The Elections Transparency Act: What You Need to Know About NJ’s New Campaign Finance and Pay-to-Play Law

On April 3, 2023, New Jersey Governor Phil Murphy signed the Elections Transparency Act (ETA) (Bill No. A4372/S2866) into law. Sponsored by Senate President Nicholas P. Scutari, Assemblyman Louis D. Greenwald, and Assemblywoman Carol A. Murphy, the ETA massively overhauls the state’s campaign finance and pay-to-play laws, among other things. The ETA is the first major change to New Jersey’s campaign finance and pay-to-play laws in almost two decades and will greatly affect the way political campaigns and public contracts are managed in the state.

Reporting Requirements

Candidates and committees are required to report contributions over $200, as opposed to the previous reportable threshold of $300. The ETA also changes the deadlines for reporting certain contributions and expenditures that occur within a certain number of days before an election from 48 hours after receipt to 72 hours, though all contributions must be reported within 24 hours in the week before the election.

Campaign Contributions

Pursuant to the ETA, the state’s baseline campaign contribution limits have doubled from $2,600 to $5,200 per candidate per election. As outlined in the chart below, a number of other limits on contributions to candidates and political committees have either doubled or tripled under the ETA.

Contribution Limits for Individuals and Corporations

These increased contribution limits take effect after the upcoming June 2023 Primary Election.

Pay-to-Pay Laws

Prior to the enactment of the ETA, the state had an amalgamation of state, county, and local pay-to-play laws regulating government contracts. Now pay-to-play ordinances and regulations adopted by local governments as well as pay-to-play rules adopted by local independent authorities and boards of education are preempted by the ETA, meaning pay-to-play, or the restriction of same, will be governed by state laws. The “fair and open process” exception that previously only applied to contracts in the legislative branch, counties, and municipalities has been extended to the executive branch and independent authorities and agencies.  The law defines “fair and open process” as one in which the contract is:

1. “publicly advertised in newspapers or on the Internet website maintained by the public entity in sufficient time to give notice in advance of the contract;”
2. “awarded under a process that provides for public solicitation of proposals or qualifications;”
3. “awarded and disclosed under criteria established in writing by the public entity prior to the solicitation of proposals or qualifications;” and
4. “publicly opened and announced when awarded.”

The ETA also removes the prohibition on contractors donating to state, county, and municipal political parties and legislative leadership committees.

Housekeeping Accounts

State party committees, and their respective county political party committees, are now able to maintain “housekeeping” accounts to pay for non-political expenses. These housekeeping accounts must be segregated depository accounts, separate from any campaign depository accounts. According to the ETA, the intended purpose of the housekeeping account is for committees to pay eligible expenses for “non-political purposes including, but not limited to, legal activity, accounting, compliance, human resources, collective bargaining, capital expenses such as mortgage payments, rent, utilities, and taxes, and expenses related to county, State, or national political party conventions.” Under the new law, state political party committees and county political party committees that establish a housekeeping account will be required to file a report of all contributions received for the housekeeping account in excess of $200 and of all expenditures made from the account with the New Jersey Election Law Enforcement Commission (ELEC).

Independent Expenditure Committees

The new law now requires independent expenditure committees to disclose any contributions larger than $7,500, as well as all expenditures made on elections. Specifically, the law governs entities that spend funds on “electioneering communications,” a term defined as “any communication made within 30 days of a primary election and made within 60 days of a municipal, runoff, school board, special or general election, that mentions a clearly identified candidate and expressly supports or opposes that candidate or, by virtue of the communication, is the functional equivalent of express advocacy.” By and large, this requirement applies to 527, 501(c)(4), and 501(c)(6) organizations.  Reports on independent expenditures must be filed with ELEC either once or twice prior to an election (depending on the type of election) and once again after the election is concluded.

Statute of Limitations

The ETA shortens the statute of limitations for agency enforcement actions from 10 years to two years following an alleged violation. The statute of limitations would apply retroactively to any alleged violations occurring prior to January 1, 2023, the effective date of the legislation.

McCarter routinely advises candidates, political parties, continuing political committees, and individual and corporate donors on issues or questions related to state campaign finance laws. For more information about the ETA and its implications, please contact the authors or the McCarter team with whom you work.