of a public body.

Williams said the majority of expenses reported as an aggregate filing worth $2,758 were made paying for equipment and food at a charity softball tournament. Lobbyists who attended generally donated between $500 and $1,000. Williams said he began holding the event after his son was diagnosed with a brain tumor. Donations go toward cancer research.

Williams said he reported the costs of the event because lawmakers were invited to attend.

Evan Wyloge contributed data analysis and data visualization for this story.

An earlier version of this story incorrectly stated which percentage of lobbying records included a beneficiary from 2010-2015.

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