The Independent View: NJ Gov. and Bill Restricting Campaign Cash from Firms Managing Pension

New Jersey Governor, Chris Christie, may have to change the way he does business. New Jersey lawmakers have sent a bill, S2430, to the Republican governor's desk that would keep state pension money from going to firms whose executives make donations to federal political organizations, including, potentially, Christie's presidential campaign.

The Christie administration has invested millions of dollars of New Jersey pension money with firms whose executives donated to the Republican Governors Association and the Republican National Committee, both of which spent heavily in New Jersey in support of Christie’s gubernatorial campaigns. The bill, which would effectively deter such campaign contributions from those firms' executives, passed both legislative chambers by large majorities.

Since 2005, New Jersey has had strict rules prohibiting public pension money from being managed by firms whose executives make political donations to lawmakers or to "any political party or political committee organized in the state."

But in March 2014, the Christie administration tucked a provision into the state’s administrative code that attempted to prevent the rule from applying to donations to "federal or national campaign committee(s)" that operate in New Jersey. Though the code continued to include other language restricting such donations, the change created a legal gray area for donations made after the change was enacted.

“This administration shouldn’t be playing politics with the public employees’ pensions,” Democratic State Sens. Shirley Turner said in a statement. “Retired workers deserve the fund allotted to them, not to be used for political gain. This is why selecting investors on performance and merit rather than campaign contributions is important, especially as investments should be made for the best financial reasons.”

That new state law would be in addition to a narrower Securities and Exchange Commission rule designed to restrict executives at firms managing state pension money from donating to lawmakers who have the power to influence state pension investments. Among prospective presidential candidates, sitting governors Christie and Wisconsin's Scott Walker both oversee the boards that make state pension investments.

Under both the state proposal and federal rule, executives at financial firms managing New Jersey pension money would still technically be allowed to give money to Christie's presidential campaign. But if those donations were made, the rules would prevent those executives' firms from receiving fees for managing state pension money. The restriction, in short, is designed to be costly enough to deter the campaign contributions in the first place.

CLICK HERE to read the bill (PDF).