Can a NY town pass a 'pay to play' law banning contracts with people who donated to town officials?

Subject

A New York town cannot ban municipal contracts to donors because the Election Law occupies the field

Plain-English summary

The Town of Southampton was considering a "pay to play" ordinance: no town contract over $1,500 to anyone who had given more than $100 in political contributions to town officials or candidates for town office. The town attorney asked the AG whether state law allowed this.

The AG said no. The proposed law was both inconsistent with and preempted by the State Election Law, and General Municipal Law § 806 (the ethics-code statute) did not supply a workaround.

The reasoning ran through standard home-rule limits. NY Const Art IX § 2(c) and Municipal Home Rule Law § 10 give local governments broad authority to legislate on local property, affairs, and government, including business transactions and public welfare. But two well-established limits apply: local laws cannot be inconsistent with general state laws, and local laws cannot occupy a field the legislature has reserved.

On inconsistency, the AG cited the Vatore line of cases stating the basic rule that a local law is inconsistent with a general state law when it prohibits what the state permits or permits what the state forbids. Election Law Article 14 sets specific contribution caps and procedures for calculating them. Southampton's ordinance would have prohibited donors above $100 from receiving contracts they would otherwise be entitled to compete for, effectively imposing a much lower de facto contribution cap on people in the contractor pool.

On preemption, the AG noted that Article 14 is comprehensive. It provides for detailed reporting and disclosure of campaign receipts and expenditures, sets individual contribution limits applicable to all public office elections including local, requires recalculation of those caps every four years by the State Board of Elections, and even set up special caps for specific New York City positions. The comprehensiveness signaled legislative intent to occupy the field.

The town argued that General Municipal Law § 806(1), which requires municipalities to adopt local ethics codes, gave alternative authority. Section 806(1) lets municipalities set "such other standards relating to the conduct of officers and employees as may be deemed advisable." The AG declined to read that catch-all as encompassing campaign-contribution limits. Two state statutes must be reconciled where possible (Levine v Bornstein, 4 NY2d 241 [1958]); § 806's broad ethics authorization can coexist with Article 14's specific campaign rules only if it does not authorize what Article 14 forecloses.

The footnote pointed out that the only locally enacted contribution caps known to exist (in New York City's voluntary public-financing system under Local Law No. 8 of 1988) operate through voluntary opt-in for public matching funds, not as outright bans. That model is materially different from what Southampton proposed.

Currency note

This opinion was issued in 1995. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

What is "pay to play"?

A pattern in which businesses that want government contracts make campaign contributions to incumbent politicians who control contract awards. Pay-to-play laws try to break the link by either prohibiting contract awards to donors or prohibiting donors from bidding for contracts. The Southampton ordinance was the former.

Why was the conflict so direct?

Because contributions and contracts are both regulated. Article 14 sets the maximum a donor can give; Southampton wanted to make donors above $100 ineligible for the bidding pool altogether. From the donor's perspective, the local law effectively lowered the contribution cap to $100 for anyone hoping to bid for town work over $1,500. That is the kind of inconsistency the home-rule rule against permits-what-state-forbids analysis catches.

Could Southampton have written the ordinance differently to avoid preemption?

The opinion suggests not, without state legislative authorization. The fundamental problem is that any restriction on contracting that turns on contribution behavior reaches into the field Article 14 occupies. A non-contribution-based contracting rule (for example, conflict-of-interest disclosures, debarment for past contract performance issues, or competitive bidding requirements) would be on different ground.

What was the New York City model the opinion referenced?

The New York City Campaign Finance Act (NYC Local Law No. 8 of 1988, N.Y.C. Admin. Code §§ 3-701 to 3-714) created a voluntary system: candidates who agreed to lower contribution caps and expenditure ceilings received public matching funds. Candidates not opting in were governed only by the state caps. The voluntary structure sidestepped the preemption problem because nobody was forced to take the lower limits.

Does General Municipal Law § 806 ever support tougher local ethics rules?

Yes, in fields not preempted by specific state law. Municipalities can require disclosure of interests, govern outside employment, regulate gifts, structure recusal practices, and many other ethics matters. The limit identified here is that § 806's general authority cannot override the Election Law's specific scheme on campaign contributions.

Statutory framework

NY Const Art IX § 2(c) gives local governments power to adopt local laws on enumerated subjects, subject to consistency with the Constitution and state law.

Municipal Home Rule Law § 10 implements that authority and lists the topics on which local governments may legislate.

Election Law Article 14 (especially § 14-114) sets campaign contribution caps and reporting requirements applicable to elections for all public offices in the state. Caps are recalculated every four years by the State Board of Elections under § 14-114(1)(c) and § 14-114(10)(d). Implementing regulations are in 9 NYCRR Part 6200. The 1974 enactment (L 1974, ch 604) is the framework legislation.

General Municipal Law § 806(1) requires municipalities to adopt local ethics codes covering several enumerated subjects and "such other standards relating to the conduct of officers and employees as may be deemed advisable." Reconciled with Article 14, this provision cannot authorize local campaign-finance restrictions.

Source

• Landing page: https://ag.ny.gov/libraries-documents/opinions/opinions-year
• Original PDF: https://ag.ny.gov/sites/default/files/opinions/I_95-46_pw.pdf

Original opinion text

Opn. No. 95-46
NY CONST ART IX § 2(c); ELECTION LAW § 14-114; GENERAL MUNICIPAL LAW § 806; MUNICIPAL HOME RULE LAW § 10; 9 NYCRR Part 6200; L 1974, CH 604.

A local law which would prohibit the award of municipal contracts to persons who have made political contributions to town officials or candidates for town office is preempted by State law.

September 22, 1995

Linda Riley, Esq.
Town Attorney
Town of Southampton
Town Hall
116 Hampton Road
Southampton, New York 11968

Informal Opinion
No. 95-46

Dear Ms. Riley:

You inquire whether the Election Law preempts enactment of town regulations which would prohibit the award of municipal contracts to persons who have made political contributions to town officials or candidates for town office. As part of your inquiry, you have transmitted to us for review a proposed amendment to the Southampton Town Code. Specifically, the proposed amendment would preclude the awarding of town contracts worth more than $1,500 to people who have made political campaign contributions of more than $100 to town officials or candidates for town office.

As a general policy, we do not review the details of proposed local enactments, since these matters are appropriately reserved for consideration by local officials familiar with local conditions and legislative intent. However, we do advise local governments whether under State law they possess the authority to enact measures dealing with various subjects.

We conclude that the proposed Southampton regulations are both inconsistent with and preempted by the State Election Law. Furthermore, in light of the specific provisions of the Election Law governing campaign contributions, the general provisions of General Municipal Law § 806 (which require the adoption of local codes of ethics governing the conduct of municipal officials) do not provide an alternative basis of authority for the proposed regulations.

Article IX of the New York State Constitution establishes the principles of home rule. NY Const Art IX § 2(c). Under the State Constitution, local governments such as the Town of Southampton are authorized to adopt local laws relating to their property, affairs and government, and relating to other listed subjects such as the transaction of business, NY Const Art IX § 2(c)(i) and (ii)(3), and the health, safety and well-being of persons or property in the local government, NY Const Art IX § 2(c)(ii)(10). See also, Municipal Home Rule Law § 10(1)(i) and (ii)(a)(3), (12).

While the above authorization encompasses your proposed local law, there are limitations on this grant of authority. First, a municipality may not adopt local laws which are inconsistent with the Constitution or general State laws. NY Const Art IX § 2(c)(i) and (ii); Vatore v Commissioner of Consumer Affairs of the City of New York, 83 NY2d 645 (1994), citing New York State Club Assn. v City of New York, 69 NY2d 211 (1987), affd, 487 US 1 (1988); Wholesale Laundry Bd. v City of New York, 17 AD2d 327 (1st Dept 1962), affd, 12 NY2d 998 (1963) (invalidating a city minimum wage law which set a rate higher than that set in the state minimum wage law by restating the general proposition that a local law is inconsistent with a general law when it prohibits what a general law permits or permits what a general law forbids).

Second, a municipality may not adopt local laws where the Legislature has expressed an intent to preempt local legislation with respect to a given subject. Jancyn Mfg. Corp. v County of Suffolk, 583 F Supp 1364 (DC NY 1984); Wholesale Laundry Bd. v City of New York, supra; Op Atty Gen (Inf) 83-57. A desire to preempt may be deduced either from (1) a declaration of State policy by the Legislature; or (2) the fact that a comprehensive and detailed regulatory scheme in a particular area has been enacted by the Legislature. Dougal v Suffolk County, 102 AD2d 531 (2d Dept 1984), affd, 65 NY2d 668 (1985); Incorporated Village of Nyack v Daytop Village Inc., 78 NY2d 500 (1991); People v DeJesus, 54 NY2d 465 (1981).

It is evident from the comprehensive nature of the Election Law that the State intended to occupy fully the area of campaign contribution limits, leaving no room for additional local regulation. Article 14 provides for detailed reporting and disclosure of campaign receipts and expenditures and establishes individual contribution limits. These limits are designed to apply to elections for party positions and to elections for and nominations for all public offices, including those at the local level. NY Election Law §§ 14-114 et seq.; 9 NYCRR Part 6200; see, Op Atty Gen (Inf) No. 83-57. Furthermore, these limits are specifically designed to be recalculated quadrennially by the State Board of Elections. Election Law §§ 14-114(1)(c) and 14-114(10)(d).

While the focus of your proposed law is the ethics of local officials, its establishment of campaign contribution limits for those entering into contracts of a certain amount with the town brings it within the subject area preempted by Election Law Article 14. The proposed local regulations are inconsistent with this preemptive State scheme. They do not permit certain contributors to make the maximum contribution permitted by the Election Law. The caps set by Article 14 are the product of a myriad of considerations such as free speech and freedom of association. See, Friedlander, et al., "The New York City Campaign Finance Act," 16 Hofstra L Rev 345, 349 (1988). Under Article 14, only the State Board of Elections may modify contribution caps, in accordance with standards set by the State Legislature. See, Election Law §§ 14-114(1)(c) and 14-114(2); see also, Governor's Memorandum, Bill Jacket, L 1974 ch 604. The absence of local authority to establish different limits was apparently recognized with the State Legislature's adoption of chapter 689 of the Laws of 1986, a statute similar to the town's proposed regulations applicable to contributions to members and candidates for election to the New York City Board of Estimate. See, Election Law § 14-114(9).[1]

Alternately, you suggest that your proposed regulation is authorized by General Municipal Law section 806(1). Section 806(1) requires municipalities to adopt local ethics codes setting forth standards for officers and employees regarding disclosure of interests in legislation before the governing body, holding of investments in conflict with official duties, private employment in conflict with official duties, future employment and "such other standards relating to the conduct of officers and employees as may be deemed advisable". Thus, section 806 establishes broad standards for enactment of local codes of ethics. However, under principles of statutory construction, two State statutes must be reconciled wherever possible. See, Levine v Bornstein, 4 NY2d 241 (1958). Section 806(1) can easily be reconciled with Election Law Article 14. While section 806(1) may permit the enactment of relatively broad municipal ethics codes, that authority is limited by the specific campaign receipt and contribution regulations expressed in Election Law Article 14. Hence, an act of the State Legislature would be needed to authorize such local limitations.

We conclude that the proposed regulations are both inconsistent with and preempted by Election Law Article 14. Furthermore, General Municipal Law section 806 cannot be read in a manner that is inconsistent with the State Election Law.

The Attorney General renders formal opinions only to officers and departments of State government. This perforce is an informal and unofficial expression of the views of this office.

Sincerely,

JOSEPH CONWAY
Assistant Attorney General

[1] To our knowledge, the only locally enacted contribution caps currently in effect that are not expressly authorized under Article 14 are those found in New York City's Campaign Finance Act, a local innovation which employs a voluntary system of contribution and expenditure caps in exchange for public financing of certain City elections. New York City Local Law No. 8 of 1988, N.Y.C. Admin. Code §§ 3-701 to 3-714.