Advocates see few upsides to recent pay-to-play overhaul

Advocates warn that the campaign finance bill Gov. Phil Murphy signed into law last week will weaken safeguards meant to prevent local and state officials from steering public contracts to donors.

The bill has been roundly criticized by good government advocates and Republican lawmakers for its provisions curtailing investigations by the New Jersey Election Law Enforcement Commission and allowing a dramatic increase in campaign donation limits.

But it also ends local pay-to-play ordinances that are often stricter than the state law, permits the executive branch to award contracts through a system critics have decried as a loophole, and removes donations to political parties from the list of those that invoke the anti-corruption protections.

Flavio Komuves, an election law attorney with Weissman Mintz, called the new law a “real regression” on where New Jersey stands regarding the influence of political dollars on public contracting generally.

“I frankly think it’s an embarrassment,” Komuves said.

Pay-to-play laws are meant to prevent political corruption by limiting when governments can award contracts to campaign donors. Under the state’s law, those who give $300 or more to a candidate are barred from receiving no-bid public contracts worth more than $17,500 from that candidate’s municipality.

The new changes to the pay-to-play law went into effect immediately with the bill’s signing, retroactive to Jan. 1, 2023.

Local law

Critics have raised alarms over the provisions sunsetting local pay-to-play ordinances, noting those laws are typically stricter than the limits imposed by the state.

Franklin Township’s pay-to-play ordinance, for example, barred awarding contracts to redevelopers who have made any contributions to candidates, party organizations, or PACs related to the township during a certain period.

The Election Law Enforcement Commission has for years sought to wind down local pay-to-play restrictions, charging the patchwork system needed to be simplified to aid compliance.

Jeff Brindle, the commission’s executive director, said the law was already notoriously difficult to comply with and enforce, and those difficulties were only compounded by restrictions that varied from town to town.

Barring local provisions on pay-to-play also prevents rules from changing with political winds, Brindle said.

“[The] administration would change as a result of an election, and then they would change the local pay-to-play ordinance,” he said. “They could make it weaker, or they could make it stronger. This kind of thing was always occurring.”

Moorestown experienced that rollercoaster a decade ago, when changing political fortunes and shifting representation led officials to twice winnow their local pay-to-play ordinance over four years, eventually leaving the township with protections laxer than those imposed by state law.

It’s unclear whether the new law’s preemption of local pay-to-play rules will also sunset ordinances targeting specific groups, like a Jersey City pay-to-play law specifically targeting developers. A spokesperson for the city did not return requests seeking comment.

Much of the opposition to the sunsetting of local pay-to-play laws has centered around the weakness of the state’s law, which then-acting Gov. Dick Codey signed into law in 2005.

Advocates said they might have been more welcoming to changes on the local level if they accompanied revisions to the state law ending the so-called fair-and-open loophole, requiring contractors to disclose donations to independent expenditure groups, and lowering the $50,000 disclosure threshold imposed on public contractors.

“As a matter of policy, if the state had a real, tough, robust pay-to-play law and they wanted to make it uniform throughout the state so you don’t have hundreds of different regimes of compliance, that would not be a bad policy solution,” Komuves said. “The problem is that the state law never has been — and isn’t — robust, in any sense of the word.”

Senate President Nicholas Scutari (D-Union), a chief sponsor of the bill, called the Elections Transparency Act, declined to comment through a spokesperson.

Wheeling and dealing

Changes to New Jersey’s pay-to-play law made by the new law removes party committees from the list of those to whom donations would trigger pay-to-play protections, a move opponents said weakens the law.

Political parties work closely with party-backed candidates, and donations to parties often help fund the campaigns of their endorsed candidates.

Critics of the law say the change enables “wheeling,” the practice of transferring campaign donations between different accounts to sidestep local limits or hide the origin of the campaign cash. A donor interested in influencing a political candidate would donate instead to that person’s political party, which then transfers — wheels — the money to the candidate.

While wheeling is a long-standing issue — former Sen. Loretta Weinberg unsuccessfully sought to outlaw the practice in 2010 — the changes made by the Elections Transparency Act cut several steps for those looking to unduly influence a public official, said Craig Holman, a lobbyist with Public Citizen.

Holman noted that state and local parties are “essentially appendages of those same public officials.”

“Exempting party officials from the contribution restrictions provides an easy end-run around the restrictions on public officials,” he said.

Some local pay-to-play ordinances included stricter protections against wheeling.

Wheeling can also allow donors to direct more funds to candidates than would otherwise be allowed under state law.

The Elections Transparency Act raised the cap on individual donations to candidates to $5,200. But county parties can donate up to $8,200 to most candidates, and there is no limit on contributions made by local and state party committees to all non-gubernatorial candidates.

Fair and open

The law extends an oft-derided pay-to-play loophole to public contracts awarded by the executive branch.

The change will allow state departments to award contracts worth more than $17,500 to individuals and firms that have contributed to the governor or lieutenant governor so long as those contracts go through a formal bidding process. Under prior law, gubernatorial donors were entirely barred from securing state contracts worth more than $17,500.

“We are returning to the bad old days of political contributions influencing contract selection and the lower quality and waste of tax dollars that we know, from experience, will be the likely result,” said Harry Pozycki, founder and chair of the Citizen’s campaign.

That bidding process, called fair-and-open, requires contracts to be put up for public bid. While this provides some oversight of government procurement, the system isn’t foolproof. Governing bodies set the selection criteria themselves and have final say over what constitutes a fair and open process.

And even with those safeguards, contractors who make large donations can still curry favor with officials to gain an advantage in the bidding process, Holman said.

Codey was among a handful of Senate Democrats who abstained from voting on the Elections Transparency Act.

“In life, sometimes you gotta change with the times,” Codey said.