Court Finds Atlantic County Contract Violated Pay-to-Play Ordinance

In Schroeder v. County of Atlantic, a New Jersey court addressed the applicability of a local pay-to-play ordinance where the contributions in question were made to the State campaign rather than the county campaign of a current holder of county public office. The decision provides useful guidance to New Jersey municipalities regarding the interplay between the state pay-to-play statute and local ordinances.

The Facts of the Case

Atlantic County’s “pay-to-play” ordinance (Ordinance 10-2007) restricts the County’s ability to award a contract to any “professional business entity” that contributed more than $300 to “any campaign committee for any elective County office or to the current holders of any elective County office” within one calendar year preceding the date of the contract. The ordinance also bans any professional business entity under contract with the County from making any contribution to “any campaign committee for any elective County office or to current holders of any elective county office” during the duration of the contract.

Court Finds Atlantic County Contract Violated Pay-to-Play Ordinance

In 2013, Ford-Scott & Associates applied to perform Atlantic County’s annual audit. As part of the process, it disclosed that it made four contributions, including two to Frank Balles, the Atlantic County Sheriff who was running for state senate. On April 15, 2014, in an eight-to-one vote, Atlantic County adopted Resolution 219, awarding Ford-Scott the contract to perform the 2013 annual audit.

Forty-four days after the contract was approved and after Ford-Scott & Associates performed the audit, James Schroeder, a resident and taxpayer of Atlantic County, filed suit. He alleged that Atlantic County’s decision to award Ford-Scott the 2014 contract was arbitrary, capricious, and in violation of the ordinance due to the company’s political contributions. In response, the defendants maintained that the ordinance was never intended to preclude campaign contributions to those running for state office.

The Court’s Decision

The court concluded that the purpose of the municipal play-to-play ordinance is to regulate political contributions to any campaign fund, county or state, of a current holder of any county elected office. Accordingly, the court disqualified Ford-Scott from eligibility for county contracts for four years. However, it did not declare the contract null and void, but rather ordered payment for the services provided.

In reaching its decision, the court found that the plain language of the pay-to-play ordinance did not provide a clear answer to the issue at hand and, therefore, required the court to examine the legislative intent behind the enactment. Looking to the preamble to the ordinance as well as the discussion among the freeholders prior to its enactment, the court reached the following conclusion:

[T]he underlying purpose of the pay-to-play ordinance is to create transparency and public trust in county contracts by removing the possibility of influence that a campaign donor may have over the person who he or she helped get elected. The goal of Ordinance No. 10 is to regulate the political contributions made to an elected Atlantic County official by public contractors, regardless of the type of campaign that the current holder of county office is running for.

The court also rejected arguments that state pay-to-play laws preempted the ordinance. As highlighted by the court, a contractor is free to contribute to a state campaign of a current county official; however, to be considered for a county contract a prospective contractor must abide by the county pay-to-play ordinance. “Only the right to contract with the county is impacted; a persons rights under state law is in no way impacted, and thus, no state law preempts the ordinance as the court interprets it,” the opinion explains.

For more information about this case or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group

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