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Secretary of state candidates seek more dark money disclosure

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PHOENIX – With shadowy nonprofit groups expected to spend millions this year to influence Arizona voters without disclosing the sources of their money, both candidates for the state office overseeing elections are offering plans to address the practice.

Democrat Terry Goddard and Republican Michele Reagan say they want laws taking a harder line with so-called dark money groups and requiring them to register with the Secretary of State’s Office.

Goddard, the former state attorney general, said the lack of a state law requiring disclosure of the sources of money such groups spend in support of candidates and campaigns has turned Arizona into the Cayman Islands of dark money. That has nonprofits here attempting to influence not only Arizona elections but those in other states, he said.

Goddard said his plan would require complete and timely disclosure of the original source of every expenditure aimed at influencing elections. He also wants groups to provide disclaimers on their ads saying they aren’t affiliated with any candidate.

“People are making a difference in the election process but aren’t letting voters know who they are,” Goddard said.

Groups with 501(c)(4) nonprofit status aren’t required to disclose their donors. In its 2010 Citizens United ruling, the U.S. Supreme Court allowed organizations and labor unions to spend unlimited amounts on ads and campaigns and left it up to the states to establish laws on disclosure.

Earlier this year, in a move stemming in part from spending by an Arizona-based nonprofit, Americans for Responsible Leadership, California enacted a law requiring dark money groups to disclose the names of large contributors.

Goddard said spending by dark money groups is one reason why voter turnout in Arizona isn’t higher.

“How can somebody feel that their vote counts for much when they don’t even know who it is that’s arguing for or against a particular candidate,” he said.

Reagan, chairwoman of the state Senate Elections Committee, didn’t respond to multiple messages seeking an interview, but her campaign website offers plans for addressing dark money that include increased disclosure and enforcement.

”It’s not something that we can just stop and run a magic bill and say it’s not allowed, because it is upheld by the U.S. Supreme Court,” Reagan said in a Clean Elections Commission debate before the August primary election.

One part of the plan is having the state police these organizations to ensure that they are spending more than half their dollars on social welfare issues, as required by the IRS. She wants to make failing to do so a violation of Arizona law.

The plan also features changes Reagan sought in legislation this year. Her bill, which won committee approval but went no further, would have made contributing to a campaign in the name of another person or knowingly accepting a contribution in the name of another subject to a civil penalty of three times the amount in question. It also would have required groups to disclose the names of three “identifiable contributors” making the largest cumulative contributions in the 18 months before their first expenditures.

David Berman, a senior research fellow with Arizona State University’s Morrison Institute for Public Policy who wrote a report on the subject, said dark money groups look to Arizona as a state that hasn’t regulated campaign finance or nonprofit corporations very well.

“They come and go here without anybody knowing they were even here,” he said. “I think we’ve left ourselves wide open by not having more laws regarding nonprofits and political finance.”

Berman said legislation is a way to change this, but he added that it would be difficult to craft an effective law.

“You try to get legislation that would reach back into the original donors to a campaign,” he said. “The money that is originally given to a campaign may come through seven or eight different organizations before it gets there. It’s laundered money.”