Campaign Contributions by Those Doing Business with Local Governments

Campaign contributions are not generally considered to be bribes, but the perception of large campaign contributions from local government contractors is often that they are payments for contracts past or future, what is known in the government ethics business as "pay-to-play."

For this reason, state and local governments have taken a variety of approaches toward dealing with this perception. The most common response is disclosure, for example, requiring local government contractors to disclose their status when they give a contribution above a certain amount. The most extreme response is to prevent contractors from making contributions at all, as is more often done with lobbyists.

New York City has taken a new approach, in conjunction with its public financing program, which, as I said in an earlier blog entry, has caught the attention of James Bopp, the nation's leading bringer of suits against public campaign financing programs, according to an article in the New York Sun.

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The NYC Campaign Finance Board is compiling a list of individuals who have "business dealings" with the city, including the usual sort of contractors, as well as officers of organizations that get money from the city, those with zoning variance requests before the city, and companies receiving economic development packages from the city. In short, anyone who could be seen as benefiting from the city and, therefore, having a reason to give contributions for reasons other than support of a candidate.

The NYCCFB's new rule is as follows. People on the list can give only about 1/10 of the contribution limit (they can give $400 to mayoral candidates, $250 to council candidates), and their contributions will not be matched by the public financing program. This allows them to voice their support, but not give amounts that look like legal bribes. This works in NYC, because the contribution limit is so high to begin with. In Connecticut, for example, the limit for mayoral contributions is only $1,000, and $400 is the amount at which contractors have to disclose their relationship with the city.

Mr. Bopp, as well as the Sun, refer to the "business dealings" list as a "blacklist," akin to being prevented from getting a job. But in fact it is because of the job they have that they are on the list. No one requires them to work for a company that does business or seeks money or valuable actions (i.e. zoning variances) from the city. It has nothing to do with the individuals' views or party membership. It is nothing more than an attempt to deal with the perception of corruption in city government.

Mr. Bopp says, in addition, "They have been presumed guilty instead of innocent just because of their prominence in the community." But being on the list has nothing to do with guilt or innocence, or with prominence in the community. In fact, having such a list makes it less likely that the individuals will be perceived as guilty of corruption. And it gives to individuals, uncomfortable with the pressures put on them to give when they know this can be seen as pay-to-play, the protection of saying no to candidates seeking large contributions.

Free speech is not the issue here. People making money off of government give up some things, just the way those who work in government do. It's part of democracy. In Russia, for example, working in government and running a major company that does business with government is considered just fine. And how do we perceive Russia's government and its most prominent individuals?

Robert Wechsler
Director of Research-Retired, City Ethics

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