Contractors’ contributions circumvent pay-to-play laws

Nine New Jersey companies that received $12.3 million in payments related to state contracts in 2016 contributed $55,900 to the Democratic Governors Association (DGA) in the first six months of 2017, according to a review of data available from the Internal Revenue Service and the New Jersey Election Law Enforcement Commission.

Citizens for Responsibility and Ethics in Washington’s (CREW) found that the DGA spent more than $2 million to help Democratic Governor Phil Murphy, defeat Republican Lt. Governor Kim Guadagno.

If the contractors’ contributions had gone to the candidate himself or to one of his committees, they might have run afoul of state law, but by giving to the national group, they were able to donate to the Democratic candidate without restricting their ability to seek contracts from his administration.

New Jersey has restrictive pay-to-play laws. Political donors are limited in terms of the contracts they can seek with the state and local governments, and companies with state contracts worth more than $17,500 are generally barred from giving more than $300 to candidates for governor.

The Democratic Governors Association and the Republican Governors Association, national political spending groups organized under section 527 of the tax code, can spend on state and local races without necessarily abiding by state and local pay-to-play laws.

Because these outside groups are less restricted in how they raise and spend money, state contractors can use them to target local races while steering clear of pay-to-play restrictions.

New Jersey is one of just two states that elected a governor this year, suggesting that at least some recent contributions to the DGA are related to the state’s election. Indeed, of the nine New Jersey state contractors that contributed to the DGA in 2017, only two of them gave to the DGA in 2014, 2015, or 2016. One of these two contractors’ only contribution to the DGA over this period was made after the 2016 election, suggesting that it was also related to the 2017 election.

Several of the DGA contributors that are also state contractors were New Jersey law firms. The biggest contributor among these contractors was DeCotiis, Fitzpatrick, Cole & Giblin LLP, a law firm that practices  in areas ranging from construction and infrastructure to commercial real estate. DeCotiis donated $26,250 to the DGA this year. In 2016, the firm was paid $1.1 million related to New Jersey state contracts. Florio, Perrucci, Steinhardt Fader LLC, a law firm that contributed $12,500 to the DGA in 2017, was paid $206,020 through state contracts in 2016. Genova Burns LLC, a law firm headquartered in Newark, New Jersey, which contributed $11,000 to the DGA, received $284,192 in contract payments. Union Paving Construction was the biggest contractor that also gave to the DGA this year. The Mountainside, New Jersey company received received almost $5 million in payments for state contracting work in 2016.

The total amount that contractors gave to the DGA ahead of New Jersey’s election in 2017 has not been disclosed due to a campaign finance loophole. Political organizations like the DGA must disclose their contributors and expenditures more frequently on even-numbered years, when most states have elections.

On odd-numbered years, these groups are only required to file disclosures twice a year – as a result, only those who gave to the DGA before July have been disclosed. Elections that take place on odd years therefore suffer from a lack of campaign finance transparency until after voters have had their say.

This is particularly troubling given how many of the DGA donors that have been disclosed have business with the state – the total that contractors spent prior to the 2017 election is likely far greater than the figure reported here.

This is not the first time that state contractors circumvented New Jersey’s strict pay-to-play laws by giving to a national group spending in the state.

A 2014 report by the New Jersey Star-Ledger detailed how GOPAC, a national Republican political group, was able to funnel roughly $1 million dollars to New Jersey politicians and candidate committees from New Jersey donors, the majority of which were state contractors.

The Star-Ledger’s report found that over 35 state contractors had made contributions totaling about $850,000 to GOPAC between 2009-2013, while they made roughly $1.5 billion from state, local, and municipal government contracts during the same time period.

Some of the same contractors that gave to the DGA in 2017 – T&M Associates, Remington & Vernick, DeCotiis, Fitzpatrick, Cole & Giblin LLP, and Maser Consulting – also gave to GOPAC during the period the Republican group advocated for former Gov. Chris Christie.

While New Jersey has been lauded for the strictness of its pay-to-play laws, these cases demonstrate how current campaign finance laws governing donations to outside groups allow those seeking to peddle influence ample opportunity to get around even the most rigorous regulations.


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