Relates to political contributions

25 Co-sponsors

• Joseph P. Addabbo Jr.
• Tony Avella
• Neil D. Breslin
• Leroy Comrie
• Martin Malavé Dilan
• Adriano Espaillat
• Michael Gianaris
• Jesse Hamilton
• Ruth Hassell-Thompson
• Brad Hoylman-Sigal
• Todd Kaminsky
• Timothy M. Kennedy
• Liz Krueger
• George Latimer
• Velmanette Montgomery
• Marc Panepinto
• Kevin S. Parker
• José Peralta
• Bill Perkins
• Roxanne J. Persaud
• Gustavo Rivera
• James Sanders Jr.
• José M. Serrano
• Toby Ann Stavisky
• Andrea Stewart-Cousins

Title of bill

An act to amend the election law, in relation to political contributions

Purpose

This bill would add Limited Liability Companies (LLCs) to section 14-116 of the election law, so that LLCs are made subject to the existing contribution limits for corporations. This bill would also increase transparency by requiring disclosure of the identity of individuals with membership interests in LLCs and attribute contributions to members of LLCs.

Summary of specific provisions

Section 1 of the bill adds LLCs to Election Law § 14-116 to provide that LLCs are subject to the aggregate contribution limit of $5000 that applies to corporations. Section 1 also requires disclosure of the identity of all direct and indirect owners of the membership interests in the LLC and the proportion of each direct and indirect member's ownership interest in the LLC.

Section 2 amends § 14-120 of the Election Law by requiring all contributions made to a campaign or political committee by a LLC be attributed to each member of the LLC in proportion to the member's ownership interest. In addition, the State Board of Elections shall enact regulations that prevent the avoidance of the established rules.

Section 3 of the bill establishes the effective date.

Justification

Current law, as interpreted by the State Board of Elections (SBOE), allows a single individual to make multiple contributions to the same candidate or committee through separate LLCs. Often it is difficult to know who is ultimately directing the contributions.

The election law does not explicitly address contributions by LLCs. Instead, pursuant to a 1996 SBOE decision, each LLC is treated as a separate contributor even if many of them are controlled by the same person. As a result, LLC contributions are governed in a way that is inconsistent with all other types of campaign contributions. The contribution limits that apply to corporations do not apply; the assignment of contributions to members required of partnerships does not exist; and the transparency and protection against an individual contributing above the legal limits is absent.

In April, 2015, in the face of public outcry and despite the support of two of the four SBOE members, the board declined to revisit its 1996 decision, leaving it up to the legislature to act. Thereafter, the Daily News reported that the LLC loophole was used to contribute $25 million to state politicians over the past decade and that LLCs linked to one individual have used it to contribute $13.2 million since 2000 (Bill Hammond, NY Daily News, April 28, 2015, www.nydailynews.com/opinion/bill-hammond-bending-cash-article 1.2202628).

Contrary to the current approach, the Federal Election Commission treats LLCs as corporations or partnerships rather than individuals for campaign finance purposes. This bill would apply to LLCs the provisions that already apply to corporations under New York law. It would also increase transparency by requiring disclosure of the identity of individuals with membership interests in LLCs. Finally it would ensure that the loophole is fully closed by attributing LLC contributions to each LLC member in a manner similar to that provided for under current law for partnerships.

These changes would clarify the election law with respect to LLCs, provide uniformity, and close an egregious loophole that has allowed certain individuals to evade limits that other contributors adhere to.

Prior legislative history

2015: S60/A6975 - REPORTED FROM ELECTIONS AND COMMITTED TO CORPORATIONS/passed assembly 2013-2014: S166/A5067- REFERRED TO ELECTIONS/Advanced to Third Reading (Assembly) 2011-2012: S30/A2493- REFERRED TO ELECTIONS 2010: S8395/A11355- REFERRED TO RULES

Effective date

This act shall take effect immediately.