Insider NJ Compliance Corner: The Importance of Election Cycles

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In our last column, we addressed the applicability of reduced pay-to-play limits for government contractors and prospective government contractors. In this column, as the first month of 2021 comes to a close, it is an opportune time to review the varying time periods applicable to traditional New Jersey campaign-finance limits. While some contribution limits operate on a calendar-year basis, not all contribution limits re-set in a new calendar year.

Without regard to pay-to-play restrictions, for contributions to political candidates, the limit is $2,600 per election. (Contributions to gubernatorial candidates are subject to the current inflation-adjusted amount of $4,900 per election.) Under state campaign-finance law, each of the primary and general elections are treated as separate elections. Therefore, for any contributor that has maxed out to a candidate for the 2021 primary election, the limits will re-set for the 2021 general election and thus the contributor will start with a clean slate for the 2021 general election.

However, the start of the new year doesn’t mean that contribution limits re-set once the calendar changes. Instead, all contributions during one election count toward the same limit, even if the contributions were made in different calendar years. For candidates who run in municipal elections where there is no primary election, the entire four-year election is counted as one reporting period. For example, for a candidate who is running in the 2021 municipal election, a contribution to this candidate made as far back as 2017 or 2018 will still count toward the current 2021 municipal election.

To comply with contribution limits, it is therefore important for all contributors to understand the applicable election for tracking purposes, keeping in mind that some election periods may span a four-year period. One potential curveball here is that, if a candidate ends an election with outstanding obligations, the candidate may continue raising funds to retire debt from that election. So, if the candidate asks you to contribute to his or her campaign, you need to determine whether your contribution will count toward retiring debt or toward the next election.

For non-candidate committees (such as PACs, political committees, and legislative leadership committees) the relevant period is not an election but the calendar year. Thus, even if I had contributed the maximum to a given PAC in 2020, I will be starting with a clean slate for 2021.

In sum, the start of a new calendar year means the re-setting of contribution limits for New Jersey non-candidate committees but, in most cases of a candidate committee, the history of contributions from previous years will continue to apply during the course of the election. Before you contribute, you should ensure that you understand for which election the contribution will apply, even if this means asking the candidate or event organizer before you write a check.

Compliance Tip: Although it is important to understand traditional campaign-finance limits and the application of relevant reporting cycles, if your company currently holds or wishes to pursue government contracts in New Jersey, traditional contribution limits and reporting cycles are just a starting point. Before your company or any covered individual makes or solicits a contribution in any amount, you need to determine whether reduced pay-to-play contribution and solicitation limits apply.

Avi D. Kelin, Esq. is a Senior Associate in Genova Burns LLC’s Corporate Political Activity Law Practice Group and Chair of the firm’s Autonomous Vehicle Law Practice.

This column is for educational and informational purposes only and is not intended and should not be construed as legal advice. It is recommended that readers not rely on this column, but that professional advice be sought for individual matters.

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