'Dark Money' in the States: Arizona GOP Blocks Cities From Implementing Transparent Elections

Updated | The Arizona legislature passed a bill that protects anonymous political spending Thursday, less than a month after Tempe, Arizona, residents voted overwhelmingly to increase transparency on that type of spending in local elections. The battle between city and state opens a new front in the national debate over so-called “dark money” in politics; it's also the first time a state has moved to ban local governments from shining light on secret spending.

Dark money is money spent on influencing voters that can’t be traced back to a donor. While parties and candidates must disclose the sources of their donations, those disclosure requirements don’t apply to some types of independent groups spending money to influence voters. This type of spending is most consequential at the local level, experts say, because since local elections are relatively cheap and receive little media coverage, ads or mailers backed by just a few thousand dollars of dark money can easily dominate a campaign.

More than 90 percent of Tempe voters cast ballots for an amendment to the city’s charter requiring all groups spending more than $1,000 on local races to disclose their donors in March. The amendment aimed to eliminate anonymous political spending by independent groups, a type of spending often dubbed “dark money,” from local elections. 

In response, the Republican-controlled Arizona Legislature passed a bill last week that bans local governments from requiring non-profit groups, the most common dark money vehicles, to disclose the source of their funding. The bill, which passed both chambers on strictly party-line votes, is headed to Republican Governor Doug Ducey's desk. 

“I’m a candidate, every donation that comes to me, I need to report,” Tempe City Council member Lauren Kuby, who spearheaded the effort, told Newsweek. “Why should an independent expenditure group be able to hide their money? Whether it’s unions or the Koch brothers, it doesn’t matter. They should have to disclose. The public has a right to know.”

Unlike Arizona, other states have recently implemented measures to increase transparency in political spending by independent groups, which aren’t affiliated with parties or candidates. Thanks to the U.S. Supreme Court’s 2010 Citizens United decision, these groups can spend an unlimited amount of money on elections, so long as they don’t coordinate with candidates and their parties. Washington state governor Jay Inslee signed a disclosure bill into law earlier this month, and New Mexico’s Secretary of State implemented new disclosure rules in 2017. California passed a transparency bill in October, and Montana passed a bipartisan transparency bill in 2015.

Yet dark money is surging in Arizona, and the state is preemptively defending secret spending, said Chisun Lee, a senior counsel at the Brennan Center For Justice, a nonpartisan law and policy institute.

“Arizona is a state where the amount of dark money being spent has skyrocketed in comparison to transparent money, where voters can tell who’s behind political messaging,” Lee told Newsweek. She was the lead author on a 2016 report on dark money in state and local elections. Lee and her co-authors examined spending in six states and found that fully transparent political spending in those states accounted for three-quarters of spending in 2006, but declined to just 29 percent in 2014. In Arizona, the change was particularly dramatic: dark money accounted for just $35,000 in 2006 elections. By 2014, that figure rose to more than $10 million. Despite this surge, or maybe because of it, Arizona is “singular” in trying to keep dark money hidden, Lee said.

Supporters of the state bill, which would effectively nullify Tempe’s amendment, have argued that donors to political groups have a right to remain anonymous for fear of harassment. "The problem is that the Left will use this information and they harass businesses,'' Republican state Sen. Sylvia Allen, told the Arizona Daily Sun earlier this week. "They go after businesses, they go after individuals, and they make their lives so miserable when they find out that they've donated to a cause that they don't agree to.”

Allen’s argument is one that has been used many times by defenders of dark money, including groups supported by billionaire industrialist Republican mega-donors Charles and David Koch. In 2014, the Kochs’ primary political group, Americans for Prosperity, convinced a U.S. District Court that donors to the group should remain anonymous, citing a 1958 U.S. Supreme Court ruling that found the NAACP did not have to turn its donor list over to the Attorney General of Alabama for fear those donors would face violent retribution for supporting the civil rights group. The argument that the threats facing modern conservative donors are analogous to those facing black civil rights activists in 1950s Alabama has been criticized as disingenuous by civil rights and campaign finance reform groups.   

In recent years, the Supreme Court has ruled against the right to anonymity in political speech. In Citizens United, the court famously ruled 5-4 that outside groups could spend an unlimited amount of money on independent expenditures. But somewhat less famously, the Court also ruled 8-1 against an independent group’s argument that it should be able to hide its identity in ads it paid for.

“The First Amendment protects political speech; and disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way,” the Court wrote. “This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages.”

But despite the Court’s endorsement of disclosure, anonymous spending has surged since the court decided Citizens United. Democrats in Congress have tried repeatedly to pass bills that add new levels of transparency to the increased levels of political spending unleashed by recent Supreme Court decisions. But those efforts have been stymied by Republicans.

As a result, cities and states have passed their own political disclosure laws. Denver and Philadelphia, for example, have passed laws requiring disclosure of dark money. Earlier this year, Spokane passed a similar law by overriding a veto from the mayor. Tempe City Council member Kuby is hopeful cities can set an example of how to regulate dark money that states and eventually the federal government will follow.

“I think cities innovate,” Kuby told Newsweek. “I think change percolates best from cities moving upward."

Correction: An earlier version of this story incorrectly stated the so-called "dark money" bill in question was signed by Governor Doug Ducey. This story has been updated to reflect the fact the governor has not signed the bill into law.