OPINION NUMBER - 160

ADOPTED - 1995/06/16

SUBJECT - Campaign Financing/Lottery Contractors and Lobbyists.

REQUESTED BY: Judy Monaghan, Lobbyist for Scientific Games, Inc.

QUESTION: 1) Does the Nebraska Political Accountability and Disclosure Act prohibit a Lobbyist for a lottery contractor from making a contribution to a candidate for state elective office? 2) Is a lottery contractor prohibited from making a contribution to a political party?

CONCLUSION

See analysis.

FACTS

Scientific Games, Inc. is a lottery contractor as defined by 9-803 R.S. Supp, 1994. That is, it holds a contract with the Lottery Division of the Nebraska Department of Revenue to provide goods or services for the state lottery. Inasmuch as the value of the contract exceeds $15,000, the contract is considered a major procurement. During the 1995 Legislative Session, Legislative Bill 28 was introduced and passed. It was signed by the Governor on February 28, 1995. LB28 included an emergency clause and is now in effect.

Section 5 of LB28 includes the following provision:

A person who is awarded a contract by the Director of the Lottery Division as a lottery contractor for a major procurement as defined in 9-803 may not make a contribution to or an independent expenditure for a candidate for a state elective office during the term of the contract or for three years following the most recent award or renewal of the contract. A person shall be considered to have made a contribution or independent expenditure if the contribution or independent expenditure is made by the person, by an officer of the person, by a separate segregated political fund established and administered by the person as provided in 49-1469, or anyone acting on behalf of the person, officer, or fund. A person who knowingly or intentionally violates this section shall be guilty of a Class IV felony.

Section 49-1444 of the Nebraska Political Accountability and Disclosure Act defines the term state elective office as "the office of Governor, Lieutenant Governor, Secretary of State, Auditor of Public Accounts, State Treasurer, Attorney General, member of a board or commission with one or more election districts of more than one county, and a member of the Legislature."

Scientific Games, Inc. is the principal of a lobbyist. That is, it has retained the services of an individual to represent its interests before the Legislature. The lobbyist is not an officer or an employee of Scientific Games, Inc. The relationship of the lobbyist to Scientific Games, Inc. is that of an independent contractor. The lobbyist has been involved in Nebraska politics for at least twenty years and has a long history of making political contributions to candidates and to one of the political parties. She wishes to know if she may continue to make political contributions to candidates for state elective office and political parties as long as she is not making them on behalf of Scientific Games, Inc.

Scientific Games, Inc. wishes to know if it may make contributions to political parties in Nebraska.

ANALYSIS

As stated, a contribution or independent expenditure may not be made to a candidate for state elective office by a lottery contractor, an officer of that contractor, a separate segregated political fund established and administered by that contractor, or anyone acting on behalf of the contractor, one of its officers, or its separate segregated political fund. A lobbyist who makes a contribution to a candidate for state elective office violates the provisions of section 5 of LB28 if he or she is also an officer of the lottery contractor. It would also be a violation of that section for a lobbyist of a lottery contractor to make a contribution to or an independent expenditure for a candidate for state elective office if the contribution or expenditure is made at the direction of the lottery contractor, one of its officers, or its separated segregated political fund. That is, the lobbyist would be "acting on behalf of" a person or entity which may not make a contribution. In addition, a lobbyist would be prohibited from making a contribution to a candidate for state elective office or an independent expenditure if the lobbyist is reimbursed for the contribution or expenditure by the lottery contractor, an officer of that contractor, or a separate segregated political fund administered by the contractor. Stated succinctly, a lobbyist acting on behalf of himself or herself and using his or her own money may make contributions to or independent expenditures for candidates for state elective office as long as he or she is not also an officer of the lottery contractor.

We turn now to the question of whether a lottery contractor is permitted to make a contribution to a Nebraska political party committee.

Section 9-835 of the state statutes as amended by LB28 provides in part as follows:

The director may not award and the Tax Commissioner may not approve a contract with a person to serve as a lottery contractor for a major procurement if the person has made a contribution to a candidate for state elective office as defined in section 49-1444 after the effective date of this act and within three years preceding the award of the contract. A person shall be considered to have made a contribution if the contribution is made by the person, by an officer of the person, by a separate segregated political fund established and administered by the person as provided in section 49-1469, or by anyone acting on behalf of the person, officer, or fund. Any contract awarded in violation of the subsection shall be void.

Section 49-1438 of the Nebraska Political Accountability and Disclosure Act includes within the definition of the term person a ". . .corporation, association, committee, or other organization or group of persons acting jointly."

Section 49-1440 defines the term political party committee as "a state central, district, or county committee of a political party which is a committee."

It should be noted that for the purposes of this opinion, the terms political party and political party committee refer to Nebraska political parties and Nebraska political party committees.

A political party committee could, under certain circumstances, be a person acting on behalf of a lottery contractor, an officer of the lottery contractor, or a separate segregated political fund of the lottery contractor, if the political party accepts a contribution from one of them with the understanding that the contribution will be forwarded to a candidate for state elective office. The question then becomes whether any contribution to a Nebraska political party committee by a lottery contractor, an officer of the lottery contractor, or a separate segregated political fund of a lottery contractor constitutes a violation of the provisions of LB28.

A review of a colloquy occurring during the hearing on LB28 may be helpful.

LB28 was heard by the Legislature's Committee on Government, Military and Veterans Affairs on January 18, 1995. Committee Member Senator David Bernard-Stevens posed a question to Senator Jerome Warner, the sponsor of the bill:

Senator Bernard-Stevens: Jerome, as I read through this last night I'm trying to remember it deals with directly and indirect contributions to a candidate?

Senator Warner: Yes.

Senator Bernard-Stevens: So that would, just to make sure, then that would include donations, say to a political party?

Senator Warner: Yes.

It is clear that the sponsor of the bill intended that contributions by lottery contractors not be funneled through political parties to candidates for state elective office. However, LB28 does not specifically prohibit contributions to political parties by lottery contractors. In viewing the plain language of the statute, it is our opinion that a lottery contractor, an officer of a lottery contractor, or a separate segregated political fund of a lottery contractor is only prohibited from making a contribution to a Nebraska political party when the contribution is for the support of a candidate for statewide office.

Given the fact that a violation of section 5 of LB28 is a Class IV a felony, a further explanation is appropriate.

Clearly, a lottery contractor may not make a contribution to a Nebraska political party committee which is earmarked for a candidate for state elective office. Merely ensuring that contributions are not earmarked to support or oppose candidates for state elective office may not be sufficient. The Commission recommends that contributions to a Nebraska political party committee by a lottery contractor, an officer of a lottery contractor, or a separate segregated political fund established and administered by a lottery contractor be earmarked such that they will not be used to support or oppose candidates for state elective offices. That is, the contribution could be earmarked for administrative expenses of the party, or it could be earmarked for candidates other than candidates for state elective office. Contributions to political parties should not be earmarked for projects which benefit a number of candidates, such as the mass mailing of brochures, if a candidate for state elective office benefits therefrom.

In focusing on Nebraska political parties and Nebraska political party committees, it is not the intent of the Commission to imply that lottery contractors may make contributions to political parties or political party committees in other states which are earmarked for candidates for state elective office in Nebraska. An out of state political party or political party committee under such circumstances would be acting on behalf of a lottery contractor and the contribution would still be illegal. Instead, it is the Commission's intent to make clear that a contribution by a lottery contractor, an officer of a lottery contractor, or separate segregated political fund established and administered by a lottery contractor is not, under all circumstances, a violation of the provisions of LB28.

It is important that the Commission make its position clear. We do not view the provisions of LB28 as an invitation to gamesmanship. In determining if there has been compliance with the provisions of LB28, the Commission will always look for the ultimate source of the contribution and for the ultimate beneficiary of the contribution. The penalties for violations are harsh. The person making an illegal contribution may be guilty of a Class IV felony. A violation can result in a major procurement contract being denied or voided. A candidate or candidate committee knowingly accepting a contribution barred by the provisions of LB28 could be guilty of a Class III misdemeanor.

SUMMARY

A lobbyist whose principal is a lottery contractor may make a contribution to a candidate for state elective office as long as the lobbyist is not an officer of the lottery contractor or acting on behalf of the lottery contractor, an officer of the lottery contractor, or a separate segregated political fund established and administered by the lottery contractor. A lottery contractor, an officer of a lottery contractor, or a separate segregated political fund established and administered by a lottery contractor may not make a contribution to a Nebraska political party for the purpose of supporting or opposing a candidate for state elective office. Therefore, the Commission strongly recommends that a contribution to a Nebraska political party committee be earmarked in such a way that it will not be used to support or oppose candidates for state elective office.