GRRC Tackles Key Clean Elections Regulation Today

Today the Governor’s Regulatory Review Council (GRRC) will consider whether the Citizen’s Clean Elections Commission (CCEC) has sufficiently curtailed its regulations in reaction to Proposition 306 passed by voters last year. If the preliminary sessions leading up to today’s vote are any indication, there will continue to be disagreement over CCEC’s role in campaign finance.

GRRC’s latest scrutiny over CCEC comes after CCEC moved in July to rescind a 2017 regulation that was intended to regulate (but not ban) publicly-funded candidates’ payments to political parties and nonprofit organizations for certain services. CCEC’s effort came in reaction to Proposition 306, which  passed at the 2018 general election and bars candidates from making any payment whatsoever to political parties or nonprofits.

How we got here. The original 2017 rule amendment grew out of a controversy when the Arizona Free Enterprise Club published an article in late 2016 arguing “[s]everal Democratic [c]andidates running for office contributed over $80,000 to the Democratic Party from funds provided through the program.” In response, CCEC put forward three rule proposals in early 2017 to amend CCEC’s Rule 702 governing “Use of Campaign Funds”: “Option A” would have banned all payments to political parties; “Option B” would have allowed payments only for specific types of services; and “Option C” did not limit the types of services but implemented certain safeguards. After much debate, CCEC adopted Option C on July 20, 2017.

In July 2019, CCEC sought to repeal the 2017 Rule 702 amendment in the wake of Prop. 306, but CCEC proposed to leave intact a preexisting portion of Rule 702 (not affected by the 2017 amendment) that had long allowed “payment from the candidate’s campaign bank account . . . [t]o a political committee, civic organization . . . or unincorporated association.” (In other words, CCEC essentially sought to return Rule 702 back the way it was prior to 2017). The problem was, a political committee includes a political party and most “organizations” and “associations” are nonprofits. In order to avoid running afoul of Prop. 306, therefore, CCEC should have proposed rescinding that pre-2017 portion of Rule 702 as well.

GRRC held a hearing on CCEC’s proposal on November 5, 2019 and expressed considerable skepticism. For example, even apart from the discussion whether the draft rule sufficiently complied with Prop. 306, one GRRC member appeared to question whether Rule 702 was void on independent grounds because it simply lacked any statutory basis. The member suggested CCEC not merely rescind the offending portions of Rule 702, but reword Rule 702 to affirmatively ban payments to nonprofit groups and political parties to more closely mirror Prop. 306. With that, GRRC voted to “return” the proposed regulation to CCEC for further amendment—a de facto veto.

In reaction, CCEC issued a new notice of rulemaking on November 14, 2019. CCEC merely sought to eliminate the offending portions in Rule 702, and did not take up the suggestion to affirmatively ban payments to nonprofit groups and political parties. thus, today’s hearing likely will turn on whether CCEC went far enough to satisfy GRRC. The study session that immediately preceded today’s hearing almost got testy, and it is possible GRRC may “return” Rule 702 back to the drawing board once again.

Where do publicly-funded candidates go from here? Regardless of what happens today, participating candidates still have options. CCEC left intact an entirely different regulation passed in July 2017 that allows participating candidates to pay campaign consultants. Under Prop. 306, those consultants cannot be tax exempt organizations such as unions or trade associations, but traditional for-profit consultants are fair game.

Why Prop. 306 matters to candidates. Privately-funded candidates are not hamstrung by Prop. 306 and not affected by the GRRC proceedings. For example, a privately-funded candidate may continue to purchase voter registration data from a political party. This represents quite an advantage, and might cause prospective candidates to think twice about running with public funds from CCEC.

Regardless of what happens between GRRC and CCEC, this imbalance between publicly-funded and privately-funded candidates is the real significance to watch. This and future GRRC/CCEC hearings are merely proxy wars in a broader debate about the proper role of public money to fund political campaigns.


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