September 29, 2004

How do the new “pay-to-play” rules work?

by W. Timothy Howes, Esq.

The Governor issued an executive order limiting the political activities of state goverment contractors.  The order limits the amounts that contractors can donate to campaigns.  The order limits contractors’ ability to raise funds for campaigns and political parties.  The devil is in the details.

The Executive Order applies to firms or individuals who enter into contracts with the State of New Jersey and its independent agencies.  It does not apply to contracts with counties, municipalities or school boards.  No firm may enter into a transaction in excess of $17,500 with the state if anyone owning more than a ten percent interest in that firm has made a contribution in excess of $300 to the governor’s campaign fund, or to any State or county political party committee within 18 months preceding the transaction.

The Executive Order also bars firms from contracting with the state government if anyone owning a greater than ten per cent stake in that firm solicits campaign donations on behalf of a gubernatorial campaign, or on behalf of a State or county political committee within eighteen months prior to the transaction.

It is clear that this order still allows large firms to receive contracts when their employees donate because the bar only applies when someone with a ten percent or larger interest in the firm makes a contribution.  It is clear that contributions to legislative leadership PACs, legislative campaigns and municipal campaigns are exempt from these rules.

Notable in their absence in these are gubernatorial appointments.  As such, these rules do not bar donors or fund-raisers from taking positions with the state government.

The Executive Order is effective October 15, 2004.  Many legal authorities believe that it will expire on January 1, 2006, when rules passed by the Legislature will take effect.

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Howes & Howes

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Raritan, New Jersey 08869

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