January 5, 2022

Pay-to-play Regulations Continue to Move Local

Pay-to-play regulations are becoming increasingly difficult to manage as they continue to move beyond just federal and state laws. We saw this recently in a City Council decision in Pennsylvania:

“Delaware County Council has enacted an ordinance that requires contractors to disclose contributions to county officials, certain statewide officials, and political parties prior to conducting county business.

With political activity ever increasing, more local governments are pushing for enforcement and disclosures around political contributions for entities conducting business with them, to avoid potential conflicts of interest. In states like New Jersey, where there is a statewide statute covering pay to play, municipalities are also adding their own regulations:

more than 100 New Jersey counties and municipalities have adopted their own local pay-to-play ordinances, each of which may impose different limitations on political contributions, different disclosure requirements, and a different scope of covered contributors and recipients for business entities that wish to contract with that jurisdiction.”

In 2020, the District of Columbia adopted a pay-to-play regulation for city contractors:

“The District of Columbia has adopted a “pay-to-play” law that bans political contributions from city contractors, as well as personal political contributions from their senior officers. Violators may forfeit contracts, face disqualification on bidding for up to four years, and pay civil penalties.”

However, this law has yet to be implemented due to a lack of funding in the 2021 budget.

In 2019, San Francisco joined other major municipalities such as New York City and Los Angeles in implementing their own pay-to-play regulations through amendments that:

“Expanded the scope of contracts covered by the contribution ban;

Lowered the ownership level at which a contractor’s owners become subject to the ban; Doubled the time period after a contract is approved for when the ban continues to apply; Raised the dollar threshold for covered contracts”

Not only are new jurisdictions implementing pay-to-play rules, others are changing the scope and coverage of longer-held laws. In 2021, Hoboken, NJ voted to amend their 2011 pay-to-play regulation:

the measure would not allow vendors who received emergency contracts to contribute to any Political Action Committees, or independent expenditure groups, for 12 months before entering into a contract with the city.”

While contractors and financial institutions working on behalf of public entities have to be wary of SEC and state-by-state regulations, they also could be subject to a dizzying array of local rules at the municipal level. Given the scope of an organization’s government relationships and the various disclosure/reporting requirements, pay-to-play can quickly become a burdensome set of requirements to manage.

At illumis, we provide the leading monitoring solution to help reduce risk and increase transparency around pay-to-play rules. Our platform continues to set the standard, with cutting-edge technology to help ensure comprehensive coverage. Interested in a demo of the illumis Compliance platform? Click here or email solutions@illumis.com.

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