The Elections Transparency Act (P.L. 2023, c. 30) made various significant changes to New Jersey’s pay-to-play laws. Local Finance Notice 2023-14 explains the law and its impacts on non-fair and open contract awards, along with other areas such as the elimination of local pay-to-play policies.
The notice identifies key changes relevant to local government pursuant to N.J.S.A. 19:44A-20.4 and 20.5. The term “business entity,” used in the notice as an umbrella term for vendors or contractors, is defined by N.J.S.A. 19:44A-20.7 as “any natural or legal person, business corporation, professional services corporation, limited liability company, partnership, limited partnership, business trust, association, or any other legal commercial entity organized under the laws of this State or of any other state or foreign jurisdiction.”
Section 13 of the act amended the definition of “fair and open process” in N.J.S.A. 19:44A-20.7 to expressly include contracts awarded under a public bidding or competitive contracting process pursuant to the Local Public Contracts Law.
Campaign Contribution Reporting Threshold; Non-Fair and Open Contract Awards
Although the statutory pay-to-play threshold remains in excess of $17,500, Section 4 of the act amended N.J.S.A. 19:44A-8 to reduce the Election Law Enforcement Commission contribution reporting threshold from over $300 to over $200. Please note that cash contributions of any size by business entities are prohibited. Pursuant to N.J.S.A. 19:44A-20.4 and 20.5, a county (or any agency or instrumentality thereof) may now award a non-fair and open contract over $17,500 to a business entity making reportable contributions under N.J.S.A. 19:44A-8 toward any county committee of a political party in that county. Likewise, a municipality (or any agency or instrumentality thereof) may now award a non-fair and open contract over $17,500 to a business entity making reportable contributions under N.J.S.A. 19:44A-8 toward any municipal committee of a political party in that municipality. Business entities being awarded non-fair and open contracts are no longer prohibited from making reportable contributions under N.J.S.A. 19:44A-8 toward a political party’s county or municipal committee during the term of their contract.
The award of non-fair and open contracts to business entities making reportable contributions toward candidate committees remains prohibited, and business entities having been awarded non-fair and open contracts are still barred from making reportable contributions toward candidate committees during the contract term. The notice provides numerous examples of permissible and nonpermissible contributions in the context of a nonfair and open contract award:
Further amendments and details of changes to the pay-to-play laws, as well as links to newly updated pay-to-play model forms, can be found in the full notice.