Elections Board Deadlocks On LLC Reclassification
The state Board of Elections on Thursday declined to reclassify limited liability companies when it comes to the state’s campaign finance law.
The board, following a discussion about the influence of money in state politics and the merits of free speech in political donations, deadlocked its vote between the two Republican and two Democratic commissioners.
“I think it’s something we should do symbolically at least as a board in order to say, ‘Hey, we don’t think this should be happening,'” said Democratic Commissioner Andy Spano, a former Westchester County executive, who backed the reclassification.
The result was to the disappointment of the state’s good-government organizations and left-leaning advocacy groups that had sought to close what they say is a loophole in the state’s campaign finance law that allows individuals to contribute to political campaigns and candidates far beyond the legal limit through LLCs.
A coalition of groups had sought to end the practice of LLC contributions, a campaign that had grown to include Attorney General Eric Schneiderman urging the loophole be closed.
In a statement, a Schneiderman spokesman called the result a “squandered” opportunity.
“It is deeply disappointing that the Board of Elections squandered an opportunity to close the LLC loophole, which has made a mockery of New York’s campaign finance rules,” said Schneiderman spokesman Matt Mittenthal. “We will continue to fight to give New Yorkers the real, comprehensive ethics reform they demand.”
In essence, the resolution before the board would have reclassified LLCs as partnerships, which would have the impact of restricting how much money the ownership could contribute to campaigns.
Supporters had insisted the Board of Elections itself created the loophole through a 1996 determination that relied on a federal opinion that was later reversed.
“It’s obvious that we have a serious corruption problem in Albany,” said the Brennan Center’s Larry Norden. “We’ll have to explore what our next steps are.”
Added Blair Horner of NYPIRG: “It’s obviously a bogus argument to say that on the one hand they’re allowed to make an interpretation that allows the LLC loophole and now they say they don’t have the authority to close it.”
But in the end, the board’s two Republican commissioners voted against the reclassification, in part saying it was up to the Legislature to consider campaign finance regulations such as contribution limits.
“The Legislature has created this very comprehensive system of campaign contribution limits in New York state,” said Republican Co-Chairman Peter Kosinski. “I feel we have to honor that. That’s there prerogative to do so. We administer it. We make sure it’s complied with. But we don’t create it.”
Kosinski was appointed to become the new Republican chairman on the board on Wednesday, replacing James Walsh. He is a former counsel to the Senate Republicans.
Kosinski also pointed to free speech concerns raised by reclassifying LLCs in order to limit campaign donations.
“These are constitutional issues,” he said. “To have a state agency affecting peoples’ first amendment rights I think is very troubling.”
The state Business Council, too, had made the argument the Legislature should be tasked with any campaign finance changes and not the appointed commissioners at the Board of Elections.
Up until now, the state Legislature has shown little willingness to change the law and restrict LLC giving.
Politicians in both parties have benefited from LLC contributions, including Gov. Andrew Cuomo, who received more than $1 million in contributions from a single donor last cycle, developer Leonard Litwin.
Democratic Co-Chairman Douglas Kellner, who had the LLC change added to the agenda this week, urged the board’s recently appointed enforcement counsel Risa Sugarman to probe political donations through LLCs.
In particular, Kellner urged her to review contributions from entities that do not have any other apparent business purpose and mass donations from LLCs.
“I would certainly urge the independent enforcement counsel to take a look at two classes of suspicious LLC contributions,” he said.
|Print article||This entry was posted by Nick Reisman on April 16, 2015 at 3:28 pm, and is filed under Campaign Finance Reform. Follow any responses to this post through RSS 2.0. Both comments and pings are currently closed.|