SB2530 SD1

SECTION 1. The integrity of the State's government and its contracting and grant-making processes is fundamental to maintaining public trust and preventing corruption or the appearance of corruption. This Act represents a crucial step towards transparency and accountability in government spending and the electoral process.

Existing campaign finance law prohibits organizations with state and county contracts from making political contributions, but this prohibition has proven insufficient to prevent undue influence. For example, the law permits officers and family members of government contractors to make substantial campaign contributions, creating an appearance of pay-to-play politics and raising concerns of quid pro quo corruption. Similar to contractors, grantees receive state and county funds and thus should be treated similarly in the context of political contributions. Whether as contractors or grantees, the flow of money from individuals with a direct financial interest in government decisions undermines the public's confidence that state and county contracts and grants are awarded based on merit rather than political favor. To combat any undue influence that arises from such contributions, it is necessary to strengthen prohibitions on political contributions from those who financially benefit from government contracts and grants.

Accordingly, the purpose of this Act is to address this defect and:

(1) Expand the ban on contributions from state and county contractors to state and county grantees as well as to the contractors' and grantees' compensated officers and their immediate family members for contracts and grants above certain thresholds;

(2) Require the disclosure of names of any compensated officers and their immediate family members of a state or county contractor or grantee for contracts or grants exceeding a certain threshold; and

(3) Require the Campaign Spending Commission to make available to candidate and noncandidate committees a database that is on a password-protected section of its website compiling the names of state and county contractors and grantees, their compensated officers, and the officer's immediate family members.

SECTION 2. Section 11-355, Hawaii Revised Statutes, is amended to read as follows:

"[[]§11-355[]] Contributions by state [~~and~~] or county contractors, state or county grantees, compensated officers of state or county contractors or the officer's immediate family, and compensated officers of state or county grantees or the officer's immediate family; disclosures; database; prohibited. (a) It shall be unlawful for any person who enters into any contract with the State, any of the counties, or any department or agency thereof either for the rendition of personal services, the buying of property, or furnishing of any material, supplies, or equipment to the State, any of the counties, any department or agency thereof, or for selling any land or building to the State, any of the counties, or any department or agency thereof, if payment for the performance of the contract or payment for material, supplies, equipment, land, property, or building is to be made in whole or in part from funds appropriated by the legislative body, at any time between the execution of the contract through the completion of the contract, to:

(1) Directly or indirectly make any contribution, or promise expressly or impliedly to make any contribution to any candidate committee or noncandidate committee, or to any candidate or to any person for any political purpose or use; or

(2) Knowingly solicit any contribution from any person for any purpose during any period.

(b) It shall be unlawful for any compensated officer, or the officer's immediate family, of any state or county contractor under subsection (a) that is awarded a state or county contract of $100,000 or more for goods or services, or $250,000 or more for construction, at any time between the execution of the contract through the completion of the contract pursuant to subsection (h), to:

(2) Knowingly solicit any contribution from any person for any purpose during any period.

(c) It shall be unlawful for any person who receives a grant or subsidy of $100,000 or more from the State pursuant to chapter 42F, or from a county pursuant to a county charter or code, at any time between the execution of the contract through the completion of the contract for the grant or subsidy to:

(2) Knowingly solicit any contribution from any person for any purpose during any period.

(d) It shall be unlawful for any compensated officer, or the officer's immediate family, of a state or county grantee under subsection (c), at any time between the execution of the contract through the completion of the contract for the grant or subsidy pursuant to subsection (h), to:

(2) Knowingly solicit any contribution from any person for any purpose during any period.

(e) Any candidate, candidate committee, or noncandidate committee that receives a contribution made unlawful by this section shall return the unlawful contribution to the contributor within thirty calendar days of receipt. If any unlawful contribution is not returned to the contributor within thirty calendar days of receipt, the unlawful contribution shall escheat to the Hawaii election campaign fund.

[~~(b)~~] (f) Except as provided in [~~subsection~~] subsections (a), (b), (c), and (d), this section [~~does~~] shall not prohibit or make unlawful the establishment or administration of, or the solicitation of contributions to, any noncandidate committee by any person other than the state or county contractor, the state or county grantee, the compensated officers of the state or county grantee, or the officer's immediate family of a state or county contractor or grantee, for the purpose of influencing the nomination for election, or the election of any person to office.

(g) At the time of execution of a contract or grant subject to this section that meets the applicable thresholds described in subsections (b) or (c), a state or county contractor or grantee shall disclose to the commission a list of the names of any compensated officers and the officer's immediate family. The commission shall make the disclosed information available to candidate and noncandidate committees in a database that is on a password-protected section of the commission's website; provided that the name of the contractor or grantee and any officers may also be made available to the public.

[~~(c)~~] (h) For purposes of this section[~~, "completion~~]:

"Completion of the contract" means that the parties to the government contract have either terminated the contract [~~prior to~~] before completion of performance or fully performed the duties and obligations under the contract, no disputes relating to the performance and payment remain under the contract, and all disputed claims have been adjudicated and are final.

"Officer" means an individual who is:

(1) The owner of a sole proprietorship;

(2) A general partner of a general partnership, limited or limited liability partnership;

(3) A manager or co-manager of a limited liability company; or

(4) An officer of a corporation or any of the entities described in this section.

"Officer's immediate family" means a spouse or reciprocal beneficiary, as defined in section 572C-3, and any child, any dependent, and the spouse or reciprocal beneficiary of the dependent."

SECTION 3. Section 11-364, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Any candidate, candidate committee, or noncandidate committee that receives in the aggregate more than the applicable contribution limit in section 11-357, 11-358, 11-359, or 11-360 shall return any excess contribution to the contributor within thirty calendar days of receipt of the excess contribution. Any candidate, candidate committee, or noncandidate committee that receives in the aggregate more than the applicable contribution limit in section 11-362 shall return any excess contribution to the contributor within thirty calendar days of the end of the election period; provided that the candidate, candidate committee, or noncandidate committee may choose which contributions to return. Any excess contribution not returned to the contributor within thirty calendar days shall escheat to the Hawaii election campaign fund."

SECTION 4. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 5. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 6. This Act shall take effect on November 4, 2026; provided that this Act shall only apply to contracts or grants executed on or after the effective date of this Act.

THE SENATE	S.B. NO.	2530
THIRTY-THIRD LEGISLATURE, 2026		S.D. 1
STATE OF HAWAII