Dark money group leads last-minute effort to speed up campaign finance changes

PHOENIX — Arizona is already poised to relax rules regarding so-called “dark money” groups starting next year, but a last-minute amendment proposed on the Senate floor could make the changes go into effect in less than a month.

The proposal to accelerate the dark money regulation changes came late Thursday, as an amendment to HB 2296, and originated with the Arizona Free Enterprise Club, a dark money group that spent about $1.7 million during the 2014 election cycle.

The amendment directly borrows language regarding the requirements for a 501c(4) organization to register as a political committee from SB1516, which was passed and signed by Gov. Doug Ducey earlier this year.

Under existing law, those groups, which do not disclose the source of their income, have to pass the “primary purpose” test, meaning they have to spend a majority of their money on non-electioneering.

Under SB1516, and the newly proposed amendment to HB2296, as long as the group has properly filed their incorporation paperwork with the Arizona Corporation Commission and the IRS, and as long as the IRS has not declared them in violation of tax laws, the group can spend entirely on political campaigns.

Scot Mussi, the executive director of the Arizona Free Enterprise Club, said he wants the amendment in order to provide “clarity” regarding campaign spending this year. But Sen. Steve Pierce, R-Prescott, who formally proposed the amendment, and Senate President Andy Biggs, R-Gilbert, said the goal of the amendment is ensure the changes go into effect for the 2016 elections.

“It just moves it up, so it’s active for this election,” Pierce said. “If we’re passing a law, let’s get with the program and do it.”

The Arizona Free Enterprise Club was investigated for campaign finance violations related to the primary purpose test following the 2014 election. The investigation was ultimately dismissed, but the changes already slated for next year in SB1516, and now proposed for this cycle in HB2296, would ensure that similar spending would not run afoul of the law.

In the 2014 election cycle, dark money groups spent roughly $9.6 million advocating for the election or defeat of candidates.

Tom Ryan, an attorney who is working to organize a referendum that would let voters reject SB1516, said the new proposal is an effort to scramble any attempt to give voters a say on the provisions of SB1516.

“When you pass a law, the Arizona Constitution gives the citizens a right to take action within 90 days. They’re trying to do an end run around it,” Ryan said.

Ryan said that if HB2296 is passed with the proposed amendment, it would require a separate referendum from the one on SB1516.

And because the proposed amendment has a retroactivity clause that puts it into effect on June 1, the way a referendum would work is further complicated.

Ryan said he’s not sure whether there would need to be an injunction put into place, or how a court might view the near-immediate campaign finance law change.