BREAKING: Both Candidates Raising Money At Equally-Furious Clip - >$1M/Week - But McSally Heads Into Home Stretch With $1.2M More In Bank

Both candidates for Arizona's open Senate seat raised more than $3M in the first 2 1/2 weeks of October, yet Rep. Martha McSally (R-CD2) headed into the final three weeks of the hotly-contested campaign with $2.5M in the bank compared to Rep. Kyrsten Sinema's $1.3M.

The new filings (below) are the last reports before the November 6 election, and it proves that the race is nearly even in more ways than just the polling.

McSally's campaign took in $3.6M between October 1-17, which brought its total to $16.2M. In those 17 days, it spent $4.4M ($13.7M total).

By comparison, Sinema both raised and spent about $300k less for the October 1-17 period. However, her campaign totals are higher, having received $19.3M and spent $20.3M.*

As Arizona's Politics has noted on several occasions, the ginormous amounts being spent by outside groups in this race - making it the 3rd most expensive race in the country (in a year that will be the highest-spending Congressional elections in history) - almost make any differences between the candidates' committee numbers meaningless. According to the Center for Responsive Politics, $57M has been spent on the campaign to replace the retiring Jeff Flake.

Related coverage: 
NO WINGMEN OR WINGWOMEN: @MarthaMcSally ONLY Major Senate Candidate With No Employees, Paying No Payroll Taxes

OOPS, I Did It Again: FEC Tells McSally Campaign Its "Best Compliance Team" Still Not Cutting It

   Mcsally Pre General by arizonaspolitics on Scribd

   Sinema Pre General by arizonaspolitics on Scribd

* The seeming imbalance in the Sinema figures was explained earlier this year, in that Sinema started the 2017-2018 election cycle with $2.3M cash on hand and converted her House campaign committee into the Senate campaign committee. McSally started 2017 with a similar amount socked away, but had to open up a new committee for the Senate race because an audit of her House campaign committee was still ongoing at that point.

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BREAKING/READ: Arizona Supreme Court 5-2 Opinions Removing Invest In Ed Initiative; Factual Error (In Majority Opinion) Detailed

Less than two weeks before an election in which two Arizona Supreme Court Justices are on the ballot for retention, the Court today released its 5-2 opinion on why it removed the Invest In Ed initiative from the ballot.

The two Justices on the ballot - Clint Bolick and John Pelander - both signed on to the majority opinion (which does not list a specific author). Chief Justice Scott Bales and Justice Ann Timmer each wrote brief dissenting opinions.  The opinions are published below.

The majority determined that the initiative's language would jeopardize bracket indexing and that that was a "principal provision" of the measure. Therefore, they reasoned, "Our failure to determine whether the description omits a principal provision before the measure appears on the ballot would reward sloppy or even deceptive drafting, and would render the statutory transparency requirement meaningless because it would allow a measure to proceed even if voters signing the petition were not made aware of principal provisions." (Paragraph 27)

Bales' dissent acknowledged that better drafting could have prevented the decision, but noted the incongruity of requiring drafting perfection from initiatives but not from the legislature's bill drafting. "But we have never required perfection in drafting as a condition for the valid exercise of legislative authority, and doing so with initiatives would infringe upon the people’s constitutional right to enact laws independently of the legislature."

He did not believe the 100-word description created a "substantial danger of fraud, confusion or unfairness sufficient to invalidate" the measure without a vote of the people. That challenges the language used on August 29, when the Court issued a brief order removing it from the November 6 ballot.

Interestingly, that order did not specify whether the seven Justices all agreed or who - if anyone - had voted to not remove the initiative; however, the Governor's office appeared to have inside information about how each justice had voted. (Arizona's Politics filed a records request with the Court to see if there were communications between the different branches on the subject; the court determined there were not.)


As a lead-in to addressing the specific language of the Invest In Ed proposal, the majority cited other cases where they prevented measures from being placed on Arizona ballots.  Then, to emphasize their fairness, they listed one example where they also required challengers to an initiative to conform to statutory requirements even if there was an addressable issue with the measure.

The example they attempted to use was against the Minimum Wage initiative two years ago. (Not coincidentally, the interests and attorneys on either side of that measure overlapped in the present measure.*)

The Supreme Court falsely states today that the trial judge in the minimum wage challenge had determined that not enough valid signatures had been filed. (The challenge was dismissed because it had not been timely filed.) The facts are that the trial court judge did not make such a determination and was unable to do so.

   Arizona Supreme Court - Invest in Ed Opinion by arizonaspolitics on Scribd

*Disclosure: The attorney/author of this article (Paul Weich) was peripherally involved in the minimum wage case.

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GONE NATIONWIDE: APS Uses Bernie Sanders In New, Federal-level Phone Calls In Fight Against Prop. 127

In a surprising turn of events, APS opened up a new federal front in its fight against Arizona's Proposition 127 (renewable energy mandate) - spending $330,791 in phone calls "opposing" Vermont Senator Bernie Sanders. Confused? Rightly so. Here is the explanation.

APS' parent company is Pinnacle West ("PinnWest"). Yesterday, PinnWest transferred another $3M to its committee primarily dedicated to opposing Prop. 127, Arizonans for Affordable Electricity. That is not surprising, as APS/PinnWest had already contributed more than $22M to AAE.

However, today is the first time that AAE has disclosed a PinnWest cash infusion to the Federal Election Commission. (It was not concurrently filed with the Arizona Secretary of State's Office.*) And, the first expenditure from this new $3M pool of money was the flurry of phone calls "oppos(ing) Vermont Senator Bernard Sanders".

(Arizona's Politics has extensively covered (and uncovered) APS' political contributions on the state and local levels since 2014 - whether they have been to dark money organizations, to those national organizations that have funded campaigns supporting Governor Doug Ducey and Attorney General Mark Brnovich, or to SuperPACs that have spent money on federal races.)

AAE spokesman Matt Benson tells Arizona's Politics that the calls  were made to Arizonans as "a continuation of our GOTV efforts as part of hte No On 127 campaign." The federal disclosure was made "out of an abundance of caution" since the calls referred to Senator Sanders. (The FEC form would have supported a more complete explanation of the purpose of the phone calls and the disclosure.)

The calls were apparently made to Arizona voters to coincide with Sanders' Arizona visit yesterday, where the former Presidential candidate rallied students at the UA and ASU in support of David Garcia, the Democratic candidate for Governor.

Sanders did not directly mention Prop. 127 in his Tucson rally, but he did say "the time is now to transform our energy system away from fossil fuels to (energy efficiency) and solar energy and renewables. This state can be a leader in solar energy." Neither AAE nor the committee supporting the Proposition that would require utilities to obtain a minimum of 50% from renewable sources mentioned Sanders' visit in their social media feeds yesterday, and both told Arizona's Politics that they were unaware of Sanders' comments about solar energy.

Benson indicates that he will soon share with Arizona's Politics the content of the live phone calls.

Arizona's Politics has extensively covered (and uncovered) APS' political contributions on the state and local levels since 2014 - whether they have been to dark money organizations, to those national organizations that have funded campaigns supporting Governor Doug Ducey and Attorney General Mark Brnovich, or to SuperPACs that have spent money on federal races.

   AAE IE Rept vs Bernie by arizonaspolitics on Scribd

*The only AAE filing with the state today was that of a $28k mailer supporting state lawmaker Cesar Chavez.

Just saw today's FEC filing for Arizonans for Affordable Electricity, and wow, it surprised the heck out of me! So many questions that I hope you can answer quickly:

Spend side:

1) The report lists $330,791.70 in "phone calls" opposing Bernie Sanders. Were these calls to Vermonters or Arizonans?

2a) If calls were to Vermonters, why? What was the subject and the messaage?

2b) If calls were to Arizonans, was the subject Prop. 127 or was it Sanders or was it something else?

3) Were they timed to coordinate with Sanders' rallies in the state?

4a) Were these live calls or robocalls?

4b) If live calls, can you provide a script? If robocalls, can you provide a copy?

5) I did not cover either of the Sanders rallies yesterday, and as far as I can tell, he did not address Prop. 127. Do you know if he did?

Contribution side:

6) According to the report, PinnWest contributed $3M to AAE yesterday. Is this $3M specifically for the Sanders expenditure and similar, federal-level efforts? (Segregated?) Or, is it simply a $3M contribution to AAE that will be spent on federal/state/etc efforts?

7) What other contributions has PinnWest made to political organizations (e.g. Arizona Grassroots, RAGA, RGA, etc) since October 1?

8) What is the current total of all contributions PinnWest has now made to AAE (at all levels)?

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UPDATE: Intentionally Flying Solo - McSally Campaign States It Pays More, Does Not Need To Classify Staff As Employees

27 hours after Arizona's Politics first asked the McSally office to explain why they are the only major campaign that does not pay payroll taxes/Social Security/Medicare/benefits, the Communications Director finally released a statement. (The statement was provided to NBC's Vaughn Hillyard*, and not to the other inquiring national reporters or Arizona's Politics, but that was probably just an oversight.)

Arizona's Politics first reported yesterday about its review of the 20 major party candidates running in the 10 most expensive 2018 Senate campaigns. McSally is the only one who reports zero employees; instead, paying them as independent contractors. Even though her campaign declined to respond before it was published, the article presented possible reasons for the "unusual nature" of the set-up and compared the "payrolls" between the McSally and Sinema campaigns.

As the article received more and more attention from local and national media, Communications Director Torunn Sinclair finally issued her statement at approximately 5pm, tonight. The full statement is published below, and it throws a lot into the mix. Sinclair leads with a seeming non-sequitor about the high amount of pay that she and the others are receiving; that IS somewhat relevant because it not only gives the independent contractor money to choose an ACA policy (etc), but it gives them money to pay the self-employment taxes that the campaign would otherwise be withholding and paying the employer's share.

However, as many readers and social media users pointed out, federal and state laws do not give a campaign (aka business) the option to treat staff as independent contractors or employees. Instead, there are (somewhat) fuzzy standards regarding how much control the business has over the individuals they are contracting with. Yesterday's article also addresses this aspect, but here are additional cites from the IRS and the Internal Revenue Code.

Finally, we will note that Sinclair attempts to attribute the questions she was receiving - and yesterday's article - to "the Sinema campaign" and its efforts to distract from the border issues that McSally, the President and other Republicans are trying to emphasize. The Sinema campaign had absolutely nothing to do with our article. (In fact, they did not respond to our emails requesting comment, either.)

*Vaughn is from the Valley, received reporting notoriety here in high school and at ASU's Cronkite School, before moving on to bigger things at NBC. We first took note of his work 8 years ago, for great work on a Russell Pearce Fact Check despite less than awesome support from the Republic.

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BREAKING: No Wingmen Or Wingwomen: McSally ONLY Major Candidate With No Employees, Paying No Payroll Taxes

Last year, Arizona Rep. Martha McSally (R-CD2) voted against permitting Congress to review the tax returns of President Donald Trump (as part of tax reform legislation). This year - as McSally has become a frequent defender of the President - her Senatorial campaign committee has taken the unusual position that there are NO (taxable) employees working on her campaign.

By classifying 13 apparently-full-time persons as independent contractors, McSally has avoided paying the employer's share of payroll taxes, Social Security and Medicare withholding, unemployment taxes, benefits, etc.

Arizona's Politics reviewed the campaign filings of the Republican and Democratic candidates running in the 10 highest-spending Senate campaigns and found that McSally is the only one who decided to classify her top staff as independent contractors.  Democratic Senator Bill Nelson's (D-FL) campaign previously was set up the same way until the Washington Free Beacon publicized the questionable workaround in July.

(Last week, Arizona's Politics reported on the FEC's concern about the McSally For Senate committee not disclosing necessary contributor information, despite previous assurances.)

Based on our review of the most recent, 3rd quarter filing, McSally has 13 people receiving monthly payments ranging from between $1,445 and $7,000, and at least that many receiving smaller bi-weekly payments. All of them list "field consulting" in the subject line. There are no payments made for "taxes", "payroll", "health insurance", etc.

While the second group may legitimately be people being paid for irregular, part time work making phone calls or knocking on doors. However, the first group includes people listed - by the campaign and/or the individuals - as the Finance Director, the Political Director, and the Communications Director. None of these individuals lists any jobs other than their title with the McSally For Senate campaign on their personal Twitter or LinkedIn pages.

It is not simply the exclusivity or number of hours worked that the IRS and Arizona agencies use to determine whether someone is a legitimate "independent contractor" rather than an "employee". In order to prevent abuse of the distinction, the government polices possible abuses through complaints by the workers, third parties and sometimes on their own initiative.

In fact, Arizona passed a new law in 2016 which was designed to give businesses some clarity in setting up an independent contractor relationship. It lists a number of criteria to be considered in determining whether an employer/employee relationship can be avoided. Those criteria are listed below.* Similarly, the IRS test provides 20 questions to help parties determine how much control the "employer" has in the relationship.

McSally is running for the hotly-contested Senate seat opening up because of the retirement of Sen. Jeff Flake (R-AZ). Fellow Rep. Kyrsten Sinema (D-CD9) is the Democratic nominee.

Sinema's most recent campaign report indicates a payroll of more than $90,000 per month, with withheld taxes/Social Security/Medicare/workers comp/etc totaling more than $36,000 per month. While McSally's payments for "field consulting" is approximately half of the Sinema payroll, the taxes not paid are in the five figures each month.

Then-candidate Trump infamously said that avoiding taxes made him smart. He has declined to provide the evidence that would prove him to be smart or possibly having crossed the line. McSally's campaign has not yet responded to Arizona's Politics' requests for more information that may prove her independent contractor move to be smart.

(Below the jump: McSally campaign finance report, Arizona statute re: independent businesses)

McSally for Senate 3q18 FEC by on Scribd

* The contractor acknowledges at least six of the following:

(a) That the contractor is not insured under the contracting party's health insurance coverage or workers' compensation insurance coverage.

(b) That the contracting party does not restrict the contractor's ability to perform services for or through other parties and the contractor is authorized to accept work from and perform work for other businesses and individuals besides the contracting party.

(c) That the contractor has the right to accept or decline requests for services by or through the contracting party.

(d) That the contracting party expects that the contractor provides services for other parties.

(e) That the contractor is not economically dependent on the services performed for or in connection with the contracting party.

(f) That the contracting party does not dictate the performance, methods or process the contractor uses to perform services.

(g) That the contracting party has the right to impose quality standards or a deadline for completion of services performed, or both, but the contractor is authorized to determine the days worked and the time periods of work.

(h) That the contractor will be paid by or through the contracting party based on the work the contractor is contracted to perform and that the contracting party is not providing the contractor with a regular salary or any minimum, regular payment.

(i) That the contractor is responsible for providing and maintaining all tools and equipment required to perform the services performed.

(j) That the contractor is responsible for all expenses incurred by the contractor in performing the services.
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#ArizonaElectionCashRegister: $6.1M Spent On #AZSen Race TODAY (So Far)

Which is going up faster, the MegaMillions Lottery jackpot or the total outside money being spent on the riveting Arizona Senate campaign?

Independent Expenditure committees have disclosed $6.1M in spending - mostly on TV ads - during the first 18 hours of this October 18th. The lottery jackpot for tomorrow's drawing is the 2nd highest in history, and this campaign between Reps. Martha McSally (R) and Kyrsten Sinema (D) is guaranteed to be the most expensive in Arizona history. (And, today is the biggest single day to date.

The first to file today was NextGen Climate Action Committee - the vehicle for billionaire Tom Steyer's national spending. It plunked down a measly (estimated) $242,000 for digital advertising. It was the first foray for the group into the Senate race, as the group has been concentrating on the clean energy Prop. 127, and state candidates.

That was followed in short order by media buys hammering McSally by the Democrats' dark money (#50ShadesofDarkMoney) group Majority Forward ($1.3M) and the not-dark Democratic Senatorial Campaign Committee ($1.2M).

However, all three of those pro-Sinema/anti-McSally spends were then dwarfed by the homegrown-turned-national DefendArizona. The omni-present SuperPAC made their daily FEC filing a big one, $3.7M on producing and placing two new ads. Arizona's Politics profiled DefendArizona on Monday, and the Arizona Republic's Ron Hansen went into more detail yesterday.

DefendArizona - now mainly funded by the national Senate Leadership Fund (despite its still-local name) - has now spent $18.8M relentlessly attacking Sinema.

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BREAKING: Watch UNCOVERED Video Of McSally Calling On Herself/Others To "Look Within Our Hearts...Make Sure We're Not Facilitators Or Bystanders" Fomenting Political Violence

Yes, Martha McSally is passionate when she speaks. The Republican Congresswoman's passion came through in last night's debate with fellow Rep. Kyrsten Sinema to help voters decide which should be Arizona's next Senator. In the most memorable exchange - during and after the debate - McSally accused Sinema of committing treason against the United States.

However, it was 16 months ago this week that McSally (R-CD9) was just as passionately imploring herself and fellow elected officials (including the President) to "look within our hearts" to ensure that "we each need to do our part to ratchet this down."

Arizona's Politics wrote about her striking comments in the aftermath of the shooting of Rep. Steve Scalise, and posted the video of her dual interviews on both Fox News and MSNBC.* While the links to the embedded videos are no longer operative, we were able to find one of the interviews, and are re-posting it below.**

McSally leaned on her military background to lead into the answer, suggesting that they would talk about dealing not only with the perpetrators, but also with the facilitators and bystanders. She then included herself in stating that elected officials - and everybody in our country and community - need to "make sure that we're not being facilitators or bystanders in creating an environment where it is so hot...perhaps unstable individuals will be unleashed to violence...." (full quote and video below)

Arizona's Politics has asked both campaigns to address these 2017 remarks in the context of last night's debate, and will update as warranted.

"The people that are responsible for the acts of violence are the assailants.  But, when I was a colonel in the military, as a commander we used to talk about when we were dealing with other issues like sexual assault: you’ve got the perpetrators – which is kind of the inner circle – you’ve got facilitators and then bystanders. I think the rest of us, whether we’re public officials, the President, Members of Congress, elected officials up and down – but everybody in our country and community, we need to look within our hearts and make sure that we’re not being facilitators or bystanders in creating an environment where it is so hot – that perhaps, the investigation is still ongoing – but, perhaps unstable individuals will be unleashed to violence in this environment. So, we each need to do our part to ratchet this down and find where we can unify together and be civil about our disagreements." (this transcript produced by Arizona's Politics, any errors are inadvertent)

(If clicking on the above picture does not open the video in a new window, please use this link.)

*The McSally remarks were inadvertently re-brought to our attention by a Republican reader when we accidentally posted a picture of McSally from the 2017 MSNBC interview this past week, accompanying a different article. 

**If you are able to retrieve the video from Rep. McSally's Fox News interview, please email us details. Thanks.

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BREAKING UPDATE: APS Crosses $150,000 Mark In Donations To Help AG Brnovich

APS' contributions to help re-elect Arizona Attorney General Mark Brnovich have now hit - or, exceeded - $150,000, Arizona's Politics is now reporting. The Republican Attorneys General Association (RAGA) filed its third quarter report with the IRS last night, and indicated that APS parent Pinnacle West contributed another $100,000 on July 10.

Pinnacle West spent $425,000 in 2014 to benefit Brnovich's first campaign, and the Arizona Republic reported last month about the changes the AG's office made to Prop. 127. Arizona Public Service is investing heavily in defeating the measure.

In 2014, APS donated much of its money to RAGA after the final pre-election reporting period. Earlier this year, we noted they had made an early $50,000 contribution to RAGA.

Since 2014, RAGA vastly outraises and outspends its Democratic counterpart, especially in Arizona. However, Arizona's Politics noted earlier today that DAGA is holding a fundraising dinner with former Presidential candidate Hillary Rodham Clinton with the intent of supporting Arizona Democratic AG candidate January Contreras.

   RAGA IRS 3q18 by arizonaspolitics on Scribd

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