Illinois Governor Quinn Rejects Campaign Finance Bill But Signs Lobbying Reforms Into Law
Government Affairs Compliance Update 09/03/09 Jeff Peelen
In response to the seemingly never-ending scandals involving Illinois' political figures, one of the first things that Governor Quinn tackled after taking over from former Governor Blagojevich was government ethics. Within days of taking office in early 2009, the governor assembled the Illinois Reform Commission, whose stated mission is to "examine government practices and ethics" and recommend ways to "clean up state government."
In April 2009, the Reform Commission issued a report, detailing numerous ways that Illinois could achieve a better, more transparent government. Many of the commission's recommendations made their way to the General Assembly, but while most did not emerge from the legislative process intact, several bills were enrolled that contained changes to the procurement, ethics, campaign finance and lobbying laws that impact compliance requirements for those who engage in government affairs activities in Illinois.
Governor Quinn Temporarily Staves Off Limits on Political Contributions With Veto of Campaign Finance Reform Legislation
The most watched and hotly contested compliance-related reform legislation was HB-7, which for the first time in Illinois' history would have instituted limits on campaign contributions. This bill was originally backed by the governor and was widely anticipated by watchdog groups, but the legislation presented for the governor's signature in June contained so many loopholes that even the reform-minded groups that had long sought campaign finance reform lined up to oppose the bill.
In the end, Governor Quinn agreed that the legislation did not do enough, so he vetoed the legislation. While this might seem to be a step back from the governor's promise to clean up Illinois politics, the reason for the veto - a move that was supported by both reformers and all four legislative caucuses - was that the law did not go far enough. As the governor succinctly put it when issuing the veto, "I think we can do better."
Consequently, while the limitations on political contributions contained in HB-7 will not become effective, it is certain that we will see an attempt to enact new legislation in the future that will likely be more restrictive.
Complying with Illinois' Lobbying Law Becomes More Complicated - and Non-Compliance More Costly
By many measures, Illinois' lobbying law has historically been one of the easiest in the country with which to comply, with its semi-annual reporting frequency, limited expenditure disclosure and seemingly little oversight. SB-54, which was signed into law on August 18, 2009 drastically changes the landscape, beginning with next year's registration period on January 1, 2010. Among the significant changes are:
- Requirement for each registrant - both lobbyists and lobbying entities - to undergo ethics training each calendar year.
- Codification of the registration exemptions previously contained only in the administrative regulations.
- Increase in the filing fee for each lobbyist and lobbying entity from $350 per year ($150 for tax-exempt organizations) to $1,000 per year for all registrants, with the fee increase being used to finance more robust compliance reviews and enforcement.
- Changes in the reporting requirements, including:
- an affirmation by an entity that its lobbyists reports are accurate;
- itemization of all reportable expenditures, not just those of $100 or more;
- more detailed description of expenditures; and
- identification of what agency or entity was lobbied and the subject of the lobbying.
- Changes in the frequency of reporting, from semi-annual to:
- weekly during the legislative session and
- monthly during the remainder of the year.
- Clarification that a separate violation of the lobbying law occurs each single day that a registration or report is late, subjecting the violator to a $10,000 fine per separate violation.
The details of how the secretary of state will implement these new provisions remain to be seen, but it goes without saying that the "good ol' days" of complying with Illinois' lobbying law may soon be a thing of the past.
Changes to the Illinois Procurement Code Affecting the Pay-to-Play Law Remain On Hold
Illinois' pay-to-play law - one of the most onerous in the country due to its registration requirement for covered entities and strict prohibition against political contributions to officials in the contracting chain - was set to be slightly changed by SB-51. These changes included expansion of the definition of affiliated entity, clarification as to who is considered to be an executive employee, establishment of a quarterly registration update requirement and elimination of minor children from the definition of affiliated person.
These changes are on hold due to Governor Quinn's August 18, 2009 amendatory veto of SB-51, by which he proposed several revisions to the bill. Although he apparently did not take issue with the pay-to-play changes, his objection to language affecting other procurement-related audit and enforcement matters stopped the entire piece of legislation.
As a result of the governor's action, the pay-to-play law currently on the books continues to control, requiring businesses that have any combination of bids or actual contracts, valued at $50,000 or more per calendar year with an Illinois state agency, to register with the Illinois State Board of Elections. The law also prohibits such businesses, their affiliated entities and affiliated persons from making political contributions to the state officer responsible for the contract (usually the governor, but other state officers as well). The law's penalties - including the loss of the current or future contracts, monetary penalties and criminal penalties - remain intact.
Electronic Registration Now Required for Pay-to-Play Registrants
Businesses that are subject to pay-to-play registration are now required to file their registration electronically, using the State Board of Elections' Business Entity Registration for Procurement ("BEREP") Web site. Effective September 1, 2009, all registrants must register using the BEREP e-filing system upon triggering the registration requirement. Further, all current registrants that registered in paper format after the pay-to-play law's January 1, 2009 effective date must re-register, using the electronic filing option, no later than September 30, 2009.
What Difference Will We See in Illinois?
Although change doesn't come quickly, it is in the air in Illinois. Precisely when and what form these changes will take - as well as their ultimate impact - remains to be seen; however, it goes without saying that those participating in government affairs activities in Illinois will have much more to be wary of in the future than in the past, not only from a compliance standpoint but from an enforcement standpoint as well.
If you would like additional information on how these changes will affect you, your business or other organization, please contact Jeff Peelen 414-277-5773 / [email protected] or your Quarles & Brady attorney.