Dark Money Into The Toilet

Money_ToiletMoney makes things happen in politics. Recent rule changes for campaign finance reporting have thrown open the doors for gigantic anonymous contributions.

Predictably, “dark money” has since been firehosing into the coffers of candidates and causes nationwide.

Glendale (AZ) is having a great view of what present and future election cycles will be.

Background

The Glendale City Council passed an ordinance in June, 2012 (click here) to raise the city sales tax rate from 2.2% to 2.9%. Provisions excluded purchases over $5,000 from the additional tax. It passed 5-2 with Clark, Frate, Knaack, Martinez, Scruggs voting “aye” – Alvarez and Lieberman voted “nay”.

A “sunset provision” in the language had the additional tax disappearing in August, 2017.

The sales tax survived a ballot initiative (Glendale First! helped successfully oppose the Prop 457 initiative) and Glendale voters approved the tax increase with a 66% mandate in November, 2012.

Glendale budget issues won’t be resolved before 2017, so the current Council voted to extend the sales tax increase by removing the sunset provision on June 24, 2014 (click here). The ordinance passed 4-3 with Chavira, Knaack, Martinez, Sherwood voting “aye” – Alvarez, Hugh, Weiers voted “nay”.

Lobbyists Jump In

The Arizona Free Enterprise Club (AFEC, Twitter @AFEC) is a politically conservative 501(c)(4) non-profit organization.

Note the “4” instead of the more familiar “3”. That difference in the IRS tax code eliminates the ability of donors to deduct their contributions, but it adds a plethora of possibilities for donations for lobbying and influencing politics without fear of discovery.

The ties between the perennial Glendale annoyers Goldwater Institute (GWI, a 501(c)(3)) and AFEC are more than coincidental, yet acknowledged by neither group. Common board members have recently resigned from AFEC. One, Randy Kendrick, is not on the list of founding members on the AFEC site although she is listed as a director on the AZ Corporation Commission site when AFEC was formed in March, 2005.

Objections From Right Field

Scot Mussi, second from left
(image from FunkaliciousBeachBall.com)

On June 6, before the vote to remove the sunset provision was recorded, a political action committee (PAC) was formed in Glendale (click here) to support an initiative filed the same day.

The committee chairman is Scot Mussi, the President and Executive Director of AFEC and, apparently, a Funkalicious volleyballer.

The treasurer is Tim LaSota, a lawyer frequently and successfully representing high profile conservative politicos (think “Sheriff Underpants” Paul Babeu) and interests. LaSota used to work with the Rose Law Group, a name familiar to Glendale and readers of these pages. We don’t know Tim’s Funkalicious quotient.

The initiative (click here) from the resulting “Protect Glendale Taxpayers (PGT) In Support of the Ballot Measure I-14-01” committee seeks to accomplish two things.

First, the sales tax would be reduced .7% on August 1, 2017 as it would have with the original sunset provision.

Secondly, the initiative specified a supermajority (three fourths) vote of the council would be required to pass nearly every future tax measure.

Rolling In Dough

Once the paperwork was filed with the Glendale City Clerk, petition signatures could be solicited. The rules for this initiative to make it on the November ballot require 10,434 signatures (10% of the people who voted in the prior mayoral election).

The only realistic way to gather that many signatures in a month is to hire professional petition circulators, an expensive process.

Money is not a problem for PGT.

Based on campaign finance reports filed with Glendale, Mussi wrote $140,000 worth of checks from his 401(c)(4) to his PAC between June 10 and July 2. There is no legal requirement to disclose the original source of any of those funds that were donated to AZFEC, so there is no way of knowing what entity actually funded this initiative process. That’s the design built into the system.

The only reported disbursement from PGT is $21,860.50 to the company hired to get the necessary signatures for them, Linjen Corp from New Port Richey, FL and Las Vegas. It’s likely significantly more than roughly $22k went for signatures, the total is probably closer to the entire $140k although it’s not yet reported.

Who Hired These People?

A LOT of signatures were turned in before the deadline. The number we heard is 20, 389, nearly double the amount required. The normal signature rejection rate hovers around 30% (I believe), so it appeared Mussi had gotten his dark money’s worth.

There are rules for signatures on petitions. The instructions are clear and not difficult to follow if you know them. Professional signature gatherers should be familiar with the rules.

The Coyotes are still in Glendale because these rules are often not followed.

The first review of the signatures is performed by the City Clerk of Glendale. That office has certain things they can look for to verify signatures. They found 9,269 bad signatures, so many more than usual that PGT recruited familiar Glendale face Walt Opaska to give them standing in suing Glendale, asking the court to reinstate 8,540 of those signatures dismissed by the City.

Feel free to click here and review their complaint and their rationale for reinstating the signatures. Some are laughable, for example petition circulators not completing their affidavits. Mussi and Opaska figure the street address or zip code is close enough to complete the requirement for address, city, state, and zip code.

PGT is pleading in nearly every instance for the court to cut them a break and let them get by with “substantial compliance” instead of “complete compliance”. There is some precedent in court decisions for leniency in this regard, but the extent of the errors is significantly higher than usual in this case.

It’s likely the judge will look askance at a professional lobbyist and a politically savvy lawyer not being able to follow the simple rules and then asking for forgiveness and a trophy for last place.

Maricopa County Review

After the City reviews petition signatures, the process continues with a Maricopa County Recorder review. The County uses the subset of the original signatures that passed the City review, in this case 11,120 (20, 389 – 9,269) of them.

The County randomly selects five percent of the signatures and reviews them for validity. When then arrive at the percentage from the sample review, they apply that percentage to the total to arrive at the FINAL figure for comparison to the needed 10,434.

So, Maricopa County reviewed 556 signatures and rejected 201 of them for a validity percentage of 63.8%. Applying that percentage to the 11,120 signatures received, the final total of valid signatures is 7,095.

The number of valid signatures turned in was 3,339 short of the goal.

It’s likely the PGT buds Mussi and LaSota will also sue Maricopa County as they did the City of Glendale and the two suits will probably be heard together.

Even if the court awards enough mulligans to PGT to squeak them back over the 10,434 mark, there’s still one more way to reject more signatures.

Private Review

Citizens have the right to request copies of all petition signature pages and conduct their own review. In a case of grassroots action being the BEST way to accomplish a task, private parties have more avenues to reject individual signatures than the city or county to reject signatures.

It’s likely a private review has also taken place, or will take place in a timely fashion. That review could easily add enough new rejections to keep the “valid” count hovering near the 7,000 mark, making up for the number of “gimmes” the court awards PGT for Glendale (or the County) overstepping their bounds with signature rejections.

In other words, this initiative attempt has failed in a spectacular fashion. Depending on the billable hours thrown at the lawsuits against Glendale and Maricopa County, the total “dark money” flushed down the toilet by AZFEC could be $300,000.

Ironic for an outfit that touts itself as preaching fiscal responsibility.

What Is Their Agenda?

What is the source of all this money and what was the reasoning behind writing the checks?

My theory is the publicly hyped reason presented for the petition, removing the .7% additional sales tax in 2017, wasn’t the driving factor behind the huge investment.

The proposed change of votes necessary to pass future taxes from a simple majority (4-3 vote) to a supermajority (5-2 vote) would be a significantly more compelling way to attract large sums from the (assumed) conservative donors. It would add an exponential order of difficulty to tax code changes in Glendale that could then be used as precedent in other cities.

Is This Over?

For all intents and purposes, the initiative is a dead man walking. A “professional” company delivered over 20,000 signatures in support of an initiative for what may have been a $140,000 invoice. Yet, they’ve only provided an estimated 7,000 valid signatures AT TWENTY DOLLARS APIECE.

The lawsuits will take awhile to resolve, but the handwriting is on the wall, AZFEC has lost this one badly.

Take it to the bank.

Supporting Campaign Finance Reports

Click here for the campaign finance reports on the Glendale City website. Scroll down to the “Protect Glendale Taxpayers” line and you will see (as of today) seven links to  a report called “$10,000 notice”. The moniker doesn’t mean that ONLY $10k is reported in there, one must click on each and add them up. The list is at the bottom of this post if you feel like clicking from there.

All of the contributions were from AZFEC, both of the reported disbursements were paid to “Linjen Corp”, the petition gathering outfit with a Florida address.

AZFEC Contributions to PGT:
June 10 – $10k, June 17 – $25k, June 24 – $30k, June 26 – $50k, July 2 – $25k

PGT Disbursements to Linjen Corp:
June 13 – $10k, June 24 – $11,860.50

Where is the rest of the $140,000?

You’d have to ask Mussi, or wait until the next batch of finance reports is due. I believe the rules are that a report must be filed with 24 or 48 hours if $10k or more comes in or goes out.

Weird, huh?

UPDATE 08/14: Arizona Republic catches up to Nebulous Verbosity with the story. Click here.

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  1. […] his Arizona Free Enterprise Club (AZFEC) botched attack on the Glendale sales tax extension. Click here for the story of that gaudy flameout. PP has a good track record and reputation in local politics […]