Complying with New Ethics Requirements

Public Act 95-971

In 2009 the Illinois General Assembly overrode former Governor Blagojevich's veto of new political contribution prohibitions. The prohibitions apply to businesses with state contracts awarded under the Illinois Procurement Code and totaling more than $50,000 annually as well as to certain affiliates and the businesses' key executives and their spouses and minor children. The prohibitions apply to campaign contributions to state executive officeholders, or any declared candidate for such office, responsible for the contracts awarded to the covered business entity.

Designed to stop the "pay-to-play" culture in Illinois, Public Act 95-971 defines the officeholders as the governor, lieutenant governor, secretary of state, attorney general, comptroller and treasurer. This law covers Illinois public pension plans and designates the Governor as the official responsible for awarding contracts in this area.

The new law sets up a complicated reporting and compliance system under which affected business entities must register with the State Board of Elections providing it with certain information, including:

The name and address of the business;
the name and address of any affiliated entity, including a description of that affiliation; and
the name and address of any affiliated person of the business entity, including a description of the affiliation. An “affiliated person” is defined as:
- any person with any ownership interest or distributive share of bidding or contracting business entity in excess of 7.5%; or
- executive employees of the bidding or contracting business entity; and the spouse and minor children of any such persons.

Additionally the new law requires an affected business entity (and certain of its affiliates as well as the business entity's executive officers, their spouses and minor children) to give notice of their registration any time such entity or persons make a contribution to a political action committee (PAC). Contributions to non-affiliated PACs (e.g., IVCA-PAC) are unaffected by this new law except for the above notification requirement. If a covered business entity sponsors a PAC, it is an affiliated entity and therefore is subject to the prohibitions on campaign contributions.

A coalition of trade associations is working on an amendment to the ethics law to clarify the burdensome and complicated registration requirements and make them more workable. IVCA is participating in the coalition.

Governor's Executive Order 3

Following the General Assembly's veto override of the ethics legislation, the former Governor cited the need to go further than the new law and issued Executive Order 3 which expanded the restrictions contained in Public Act 95-971. The Order prohibited businesses (certain of their affiliates, and key executives and their souses and minor children) with contracts with state agencies for the procurement of goods and services totaling more than $50,000 annually from making campaign contributions to state executive officeholders (whether or not that officeholder was responsible for awarding the contract), members of the General Assembly or any declared candidate for those offices or any political committee established by state political parties.

The Order also explicitly expanded compliance to all state contracts with a business entity for the procurement of goods and services totaling more than $50,000 annually regardless of the method under which such contracts were awarded (i.e., broadening compliance beyond contracts awarded under the Illinois procurement code). The Order did not require registration with the State Board of Elections by affected business entities. It did, however, require the state agency awarding such a contract to obtain from the business entity a written certification that no contribution will be made that would violate Executive Order No. 3.

Given the ethical issues surrounding the former Governor, this Executive Order caused much controversy and was viewed by many as a heavy-handed attempt to retaliate against the General Assembly for its successful effort in curbing the reported “pay-to-play” awarding of state contracts by the Governor's office. It was likely to face a court challenge with many arguing that it violated the separation of powers provision in the State Constitution and may violate First Amendment freedom of expression protections. Others were hopeful that the new Governor would rescind the Order. To that end, some political consultants recommended that businesses with state contracts, or those who hoped to win state contracts (and other covered affiliated entities and individuals), make no political contributions at all to legislators or executive officeholders until Governor Quinn clarified the Order or rescinded it.

On April 3, 2009, Governor Quinn rescinded Executive Order 3 by issuing Executive Order 9. The new Executive Order noted the uncertainty and confusion regarding the scope of Executive Order 3 and its relationship to Public Act 95-971 and pending campaign finance and procurement reforms, concluding that rescinding the earlier Order was appropriate.

Again, the Executive Order appeared not to affect contributions to non-affiliated PACS (e.g. IVCA-PAC) by affected businesses or individuals. If a covered business entity sponsors a PAC, it is an affiliated entity and therefore would have been subject to the prohibitions on campaign contributions.

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