New Jersey Gov. Jim Florio has endorsed a proposal to ban campaign contributions from companies involved in state bond business.
The restrictions would be modeled after regulations already in effect in Florida, according to New Jersey Sen. Henry McNamara, a Republican from Bergen County who initiated the proposal in the state Senate.
In a letter McNamara said he received yesterday, Florio offered his "complete support for your public call for reforming our bond laws in a way that would restrict bond underwriters, bond counsel, and related firms from making campaign contributions. "
McNamara said the proposal would also codify into law an executive order signed by Florio last month that eliminates most forms of negotiated underwriting.
Referring to recent negative publicity about bond work handled by firms well-connected to state and local politicians, Florio said there is a "perception problem" in the state.
"The time has certainly come for eliminating the appearance of impropriety that may arise when political contributions are made by individuals who may also be involved in state sponsored bond issuances," the letter says.
Florio said the legislation should prohibit contributions to candidates for state office, local office, state party organizations, and political action committees.
He said it should disqualify firms that have made contributions for a specified period in the past, and it should prohibit contributions for a "responsible period" following the award of a contract.
He also recommended developing a mechanism for disclosing existing contributions.
The proposal to restrict contributions has actually been under consideration for more than a year in New Jersey. Assemblyman David C. Russo, R-Bergen, introduced a bill in February 1992 that he said is modeled directly on Florida's law.
Florida's regulations ban underwriters or bond lawyers who have contributed to state election campaigns engaged in fund-raising activities from participating in state-level negotiated bond issues. In addition, it forbids municipal market participants from holding informal discussions with state employees about whether they should be given state bond business.
Florida lawmakers have attempted unsuccessfully to pass a measure that would make the regulations law.
Russo said he had been hoping to have hearings on his bill earlier this year, but recent investigations into New Jersey bond deals stymied the effort because industry officials were unable to testify.
"The same folks you call for the legislative hearings were being subpoenaed in New York," Russo said, referring to a federal investigation into the New Jersey Turn-pike Authority's $2.9 billion refunding program.
But he said one aspect of his reforms that passed the Assembly unanimously in March would force more detailed disclosure of allocations on bond deals.
McNamara said he wants to make sure legislation is not rushed just to clear up the matter in time for the November gubernatorial elections. He stressed that members of the industry need to be extensively polled to get their opinion of restrictions on both contributions and negotiated underwritings.
When Gov. Florio issued his executive order banning most forms of negotiated deals, market players reacted with alarm, arguing that in many instances negotiated underwritings are the only viable way of getting a deal done.
