Lowers individual contribution limits

Section 3 of the bill adds a new Election Law § 14-105 to require disclosure of the "bundling" of contributions by intermediaries.

Section 4 of the bill amends Election Law § 14-114(1) to lower contribution limits for individuals or political action committees in state and local elections.

Section 5 of the bill amends Election Law § 14-116 to apply the $5,000 contribution limit to all business entities, including limited liability companies (LLCs), and bans all contributions from corporate subsidiaries.

Section 6 of the bill amends Election Law § 14-118(1) to delete the reference to political action committees due to the new definition of such committees under Election Law § 14-100(1), and to require greater disclosure by political committees to clearly identify the economic or other special interests of contributors.

Section 7 of the bill amends Election Law § 14-120(2) to apply a $5,000 contribution limit to the partnership.

Section 8 of the bill contains a severability clause.

Section 9 of the bill contains the effective date.

Existing law

The existing campaign finance laws are contained in Article 14 of the Election Law.

Statement in support

New York State's campaign finance laws are among the weakest in the United States, including having some of the highest individual contribution limits. Moreover, prodigious loopholes, coupled with inadequate enforcement, allow these already weak laws to be subverted with ease. Enactment of meaningful campaign finance reform is critical to ensuring integrity in government by stemming the influence of wealthy special interests in elections and the legislative process.

This bill is the first step to usher in a new era in the way campaigns are conducted in New York by: (1) lowering individual contribution limits; (2) closing the loophole allowing limited liability companies (LLCs) and corporate subsidiaries to contribute vast sums of money; and (3) improving transparency and accountability through the reporting of bundled contributions.

1. Reduction of Contribution Limits

Existing contribution limits in New York State are among the highest in the Nation. As a result, the public's perception is that government is controlled by special interests and wealthy donors. This proposal calls for across-the-board reductions in individual contributions to candidates and political committees and also applies the lower contribution limits to family members of a candidate.

The bill also lowers contribution limits in primaries and elections for LOCAL public offices such as mayor, county executive, city council, etc. (exempting New York City because the New York City Campaign Finance Act has comparable limits to this proposal that operate in an existing public financing framework). Under current law, a formula for local primaries provides $0.05 x enrolled voters in a candidate's party and district, with a floor of $1,000 and a ceiling of $50,000 (the general election formula is the same, using registered voters in the district). This bill utilizes the existing formula and a $1,000 floor, but caps the maximum limit at $10,000.

2. Contribution and Fundraising Prohibitions

The bill will close the much abused subsidiary and LLC loopholes that allow these entities to circumvent campaign finance laws. No longer will a company with twenty subsidiaries sidestep the $5,000 annual aggregate cap by giving through its subsidiaries (e.g. under current law, a corporation with twenty subsidiaries could give $100,000 (20 x $5,000), despite the $5,000 cap). Likewise, LLCs, which have been interpreted by the State Board of Elections to be individuals rather than corporations under the Election Law, will no longer be able to contribute up to the individual limit of $55,800 for a statewide candidate under this proposal.

3. Improve Transparency and Accountability

Under current law, New York does not require reporting of contributions that are bundled. This legislation provides greater sunshine by requiring that intermediaries, otherwise known as "bundlers," report the source and destination of contributions.

Budget implications

This legislation will not have any significant impact on the budget

Effective date

This act shall take effect 60 days after enactment, except that: (1) the new contribution limits established herein shall take effect January 1, 2010; (2) contributions legally received prior to the effective date of this act may be retained and expended for lawful purposes and shall not provide the basis for a violation of Article 14 of the Election Law; and (3) the State Board of Elections shall notify all candidates and political committees of the applicable provisions of this act within thirty days after this bill shall have become a law.