New York State Assembly

 
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AB1926 Summary:

AB1926 Actions:

AB1926 Committee Votes:

Committee:ELECTION LAW   Chair:Cusick      
DATE:02/14/2017AYE/NAY:15/1  Action: Favorable refer to committee Codes        
Cusick
Aye
Norris
Nay
Galef
Aye
McKevitt
Aye
Dinowitz
Aye
Lupinacci
Aye
Lentol
Aye
Brabenec
Aye
Lifton
Aye
Kavanagh
Aye
Abinanti
Aye
Buchwald
Aye
Blake
Aye
Walker
Aye
Carroll
Aye
Vanel
Aye

Committee:CODES   Chair:Lentol      
DATE:03/01/2017AYE/NAY:21/0  Action: Favorable         
Lentol
Aye
Graf
Aye
Schimminger
Aye
Giglio
Aye
Weinstein
Excused
McKevitt
Aye
Pretlow
Aye
Montesano
Aye
Cook
Aye
Ra
Aye
Cymbrowitz
Aye
Morinello
Aye
Titus
Aye
O'Donnell
Aye
Lavine
Aye
Perry
Aye
Zebrowski
Aye
Abinanti
Aye
Weprin
Aye
Mosley
Aye
Hevesi
Aye
Fahy
Aye

AB1926 Floor Votes:

AB1926 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
 submitted in accordance with Assembly Rule III, Sec 1(f)



 
BILL NUMBER: A1926
 
SPONSOR: Kavanagh (MS)

 
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 exist-
ing 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 iden-
tity of all direct and indirect owners of the membership interests in
the LLC and the proportion of each direct and indirect member's owner-
ship interest in the LLC.
 
Section 2 amends § 14-120 of the Election Law by requiring all contrib-
utions 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 inter-
est. 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 assign-
ment 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 $132 million since 2000 (Bill
Hammond, NY Daily News, April 28, 2015,
www.nydailynews.comfopinion/bill-harnmond-bending-cash-article-1.2202
628).
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 indi-
viduals 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.
 
 
FISCAL IMPACT ON THE STATE:
 
None.
 
 
FISCAL IMPACT ON LOCALITIES:
 
None.
 
 
IMPACT ON REGULATION OF BUSINESSES AND INDIVIDUALS:
 
Subjects LLCs to the same campaign finance regulations as corporations,
rather than treating them as individuals, and attributes LLC contrib-
utions to each LLC member.
 
 
IMPACT ON FINES, IMPRISONMENT, FORFEITURE OF RIGHTS, OR OTHER PENAL
SANCTIONS:
 
None.
 
 
PRIOR LEGISLATIVE HISTORY:
 
2016: A6975C (Kavanagh) - Passed Assembly
2015: A6975B (Kavanagh) - Passed Assembly
2014: A5067 (Millman) - On the floor
2013: A5067 (Millman) - On the floor
2012: A2493 (Millman) - Codes
2011: A2493 (Millman) Rules
2010: A11355A (Millman) - Rules
 
Similar legislation:
 
2016: A2614 (Kavanagh) - Election Law
2015: A2614 (Kavanagh) - Election Law
2014: A112 (Kavanagh) - Election Law
2013: A112 (Kavanagh) - Election Law
2012: A5912 (Kavanagh) - Election Law
2011:  A5912 (Kavanagh) - Election Law
2010: A7069 (Kavanagh) - Election Law
2009: A7069 (Kavanagh) - Election Law
 
 
EFFECTIVE DATE:
This act shall take effect immediately.

AB1926 Text:

 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          1926
 
                               2017-2018 Regular Sessions
 
                   IN ASSEMBLY
 
                                    January 17, 2017
                                       ___________
 
        Introduced by M. of A. KAVANAGH, SIMON, ZEBROWSKI, CAHILL, M. G. MILLER,
          GOTTFRIED, JAFFEE, GALEF, ABINANTI, WOERNER, BUCHWALD, COLTON, MAGNAR-
          ELLI,  MAYER, MOSLEY, SANTABARBARA, SKOUFIS, COOK, BRONSON, ROSENTHAL,
          RYAN, BARRETT, FAHY,  JENNE,  STECK,  ROZIC,  SIMOTAS,  ORTIZ,  BLAKE,
          QUART,  DINOWITZ,  PEOPLES-STOKES,  LIFTON,  CUSICK,  TITONE,  HUNTER,
          STIRPE, JEAN-PIERRE, O'DONNELL, PAULIN, SOLAGES -- Multi-Sponsored  by
          --  M.  of A.  ENGLEBRIGHT, FARRELL, GLICK, LUPARDO, LUPINACCI, MAGEE,
          McDONALD, SCHIMMINGER, SEAWRIGHT, THIELE -- read once and referred  to
          the Committee on Election Law
 
        AN ACT to amend the election law, in relation to political contributions
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. Section 14-116 of the election law, subdivision 1 as redes-
     2  ignated by chapter 9 of the laws of 1978 and subdivision 2 as amended by
     3  chapter 260 of the laws of 1981, is amended to read as follows:
     4    § 14-116. Political contributions by certain  organizations.  1.    No
     5  corporation  [or], limited liability company, joint-stock association or
     6  other corporate entity doing business in this  state,  except  a  corpo-
     7  ration  or  association  organized  or maintained for political purposes
     8  only, shall directly or indirectly pay or use or offer, consent or agree
     9  to pay or use any money or property for  or  in  aid  of  any  political
    10  party, committee or organization, or for, or in aid of, any corporation,
    11  limited liability company, joint-stock [or], other association, or other
    12  corporate entity organized or maintained for political purposes, or for,
    13  or  in  aid of, any candidate for political office or for nomination for
    14  such  office,  or  for  any  political  purpose  whatever,  or  for  the
    15  reimbursement or indemnification of any person for moneys or property so
    16  used.  Any  officer,  director, stock-holder, member, owner, attorney or
    17  agent of any corporation [or], limited  liability  company,  joint-stock
    18  association  or  other  corporate  entity  which  violates  any  of  the
    19  provisions of this section, who participates in, aids, abets or  advises
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD00443-01-7
        A. 1926                             2
 
     1  or consents to any such violations, and any person who solicits or know-
     2  ingly receives any money or property in violation of this section, shall
     3  be guilty of a misdemeanor.
     4    2.  Notwithstanding the provisions of subdivision one of this section,
     5  any corporation or an organization financially supported in whole or  in
     6  part, by such corporation, any limited liability company or other corpo-
     7  rate  entity  may make expenditures, including contributions, not other-
     8  wise prohibited by law, for political purposes,  in  an  amount  not  to
     9  exceed  five  thousand  dollars  in  the aggregate in any calendar year;
    10  provided that no public utility shall use  revenues  received  from  the
    11  rendition of public service within the state for contributions for poli-
    12  tical purposes unless such cost is charged to the shareholders of such a
    13  public service corporation.
    14    3.  Each limited liability company that makes an expenditure for poli-
    15  tical purposes shall file with the state board of elections, by December
    16  thirty-first of the year in which the expenditure is made, on  the  form
    17  prescribed  by  the state board of elections, the identity of all direct
    18  and indirect owners of the membership interests in the limited liability
    19  company and the proportion of each direct or indirect member's ownership
    20  interest in the limited liability company.
    21    § 2. Section 14-120 of the election law is amended  by  adding  a  new
    22  subdivision 3 to read as follows:
    23    3. (a) Notwithstanding any law to the contrary, all contributions made
    24  to  a  campaign  or  political  committee by a limited liability company
    25  shall be attributed to each member of the limited liability  company  in
    26  proportion  to  the member's ownership interest in the limited liability
    27  company.
    28    (b) If, by  application  of  paragraph  (a)  of  this  subdivision,  a
    29  campaign  contribution is attributed to a limited liability company, the
    30  contributions shall be further attributed to each member of the  limited
    31  liability  company  in  proportion to the member's ownership interest in
    32  the limited liability company.
    33    (c) The state board of elections shall enact regulations that  prevent
    34  the  avoidance  of the rules set forth in paragraphs (a) and (b) of this
    35  subdivision.
    36    § 3. This act shall take effect immediately.