Add §§5-b & 5-c, amd §§1-c, 1-h & 1-j, Leg L; amd §§14-116, 14-120 & 14-124, El L
Relates to limits on outside income earned by members of the legislature; campaign contributions by limited liability companies; communications with journalists and monies received and expenditures made by a party committee or constituted committee.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A9535
SPONSOR: Heastie (MS) TITLE OF BILL: An act to amend the legislative law, in relation to
limitations on outside income for members; to amend the election law, in
relation to campaign contributions by limited liability companies; to
amend the legislative law, in relation to communications with profes-
sional journalists and newscasters; and in relation to reporting of
certain funding by lobbyists; and to amend the election law, in relation
to monies received and expenditures made by a party committee or consti-
tuted committee
PURPOSE OR GENERAL IDEA OF BILL:
This bill defines "outside income" as compensation for services actually
rendered and would limit such annual compensation for legislators to 40
percent of the annual salary of New York State Supreme Court Justices.
The bill would also prohibit legislators from receiving a salary or
other payment from any entity or firm for the use of the legislator's
name on such entity or firm letterhead, website or other promotional
materials unless such payment is directly related to work actually
performed and the amount is reasonable and proportionate to the work
performed by the individual.
The bill would codify the professional rules for lawyers regarding
referral fees and division of legal fees. No referral fees are permitted
for simply making or receiving a recommendation and the division of fees
must be proportionate to the services performed by each lawyer.
The 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, require that contributions are
attributed proportionally to LLC members and require annual reporting by
LLCs.
The bill would protect communications with the press by exempting such
communications from the definition of "lobbying" and would increase
transparency by giving the public more information about lobbyists' and
clients of lobbyists' sources of funding.
The bill would prevent contributions made to party "housekeeping"
accounts from being used for unintended purposes.
SUMMARY OF SPECIFIC PROVISIONS:
Section one of the bill adds a new section 5-b to the legislative law to
define "outside income" as compensation for services actually rendered
and limits annual outside income for legislators to 40 percent of the
annual salary of New York State Supreme Court Justices.
Payment to a legislator for the use of his or her name in promotional
materials, such as letterhead or websites, would be barred unless the
payment is directly related to work actually performed by the legisla-
tor. Any such compensation that is earned by a legislator who is part of
a business or firm must be reasonable and proportional to the work
performed by that individual.
The proposal also spells out rules for lawyers regarding referral fees
and the division of fees. Legislators may not collect any payment for
simply recommending a lawyer or obtaining employment by a client and any
division of legal fees must be proportionate to the services performed
by each lawyer.
Section two of the bill adds a new section 5-c to the legislative law
and incorporates the limitations in the Public Officers Law regarding
potential conflicts of interests. Legislators are prohibited from
receiving income from an ownership interest in an entity that engages in
an activity that the legislator may not engage in. Legislators would be
required to timely obtain an opinion from the legislative ethics commis-
sion to identify actions that must be taken to prevent income from
prohibited activities being paid to a legislator.
Section three of the bill amends subdivisions one and two of Election
Law § 14-116 to provide that LLCs are subject to the aggregate contrib-
ution limit of $5000 applicable to corporations and by adding a new
subdivision three to require LLCs to report the identity of all direct
and indirect owners of membership interests in the LLC to the State
Board of Elections.
Section four of the bill adds a new subdivision three to section 14-120
of the Election Law to require that all contributions made by an LLC
shall be attributed to each direct and indirect member of the LLC in
proportion to ownership interests and to provide that the State Board of
Elections shall enact regulations to enforce this provision.
Section five of the bill would amend section 1-c (c) of the Legislative
Law to exempt from the definition of "lobbying" communications with
professional journalists or newscasters.
Sections six and seven of the bill would amend sections 1-h (c)(4) and
1-j(c)(4)of the Legislative Law to lower the spending thresholds that
trigger the requirement that clients of lobbyists and lobbyists that
lobby on their own behalf disclose their sources of funding.
Section eight of the bill amends subdivision 3 of § 14-124 of the
Election Law to clarify the use of funds designated for a political
party committee's "housekeeping account." Such funds would be required
to be kept in a segregated account intended explicitly for such purposes
and may not be transferred or contributed to another account unless such
account is also segregated and intended for housekeeping purposes. Such
funds also may not be used for any communication that references the
name, likeness, or voice of any clearly identified candidate or elected
official.
Section nine of this bill is the effective date.
JUSTIFICATION:
The Assembly continues its support for policies that promote ethical
behavior by public officers and transparent reporting of financial tran-
sactions in both the lobbying and political campaign context. This bill
is the Assembly's 2016 package that promotes both ethics and transparen-
cy.
To eliminate the opportunity for a legislator to leverage his or her
public office for financial gain, the amount of compensation that a
legislator may earn in "outside income" would be limited for the first
time; the payment to a legislator for the use of his or her name would
be prohibited, and any compensation that is earned by a legislator who
is part of &business or firm must be reasonable and proportionate to the
work performed by that individual.
The proposal also addresses the issues surrounding legislators who are
also attorneys. Legislators may not collect any payment for simply
recommending a lawyer or obtaining employment by a client and any divi-
sion of legal fees must be proportionate to the services performed by
each lawyer.
Current law, as interpreted, allows a single individual to make multiple
contributions through separate LLCs that would, if combined, exceed the
contribution limits set forth for individuals, allowing some individuals
to avoid campaign donation limits, thus creating the "LLC loophole."
This bill closes this loophole in two ways: by drastically lowering the
contribution limits for LLCs to the same $5,000 limit applied to corpo-
rations, and by attributing the LLC's contributions to the true owners
for the first time. As a result, wealthy individuals will no longer be
free to flout contribution limits through the use of this loophole.
The Joint Commission on Public Ethics recently issued Advisory Opinion
16-01, which defines certain communications with the press as lobbying
activity, including the encouragement of an editorial board to support a
position on a specific government action. This bill would make clear
that communications with the press do not constitute lobbying activity.
This clarification is consistent with current law, which exempts newspa-
pers and other periodicals and radio and television stations from the
definition of lobbying when such entities publish or broadcast news
items, editorials, other comments, or paid advertisements.
Currently, clients of lobbyists and lobbyists that lobby on their own
behalf need to report funding sources if they spent over $50,000 on
lobbying in the year prior to the report and at least 3% of their total
expenditures were devoted to lobbying in New York. Clients of lobbyists
and lobbyists that lobby on their own behalf that meet the current
threshold must list the name of each source of funding over $5,000.
This bill would reduce the threshold for requiring donor disclosure to
any amount over $5,000 spent on lobbying during the prior year and would
remove the percentage requirement. Clients of lobbyists and lobbyists
that lobby on their own behalf that meet this lower threshold would need
to disclose the names of each source of funding over $1000. This
provision is intended to give the public more information about the
individuals and entities that seek to influence government action.
Lowering the current thresholds will provide greater transparency with
respect to lobbying activity.
This bill would provide clarification regarding the use of political
party housekeeping accounts to promote the proper use of, and prevent
the comingling of, "hard money" and "housekeeping money." Segregated
accounts would be required for each and the proper use and transfer of
housekeeping money would be further clarified to promote transparency
and accountability.
FISCAL IMPLICATIONS TO THE STATE:
None.
LEGISLATIVE HISTORY:
New bill
EFFECTIVE DATE:
This act shall take effect immediately; provided that sections one and
two of this act shall take effect January 1, 2017; provided, further,
that any income or other compensation earned prior to the effective date
of sections one and two of this act, and any services actually rendered
prior to the effective date of sections one and two of this act for
which payment is made after the effective date of sections one and two
of this act, shall not be subject to the provisions of sections one and
two of this act.
