HCR2037 - 541R

Be it resolved by the House of Representatives of the State of Arizona, the Senate concurring:

1. Article VII, Constitution of Arizona, is proposed to be amended by adding section 19 as follows if approved by the voters and on proclamation of the Governor:

19. Right to know original source of campaign expenditures; disclosure; enforcement; civil penalties; definitions

Section 19. A. Original source of campaign expenditures. The people of Arizona have the right to know the identity of the original sources of all major contributions used to pay, in whole or part, for a campaign expenditure. This right requires the prompt, accessible, comprehensible and public disclosure of original sources of monies used to influence elections in this state.

B. A person that makes campaign expenditures totaling more than $20,000 for statewide campaigns or $10,000 for all other campaigns in a two-year election cycle shall promptly disclose the amount of the expenditure and the identity of the original sources of all major contributions used to fund those expenditures. The following apply to the disclosures:

1. The person shall make the initial disclosure within five days after making the first campaign expenditure that brings the person's total campaign expenditures over the disclosure threshold.

2. If the person continues to make campaign expenditures during the same two-year election cycle, the person shall file supplemental disclosures each time the person makes additional campaign expenditures with an aggregate value of $10,000. The person shall make these supplemental disclosures within twenty-four hours after making the additional campaign expenditures.

3. If the person making the disclosure did not receive a contribution used to make campaign expenditures directly from an original source, the disclosure shall identify any intermediary persons through which the contribution passed on its way from the original source to the campaign expenditure.

4. If monies that are used for campaign expenditures come in whole or in part from intermediary persons, the person must determine the original sources of the monies accurately.

5. Contributors who contribute to the person making the disclosure must inform the person, on request, of the original sources of all major contributions used to make the contribution. An intermediary person that fails to comply with this paragraph is subject to a civil penalty as prescribed in subsection D, paragraph 5 of this section.

6. If it is not possible after diligent investigation for the person to determine the original source of all or part of the contributed monies, to the extent the original source is unknown, the last monies received before the campaign expenditures are presumed to have been used for campaign expenditures.

7. Notwithstanding paragraphs 1 through 6 of this subsection, an original source or intermediary person may prohibit the use of contributed monies for campaign expenditures, and a person who files disclosure reports may rely on that direction for reporting purposes and not identify that original source or intermediary person, if the contributed monies were not used for campaign expenditures.

8. Notwithstanding paragraphs 1 through 7 of this subsection, the identity of an original source that contributes less than $5,000 in the aggregate for campaign expenditures to the reporting person, directly or through intermediaries, shall not be disclosed.

9. The commission shall adopt rules for which records will be required to verify and describe the transactions referred to in disclosures.

10. The statutes, rules and procedures that are adopted to implement this section shall provide:

(a) That political committees may satisfy the disclosure requirements of this section through periodic campaign finance reports as required by law, if the disclosures are made available to the public and identify the original sources of all major contributions they receive.

(b) For the protection of the physical addresses of original sources whose addresses are otherwise protected from disclosure by law or court order or who demonstrate to the commission that public knowledge of their address would subject them or their families to risk of physical harm.

11. Campaign contributions may not exceed the limits set by law as of January 1, 2019, which may be reduced by a relevant governing entity at any time.

12. The person, under penalty of perjury, shall make all disclosure reports under oath. Unless otherwise provided by law, the person shall provide the disclosure reports to the secretary of state.

C. The citizens clean elections commission is the primary agency authorized to adopt and enforce rules and conduct hearings and investigations to implement this section and the following apply:

1. Notwithstanding any other provision of law:

(a) The commission is independent. Any attempt to subject the commission to the direction or control of another body or an elected or appointed official is null and void.

(b) The commission does not need the approval of the governor's regulatory review council or any other body in order to adopt rules. A rule shall be adopted on approval of the commission, regardless of whether the rule relates to the enforcement of this section.

2. The commission is authorized to adopt rules to implement this section, conduct fact-finding hearings to determine if a violation has occurred, impose civil penalties and seek legal and equitable relief in court as necessary to enforce disclosure obligations.

3. The commission shall:

(a) Establish and impose civil penalties for late or incomplete disclosures.

(b) Establish disclosure requirements for public communications that are paid for with campaign expenditures that identify original sources of major contributions to those expenditures.

4. Any civil penalties that are assessed pursuant to this subsection shall be used to defray the costs of enforcing this section.

5. The commission may adjust the amounts established by subsection B, paragraphs 2 and 8 and subsection F, paragraphs 4 and 5 to reflect the cost‑of‑living. These adjustments may occur not more than once every ten years and may not increase or reduce the amount by more than twenty-five percent of the previous level.

6. Beginning in 2021, the legislature shall appropriate monies to fund the commission's first year of costs relating to enforcement of this section in accordance with a budget approved by the commission, not to exceed $2,000,000. The legislature shall appropriate subsequent monies in accordance with the commission's budget for disclosure enforcement less all proceeds from civil penalties collected under this section, in a total amount not to exceed $2,000,000, adjusted annually for inflation based on the consumer price index.

7. If the commission is terminated by action of law or executive order, has its independence substantially reduced or removed by action of a court or executive or determines that it is unable to carry out the duties imposed by this section, the commission shall designate a successor organization, which must be nonpartisan and independent, to fulfil its duties under this section. The legislature shall fund the successor agency pursuant to paragraph 6 of this subsection, and in any interim before monies are appropriated for the following year, the successor agency shall receive a pro rata share of the commission's budget for enforcement.

D. Any registered Arizona voter may file a complaint with the commission against a person who fails to comply with subsection B of this section, and the following apply:

1. The complaint must be verified and provide grounds for believing that there has been a failure to disclose.

2. If the commission takes no substantive enforcement action within thirty days after receiving the complaint or within ten days if the complaint is filed within twenty days after the next election, the complainant may initiate a legal action against the commission to compel action.

3. If the commission files a legal action on the matter of the complaint, the complainant may intervene as a party to the action.

4. If the commission unreasonably dismisses the complaint, the complainant may initiate a legal action against the commission to review the dismissal, and the court shall review the dismissal de novo. If the complainant prevails, the complainant may bring in its own name a civil action to remedy the violation involved in the original complaint. If the complainant prevails, the court shall award the complainant reasonable attorney fees and costs.

5. If the commission or a court determines that a person failed to make a disclosure or provide information as required by subsection B of this section, the court may impose a civil penalty of not less than the amount of the undisclosed or improperly disclosed campaign contributions and not more than three times that amount.

E. This section does not prevent the legislature, a county board of supervisors or a municipal government from enacting disclosure thresholds that are more stringent than those required by this section.

F. For the purposes of this section:

1. "Campaign expenditure" means a payment for any of the following:

(a) A public communication that is susceptible to no reasonable interpretation other than an appeal to vote for or against a clearly identified state or local candidate or ballot measure.

(b) A public communication that clearly identifies one or more state or local candidates or ballot measures and that is distributed within the period beginning forty-five days before the primary election and ending on the date of the general election at which voters will consider those candidates or ballot measures.

(c) Research, design, production, polling, data analytics, mailing or social media list acquisition or other activities conducted to prepare for or produce the public communications described in subdivision (a) or (b) of this paragraph.

2. "Commission" means the citizens clean elections commission.

3. "Election cycle" means an election cycle that runs from the day after a statewide general election through the day of the subsequent statewide general election.

4. "Major contribution" means a contribution of monies, goods or services with a monetary value of $5,000 or more or aggregate contributions during an election cycle of $5,000 or more.

5. "Original source" means a person whose contribution is funded from wages, investment income, inheritance or revenue generated from selling goods or services and does not include monies derived from contributions, donations or gifts. For the purposes of this definition, membership in labor organizations or trade associations is considered the original source for monies that are derived from member dues of not more than $5,000 per year per member.

6. "Person" means both natural persons and entities, including corporations, partnerships and associations, regardless of legal form.

7. "Public communication" means a paid communication to the general public by means of broadcast, cable, satellite, internet or other digital method, newspaper, magazine, outdoor advertising facility or mass mailing or any other form of general paid public political advertising regardless of medium.

Sec. 20. Title

This constitutional amendment shall be known as the "Stop Political Dirty Money Amendment".

Sec. 21. Purpose and intent

A. This constitutional amendment is intended to secure the right of the people of Arizona to know the original source of major contributions used to influence the result of Arizona elections, to prevent corruption and to assist Arizona voters in making informed election decisions.

B. To secure this right, this constitutional amendment requires public disclosure of all contributors who give $5,000 or more to influence elections in this state in a two-year election cycle, regardless of whether their contributions passed through any intermediaries.

C. By adopting this constitutional amendment, the people of Arizona affirm their desire to stop the practice of laundering political contributions through multiple intermediaries to hide the original source.

D. Both individual citizens and the citizens clean elections commission will have the ability to enforce the disclosure requirements, and violators will be subject to significant civil penalties.

Sec. 22. Severability

The people of Arizona declare their intention that the provisions of this constitutional amendment are severable. If any provision of this constitutional amendment is held invalid for any reason, the remaining provisions of this amendment will be severed from the void portion and given the fullest possible force and application.

Sec. 23. Effective date and implementation

A. If approved by the voters, this constitutional amendment shall apply to all elections, as provided herein, occurring after January 1, 2022.

B. The legislature, secretary of state, citizens clean elections commission and state and local election officials shall promptly make such changes in and additions to state statutes, regulations and elections procedures as are necessary to fully implement the provisions of this constitutional amendment in time for the elections occurring in 2022 and every election thereafter.

C. The secretary of state and local elections officials shall publicize the requirements of these provisions.

D. The rights established by this section shall be construed broadly.

Sec. 24. Legal defense

The people of Arizona desire that this constitutional amendment be defended if it is challenged in court. They therefore declare that the political committee registered to circulate petitions in support of this constitutional amendment, or any one or more of its members, have standing to defend this constitutional amendment on behalf of and as the agent of the people of Arizona in any legal action brought to challenge the validity of this constitutional amendment.

2. The Secretary of State shall submit this proposition to the voters at the next general election as provided by article XXI, Constitution of Arizona.