New York State Assembly

 
•  Summary 
 
•  Actions 
 
•  Committee Votes 
 
•  Floor Votes 
 
•  Memo 
 
•  Text 

A06975 Summary:

A06975 Actions:

A06975 Floor Votes:

A06975 Memo:

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



 
BILL NUMBER: A6975C         REVISED MEMO 06/17/2016
 
SPONSOR: Kavanagh (MS)

 
TITLE OF BILL:  An act to amend the election law, in relation to poli-
tical 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 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 $13.2 million since 2000 (Bill
Hammond, NY Daily News, April 28, 2015,
wvvw.nydailynews.com/opinion/bill-hammond-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.
 
 
PRIOR LEGISLATIVE HISTORY:
 
2016: A6975C - Passed Assembly
2015: A6975B - Passed Assembly
2014: A5067 - On the floor
2013: A5067 - On the floor
2012: A2493 - Codes
2011: A2493 - Rules
2010: A11355A - Rules
 
Similar legislation:
 
2016: A2614 - Election Law
2015: A2614 - Election Law
2014: A112 -  Election Law
2013: A112 - Election Law
2012: A5912 - Election Law
2011: A5912 - Election Law
2010: A7069 - Election Law
2009: A7069 - Election Law
 
 
EFFECTIVE DATE:
This act shall take effect immediately.

A06975 Text:

 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         6975--C
                                                                Cal. No. 261
 
                               2015-2016 Regular Sessions
 
                   IN ASSEMBLY
 
                                     April 15, 2015
                                       ___________
 
        Introduced by M. of A. KAVANAGH, SIMON, ZEBROWSKI, CAHILL, MILLER, GOTT-
          FRIED,  LAVINE,  JAFFEE,  GALEF,  ABINANTI, WOERNER, BUCHWALD, COLTON,
          KAMINSKY, MAGNARELLI,  MAYER,  MOSLEY,  SANTABARBARA,  SKOUFIS,  COOK,
          BRONSON,  ROSENTHAL, RYAN, BARRETT, FAHY, RUSSELL, STECK, ROZIC, SIMO-
          TAS, ORTIZ, BLAKE, QUART, DINOWITZ, PEOPLES-STOKES,  LIFTON,  SCHIMEL,
          CUSICK, TITONE, HUNTER, STIRPE, CERETTO -- Multi-Sponsored by -- M. of
          A. BRENNAN, ENGLEBRIGHT, FARRELL, GLICK, LUPARDO, MAGEE, MARKEY, McDO-
          NALD,  ROBINSON,  SCHIMMINGER,  SEAWRIGHT,  THIELE  --  read  once and
          referred to the Committee on Election  Law  --  committee  discharged,
          bill  amended,  ordered  reprinted  as amended and recommitted to said
          committee -- reported and  referred  to  the  Committee  on  Codes  --
          committee  discharged,  bill amended, ordered reprinted as amended and
          recommitted to said committee -- advanced to a third reading,  amended
          and ordered reprinted, retaining its place on the order of third read-
          ing
 
        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
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD00169-11-6
        A. 6975--C                          2
 
     1  such  office,  or  for  any  political  purpose  whatever,  or  for  the
     2  reimbursement or indemnification of any person for moneys or property so
     3  used.  Any  officer,  director, stock-holder, member, owner, attorney or
     4  agent  of  any  corporation [or], limited liability company, joint-stock
     5  association  or  other  corporate  entity  which  violates  any  of  the
     6  provisions  of this section, who participates in, aids, abets or advises
     7  or consents to any such violations, and any person who solicits or know-
     8  ingly receives any money or property in violation of this section, shall
     9  be guilty of a misdemeanor.
    10    2. Notwithstanding the provisions of subdivision one of this  section,
    11  any  corporation or an organization financially supported in whole or in
    12  part, by such corporation, any limited liability company or other corpo-
    13  rate entity may make expenditures, including contributions,  not  other-
    14  wise  prohibited  by  law,  for  political purposes, in an amount not to
    15  exceed five thousand dollars in the  aggregate  in  any  calendar  year;
    16  provided  that  no  public  utility shall use revenues received from the
    17  rendition of public service within the state for contributions for poli-
    18  tical purposes unless such cost is charged to the shareholders of such a
    19  public service corporation.
    20    3. Each limited liability company that makes an expenditure for  poli-
    21  tical purposes shall file with the state board of elections, by December
    22  thirty-first  of  the year in which the expenditure is made, on the form
    23  prescribed by the state board of elections, the identity of  all  direct
    24  and indirect owners of the membership interests in the limited liability
    25  company and the proportion of each direct or indirect member's ownership
    26  interest in the limited liability company.
    27    §  2.  Section  14-120  of the election law is amended by adding a new
    28  subdivision 3 to read as follows:
    29    3. (a) Notwithstanding any law to the contrary, all contributions made
    30  to a campaign or political committee  by  a  limited  liability  company
    31  shall  be  attributed to each member of the limited liability company in
    32  proportion to the member's ownership interest in the  limited  liability
    33  company.
    34    (b)  If,  by  application  of  paragraph  (a)  of  this subdivision, a
    35  campaign contribution is attributed to a limited liability company,  the
    36  contributions  shall be further attributed to each member of the limited
    37  liability company in proportion to the member's  ownership  interest  in
    38  the limited liability company.
    39    (c)  The state board of elections shall enact regulations that prevent
    40  the avoidance of the rules set forth in paragraphs (a) and (b)  of  this
    41  subdivision.
    42    § 3. This act shall take effect immediately.