New Jersey is home to a multitude of overlapping pay-to play laws. The State has a default statute covering pay-to-play restrictions at the municipal level. In 2006, however, the State Legislature allowed municipalities to craft their own pay-to-play ordinances further restricting certain political contributions from vendors. Although these local ordinances are supposed to be “consistent with the themes” of New Jersey’s statewide pay-to-play restrictions, variations exist among the local ordinance in effect in more than 100 municipalities across the State.
As of last week, the number of municipalities with local pay-to-play ordinances in effect dropped by one when, in a 4-3 vote, the Plainfield Municipal Council voted to repeal its 2011 pay-to-play ordinance. Until recently, Plainfield had a stringent pay-to-play ordinance in effect. Under the old ordinance, covered contributors were subject to reduced contribution limits for municipal candidates and political party committees, as well as for county political party committees and PACs that regularly engage in the support of Plainfield municipal or Union county elections. Additionally, all contributions were prohibited once negotiations for a contract began. Without the ordinance, the State’s default pay-to-play laws will be in force in Plainfield. This means, if the City of Plainfield awards contracts pursuant to a “fair and open” process, vendors may contribute up to $2,600 per election to a candidate for Plainfield municipal office. If, however, the City of Plainfield does not use a “fair and open” process, vendors must adhere to the reduced pay-to-play limit of $300 per election to a candidate for or holder of Plainfield municipal office and $300 per calendar year to a Plainfield municipal party committee.
Proponents of the repeal argue that this will bring more transparency to the political process by encouraging direct contributions to candidates and party committees instead of PACs (a sentiment that echoes ELEC’s recent calls to revisit the State’s pay-to-play laws). The repeal of this ordinance is part of a trend of New Jersey counties and municipalities that have revised or rescinded local ordinances in an effort to simplify the government-contracting process. Will other municipalities follow Plainfield’s lead?
If any New Jersey State contractor or potential State contractor out there ever thought that it didn’t need to put political-activity and pay-to-play compliance at the top of its “To Do” list, we have a cautionary tale for you.
Earlier this week, after losing out on the opportunity to perform two separate NJDOT contracts worth just over $7 million, the Superior Court, Appellate Division in Mercer County held that a paving company would remain ineligible for New Jersey state government contracts through the end of Governor Chris Christie’s current term of office because the company made a $500 contribution to a county party committee. Under New Jersey’s pay-to-play laws, contributions that exceed $300 per calendar year to a county political party committee will disqualify the contributor for contracts with the State of New Jersey Executive Branch. In this case, the devil is in the details – the company wrote its check payable to the “Somerset County Republican Org to Elect Provenzano,” referencing a candidate for County Sheriff. The contribution was made in connection with an event sponsored by the Somerset County Republican Organization, which provided attendees with the option of making their checks payable to different recipients. Unfortunately for the paving company, the payee name on its check was ambiguous and was eventually deposited by the Somerset County Republican Organization. If the company check had been more clear, or had been deposited by the County Sheriff candidate (or had been made payable to the County Freeholder candidates that were also listed on the invitation), the paving company would not have been declared ineligible for contracts with the State of New Jersey. The company only realized the implications of the contribution after the close of the 30-day refund period, and thus finds itself sitting on the sidelines for the remainder of Governor Christie’s current term of office.
This case reaffirms that although both contributors and recipients sometimes make mistakes, New Jersey’s Executive Branch pay-to-play restrictions provide no room for “inadvertent” contributions except during the limited 30-day refund period. In this case, the President of the company “signed the check as a matter of office routine since he signs virtually all company checks every month.” There is nothing routine when it comes to New Jersey pay-to-play restrictions. What is the moral of the story? If you hold a State contract with the New Jersey Executive Branch and are thinking of making a political contribution, be informed about the State’s stringent pay-to-play laws and implement careful compliance and oversight policies for political contributions. Make it crystal clear who the recipient of your contribution is. Don’t let lax compliance and an inadvertent $500 contribution cost you $7 million in contracts.