Should Government Contractors Be Banned From Making Political Contributions?

Legislation banning government contractors from making political contributions to government officials often called “Pay to Play” exists in eleven states. Three cities in New Jersey: Newark, Jersey City, and Hoboken also have enacted legislation prohibiting Pay to Play.

Companies and individuals that conduct business with cities and counties often provide the lion’s share of campaign contributions in local races. In many ways contractors making political contributions to elected officials looks and smells bad. Campaign contributions should have no place in how government conducts its business on behalf of citizens. Allowing contractors seeking business from government promotes the perception that one must “pay to play”.

Common Cause Georgia is calling on the City of Atlanta to enact campaign finance reform aimed to limit the money a vendor can contribute to a political campaign. The proposal specifically caps contributions at $250 every four years, for those who have or seek a city contract. If a corporation exceeds the limit, they will forfeit any contracts they currently have, and/or their ability to compete for contracts the upcoming year. The City of Atlanta has not yet adopted the Common Cause proposal.
In Los Angles, legislation restricts contractors holding or seeking City contracts in excess of $100,000 from making campaign contributions to, or fundraising for, City officials (including the Mayor, the City Attorney, the Controller or a member of the City Council) or candidates to those offices.
In 1998 the New York City Charter Revisions Commission proposed, and the City’s voters passed by referendum, a Charter amendment that directed the Board to prohibit corporate contributions for all candidates participating in the city’s optional public financing election program. In 2006, after several public hearings and studies, the New York City Campaign Finance Board recommended banning all organizational contributions (including corporations, partnerships, LLCs, PACs, and unions) and regulating contributions by individuals and entities doing business with the City
In 2007, the New York City Council passed Local Law 34, requiring disclosure of, and restricting contributions from, individuals and entities who have business dealings with the City. “Doing business” contributors are strictly limited in their contributions as compared to others: they may donate only approximately one twelfth as much to a candidate as those who are deemed not to be “doing business” with the City. Because the “doing business” contribution limits, unlike the regular limits, are not indexed for inflation, moreover, the disparity between these two sets of limits is only likely to increase over time. Individuals who are not “doing business” with the city can contribute $4,950 to a candidate for mayor and the “doing business” contributor, in contrast, is limited to a contribution of $400.
Interestingly Federal law has long included a prohibition on political contributions by federal government contractors.

Do you think contractors doing business with state and local governments should be banned from making political contributions.


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William Lim

New Jersey has a state pay-to-play law in addition to local laws.


I think pay-to-play laws are necessary for the reason you state, to avoid the appearance of impropriety. However, sometimes the application of the law yields inconsistent results when you take into account the fact that these laws may not cover soft money like a company’s or industry group’s PAC. Thus the pay-to-play law shuts out small competitors, while a large company though technically not violating the law may nevertheless exert significant influence. On the flip side, sometimes a company may curry favor not by contributing to an official’s campaign but rather to that official’s pet non-profit charity. And although there are separate conflict of interest laws that would usually apply, the government/corporate revolving door remains a problem too.