Gov. Newsom signed bills into law this week dealing with pay-to-play provisions contained in the Levine act.

Senate Bill 1181 and 1243 increase the permissible campaign contribution threshold from $250 to $500 regarding contributions to state and local agency officials from certain entities such as corporations and individuals with business before the agency.

The bills also expand the definition of participant and license, permit, or other entitlement for use to exempt certain types of proceedings from being subject to the requirements of the Levine Act.

Other changes include an increase in the period an official may cure a violation from 14 to 30 days.

A section of the bill also clarifies a contribution of an agent will not be aggregated with contributions from a party or participant when determining whether a contribution has exceeded $500.

The bills become effective January 1, 2025.

Senate Bill 1243 was recently passed by the Legislature and will be sent to the governor for approval or veto.

The bill raises the threshold of contributions governed under the pay-to-play Levine Act from $250 to $500.

A section of the bill also clarifies a contribution from an agent which exceeds $500 will not be aggregated with contributions from a party or participant.

The period for which an officer may cure a violation is increased from 14 to 30 days.

Additional definitions are added for pending and agent, while definitions are amended for participant and license, permit, or other entitlement for use.

Senate Bill 1243 is effective January 1, 2025, dependent upon changes proposed in Senate Bill 1181 being enacted first.

A proposed amendment to the city’s ethics ordinance introduced at City Council would extend the existing $1,500 per-year campaign contribution limit on individuals and entities doing business with the City of Chicago to include officers, directors, partners, or owners of 1% or more of those companies and their spouses or domestic partners.

Reaching the $1,500 limit by a corporate entity or any combination of its officers, leadership, and their spouses, would block all further contributions from any of those sources.

The ordinance also amends the ethics ordinance to create an affirmative duty for every city contractor or lobbyist to report any information concerning conduct by any person which the contractor or lobbyist knows to involve corrupt activity.

A failure to report would constitute an event of default for the contractor and suspension of the lobbyist’s registration for two years in addition to other penalties.

If passed, the ordinance would become effective 10 days after passage.

Gov. Phil Murphy appointed four new commissioners to the state’s campaign finance watchdog agency.

The Election Law Enforcement Commission (ELEC) oversees campaign spending, lobbying, and pay-to-play in the state. 

In addition to providing Murphey with the power to appoint these commissioners, Senate Bill 2866 made a number of substantial changes to ethics laws.

These changes included increasing spending and contribution limits; overhauling pay-to-play laws; and shortening how long the state’s election watchdog commission can investigate campaign finance violations. 

A coalition of business groups have filed a lawsuit against the Fair Political Practices Commission, seeking to stop enforcement of new pay-to-play restrictions in Senate Bill 1439.

The new law removed the exception for locally elected officials and extended the restricted period from three to 12 months.

The lawsuit seeks to throw out the new law, claiming the bill is unconstitutional, both in the manner it altered the Political Reform Act and in practice.

Plaintiffs allege Senate Bill 1439 does not further the original purpose of the Political Reform Act, but directly conflicts with the original provisions regulating certain financial conflicts of interest of public officials.

Additionally, the plaintiffs claim the bill is unconstitutional on freedom of speech grounds, stating the bill significantly restricts the making and receiving of campaign contributions to local elected officials throughout the state.

No trial date has been set at this time.

On January 13, the U.S. Supreme Court issued an order denying review of an appeal concerning the legality of a Securities and Exchange Commission (SEC) pay-to-play rule, allowing that rule to stand.

Previously, on June 18, 2020, a federal appellate court had affirmed a lower court’s finding that the pay-to-play rule was legal.

In New York Republican State Committee v. SEC, the U.S. Court of Appeals for the District of Columbia Circuit found the SEC’s Financial Industry Regulatory Authority (FINRA) Rule 2030 constitutional.

The rule prohibits a placement agent from accepting compensation for soliciting government business from certain candidates and elected officials within two years of having contributed to such an official’s electoral campaign or to the transition or inaugural expenses of a successful candidate.

The New York Republican State Committee and the Tennessee Republican Party had argued the SEC did not have authority to enact the rule, the order adopting the rule was arbitrary and capricious because there was insufficient evidence it was needed, and the rule violated the First Amendment of the Constitution of the United States.

Voters will have a chance in November to increase the restrictions on political contributions in the latest campaign finance proposal aimed at pay-to-play.

The Sunlight on Dark Money ballot initiative requires greater disclosure of who is behind campaign advertisements paid for by PACs.

The measure requires the top three largest donors of the committee paying for the advertisement to disclose the name and amount contributed to the committee.

If any of the three belong to another committee, they must disclose the top two donors of that committee as well.

The measure would also prohibit top executives in development companies from contributing to candidates or current office holders of the Board of Supervisors, mayor, and city attorney.

The prohibition will be in effect while a project they have financial interest in is pending approval, or for 12 months after the city makes a final decision on the project.

The measure will also close a loophole allowing LLCs and LLPs to contribute to candidates despite an existing ban on those donations from corporations.

The measure would take effect 10 days after the election results are certified.

On June 18, a federal appellate court affirmed the legality of a Securities and Exchange Commission (SEC) pay-to-play rule.

In New York Republican State Committee v. SEC, the U.S. Court of Appeals for the District of Columbia Circuit found the SEC’s Financial Industry Regulatory Authority (FINRA) Rule 2030 constitutional.

The rule prohibits a placement agent from accepting compensation for soliciting government business from certain candidates and elected officials within two years of having contributed to such an official’s electoral campaign or to the transition or inaugural expenses of a successful candidate.

The New York Republican State Committee and the Tennessee Republican Party had argued the SEC did not have authority to enact the rule, the order adopting the rule was arbitrary and capricious because there was insufficient evidence it was needed, and the rule violated the First Amendment of the Constitution of the United States.

While the court found the plaintiffs had standing, it ruled against all their arguments and upheld the rule.

Allen Superior Court Judge Jennifer DeGroote blocked the city of Fort Wayne from enforcing a pay-to-play ordinance.

The ordinance restricts how much money the owners of companies could give elected officials and still bid on city contracts.

Under the ordinance companies are forbidden from bidding on a city contract if any owner, partner, or principal who owns more than 10% of the company gave more than $2,000 to the political campaign of a person with the responsibility of awarding contracts.

Judge DeGroote’s ruling stated the ordinance was superseded by state law, specifically the Home Rule Act.

The Home Rule Act grants municipalities the ability to self-govern in areas not covered by the state.

Under state law, elections are the domain of the Indiana Election Commission.

Allen Superior Court Judge Jennifer DeGroote heard arguments on Wednesday in a case focused on a 2018 Fort Wayne City Council ordinance.

The ordinance limits financial contributions of contractors and their family members to political campaigns in Fort Wayne.

The measure prohibits business entities from bidding on city contracts if any officer, partner, or principal with more than 10% ownership has donated more than $2,000 to a campaign of someone with ultimate responsibility for awarding city contracts.

Kyle and Kimberly Suzanne Witwer filed the suit in April challenging the ordinance and requesting a judge block it’s implementation.

While no ruling was made on Wednesday, both sides must submit proposed findings of fact and conclusions of law by Friday.

There could be a potential ruling next week.

The main issue being considered at this time is whether state contribution laws make this ordinance unnecessary.

District of Columbia Act 22-578 passed Congressional review and is now effective.

The Campaign Finance Reform Amendment Act of 2018 removes the Office of Campaign Finance from the Board of Elections and establishes an independent five-member Campaign Finance Board (CFB).

The Act restricts political contributions by contractors doing business with the district and addresses improper coordination between campaigns, political action committees, and independent expenditure committees.

The pay-to-play component of the bill bans campaign contributions by businesses seeking contracts of $250,000 or more.

The pay-to-play provisions take effect after the November 2020 general election.

We know there is a lot of news happening today, but here are four lobbying, campaign finance and pay-to-play stories from this week you don’t want to miss!

A Chicago-based real estate firm is challenging Illinois pay-to-play law in federal court as unconstitutional after losing a contract when its founder made contributions to gubernatorial candidates.

Plaintiffs, The Habitat Company and its founder Daniel Levin, lost a one-year management contract for a mixed-income building after Chief Procurement Officer Ellen Daley of the Illinois Procurement Office notified the firm that Levin’s campaign contributions to gubernatorial candidates in 2018 violated the state procurement code.

In Illinois, pay-to-play law prohibits government contractors or affiliated persons from making any contribution to a political committee established to promote the candidacy of the officeholder responsible for awarding the contracts.

The complaint alleges constitutional violations of Levin’s First Amendment rights of speech and association and Fourteenth Amendment rights of equal protection and due process of law.

Plaintiffs seek a temporary restraining order and a preliminary injunction to void Daley’s decision and prevent the Illinois Housing Development Authority from entering into a property management contract with another company.

The D.C. Council unanimously approved a bill in a second full council vote that aims to restrict political contributions by government contractors doing business with the district.

The bill also addresses improper coordination between campaigns, political action committees and independent expenditure committees.

The pay-to-play component of the bill would ban campaign contributions by businesses seeking contracts of $250,000 or more.

Provided the mayor approves the legislation, the act of the council travels to Congress for a 30-day review. If approved and funded, the bill would take effect on October 1, 2019.

Pay-to-play provisions would take effect after the November 2020 general election.