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LLC Loophole Bill Stalls In New York State Senate

New York State Capitol
Karen DeWitt

New York state Senate Republicans in the Elections Committee cast a vote on closing a campaign finance loophole that has played a role in recent corruption trials of the former legislative leaders on Monday, but the act could doom the measure for the 2016 session.

Campaign contributions from Limited Liability Companies factored heavily in the corruption cases against both former leaders of the legislature. One of them, former Assembly Speaker Sheldon Silver, was given 12 years in prison on May 3; the other, former Senate Leader Dean Skelos, awaits sentencing later this week.

The loophole in the state’s campaign finance laws also made it possible for several real estate developers and related companies, now part of a new federal probe, to donate hundreds of thousands of dollars to the campaign of Governor Andrew Cuomo.

But a bill to close the loophole could be stalled in the state Senate.

Sponsor Dan Squadron, a Democrat who represents lower Manhattan and parts of Brooklyn, made the case at the Senate Elections Committee meeting, saying the measure requires that LLC’s be more transparent, and that the founders of multiple LLC’s be subject to the same $5,000 donation limit in place for corporations and not be used “as a way for individuals and other corporate interests to skirt campaign finance regulations.”

Squadron asked committee members to vote the bill onto the floor for a debate, and not to pass it along to a higher ranking committee, the Senate Codes Committee.

“I urge the Chair not to reference it to the Codes Committee,” Squadron said.

His request was not heeded.

“We’ll be referring this particular bill to the Codes Committee,” said Election Committee Chair Fred Akshar.

After the meeting, Senator Akshar, a Republican from Binghamton, says he’s not against the ideas in the bill. But he says GOP Senators want a more “global conversation” that addresses some of the Republican Senators’ concerns about labor unions having undue influence if the LLC loophole is closed.

“Big unions, parent unions, they have many subsidiaries,” Akshar said.

Barbara Bartoletti, with the League of Women Voters, says the motion very likely killed the reform bill for the 2016 session.

“They really didn’t want to have a definitive vote on it, “Bartoletti said.  “They just voted it out of committee, shoved it along into the graveyard, so to speak.”

And Bartoletti says Senator Akshar’s argument equating  unions with corporations is like comparing apples to oranges.

“Unions are comprised of members, and those members give their small donations,”said Bartoletti. “When it comes to the LLC’s, it’s all one person, essentially.”

The Senate Codes Committee does not currently have another meeting scheduled before the end of the session. Its Chair, Michael Nozzolio of the Finger Lakes-Rochester region, recently had open heart surgery. Senator Squadron says he doesn’t hold out much hope.

“I have not heard form any individual Senate Republican or the Majority Leader that they’re going to allow this bill to come to a floor vote,” Squadron said.

The Democratic controlled state Assembly passed a measure to close the LLC, and Governor Andrew Cuomo put the measure in his budget but later pulled it, saying he wanted to pursue the issue in the second half of the session.

A recent poll found that 97 percent of the public wants something done about corruption in state government,  though they disagree on exactly what is needed.

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