Hobbs leftover inauguration funds can be used on elections
Gov. Katie Hobbs collected nearly $1.5 million in donations from corporations and other special interests to cover the cost of her inauguration.
But the event cost only about $207,000 to put on.
And that’s going to leave her with a bunch of money she can spend on everything from gifts to visiting dignitaries to trying to flip control of the Arizona Legislature to Democrats in 2024.
The report, obtained by Capitol Media Services, also shows that Arizona Public Service, the state’s largest electric utility, was the largest donor at $250,000.
APS had previously confirmed that it had given money but refused to say how much the company was providing. Instead, company spokesman Mike Philipsen would say only that the company was “joining Arizona businesses to support the governor’s inauguration.”
He also said that the donation is “directed specifically to the 2023 gubernatorial inauguration committee, meaning it can be used in support of all inauguration functions.”
But the APS contribution itself exceeds what the event cost, with what to do with the balance now up to Hobbs because she set up the inaugural fund under a section of the Internal Revenue Code that allows proceeds to be used for political purposes.
If she spends the APS money – and the surplus from the other donors – to help get Democrats elected in 2024, that would prove to be a bit of irony.
The company gave more than $850,000 to the Republican Governors Association this election cycle. And that organization in turn provided more than $9 million to the Yuma County Republican Central Committee which used the cash to run commercials seeking to defeat Hobbs.
APS would not comment on whether the donation to the inaugural fund – the largest by a factor of 2.5 over any other – was a way of mending political fences with the new Democratic governor as the company’s investment in the RGA is disclosed in public reports.
By contrast, Salt River Project donated $25,000 for the inaugural. And Hobbs got just $10,000 from Tucson Electric Power.
There was no response from APS to multiple messages to APS seeking comment on having at least some of its money left over that Hobbs can spend for political purposes.
While APS was the largest donor, there were others in the six-figure range.
That includes Blue Cross Blue Shield which not only offers health insurance plans to state employees but also lobbies on insurance legislation at the state Capitol.
Also at the $100,000 level is the Realtors Issue Mobilization Committee. It provides grants to local Realtor associations to advocate on public policy issues. Its funding was cited by the Arizona Association of Realtors in the successful 2016 campaign to add a measure to the state constitution to forever prohibit the taxing of services – like real estate services.
And Sunshine Residential Homes, which provides care to children removed from their homes by the state Department of Child Safety, also kicked in $100,000.
There also was a $50,000 donation from William Perry, owner of William K. Perry Farms which grows cotton and alfalfa.
The Union Pacific Corporation Fund for Effective Government kicked in $26,450, with $25,000 donations from the Tohono O’odham Nation, Southwest Mountain States Regional Council of Carpenters, homebuilder Taylor Morrison, the Arizona Dispensary Association that represents marijuana shops, the Health System Alliance of Arizona, which lobbies on behalf of major hospitals, Honeywell International PAC and several individuals.
And there are a series of $10,000 and $5,000 donations, a few smaller – and one at $25.
The amounts donated are far in excess of what anyone could have given Hobbs – or any other candidate for statewide office.
For the election just completed, Arizona law limited individual donations for statewide candidates to $5,300. Even political parties could give no more than $80,300 to a party’s nominee.
And corporate donations to candidates – the kind that went to fund the inaugural – are entirely prohibited.
It wasn’t just Hobbs collecting money for the inaugural.
It turns out there was a separate State Inaugural Fund which has received donations and pledges of about $85,000, the largest of which was $25,000 from food giant conglomerate Pepsico. Hobbs press aide Murphy Hebert said those dollars will be used to pay for event-production expenses.
Hobbs has been under pressure to release information on the sources of funds for the inaugural event since Capitol Media Services first wrote at the beginning of the month that she was not fully disclosing the names of all the individuals or corporations paying for the celebration.
She subsequently put a full list of the names in a booklet that was given out at the Jan. 5 event and listed them on an inaugural web site. But this is the first time there is a full accounting of how much each has donated.
“With the inauguration events now behind us, we are fulfilling the governor’s commitment to transparency by disclosing the donations made to the Inaugural Fund as well as expenditures from the fund that helped cover the costs of the Jan. 5 inauguration ceremony,” Nicole DeMont, director of the inaugural committee said in a prepared statement.
Part of what makes the excess cash noteworthy, aside from the amount raised, is that what Hobbs gets to do with inaugural money differs from her three prior predecessors.
Republican Doug Ducey raised outside money, including at his second inaugural in 2019 where he sold tickets for the best seats to the event. For example, a $25,000 donation got six seats up front, three parking passes, six reception tickets, three photos and six inaugural pins.
But what was left over after paying costs was placed into the “protocol fund” that governors can use for things like gifts to dignitaries. And Arizona law requires governors to annually account for how those monies were spent.
In 2011 when Jan Brewer was sworn in, she raised $200,000 from lobbying firms, business interests and the state’s major utilities. When the event didn’t cost that much, leftover funds were earmarked to refurbish the governor’s offices, particularly to pay for new carpeting.
And Janet Napolitano’s 2007 inauguration raised only 150,000 from private sources to supplement the $60,000 budgeted in state funds, with no indication of anything left over.
By contrast, Hobbs set up her inaugural committee as a “social welfare organization,” a category under the Internal Revenue Code for nonprofits that allows at least a portion of the funds to be used for political purposes. That 501(c)(4) category is the same, for example, as the Free Enterprise Club which has used its status to promote candidates of its choice through independent expenditures for things like commercials.
And that enables Hobbs to use at least part of what’s left over after paying expenses to run the same kind of independent expenditure campaigns in 2024 to get a legislature more to her liking.
Arizonans got to see in 2020 what a governor with available cash can do.
That year Ducey was in control of Arizonans for Strong Leadership.
There are some differences. Ducey raised his cash not from his inaugural but from private donations.
But he did use his available dollars to push for election of GOP lawmakers in the 2020 election.
Most notably, the governor directed the spending of more than $170,000 to back Wendy Rogers in the general election for the state Senate and another $290,000 in independent expenditures against Felicia French, her foe. Rogers won.
Ducey was asked about those expenses after Rogers, once elected, was mired in controversies including her association with white nationalist groups. She even was censured by the Senate for “publicly issuing and promoting social media and video messaging encouraging violence against and punishment of American citizens,” with the resolution citing a speech she made to a white supremacist group.
But Ducey was unapologetic. He said his decision to back Rogers ensured Republicans would hang on to control of the Senate with their 16-14 margin, enabling him to advance his political agenda.
There was no disclosure of who attended Hobbs’ $150-a-head inaugural ball on the Saturday after she was sworn in. A spokesman said that had nothing to do with the inaugural committee, with the funds raised going to the Arizona Democratic Party.