New Jersey could impose more stringent campaign contribution guidelines for law firms if legislators take up Gov. Jon Corzine's ethics reform initiatives.
The Democratic governor, who is up for re-election next year, yesterday signed three executive orders to close loopholes in the state's pay-to-play bans and create a task force to evaluate ways to improve local government ethics and strengthen enforcement and compliance. In addition, Corzine announced initiatives that will require legislation, including further restrictions on political contributions made by certain lawyers.
Currently, partners in law firms can serve as counsel for local governments and municipalities where they have made campaign contributions as long as the individual does not have more than a 10% ownership in the firm. The governor's proposal would extend that restriction to include "contributions by partners of professional service firms regardless of percentage of ownership," according to a Corzine press release.
The governor also called for a ban on auditors, contractors, and developers making contributions to campaigns and political parties within municipalities where they are seeking contracts or currently working. Officials want contracts to be awarded on the basis of merit rather than boosts to campaign funds.
In addition, the proposals aim to terminate wheeling, where party committees and political action committees transfer donations among organizations.
"At a time when the government of the people should be credible in stabilizing markets, home values and people's anxieties, the public questions government's motivations and intent," Corzine said at a press conference announcing his ethics reform measures. "The public understands all too well the intersection of money and politics is bad for their pocket books. Watching the sad saga of recent history - be it Enron, Halliburton, Fannie Mae, Freddie Mac, or the recent implosion of large financial institutions who lobbied audaciously for less government regulation - the public has had it."
Supporters of banning pay-to-play believe that it would create a level playing field in how cities and towns award professional contracts. John L. "Jack" Kraft, the state's first nationally recognized bond attorney, began heading up Lomurro, Davison, Eastman & Munoz PA's public finance department one year ago. Yet from 2001 through 2007, Kraft was a sole practitioner and therefore limited in his campaign contributions while large law firms with numerous partners continued to avoid the 10% ownership cap.
"Why should a firm be able to contribute hundreds of thousands of dollars merely because they're large enough so that no single partner has a 10% stake?" he said.
Kraft referred to the 10% cap as a "gaping loophole" in the state's 2004 law that attempted to eliminate pay-to play methods.
"I applaud any addressing by the governor or anyone else in power to provide the so-called level playing field, and I think the best level playing field would be to prohibit contributions altogether," Kraft said.
Conversely, Gregg Edwards, president of the Center For Policy Research of New Jersey, a nonprofit think tank that favors free markets, believes that if the state restricts contributions made by developers and contractors, then officials should also look at limiting political donations made by labor unions. Edwards said restricting professional services "may not be quite as bad," but stressed that if companies and developers face contribution restrictions, so should unions.
"Unions, which are resistant to any kind of privatization of government services, can participate in the process, make contributions and maybe encourage legislators to propose, and pass laws that make privatization more difficult," Edwards said. "Private business, which might have an interest in trying to see more privatization of services, is prevented from even engaging in that lobbying process, so I think in some instances it makes it unfair."
Corzine's announcement quickly gained bipartisan support, with many Republican legislators expressing their desire to end pay-to-play and wheeling.