Secret money targets 2 props

A group led by former state House Speaker Kirk Adams has directed $1.1million into campaigns opposing two citizen initiatives, fueling a late surge by the opposition and drawing complaints of secrecy from backers of the propositions.

Americans for Responsible Leadership, which is operating as an independent-expenditure committee, has contributed nearly 40 percent of the money to date opposing Proposition 204, a tax measure that would ensure a permanent source of funding for education by extending the temporary 1-cent-per-dollar sales tax.

It also accounts for about 40 percent of the money spent to campaign against Proposition 121, which would establish a new primary system and scrap the partisan system.

State laws do not require the Arizona non-profit group to disclose where it gets its money. But a California court this week may force Americans for Responsible Leadership to name its contributors.

The group has spent $750,000 to oppose Prop. 204 and $415,000 against Prop. 121. In addition to weighing in on the Arizona races, Americans for Responsible Leadership has poured $11million into two California ballot initiatives, triggering the legal complaint that is scheduled to be heard at 1:30 p.m. Wednesday by the California Fair Political Practices Commission. A decision is likely before Election Day.

The group is registered in Arizona as a non-profit that can advocate on issues. California law requires non-profits to disclose their donors if those contributions come from people who acknowledge their dollars will support a political cause.

The battle over disclosure stems from the U.S. Supreme Court's controversial Citizens United campaign-finance ruling in 2010. The decision allows corporate donors to direct money for political purposes through independent committees without disclosing contributors' identities.

Last week, Common Cause of California accused Americans for Responsible Leadership of attempting to "manipulate" the state's election with "laundered money." Common Cause asked the commission to investigate the group and force it to reveal its donors.

Arizonans are closely watching the case.

Former Mayor Paul Johnson, who is spearheading Prop. 121, questioned the motives of the donors: "You could start by thinking the worst: Is this someone that wants a big state contract? Is this someone that wants a private-prison contract or to adjust the way that our health-care system works? Who is this group? What do they want?"

Ann-Eve Pedersen, chairwoman of the Quality Education and Jobs committee, which brought Prop. 204 to the ballot, is also watching the California court case.

She called the secrecy surrounding the group and its Arizona contributions "troubling" and said it's hard to fight a group that hides the source of its funding.

Pedersen called on state Treasurer Doug Ducey, who is serving as chairman of the No on Prop. 204 Committee, to reveal the donors even though state law does not require that he do so. She said Ducey indicated at a debate last week that he knew who the donors were.

Ducey didn't return a call seeking comment. But Ryan Anderson, who works for DC London, the consultant advising the opposition campaign, said they have no idea who gave the $750,000 to Americans for Responsible Leadership.

"They don't know me, and I don't know them," he said.

By law, a campaign cannot coordinate with an independent-expenditure committee.

Ann Ravel, California Fair Political Practices Commission chairwoman, said laws in that state require organizations such as Americans for Responsible Leadership to disclose donors.

California has stricter disclosure laws than Arizona, and she said the commission will seek more information about the circumstances surrounding the contributions.

Americans for Responsible Leadership spent $11million in California to defeat a proposed tax increase and to support an effort to drastically change the state's campaign-finance system, including banning the practice of political contributions by payroll deduction -- which labor unions rely on to raise political money.

"Our view is that they are required to identify donors unless people gave $11million not knowing at all that it was going to be spent in California for a campaign," Ravel said. "All we are asking for is information -- an audit to see if they fall within our law. Why they would be so unwilling to just let us look at the documents if they think they're acting legally is interesting."

Matt Ross, a publicist for Americans for Responsible Leadership, said the group is acting legally. In an e-mail, he stated, "California's Fair Political Practices Commission does not have the power to conduct audits in advance of the election."

On its website, the group says it promotes government accountability, transparency, ethics and related policy issues.

"For too long, America has been led by politicians who are beholden to special interests and make decisions based on political expediency and self-promotion rather than fiscal discipline and the national interest," the website says. "We need principled leaders who will make tough choices, provide straightforward answers to difficult questions and put our country back on the path to prosperity."

According to filings with the Arizona Corporation Commission, the group was incorporated last year by Robert Graham, a businessman who is running for state Republican Party chairman, and Eric Wnuck, a Republican businessman who ran for Congress in 2010.

Adams, also a Republican, became president this fall, a few weeks after losing his primary race against Matt Salmon for a congressional seat.

Adams did not return phone calls or an e-mail seeking information about the group.

But Graham told The Arizona Republic that the group is trying "to influence the right policies for Arizona" and is on the right side of the law. The group is set up as a non-profit, he said, because that status "allows your contributors to be confidential."

He said that the group is not solely focused on politics, adding that it also works to educate the public about policy. Graham said the group has educated the public generally about policies or proposals it supports or opposes. He did not detail what that "education" entailed.

Graham said the group is funded through in-state and out-of-state individuals and business groups. He would not identify donors. He said the group's non-profit status allows people "to feel like they had the freedom to impact election cycles or initiatives or policies without having a target on their back."

Steve Nickolas, a Valley beverage-industry businessman, and financial adviser Taylor Searle are also listed as group directors. Nickolas referred calls to the publicist; Searle did not return a call for comment.

In addition to Arizona's two ballot measures, the group gave about $11,500 to support House Speaker Andy Tobin's re-election bid. So far, the group has also donated $57,000 to independent committees working to elect Republicans to the Arizona Legislature.

Pedersen questioned why out-of-state donors would care about Prop. 204.

"It just is discouraging to have a citizens' effort, that again is being led by a bunch of volunteer parents, up against this kind of political machinery," Pedersen said. "And not even just from in-state folks, but from people out of state, and we have no idea who they are, what their motives are and why they're trying to buy an election."

In contrast, she said, the "yes" campaign discloses all its donors. Only one, the National Education Association, is from out of state. In that instance, she said, the public knows what the NEA is: a national teachers union.

She said she believes voters are interested in where the campaign money is coming from.

"I think the special-interest argument makes a difference to (voters,)" she said. But without disclosure, it's impossible to know which interests are playing a role in the closely watched education-sales-tax ballot measure, Pedersen said.

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