Using Pay-To-Play as a Political Weapon

image001 (5)

Pay-to-Play laws are political wolves in sheep’s clothing.  They don’t “reform” anything!

After more than a decade of experimentation with the idealistic notion that it is possible to take the money out of politics, the intricate rubric of local Pay-to-play ordinances has failed. Instead of reforming anything they have strangled public participation in government, restricted the most protected free speech—political speech, caused contributors to hide their campaign contributions from the public, and achieved nothing except to create a new tool or weapon for politicians to manipulate to gain a political advantage over their opponents.

The most glaring example of using pay-to-play laws as a political weapon is what a Jersey City Councilman has been attempting to do this month. It is interesting to observe what is happening there, not to be critical of the Councilman, but to highlight the way pay-to-play ordinances in many towns are used as political weapons.

It is important to note that Jersey City uses the strictest version of local pay-to-play rules.  It is the model pay-to-play ordinance that the State of New Jersey requires from all of New Jersey municipalities that receive state funds.  It was last overhauled in 2008 and again in 2012.

The latest amendments proposed by the councilman who opposes Mayor Steve Fulop would extend current restrictions to the city’s autonomous agencies, such as the Municipal Utilities Authority. They would also increase the no-bid restriction on contributors who donate more than $300 to a single candidate from one year to four years. Also, the proposed changes would limit donations to PACs formed to raise funds for current Jersey City office holders seeking another office.

In Hudson County, politicians typically don’t hide their true intentions.  So, while a few supporters of the proposed amendments to Jersey City’s ordinance say that they are closing “loopholes,” most of them have openly acknowledged that they are targeting Mayor Steve Fulop and his campaign contributors.  The honesty about the whole thing is what makes this incident so thought-provoking and instructive, which is not unique for the councilman of this city.

New Jersey’s Pay-to-Play Laws

At the state level, New Jersey has some of the strictest pay-to-play laws in the country. State agencies and authorities may not award public contracts worth more than $17,500 to a “business entity” that has made certain “reportable” political contributions (those more than $300) in the one year preceding award of the contract. A business entity is broadly defined to include not only contractors, but also subsidiaries; officers; spouses, partners, and dependent children of officers; and any person or entity that controls more than 10 percent of the contractor.

New Jersey also allows municipalities to impose additional restrictions. In fact, contrary to a millennium of legal evolution, the NJ State Legislature set aside the doctrine of pre-emption that allows local pay-to-play ordinances to pre-empt state laws on the subject. Over 175 municipalities and counties throughout the State of New Jersey have enacted pay-to-play laws.

The consequence of having a body of laws that conflict with each other on a town by town basis without a state statute that supersedes them has created new tools for politicians and a new practice area for lawyers.  Unfortunately, since most pay-to-play ordinances contain provisions that are unconstitutional, potential donors have to decide whether they are willing to be the “test case” and pay for a court challenge if it comes to that or just opt out of expressing their political views with their checkbook entirely.

Conclusion

New Jersey needs campaign finance reform.  However, that change needs to occur at the state level, and state law must always pre-empt local ordinances.

Donald Scarinci is a managing partner at Lyndhurst, N.J. based law firm Scarinci Hollenbeck.  He is also the editor of the Constitutional Law Reporter and Government and Law blogs.