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Groups Urge U.S. Senate to Back Amendment to Highway Bill Allowing States to Limit Corruption in Government Contracting

May 5, 2005

Groups Urge U.S. Senate to Back Amendment to Highway Bill Allowing States to Limit Corruption in Government Contracting

WASHINGTON, D.C. – Seven good government groups are urging U.S. senators to allow states to enact so-called “pay-to-play” laws designed to stem corruption in state highway contracting.

The groups are urging senators to adopt a measure sponsored by U.S. Sen. Jon Corzine (D-N.J.) that would explicitly give states the right to limit the amount a state contractor can contribute to political campaigns. The measure, to be added to the Safe-TEA Act ( S. 732), would prevent the Federal Highway Administration (FHWA) from withholding federal funds from states that restrict government contractors from making campaign contributions to state elected officials who are ultimately responsible for approving the contracts, such as the governor or state legislature.

The U.S. House of Representatives already has approved a similar amendment to its version of the highway authorization bill (H.R. 3).

The measure is necessary, the groups said in recent letters to the Senate, because the FHWA pulled funding from New Jersey after it enacted a pay-to-play law in 2005. Faced with the threat of losing $1 billion in highway funds, New Jersey suspended the portion of its law that applies to highway contracts. The state is challenging the federal government’s intervention in court.

The coalition of groups have sent to the Senate three separate letters supporting the pay-to-play amendment. These groups include Public Citizen, Public Campaign, Common Cause, Democracy 21, Campaign Legal Center, the Center for Civic Responsibility and the Brennan Center for Justice at the New York University School of Law.

“It is ludicrous that the federal government should try to stop states from taking steps to prevent corruption in contracting,” said Joan Claybrook, Public Citizen’s president. “It’s well known that contractors try to influence officials by contributing large amounts of cash to campaigns. This has taken a serious toll on public confidence in state and local governments across the nation. States should be applauded for trying to stop it.”

In addition to New Jersey, Kentucky, Ohio, South Carolina and West Virginia have enacted pay-to-play laws as have local jurisdictions in California, Illinois and New Jersey. Connecticut, whose former governor is on his way to prison for pay-to-play corruption, is writing a similar law.

The Securities and Exchange Commission (SEC), led by former SEC chair Arthur Levitt, has also adopted a pay-to-play restriction for bond traders involved in the municipal bonds market, known as Rule G-37. Rule G-37 has been upheld by the courts and serves as a useful model for states attempting to curtail corruption in state government contracting procedures.

“Pay-to-play restrictions are far from draconian measures,” the groups wrote in an April 28 letter to senators. “They are a narrow remedy that focuses exclusively on a specific problem” – to ensure that government contracts are awarded on merit rather than favoritism.

Corzine’s amendment, which the groups urged senators to support, says, “Nothing in this section prohibits a State from enacting a law or issuing an order that limits the amount that an individual that is a party to a contract with a State agency under this section may contribute to a political campaign.”

In blocking New Jersey’s pay-to-play law, the FHWA claimed that it reduced the pool of competitive bidders for government contracts. The agency maintains that merely disclosing lobbying and political contributions is sufficient to deter corruption, even though several states have concluded that disclosure alone is not enough to end pay-to-play corruption.

“Federal intervention is unjustified and counterproductive,” said Craig Holman, legislative representative for Public Citizen. “States must have the right to ensure that their contracting procedures conform to the highest ethical standards and offer the best value for taxpayers.”

To read the groups’ letter, click here.