Businesses, unions slow to spend on campaigns

Glenn Hamer, CEO of the Arizona Chamber of Commerce and Industry, is heading up a group called the Arizona Business Coalition, which formed in the wake of the Citizens United decision and is now raising money for political candidates.

The majority of spending that can be directly attributed to the landmark legal ruling that allows corporations, unions and other groups to spend freely on candidate campaigns largely affected Republicans in the Arizona primary election.

But the floodgates of spending that many expected to open after the U.S. Supreme Court’s Citizens United ruling turned out to be more of a trickle.

Only about $140,000 was spent by a handful of groups that took advantage of the January ruling that eased restrictions on political spending.

One reason for the so-far modest impact to Arizona’s elections is obvious: Corporations are simply reluctant to take sides in an election, especially in this economy, where even a small group of jilted customers can significantly impact the bottom line.

“There may be corporations who are thinking ‘I don’t want to go out and support Tom Horne because then all of Felecia (Rotellini’s) fans are not going to come to my company,’ and in a down economy you can’t afford to lose one customer,” said election attorney Rhonda Barnes.

Horne, a Republican, and Rotellini, a Democrat, are running for attorney general.

The perils of political spending by corporations became all too apparent in Minnesota this year.

The retail company Target gave $150,000 to a pro-business group, MN Forward, thinking the move was going to help its bottom line.

The pro-business group ran ads to support Republican Tom Emmer, a gubernatorial candidate who espouses lower corporate taxes. The problem is that Emmer also has a long history of opposing gay rights.

As a result, Target became the target of a boycott from gay rights groups. Its chief executive has since had to apologize to employees, saying the company was only trying to promote a business climate conducive to growth and did not anticipate unintended consequences.

Another reason for the lack of spending in Arizona can be attributed to the technical uncertainty arising from the scheme’s novelty. Public officials and others suggest that legal clarity in campaign finance laws is still needed.

Russell Smoldon, a lobbyist for Salt River Project, said he doesn’t want his company to become the test case for what is or is not considered proper compliance with the law.

“I wanted to wait until after this election cycle to see what kind of fallout occurred,” he said.
Secretary of State Ken Bennett successfully pushed for legislation this year that aims to comply with the court ruling, yet also maintains some level of transparency.

Under the law, corporations and labor groups can spend money for or against a candidate, but they must report expenses to the Secretary of State’s Office if they reach certain thresholds. They must also list whether the spending was for or against a candidate, the name of the candidate impacted and the type of campaign communication made.

Still, the possibility of amending the statute appears likely next year, Bennett said, largely to clarify questions about what type of contributions corporations may make under the law.

Bennett sought guidance from the Attorney General’s Office, which explained that the new state law is silent about contributions by corporations or labor groups to other political campaigns. For instance, the law doesn’t talk about whether a corporation can contribute to another corporation to do independent spending. The Attorney General’s Office said that would not be permitted.

Though the collective total spending was small, business groups did have an impact in some races.
The Arizona Business Coalition, a nonprofit group formed by the Arizona Chamber of Commerce and Industry, spent nearly $30,000 to help elect Rep. Adam Driggs, a moderate, pro-business Republican who is running for the Senate in a north-central Phoenix district.

Driggs, who benefited from nearly $60,000 in total independent spending, won his primary election by fewer than 2,000 votes, defeating Rich Davis and Andrew Smigielski.

Of his two primary opponents, it was Davis who posed the biggest threat. Davis had raised $76,000 and spent close to the amount Driggs spent.

Davis, however, did not benefit from any independent spending.

“I’m sure that it helped,” Glenn Hamer, president and CEO of the Arizona Chamber of Commerce and Industry, said of spending for Driggs. “And it wasn’t just the Arizona Business Coalition. There were a number of other groups that played in that.”

The implication of Driggs’ support was apparent. The business community is eager to shift the Legislature’s focus to the economy, and it’s doing so through the most powerful tool in its arsenal — financial aid.

“This increased participation that Citizens United allowed, I believe, is good for the greater body politic,” Hamer said. “The reason being is when you think about it, businesses tend to be centered on issues that most voters care about (like) job creation. Our top issue isn’t: What’s the next immigration bill the state can pass?”

While no major corporation chose to engage in electioneering in the recently concluded primary, two local businesses did.

A pair of mailers blasted Rep. Carl Seel of Phoenix, who is running for re-election in a North Valley district, for personal financial troubles and for misspending campaign funds. The mailers were funded by Brewer Companies LLC, a plumbing company, and Bell Drapery Cleaners.

Both mailers claimed that Seel, who won his primary race by fewer than 40 votes, is “bad for business.”

The companies’ expenditure was minimal; it didn’t reach the spending threshold that would have required them to register with the Secretary of State’s Office.

Even unions are acting cautiously.

The president of the state’s biggest teachers’ union said the Citizens United decision hasn’t changed its approach to elections — not yet anyway.

The Arizona Education Association maintains a political action committee and also contributes to independent expenditure groups through its PAC.

Andrew Morrill, the group’s president, said it was always understood that membership dues won’t go into its political committee. Contributions to the political committee are voluntarily made by members.

“I don’t anticipate it changing,” Morrill said. “Even though the law changed, our internal practice is what we go by, as long as it is complying with the law.”

Meanwhile, the president of one of the biggest private sector unions in Arizona also said his group is not planning to do any independent spending during this election cycle. His reasons are based entirely on the political climate in the state, which right now heavily favors Republicans.

“Right now there doesn’t seem to be any race that makes sense for us to do that,” said Jim McLaughlin, president of the United Food and Commercial Workers Local 99, which also maintains a Super PAC.

Others say the Citizens United decision and the subsequent state law that was passed to implement it have the potential to be impactful. Some say it’s too early to tell.

“Is it a game changer? That jury is still out,” said Todd Landfried of the consulting firm Civic Ventures Inc, which also registered with the Secretary of State’s Office and spent money in the primary. “But the game is underway, and we just got passed half time.”

“I don’t think it’s going to open a floodgate of spending that we hadn’t seen before,” said Steve Voeller, president of the Free Enterprise Club, a pro-growth group. “While groups can now spend in a different manner, like ours, it didn’t necessarily give an entity a way to spend money that it couldn’t otherwise figure how to do.”

Groups using Citizens United decision

Here’s a list of groups that registered with the Secretary of State’s Office in order to have the ability to expressly advocate for or against a candidate:

Arizona Business Coalition – $80,037.58
Arizona Free Enterprise Club – $39,342.82
American Federation for Children, Inc. – $17,990.28
Arizona Civic Ventures, Inc. – $2,977.11
Arizona Farm Bureau Federation – Amount below reporting threshold
Arizona Sportsmen for Wildlife – Amount below reporting threshold
American Solar Electric, LLC. – No report
Arizona Conference of Police and Sheriffs – No report
Arizona Parents for Education, Inc. – No report
Home Builders Association of Central Arizona – No report
Water Resource Institute, LLC – No report
Arizona Taxpayers Association, LLC – No report

Candidates affected by Citizens United spending
Here’s a list of candidates who benefited from independent spending by groups that registered as a result of the ~Citizens United~ decision. Not all political spending may be reflected because the amount of some expenditures might not have reached thresholds that would trigger a report to the Secretary of State’s Office.

SENATE
Sylvia Laughter, Democrat, LD2 Senate
$11,802 — American Federation for Children, Inc.

Rep. Adam Driggs, Republican, LD11 Senate
$29,482.04 — Arizona Business Coalition

Sen. John Nelson, Republican, LD12 Senate
$6,500 — Arizona Business Coalition

Victor Jett Contreras, Democrat, LD16 Senate
$6,188.28 — American Federation for Children, Inc.

Rep. Rich Crandall, Republican, LD19 Senate
$6,227.98 — Arizona Business Coalition

Rep. Marian McClure, Republican, LD30 Senate
$600 — Arizona Civic Ventures, Inc.

HOUSE
Rep. Andy Tobin, Republican, LD1 House
$2,012.22 — Arizona Business Coalition

Rep. Bill Konopnicki, Republican, LD5House
$2,372.11 — Arizona Civic Ventures, Inc.
$3,562.59 — Arizona Business Coalition
$7,511—Arizona Free Enterprise Club *

Rep. Amanda Reeve, Republican, LD6 House
$8,603.9 — Arizona Business Coalition

David Fitzgerald, Republican, LD6 House
$855.72 — Arizona Business Coalition *

Rep. Carl Seel, Republican, LD6 House
$855.72 — Arizona Business Coalition *

David Smith, Republican, LD7 House
$1,636.71 — Arizona Business Coalition *

Rep. Nancy Barto, Republican, LD7 House
$6,699 — Arizona Business Coalition

Kristen Burroughs, Republican, LD7 House
$12,329 — Arizona Free Enterprise Club

Doug Quelland, Republican, LD10 House
$1,056.44 — Arizona Business Coalition *

Rep. Kirk Adams, Republican, LD19 House
$6,227.98 — Arizona Business Coalition
$2,907.91 — Arizona Free Enterprise Club

Justin Olson, Republican, LD19 House
$2,907.91 — Arizona Free Enterprise Club

Bob Robson, Republican, LD20 House
$6,317.28 — Arizona Business Coalition

Terri Lynn Proud, Republican, LD26 House
$13,687 — Arizona Free Enterprise Club

*Indicates that the group’s political spending benefitted the candidate’s opponent.