Which states have "pay-to-play" restrictions limiting campaign contributions by businesses holding or seeking government contracts?
According to Public Citizen, a consumer advocacy group, legislation has been enacted in nine U.S. states to restrict campaign contributions from government contractors. In the Midwest, only Illinois and Ohio have "pay-to-play" laws on the books.
Outside the region, Colorado, Connecticut, Hawaii, Kentucky, New Jersey, South Carolina and West Virginia have such laws in place.
The goal of pay-to-play restrictions is to address concerns that campaign donations can influence the awarding of contracts to non-governmental firms. State laws vary on a number of points, such as:
• the types of contracts subject to limits,
• the minimum value of the contract subject to limits,
• the state officials subject to the restrictions,
• disclosure requirements,
• pre-negotiation and post-termination limits (limits on contributions within a certain amount of time before or after a contract is issued or carried out); and
• penalties for violation of these limits.
Ohio and Illinois extend restrictions to competitive-bid as well as no-bid contracts, while laws in states such as Kentucky, Colorado and South Carolina apply only to no-bid contracts. In Illinois, the pay-to-play law does not cover highway projects eligible for federal funds, because the federal government has made it a practice to hold back some highway funds to states that have pay-to-play laws.
Four states (South Carolina, Kentucky, West Virginia and Hawaii) place no minimum on the value of a contract subject to restrictions. In the other states, the minimum varies from $10,000 in Ohio to $100,000 in Colorado.
Some states subject a wide range of public officials and political candidates to the pay-to-play laws. Colorado applies its limits to all state candidates, parties and political subdivisions. Ohio and Illinois are among the states where the law applies only to the state and local officials responsible for awarding the contract. Some states include state and local party committees in their restrictions. Kentucky is the least restrictive in this area, with its law applying only to gubernatorial candidates.
The various laws also come with differing penalties for a violation. South Carolina, West Virginia and Hawaii penalize offending contractors with fines only. The penalties in Connecticut, New Jersey, Ohio and Illinois include cancellation of the contract. Business entities in violation of these laws in Colorado, Connecticut, Kentucky, New Jersey and Illinois also are deemed ineligible for future contracts for a specified period of time. Ohio public officials violating the law may be subject to first-degree misdemeanor charges, with businesses subject to fifth-degree felony charges. According to Public Citizen, none of these tough penalties in Ohio has been issued to date.
In 2006, Ohio lawmakers passed legislation (HB 6944) that would have expanded the state’s current restrictions. For example, the pay-to-play law was extended to cover contributions made by the spouses and children of potential government contractors as well as political action committees affiliated with the contractors. The new law, however, was overturned by a lower court on procedural grounds — a decision that was upheld by an appellate court last year.
Connecticut’s restrictions, which place an absolute ban on contributions made by state contractors, potential contractors and their principals, are considered the most stringent in the nation. They withstood a legal challenge in federal court in late 2008.
This year, Indiana lawmakers passed new ethics rules (HB 1001) regarding a number of issues related to the conduct of state officials. The original House bill included pay-to-play rules, but these provisions were stripped from the final version sent to the governor’s desk.
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The Council of State Governments is the nation's only nonpartisan association of state officials serving all three branches of government in all 50 states and the U.S. territories. CSG is a regionally-based, national organization that promotes excellence in state government. CSG fosters the interstate exchange of insights and ideas to help state officials shape public policy, and it offers unparalleled regional, national and international opportunities to network, develop leaders, collaborate and create problem-solving partnerships. CSG Midwest focuses on meeting the needs of state policymakers and leaders in the nation's heartland, including 11 Midwestern states.