State lawmakers are making strides to eliminate a longstanding loophole that has permitted government contractors to contribute to political candidates, despite existing regulations aimed at banning such donations. An investigation revealed that contributors linked to contractors had donated approximately $24 million to political campaigns over the last 17 years, with these contributions emerging often in tandem with crucial legislative decisions regarding contracts.
Recently, the House Judiciary and Hawaiian Affairs Committee reached a consensus to advance House Bill 371, which seeks to tighten the restrictions on political donations. While the current law prohibits companies holding government contracts from making contributions, it has failed to cover donations from company executives or their immediate family members. The newly proposed legislation would address this oversight, effectively barring not only contractors but also their family members and recipients of government grants from making political contributions.
Under HB 371, state and county agencies will be obligated to provide the Campaign Spending Commission with comprehensive lists of contractors along with details pertaining to their officers and family members. This commission plays a crucial role in overseeing political donations, and it will utilize this information to enforce the new rules effectively. Representative David Tarnas, who chairs the Judiciary Committee, emphasized that this measure aims to enhance transparency regarding campaign contributions and help prevent any illicit funding in the future.
The bill also aims to extend the ban, disallowing individuals connected to contractors from contributing to noncandidate committees, which may include super PACs that face no restrictions on either contribution amounts or overall expenditures in support or opposition of candidates. Nevertheless, legal experts anticipate potential challenges to the provisions regarding PACs, particularly due to existing legal precedents.
Enforcement of these prohibitions is designed to last for the entire duration of any government contracts. Should any violation occur, the law stipulates that the offending contributions must be returned to the donor within 30 days; otherwise, those funds would revert to the state treasury. Interestingly, previous attempts to tackle this loophole in the past two legislative sessions have failed to gain traction.
In shaping HB 371, Tarnas opted for this more measured approach over the alternative proposal, House Bill 894, which aimed for a more profound reform by entirely barring prospective bidders and subcontractors from contributing to political campaigns. While Tarnas adapted features from Connecticut’s laws, he acknowledged the challenges of directly translating them into Hawaii’s unique regulatory environment, noting that the state lacks a standardized approach for contractor prequalification.
Bonnie Kahakui, the State Procurement Officer, echoed these sentiments, indicating that the administrative burden of complying with the Connecticut model could be significant, given the staggering volume of proposals state agencies received annually. She proposed an alternative approach where agencies would compile information on winning bidders’ officers and their immediate family members and subsequently publish that data in a public database.
In conjunction with these reforms, lawmakers are also considering measures to strengthen the Campaign Spending Commission’s capabilities by advocating for additional staffing. Governor Josh Green has earmarked funding in his budget to support this initiative, with plans for hiring more personnel, including an investigator to oversee campaign spending violations.
Campaign finance expert Craig Holman expressed support for the proposed changes, describing them as beneficial legislation. However, he urged lawmakers to establish contract provisions that would allow the government to terminate agreements if contractors infringe upon campaign spending regulations. Holman weighed in on the theory that requiring businesses to self-regulate through the threat of losing lucrative contracts could be an effective deterrent.
The efforts to prohibit contractor contributions to super PACs, however, face an uphill battle due to Supreme Court rulings such as Citizens United v. FEC. This landmark case recognized the rights of corporations to engage in political speech, undermining state-level attempts to place limits on super PAC funding. For instance, despite Connecticut’s stricter regulations, contractors continue to find ways to support candidates through external super PACs, indicating that similar legislative efforts in Hawaii may encounter significant legal hurdles.
Critics of the new measures, such as attorney Jim Hochberg, argue that any restriction on political contributions undermines free speech. He even threatened legal action against the legislature over their proposed limitations, asserting the importance of political expression. Campaign spending data reveals that since 2012, independent expenditure committees in Hawaii have spent over $12.4 million to influence elections, with some funds funneled through contractors.
Historical cases illustrate how contractors have navigated existing donation regulations; for example, in 2016, Dennis Mitsunaga, head of Mitsunaga & Associates, supported a super PAC that backed Honolulu Mayor Kirk Caldwell’s reelection. His family’s contributions were also noted, drawing scrutiny as the PAC was found to have misreported financial information subsequent to the election.
As this legislative initiative develops, Holman has advised integrating a “severability clause” into the proposed laws, which would ensure that if any portions of the legislation are invalidated, the remaining restrictions on contractor contributions will still be upheld.
