THE D.C. COUNCIL was winding up budget deliberations last summer when it got an urgent request from Mayor Vincent C. Gray (D) for $32 million to increase reimbursement rates to two companies providing health care to low-income residents.

“No way, shape or form,” was the mince-no-words response of D.C. Council member Jack Evans (D-Ward 2) on June 14, as he warned his colleagues that to accede to the request without first getting more information would be “abrogating our responsibility to really dig into this and find out what’s going on.”

The council ignored that advice, a decision it may be ruing in light of the recent interest by federal authorities into the activities of the prominent businessman whose company benefited from the additional money.

Last week federal agents raided the home and offices of Jeffrey E. Thompson, owner of D.C.’s top Medicaid contractor, Chartered Health Plan, and co-owner of an accounting firm whose clients include the city. In addition, sources told Post reporters, federal officials ordered the city to preserve all documents related to Chartered Health. The U.S. Attorney’s Office refused comment, and no charges have been filed.

According to an official in Mr. Thompson’s accounting firm who stressed that there has been no accusation of wrongdoing, last week’s search was related to the ongoing investigation into campaign finance in the District. Mr. Thompson, whose attorney did not return our phone call for comment, and his various businesses have been prolific contributors to the political campaigns and constituent service accounts of the city’s elected officials. These include Mr. Gray and D.C. Council Chairman Kwame R. Brown (D), both reportedly under scrutiny in what appears to be a widening probe of possible government corruption, as well as most of the council members who were called upon to approve the request for additional monies. Six council members, including Mr. Brown, opposed the allocation; seven voted in favor.

Administration officials involved in the $32 million request told us that the infusion was necessary to protect health care for the city’s needy. Driving the necessity were rising health-care costs; a federal requirement that the District pay actuarially sound rates for the Medi­caid program; and prudence with respect to a lawsuit it faced for the previous administration’s failure to pay rates that were actuarially sound. The officials are confident that no wrongdoing will be found.

The federal probe must run its course before any conclusions are drawn. But questions about these events — and we voiced our doubts at the time of the funding request — underscore the need to do something about the unseemly nexus of contracts and campaign contributions in D.C. politics.

The city’s lax campaign-finance laws on corporate giving have fostered a culture of “pay to play,” in which donors can use subsidiaries to obscure their identities and circumvent legal limits. “How and from what sources candidates for public office fund their campaigns needs to be more transparent,” said D.C. Council member Mary M. Cheh (D-Ward 3) in unveiling legislation co-sponsored by Tommy Wells (D-Ward 6) that would impose strict curbs on campaign donations. Ms. Cheh and Mr. Wells are on the right track in wanting to reform the process, and their proposals are worthy of serious study. Unfortunately, they don’t appear to have much support from council colleagues, which could mean that a citizen effort for a ballot initiative this fall may be the only way to force this important issue onto the public agenda.