A special interest group formed by several Republicans last year has dumped $500,000 into a campaign to kill Proposition 204.
Records filed with the Secretary of State's Office show the opposition campaign got money last month from Americans for Responsible Leadership. The money came in just eight business days after the No New Taxes campaign began fundraising.
The group is listed in its incorporation papers as a non-profit educational organization.
Reports show that the same group also put $100,000 into the effort to kill Proposition 121 to create an open primary system.
State Treasurer Doug Ducey, who is chairing the anti-204 campaign, said he did not know where the group, led by several Arizonans active in the Republican Party, got its money. But he said it does not matter.
"To put up over $500,000 (in donations) shows how much energy there is against the $1 billion permanent sales tax increase,'' he said. "And we're just getting started.''
What brings the donations up over $500,000 are a pair of $25,000 contributions, one from Americans for Limited Government and the other from John Dawson, owner of the Scottsdale Plaza Resort. He said his hotel, which caters to conventions and meetings, is losing business to other cities because the higher tax has to be passed on to the groups.
Dawson is no stranger to the issue: He also gave money to try to defeat -- unsuccessfully -- the 2010 ballot measure which first imposed the temporary one-cent hike in the state sales tax.
The organization's incorporation papers include Eric Wnuck, an unsuccessful candidate for Congress.
It also includes Robert Graham, owner of a Scottsdale wealth management firm who just announced Wednesday he plans to run as chair of the Arizona Republican Party.
And Ducey said the board also includes former House Speaker Kirk Adams who, like Wnuck, made a failed bid for Congress.
Wnuck promised to return a call but did not; messages to Adams and Graham were not returned.
Ducey said he got the money by talking to the board and making his pitch against the ballot measure.
If approved, Proposition 204 would create a permanent one-cent surcharge on the state sales tax. But it is designed to take effect -- if approved -- only after the current levy expires on May 31, meaning the rate would remain at 6.6 percent.
Ducey said that would give Arizona permanently the second highest sales tax rate in the country, second only to Tennessee.
Little is known about the group or where it gets its money.
A report with the Secretary of State's Office shows the organization got involved in only one other race this year: It spent $11,500 for mailings to help current House Speaker Andy Tobin, R-Paulden, survive a three-way GOP primary for the two House seats in his district.
That report lists no source of contributions, for either the Tobin race or this one.
Asked whether he knows the source of the committee's cash, Ducey responded, "from hardworking taxpayers who don't want to see their taxes raised by a scheme to fund bigger bureaucracy and government unions and pay back special interests who wrote Proposition 204.''
Pressed further, Ducey said he and others opposed to the initiative just make their pitch to various groups and hope they will contribute.
"That's how this campaign game works,'' he said. "You have to communicate with the voters.''
One of the arguments against the initiative -- other than the tax rate -- has been that it locks in how the approximately $1 billion a year to be raised initially would be divided up. While the majority goes to K-12 schools, there also is guaranteed funding for health insurance for the children of the working poor, university budgets and road construction.