Pay-to-Play Resolutions for 2013

Out with the old, in with the new. Here are a few practical tips government vendors in New Jersey should add to their list of resolutions:

As a final resolution, be proactive. Don’t wait for problems to arise before you give attention to your compliance plan. The pennies you invest today in prevention will avert draining your dollars in hope of a cure tomorrow.

Pay-to-Play Amendments at the Forefront in Jersey City

Four years ago, Jersey City adopted one of the toughest local pay-to-play ordinances in the State of New Jersey. Indeed, the Jersey City Ordinance has become the model for the transitional aid ordinances  adopted by dozens of New Jersey municipalities in recent years.

Last night, the Jersey City Council voted on introducing competing amendments to the current Jersey City Ordinance. One proposed amendment would expand the ordinance to include contributions by city vendors to Jersey City Board of Education candidates and the other proposed amendment would expand the ordinance to include contributions by city vendors to both Jersey Board of Education candidates and candidates for State Assembly and Senate representing Jersey City.

The amendment expanding the scope of the ordinance to both Board of Education and Senate and Assembly candidates was voted down. The Jersey City Council is scheduled to hold a final vote on the amendment to expand the scope of the ordinance to cover contributions to Board of Education candidates on November 14, 2012. The question remains whether additional amendments will be proposed for consideration between now and then and how far those amendments may go in expanding the scope of an already stringent ordinance.

Additional Transitional Aid Pay-to-Play Ordinances on the Horizon in NJ?

Last Friday (September 7, 2012) was the deadline for New Jersey State Fiscal Year municipalities to inform the Department of Community Affairs (the “DCA”) of their intent to apply for transitional aid for the 2013 State Fiscal Year.

As previously discussed here and here, adoption of a stringent pay-to-play ordinance is one of the requirements for receiving transitional aid.  If a municipality wishes to be considered for transitional aid for State Fiscal Year 2013 and does not currently have a transitional aid pay-to-play ordinance in effect, the municipality must agree to introduce a model ordinance prior to Friday, September 28, 2012.

With additional municipalities applying for and receiving transitional aid, local government vendors in New Jersey will be required to comply with more stringent pay-to-play restrictions on a regular basis.

501(c)(4) Rules to Be Reviewed

Just weeks after the Supreme Court’s recent health care law decision, 501(c)(4) groups are framing an election debate on that law’s future.  Under current law, these groups do not disclose the funding sources for their ads to the public.

As 501(c)(4) political activity has increased in the current federal election cycle, watchdog groups have stepped up their effort to obtain funding source disclosure.  One approach has been to seek a rulemaking from the IRS to limit the amount of candidate related activities in which a tax exempt 501(c)(4) may engage.

Now comes an IRS response signaling receptivity to reviewing its political activity limitations for tax exempt organizations.  There is no indication, however, that the IRS will take any action prior to the fall elections.

Additional Local Pay-to-Play Restrictions are on the Way for Municipalities Receiving 2012 Transitional Aid Awards from the State of New Jersey

The Christie Administration has announced that five (5) New Jersey municipalities operating on a calendar year budget will be receiving transitional aid in 2012.

These municipalities include:

  • Maurice River (Cumberland County)
  • Harrison (Hudson County)
  • Asbury Park (Monmouth County)
  • Plumsted (Ocean County)
  • Penns Grove (Salem County)

The main goal of the transitional aid program is to “increase the efficiency, effectiveness and accountability of local governments statewide.” One step in achieving this goal is the requirement that each municipality receiving transitional have a stringent local pay-to-play ordinance in effect.

As the State doles out transitional aid funds to the five (5) municipalities listed above, vendors doing business or wishing to do business with these municipalities, must be prepared to comply with the additional pay-to-play restrictions that will be going into effect in coming months.

ELEC Issues Advisory Opinion Addressing Independent Expenditure Only Committees

Earlier today, the New Jersey Election Law Enforcement Commission (“ELEC”) issued an advisory opinion to the National Association of Realtors (“NAR”) regarding the treatment of independent expenditure only committees under New Jersey law.

The NAR has both a federally registered PAC and an independent expenditure only committee that is registered with the IRS as a 527 organization.  The NAR asked ELEC whether making independent expenditures in a New Jersey election would subject the committee to New Jersey filing obligations as a political committee. 

Based upon NAR’s contemplated activities (of making independent expenditures only), ELEC advised that the committee would not be subject to contribution limits or political committee registration and reporting requirements under New Jersey law.  The committee is, however, required to file independent expenditure reports with ELEC.

In its conclusion, ELEC made it clear that the opinion was “intended to apply only to the particular facts presented.”  ELEC also left open the question of whether the coordination of independent expenditures among affiliated entities would lead to a different result.

Clarification Issued to Bergen County Pay-to-Play Ordinance

Yesterday, Bergen County posted a clarification to its recently enacted pay-to-play ordinance on its website.

The clarification is intended to resolve “confusion” among vendors relating to the phrase “any candidate for elective office in the County of Bergen or holder of elective office in the County of Bergen”.

The County has now made it clear that the above phrase is limited those persons who run for or are elected to, any county office in Bergen County, which includes:

  • County Freeholder
  • County Sheriff
  • County Executive
  • County Clerk
  • County Surrogate

The phrase does not include:

  • Candidates for elective office on a municipal level in Bergen County
  • Candidates for Governor
  • Candidates for Assembly
  • Candidates for Senate
  • Candidates for Congress whose districts include Bergen County

The treatment of contributions to party committees and continuing political committees has not changed.

2011 ELEC Business Entity Annual Disclosure Statements Become Public Today

Today, the Business Entity Annual Disclosure Statements filed with ELEC on Friday, March 30, 2012 will become public.

Business entities can view their own reports or can search for the reports filed by their competitors by visiting ELEC’s website.

The annual disclosure requirement applies to business entities that received payments of $50,000 or more, during the previous calendar year, as a result of their government contracts in New Jersey.

New Jersey Ranked State Best Prepared to Prevent Corruption

Yes, you read the heading correctly and, no, it is not April Fool’s Day!

Today, the Center for Public Integrity released a report ranking New Jersey the state best prepared to prevent corruption. As part of the study, each state received a “corruption risk” report card.

Although no state received an “A”, New Jersey got the highest grade with a “B+” . New York, on the other hand, received a grade of a “D” and ranked 36th out of all 50 states.

New Jersey received its top rank largely because of its sweeping pay-to-play laws, which have curbed political contributions and have increased transparency in relation to government contracting.

Independent Spending in New Jersey’s Elections

Yesterday, New Jersey voters went to the polls to elect candidates for local and legislative office.  Despite the fact that all 120 seats in the New Jersey Legislature were up for grabs, in a press release issued last week, ELEC reports that fundraising and spending by legislative candidates is at an all time low since 2001.

Although the economy and pay-to-play restrictions may be partially to blame, ELEC has indicated that “the recent growth of independent non-profit political groups organized under IRS rules” may be one of the factors leading to this decline.  Prior to yesterday’s election, these groups – commonly referred to as Super PACs or Independent Expenditure Only PACs – were required to report their independent spending in excess of $1,200 to ELEC on pre-election and 48-hour notice reports. 

In the wake of Citizens United v. FEC, will the level of independent spending in New Jersey foreshadow the level of independent spending in the 2012 federal election cycle or in the 2013 New York City elections where new independent expenditure reporting requirements will likely be in effect?