In the wake of the corruption scandal involving former Governor Rod Blagojevich, Illinois adopted its first-ever limits on campaign contributions. Individuals could give candidates up to $5,000 per election, and corporations could give candidates up to $10,000. At a signing ceremony for the bill, held on the one-year anniversary of Blagojevich’s arrest, Governor Pat Quinn touted the new limits as “the beginning of citizens making sure that their government works right for the common interest.” The limits took effect on January 1, 2011.

Things can change a lot in eighteen months. On July 6, Gov. Quinn signed a new law waiving these limits whenever a candidate faces high levels of outside spending – that is, spending undertaken independently of any campaign. The change is effective immediately.

Contribution limits to candidates are now waived in a statewide election whenever an individual or Super PAC discloses making independent expenditures in excess of $250,000 to support or oppose a candidate in that race, and in other elections, when such spending eclipses $100,000. So, for example, if a Super PAC launches a $300,000 ad campaign attacking a candidate running for Illinois governor, all gubernatorial candidates will be permitted to accept unlimited contributions from individuals and corporations.

For state contractors, it is important to note that the new law does not alter the contribution ban in the State’s “pay-to-play” law. Companies with state contracts and pending bids with a combined value in excess of $50,000 are barred from contributing to the executive branch official responsible for their contracts – usually the Governor. Affiliated entities are also subject to the contribution ban, as well as the contractor’s owners, officers, and employees whose compensation is tied to the award of state contracts. Contractors must register and disclose the names of their affiliated persons and entities, and keep their registrations up-to-date.

Will Other States Follow Suit?

Many states with corporate expenditure bans that were invalidated by the Supreme Court in the Citizens United case have adopted tougher disclosure rules. Illinois, which has never banned corporate expenditures, has responded to the threat of Super PAC spending with a different – and decidedly deregulatory – approach.

It remains to be seen whether other states will follow suit. The City of Los Angeles postponed action on similar legislation earlier this year.