A level playing field: the influence of dark money in local politics

Scottsdale resident Pascal Choucair proudly displays his “I voted” sticker during the November 2016 election. (File photo)

The dollars and cents of the American political system is one shaped by what local aficionados have coined, “dark money,” the impact of political action committees and the quadrennial race for campaign donations.

As election season looms in the city of Scottsdale, one member of the local governing board is looking to curtail the growing influence of large contributions made by unidentified or ambiguous sources.

He says the effort is meant to curb their ability to impact local races, decisions on local issues and the psyche of the local voter.

Scottsdale is hosting an August primary election where three people could be elected to the local dais. Councilman David Smith wants the city to follow the lead of Tempe, which recently adopted strict new campaign finance rules.

The city of Tempe enacted strict personal campaign donation limitations and strong disclosure requirements for when 501(c)4 organizations — a hybrid entity between charity and political influence — look to get involved in a local election.

In the city of Tempe, a personal donor can only provide up to $500 for an individual candidate seeking public office. In neighboring Scottsdale, personal donations can exceed $6,000, in tune with the latest donor rules adopted by the Arizona Legislature.

Councilman Smith has asked Scottsdale City Council to explore the possibility of adopting similar provisions. He says limiting personal donations will level the political playing field, but others argue caps on those donations provide the well-heeled a more direct route to political office and greater influence over public policy.

But his requests to corral personal campaign donation amounts, so far is largely falling on deaf ears.

As local political races become more sophisticated and stakes continue to rise in the Valley of the Sun, a former Arizona Attorney General is pushing for greater disclosure and transparency when it comes to dark money operators, political action committee directors and political agents.

One’s perception on the role dark money can play in a campaign often depends on where you stand on a political issue or candidate — and whether or not that issue or candidate is the beneficiary of those funds.

But the old adage of “don’t judge a book by its cover” could not be more true as opinions of officials on both sides of the mainstream political aisle are wildly different then what one might expect.

A view of the barren pathways oftentimes found during a local election where those seeking office are elected to determine the rules that govern.(file photo)

A light in the dark

 

Clarification: “An earlier version of this story should have quoted Mr. Goddard as saying, ‘The Supreme Court has been adamant that disclosure is not prohibited by the Constitution.” We apologize for any confusion this may have caused.

 

In its 2010 ruling in Citizens United vs. the Federal Election Commission, the United States Supreme Court confirmed corporations are people and have the same rights as human beings to express its First Amendment right to political speech.

The idea a corporation as a person reaches back to the turn of the 19th Century when the Southern Pacific Railroad successfully argued — represented by Roscoe Conkling, who at the time was a prominent leader of the Republican Party — the 14th Amendment was designed to protect corporations from discriminatory tax burdens.

Following the Civil War, the 14th Amendment appears to have been struck to ensure all people regardless of color were guaranteed “equal protection of the law.”

Turns out, Mr. Conkling was a part of the drafting of the 14th Amendment. According to a recent article penned by UCLA Law Professor Adam Winkler for the Atlantic, Mr. Conkling successfully argued those equal protections were drafted with corporations in mind.

Terry Goddard, a longtime political activist in Phoenix and former Arizona Attorney General, says the Citizens United case did two things: it confirmed the idea corporations are people and have a right to free speech, and that the general public has a right to know where money comes from in political races.

Terry Goddard

Mr. Goddard is asking Arizona voters to stop the use of undisclosed political funds that are allowed to be funneled into local races though a statewide citizen initiative.

“You don’t know who wrote the original check,” he said of dark money players. “They have funny sounding names that tell you nothing. ‘Americans for a Better Tomorrow;’ you know they are hiding money by using a contribution. They are set up specifically to hide the ball to keep anyone from knowing who is paying for a television ad or a print advertisement.”

According to federal law, 501(c)4 nonprofit donors can be anonymous as long as 51 percent of the funds spent go toward a social service effort. The other 49 percent can be used in any political manner, which is oftentimes funneled into local political races or referendums through a political action committee.

“Dark money basically imperils our democracy — it puts the credibility of our elections at-risk,” Mr. Goddard contends. “If you don’t know who is paying for a statement you can’t evaluate it.”

Mr. Goddard also points out a 501(c)4 is under no obligation to register as a PAC and can provide as much funding as they like under Arizona guidelines.

“Our Legislature has gone out of its way to allow contributers to hide,” he said. “You can spend millions of dollars for or against a candidate or ballot proposition in Arizona without being registered at all.”

The Citizens United case had everything to do with disclosure but also redefined dollars and cents as corporate free speech. Mr. Goddard says the 2010 Supreme Court ruling did not grant a constitutional right to hide political contributions.

“There is no constitutional right to hide your contributions to political causes,” he said.

“The Supreme Court has been adamant that disclosure is not prohibited by the Constitution. What I am working on right now is an initiative to create an amendment to our (Arizona) Constitution that would require disclosure of everyone who made a major contribution to a political campaign. There is more dark money at play in Arizona and it has been more effective than in any other state.”

Mr. Goddard is seeking to collect 225,000 signatures by July 5, 2018 to have the amendment reach the statewide ballot. His team just crossed the 75,000-signature mark.

Jason Rose

Jason Rose, a Scottsdale public relations executive and longtime Arizona political operative, is not a fan of nondisclosed funding to political campaigns.

“I think it is probably the most disgusting change in American elections that has taken place in decades,” he said denouncing undisclosed political contributions.

“If political campaigns could spawn cancer, this would be the worst form of the disease and I am someone who has been involved in running elections since 1994. I have seen it all and I have done it all.”

Mr. Rose says politically active (c)4 organizations are designed solely to buy and control the minds of both the politician and his or her potential constituents.

“That’s what we are talking about — the purchasing of politicians. This is not the system that was ever envisioned,” he explained. “I am all for allowing people to give to whatever political effort they want, but I am always for immediate disclosure.”

Mr. Rose, a proud Arizona Republican, says he has been discouraged by his political party in the wake of the Citizens United ruling.

“I can’t tell you how disappointing the hypocrisy is of those who would prefer to take any executive handout rather than honor the office and be public servants.”

But while Mr. Rose denounces certain statewide campaign finance guidelines, he does believe the raising of personal political donations to $6,350 is a transparent move by the Arizona Legislature.

“At least candidates have a fighting chance,” he said. “In the case of Scottsdale, look at the resources of Mayor Lane, who raised close to $400,000 … at least they would have resources to fight back, but there is only so much money you can raise locally.”

Scottdale Councilman David Smith is seeking more control over campaign finance rules in Scottsdale. (Independent Newsmedia/Arianna Grainey)

The virtues of limitation

While a discussion on the virtues of limiting campaign donations or the requiring of disclosing (c)4 donor names didn’t see the light of day at Scottsdale City Council, each who spoke with the Independent expressed, one way or another, a reticent position on both contribution limits and the impact of dark money on local politics.

“There are several individuals who have the resources and willingness to give $6,350,” Mr. Smith said. “But, frankly, that diminishes the voice of the person who wants to give $100, or $5 bucks or even $500. You call it leveling the playing field and it is that in some sense.”

Mr. Smith says he was looking for a willingness for Scottsdale to discuss the actions of Tempe in a formal manner.

“Tempe was just trying to make sure every voice is heard. First, they went to the voters and proposed a change to their Charter limiting the size of individual donations. Gov. Ducey must have had heartburn about signing it as he took about 14 months to sign the legislation, effectively overruling what the Legislature had done in setting the $6,350 limit.”

Later Tempe went to the voters with another Charter amendment requiring disclosure of (c)4 donor names. In that case, the Legislature passed a law prohibiting cities from requiring dark money name disclosure before the Governor had a chance to sign Tempe’s Charter change.

Mr. Smith called what Tempe has done through limiting personal campaign donations and trying to require disclosure of donor names on dark money donations over $10,000 a “fair-minded approach.”

Mr. Smith believes dollars and cents should not define American democracy at any level.

“I may not have the largest amount of money raised, but I will bet you a dollar to a doughnut I will have the most donors,” he said. “Winning a seat on city council should not be a money game.”

But raising money in American politics — and the city of Scottsdale is no exception — is the name of the game in a capitalistic society.

Scottsdale Vice Mayor Virginia Korte says she believes disclosure rules are a good thing and ought to be a major part of all campaign finance rules. (Independent Newsmedia/Arianna Grainey

“I take exception to the lack of disclosure of contributors,” said Scottsdale Councilwoman Virginia Korte.  “I believe the public has a right to know the corporations or individuals behind the advocacy of a political candidate. Several states have enacted disclosure laws and I support a similar statewide effort in Arizona.”

Ms. Korte is among the top campaign donor recipients election cycle after election cycle but remains steadfast (c)4 organizations playing the political pool need accountability.

“Since these independent expenditures are regulated by the IRS, there seems to be little or no oversight of these nonprofit organizations,” she said. “My issue is with accountability.”

Campaign records show Suzanne Klapp, Jim Lane and Ms. Korte have raised six figures in the most recent election cycle in calendar year 2016 while zero indication of dark money influence has touched their campaigns.

“Scottsdale is a very politically engaged community and our voters have the opportunity to research and get to know any and all candidates,” Ms. Korte said.

“In the past two city council races, there were successful candidates who raised less than $40,000, and defeated others who raised two or three times that amount. Running for city council takes hard work, long hours and the willingness to listen to all constituents. The amount of money raised is not a free pass to the council.”

Scottsdale Councilwoman Linda Milhaven and Suzanne Klapp both say money can’t buy you an election — and both believe they exemplify that point. (Independent Newsmedia/Arianna Grainey)

Linda Milhaven, a Scottsdale councilwoman who raised just over $30,000 for her most recent re-election campaign, agrees with the notion local politics is more about shoe leather than checkbooks.

“This erroneously assumes that the person who spends the most money wins,” she said pointing out she is a sitting council member who has not raised six figures to be there.

“Looking at history, you will see that money is not a deciding factor. Smith, Littlefield and Phillips won council seats spending significantly less than folks who challenged them.”

Ms. Milhaven is right, records show.

“Money is not the deciding factor in local elections,” she said.
Scottsdale Mayor Jim Lane also agrees with the notion, money can’t buy you an election, but it can borrow the limelight from time to time.

“All the money in the world with a bad message will not get you the job,” he said pointing out the limitation of donations to campaigns is not something he has been engaged with. “I don’t think it is all about money, but as far as dark money is concerned, I am definitely not for dark money — I was actually a victim of dark money.”

But Mr. Lane does have a PAC and he contends all donors will meet every disclosure requirement enacted by the Arizona Legislature and federal law.

Scottsdale Mayor Jim Lane has found himself at times between the cross-hairs of a dark money target. (Independent Newsmedia/Arianna Grainey)

“I am certainly not looking for dark money and everything we do in my PAC is fully disclosed. On the one hand, I am not a fan of dark money, but if people are disclosed I don’t see any problems with that.”

If money was the ultimate factor in political might, Mr. Lane says the American republic is lost.

“If I didn’t believe that I would have lost all faith in our representative government,” he said. “Some people might say I am naive, but I don’t think I am.”

Ms. Klapp, a sitting member of Scottsdale City Council, contends when she raised six figures in 2016 for her successful run for the local governing board it was due to recognition of message.

“I raised significant dollars for my campaign because my supporters believe in me and my positions on issues,” she said. “That should not scare off council candidates since at least three council seats are available in any election cycle in Scottsdale. Potential candidates have three shots for one of the elected seats.”

Ms. Klapp believes Mr. Smith’s requested changes to contribution limits is not in tune with established campaign finance law.

“First and foremost, his desire to change the legal limit for donations in Scottsdale is not legal, according to state law. Also, in my first council race in 2008, I raised about $47,000 when contributions were limited to about $420 per individual donor,” she explained.

“I had an opponent who used primarily her own and family wealth as contributions, with no limitations, totaling significantly more than I could raise. Campaign limits favor wealthy candidates. I believe all people, no matter their income level, should have a path to run for city council.”

Ms. Klapp reminds Scottsdale is in the United States of America — the land of opportunity.

“Anyone can raise money for an election if they work hard at it and develop a base of supporters. They should not have small contribution limits placed on them,” she pointed out.

“The playing field is more equal for candidates of moderate or limited means if they are able to collect larger contributions per donor. Wealthy candidates can self-fund their own campaigns with little or no reliance on donations, so limiting contribution amounts from donors gives wealthy candidates an advantage.”

Scottsdale Councilwoman Suzanne Klapp (Independent Newsmedia/Arianna Grainey)

Northeast Valley Managing Editor Terrance Thornton can be contacted at tthornton@newszap.com

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