GOP leaders pressure Hobbs to donate $1.3M in excess inaugural cash

By Howard Fischer/Capitol Media Services
Published: Thursday, January 26, 2023 - 5:38pm

Gov. Katie Hobbs
Tim Agne/KJZZ
Gov. Katie Hobbs addresses the crowd during her inauguration at the Arizona Capitol on Jan. 5, 2023.

The top two Republican lawmakers want Katie Hobbs to put money left over from the inaugural celebration into a state account — where it can't be used to elect more Democrats.

In a hand-delivered letter Thursday, House Speaker Ben Toma and Senate President Warren Petersen called on her to surrender control what's left from the more than $1.5 million Capitol Media Services first reported she collected for the Jan. 5 celebration. At the same time, the costs listed totaled only about $207,000.

Right now, the excess is controlled by a corporation set up under the Internal Revenue Code as a "social welfare" organization. And under federal law, proceeds can be used for political purposes.

That alarmed the two GOP leaders who said it was not right.

Nicole DeMont, who was Hobbs' campaign manager — and now run that social welfare organization — refused to comment on the request. So the money remains where it is and can be used to buy campaign ads in 2024 to elect Democrats and defeat Republicans.

In asking Hobbs to surrender the cash, Toma and Petersen said she should put any excess into a state Protocol Fund. Under state law, Protocol Fund dollars can be used for "promoting the interests of the state or to promote and encourage citizen public service to this state." Governors also have used cash for other purposes, ranging from new office carpeting to gifts for foreign dignitaries. And an aide to Doug Ducey said some of the proceeds of his first inaugural were used to pay the costs of hiring a transition team.

Most significant, any expenditures from the fund must be disclosed in an annual public report.

Nothing in state law appears to require Hobbs to surrender control of what's left. But Toma and Petersen told Hobbs she should "follow in your predecessors' footsteps" and transfer the excess to the Protocol Fund.

And they said it would be the right thing to do.

"Given this historical practice, as well as the Inaugural Fund's own descriptive title, Arizonans would have reasonably anticipated that any excess funds would be used for state interests," they told her.

But they also hinted that failure to cough up the cash could lead to legal challenges. That's because there was a link on the governor's state-run web page where people were given a number they could call if they wanted to become paying sponsors. That, the GOP lawmakers argued, means that "public resources ... were used to solicit funds for the Inaugural Fund," the leftovers of which, if kept in the "social welfare" account, could be used in the 2024 election to try to get a Democratic majority at the Capitol — and, by extension, put Democrats in charge of the Senate and House.

"It would be inappropriate to utilize any monies in the Inaugural Fund to influence an election," Toma and Petersen said, citing state statutes that prohibit public resources to affect the outcome of any vote.

In seeking donations, there is no evidence that members of Hobbs' inaugural committee made specific promises, either to donors or others, of how any leftover funds would be used.

Arizona Public Service, the state's largest electric utility, was the biggest donor at $250,000. 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."

Philipsen did not respond to follow-up questions about how APS felt about the possibility of having some of its donations used to elect Democrats.

The rest of the list of donors is made up largely by other special interests and lobbyists with business at the Capitol.

Hobbs, however, will surrender what's left in a separate State Inaugural Fund, separate from the social welfare organization, which had received direct donations and pledges of about $85,000, the largest of which was $25,000 from food giant conglomerate Pepsico. Press aide Josselyn Berry said any money left over after all vendors are paid will be transferred to the Protocol Fund.