New York’s campaign financing system has been called a “disgrace” and an “embarrassment.” One of the most brazen examples of the disgraceful nature of the state’s campaign financing system is that it allows those with business before the government to shower contributions on elected officials who control government contracting decisions.
One does not have to look far to see the consequences. Former U.S. Attorney Preet Bharara took down a “pay-to-play” scheme in which a Buffalo-based developer funneled campaign contributions to Governor Cuomo’s re-election campaign at the direction of the governor’s aides and close allies. Bharara also uncovered a scheme in Syracuse in which a local developer there did the same thing.
In both cases, the developers’ efforts were successful – until the U.S. Attorney’s office got involved. As a result, the developers as well as top aides to the governor were convicted of corruption. The governor was not charged in either case.
But the system of “pay-to-play” – in its legal forms, in which a wink and a nod are used instead of direct kickbacks to government officials – is commonplace in New York and the rest of the nation. The nation’s campaign finance system is based – with few exceptions – on candidates’ ability to raise money from private sources. And those private sources are usually the ones with business before the government and who are seeking favors in the form of legislation and lucrative government contracts. An independent commission looking into New York’s campaign finance system stated three decades ago, “When running for public office requires enormous expenditures of privately raised funds, challenges to incumbents are all but limited to the most wealthy and well-connected. Moreover, huge campaign costs pressure candidates to maintain political views that do not offend big money.”
It doesn’t have to be this way. Some states have taken steps to curb this pay-to-play culture. Our neighbor across the Hudson, New Jersey, has had a robust program to curb contributions from those with business before the government.
Under New Jersey’s pay-to-play law, for-profit business entities that “have or are seeking” government contracts are prohibited from making campaign contributions prior to receiving contracts. Moreover, businesses are forbidden from making “certain contributions during the term of a contract.” These pay-to-play restrictions apply at state, county, and municipal levels of government. NJ law requires contributions over $300 to be reported, and the contributor’s name, address, and occupation to be identified. A government entity is prohibited from awarding a contract worth more than $17,500 to a business entity that made a campaign contribution of more than $300 “to the official’s candidate committee or to certain party committees,” specifically to committees that are responsible for awarding the specific contracts.
The notion that those receiving government contracts can be restricted is not a new concept. The federal government’s Securities and Exchange Commission, for example, has enacted a pay-to-play rule. The rule, under the Investment Advisers Act of 1940, prohibits an investment adviser from providing services, directly or indirectly, to a government entity in exchange for a compensation, for two years after the adviser or an employee or an executive makes contributions to political campaigns of a candidate or an elected official, above a certain threshold. Moreover, the rule prohibits an investment adviser or an employee or an executive from providing or agreeing to provide payments to a third party, on behalf of the adviser, in order to seek business from a government entity, unless the third party is a registered broker dealer or a registered investment adviser, in which case the party will be subjected to the pay-to-play restrictions.
New York’s State Senate is advancing legislation that would take steps to curb pay-to-play. State Senator Zellnor Myrie has moved a bill to the Senate floor that restricts campaign contributions from vendors to “any officeholder of or with authority over the state governmental entity or entities responsible for issuing such procurement.”
Governor Cuomo has said that he supports such limits but has not put his muscle behind reform legislation. If the Senate approves the Myrie measure, the attention will turn to the Assembly. In that chamber Assemblywoman Sandy Galef has a bill that matches Myrie’s legislation, but there has been no movement this session – at least not yet.
As Albany hurtles toward wrapping up its legislative session later this week, lawmakers should remember that their work to repair New York’s democracy is still unfinished. Banning pay-to-play is an important step for them to take.
Blair Horner is executive director of the New York Public Interest Research Group.
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