NY State Senate Bill 2017-S7149

Archive: Last Bill Status - In Senate Committee Rules Committee

Introduced
- In Committee Assembly
- In Committee Senate
- On Floor Calendar Assembly
- On Floor Calendar Senate
- Passed Assembly
- Passed Senate
Delivered to Governor
Signed By Governor

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Actions

View Actions

	Assembly Actions - Lowercase Senate Actions - UPPERCASE
Jun 04, 2018	reported and committed to rules
Mar 19, 2018	notice of committee consideration - requested
Jan 03, 2018	referred to elections

Votes

- Jun 4, 2018 - Elections Committee Vote
  S7149
  
  5
  
  Aye
  
  1
  
  Nay
  
  3
  
  Aye with Reservations
  
  0
  
  Absent
  
  0
  
  Excused
  
  0
  
  Abstained
  - - Elections Committee Vote: Jun 4, 2018
      
      aye (5)
      
      Avella
      
      Dilan
      
      Kavanagh
      
      Krueger
      
      Tedisco
      
      nay (1)
      
      Akshar
      
      aye wr (3)
      
      Amedore
      
      Gallivan
      
      Marchione

co-Sponsors

View additional co-sponsors

2017-S7149 (ACTIVE) - Details

See Assembly Version of this Bill:: A9758
Current Committee:: Senate Rules
Law Section:: Election Law
Laws Affected:: Amd §§14-116 & 14-120, El L
Versions Introduced in 2017-2018 Legislative Session:: S7149, A9758

2017-S7149 (ACTIVE) - Summary

Relates to political contributions by limited liability companies; requires limited liability companies that make expenditures for a political purpose to file with the state board of elections, the identity of all direct and indirect owners of the membership interests in the limited liability company and the proportion of each direct or indirect member's ownership interest in the limited liability company.

2017-S7149 (ACTIVE) - Sponsor Memo

                                
 
BILL NUMBER: S7149

SPONSOR: KAVANAGH
 
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 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 SHOE 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: S6OB/A6975C - REPORTED FROM ELECTIONS AND COMMITTED TO CODES/
passed assembly
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 on the seventh day after it shall have become
law.

2017-S7149 (ACTIVE) - Bill Text download pdf

                            
 
                     S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   7149
 
                             I N  S E N A T E
 
                                (PREFILED)
 
                              January 3, 2018
                                ___________
 
 Introduced  by Sen. KAVANAGH -- read twice and ordered printed, and when
   printed to be committed to the Committee on Elections
 
 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:

   Section 1. Section 14-116 of the election law, subdivision 1 as redes-
 ignated by chapter 9 of the laws of 1978 and subdivision 2 as amended by
 chapter 260 of the laws of 1981, is amended to read as follows:
   §  14-116.  Political  contributions  by certain organizations. 1.  No
 corporation [or], LIMITED LIABILITY COMPANY, joint-stock association  OR
 OTHER  CORPORATE  ENTITY  doing  business in this state, except a corpo-
 ration or association organized or  maintained  for  political  purposes
 only, shall directly or indirectly pay or use or offer, consent or agree
 to  pay  or  use  any  money  or property for or in aid of any political
 party, committee or organization, or for, or in aid of, any corporation,
 LIMITED LIABILITY COMPANY, joint-stock [or], other association, OR OTHER
 CORPORATE ENTITY organized or maintained for political purposes, or for,
 or in aid of, any candidate for political office or for  nomination  for
 such  office,  or  for  any  political  purpose  whatever,  or  for  the
 reimbursement or indemnification of any person for moneys or property so
 used. Any officer, director, stock-holder, MEMBER,  OWNER,  attorney  or
 agent  of  any  corporation [or], LIMITED LIABILITY COMPANY, joint-stock
 association  OR  OTHER  CORPORATE  ENTITY  which  violates  any  of  the
 provisions  of this section, who participates in, aids, abets or advises
 or consents to any such violations, and any person who solicits or know-
 ingly receives any money or property in violation of this section, shall
 be guilty of a misdemeanor.
   2. Notwithstanding the provisions of subdivision one of this  section,
 any  corporation or an organization financially supported in whole or in
 part, by such corporation, ANY LIMITED LIABILITY COMPANY OR OTHER CORPO-
 RATE ENTITY may make expenditures, including contributions,  not  other-
 wise  prohibited  by  law,  for  political purposes, in an amount not to
 exceed five thousand dollars in the  aggregate  in  any  calendar  year;

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
                                                            LBD13935-01-7

 S. 7149                             2
 
 provided  that  no  public  utility shall use revenues received from the
 rendition of public service within the state for contributions for poli-
 tical purposes unless such cost is charged to the shareholders of such a
 public service corporation.
   3.  EACH LIMITED LIABILITY COMPANY THAT MAKES AN EXPENDITURE FOR POLI-
 TICAL PURPOSES SHALL FILE WITH THE STATE BOARD OF ELECTIONS, BY DECEMBER
 THIRTY-FIRST OF THE YEAR IN WHICH THE EXPENDITURE IS MADE, ON  THE  FORM
 PRESCRIBED  BY  THE STATE BOARD OF ELECTIONS, THE IDENTITY OF ALL DIRECT
 AND INDIRECT OWNERS OF THE MEMBERSHIP INTERESTS IN THE LIMITED LIABILITY
 COMPANY AND THE PROPORTION OF EACH DIRECT OR INDIRECT MEMBER'S OWNERSHIP
 INTEREST IN THE LIMITED LIABILITY COMPANY.
   § 2. Section 14-120 of the election law is amended  by  adding  a  new
 subdivision 3 to read as follows:
   3. (A) NOTWITHSTANDING ANY LAW TO THE CONTRARY, ALL CONTRIBUTIONS MADE
 TO  A  CAMPAIGN  OR  POLITICAL  COMMITTEE BY A LIMITED LIABILITY COMPANY
 SHALL BE ATTRIBUTED TO EACH MEMBER OF THE LIMITED LIABILITY  COMPANY  IN
 PROPORTION  TO  THE MEMBER'S OWNERSHIP INTEREST IN THE LIMITED LIABILITY
 COMPANY.
   (B) IF, BY  APPLICATION  OF  PARAGRAPH  (A)  OF  THIS  SUBDIVISION,  A
 CAMPAIGN  CONTRIBUTION IS ATTRIBUTED TO A LIMITED LIABILITY COMPANY, THE
 CONTRIBUTIONS SHALL BE FURTHER ATTRIBUTED TO EACH MEMBER OF THE  LIMITED
 LIABILITY  COMPANY  IN  PROPORTION TO THE MEMBER'S OWNERSHIP INTEREST IN
 THE LIMITED LIABILITY COMPANY.
   (C) THE STATE BOARD OF ELECTIONS SHALL ENACT REGULATIONS THAT  PREVENT
 THE  AVOIDANCE  OF THE RULES SET FORTH IN PARAGRAPHS (A) AND (B) OF THIS
 SUBDIVISION.
   § 3. This act shall take effect on the seventh day after it shall have
 become a law.

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Senate Bill S7149

Sponsored By

Archive: Last Bill Status - In Senate Committee Rules Committee

Jun 4, 2018 - Elections Committee Vote

Elections Committee Vote: Jun 4, 2018

co-Sponsors

2017-S7149 (ACTIVE) - Details

2017-S7149 (ACTIVE) - Summary

2017-S7149 (ACTIVE) - Sponsor Memo

2017-S7149 (ACTIVE) - Bill Text download pdf

Comments

Senate Bill S7149

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Sponsored By

Brian Kavanagh

Archive: Last Bill Status - In Senate Committee Rules Committee

co-Sponsors

Martin Malavé Dilan

Brad Hoylman-Sigal

Liz Krueger

Shelley B. Mayer

2017-S7149 (ACTIVE) - Details

2017-S7149 (ACTIVE) - Summary

2017-S7149 (ACTIVE) - Sponsor Memo

2017-S7149 (ACTIVE) - Bill Text download pdf

Comments