Labor Relations Today : Pay to Play Lawyer & Attorney : Bribery, Campaign Contributions

In the aftermath of the well-publicized “pay-to-play” scandals in locales such as Illinois and New Mexico in early 2009, a number of state legislators across the country felt compelled to propose pay-to-play legislation in their own states. One such state where legislation was proposed in 2009--and likely will be again in 2010--is Georgia.

During the 2009 Legislative Session, veteran Senator George Hooks (D-Americus) proposed Senate Bill 70, which would have extended Georgia’s existing ban on contributions from “regulated entities” to certain “elected state executive officers.” O.C.G.A. § 21-5-30.1 currently states in part that “no regulated entity and no person or political action committee acting on behalf of a regulated entity shall make a contribution to or on behalf of a person holding office as an elected executive officer regulating such entity” or to a candidate for such office.   The statute further states that nothing in this prohibition shall prevent individuals employed by “regulated entities” from making contributions to applicable “elected executive officers” from their personal funds.

Senate Bill 70 maintained both well-reasoned provisions above. The bill also proposed to require “elected executive officers” or candidates, that received contributions from individuals employed by applicable “regulated entities,” to separately identify such contributions on their campaign contribution disclosure reports. Senate Bill 70 would have also prohibited “elected executive officers” from soliciting contributions from individuals employed by “regulated entities.”

While Senate Bill 70 failed to become law, it did not go quietly into the night. Indeed, Senate Bill 70 passed the Senate unanimously, and ultimately was sponsored by legislators of both parties. Such factors indicate both that similar legislation is likely to appear again in Georgia in 2010, and that pay-to-play legislation has the continued potential to receive bi-partisan support nationwide.

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 There is no state in the union whose “pay-to-play” law is currently being examined as closely as Colorado’s. In November 2008, 51% of Colorado voters approved “Amendment 54,” which impacts “sole source contractors.” Specifically, Amendment 54 prohibits “sole source government contractors” with contracts over $100,000, and its 10% owners, officers, directors,and trustees, and their “immediate families,” from making or soliciting contributions to political parties or candidates for state or local office during the term of the sole source contract and for two years thereafter. As the term is used here, “sole source government contract” means any government contract that does not use a public and competitive bidding process soliciting at least three bids prior to awarding the contract.

Shockingly, the “immediate family” that is prohibited from making such contributions includes any spouse, child, spouse’s child, son-in-law, daughter-in-law, parent, sibling, grandparent, grandchild, stepbrother, stepsister, stepparent, parent-in-law, brother-in-law, sister-in-law, aunt, niece, nephew, guardian, or domestic partner from making contributions, where applicable. Given that a great number of Colorado citizens likely are not in daily contact with each of their stepbrothers or nieces, it is easy to envision a scenario where this unwieldy regulation could penalize individuals or entities that are not engaging in any untoward activity. This is not to mention the logistical nightmare that such broad restrictions create for both reporting and regulating entities.

Not surprisingly, Amendment 54 prompted a torrent of litigation shortly after it went into effect. In June of this year, Denver District Court Judge Catherine Lemon granted an injunction against Amendment 54, agreeing with both business and labor interests who had argued that Amendment 54 was causing confusion and violating free-speech rights. 

It now appears as if we will know the final fate of Amendment 54 soon enough. On August 26, it was reported that the Colorado Supreme Court has “fast tracked” the lawsuit against Amendment 54, directing attorneys to submit relevant records by Sept. 4. 

Just as fascinating as the underlying lawsuit challenging Amendment 54 are the unintended consequences of the amendment. In this story, the Denver Post reports that monthly fundraising in Colorado fell by as much as two-thirds after the amendment took effect.

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It seems as if the rancor over “pay-to-play” reaches a fever pitch once every few years. In years past, “pay-to-play” scandals have rocked state houses in New Jersey, Connecticut, and South Carolina, just to name a few. Inevitably, such scandal leads to a public outcry for legislation to address the inappropriate and illegal activities that weaken the public trust, and waste the public’s money. Unfortunately, much of the legislation that is quickly passed by well-intentioned state legislatures does not fully contemplate the unreasonable, and often unnecessary, impact that such legislation will have on the private sector.

2008-2009 have been particularly bad years for “pay-to-play” scandals. Specifically, “pay-to-play” has been dominating headlines and public sentiment since late 2008 when Illinois Governor Rod Blagojevich attempted to “sell” President Barack Obama’s empty senate seat to the highest contributor. His pick to fill that seat, Sen. Roland W. Burris, is also under investigation.  Burris implicated himself with the statement that he would “personally do something” for Blagojevich’s campaign fund if he were appointed.  Blagojevich was indicted by a Federal Grand Jury and sent packing, but the fire was already lit. That fire is“pay-to-play” legislation, and it has spread quickly across the nation.

It’s true that the idea of “pay-to-play” isn’t really a new one, and it has always been established that government favors, much less political seats, are not to be bought in America. But the changes have been coming at a more rapid pace recently. As public outcry has increased, so has the pressure for lawmakers to do something about it.

Nowhere has the outcry to “do something” been greater than in Illinois. In September 2008, then-Gov. Blagojevich originally vetoed pay-to-play legislation passed by the Illinois General Assembly and subsequently issued Executive Order 3. Ironically, Executive Order 3 actually contained broader pay-to-play restrictions than the vetoed legislation, primarily because Executive Order 3 differed from the passed legislation in that it significantly restricted contributions to members of the Illinois General Assembly. The General Assembly subsequently passed a new pay-to-play statute to override the Blagojevich veto. The end result of this legislative in-fighting was incongruent legislation which left entities attempting to comply with Illinois law little guidance.

Shortly after taking office, Illinois Gov. Pat Quinn issued Executive Order 09-09, which repealed Blagojevich’s Executive Order 3. As such, the General Assembly’s legislation remains in place. Specifically, the current “pay-to-play” statute prohibits contributions to state executive officers and candidates by state contractors and their political action committees, the company’s affiliates, 7.5% owners and executive employees of the company, and their spouses and minor children. This restriction is generally in place from the date of the request for proposal (“RFP”) to the day after the contract ends. For current contractors, no covered contributions may be made for the term of the incumbent that awarded the contract, or two years after the contract ends, whichever is longer. It should be noted that even a single violation can void a contract, and that a three year ban may be levied on businesses that have three or more violations of this provision with a 36-month period.4

Further, an entity must disclose the names and addresses of all covered donors. This disclosure must be amended within two days of any change, or within ten days if the there are no pending proposals. Of note is that an automatic $1,000 per day penalty is triggered for a failure to disclose all such contributors.

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