Closing the so-called LLC loophole alone is not sufficient to reform the state’s campaign finance system, area legislators said.
“It needs to have a comprehensive approach rather than targeting one component of campaign finance,” said state Sen. Elizabeth Little, R-Queensbury.
Little said she likely would have voted against legislation to subject limited liability corporations to the same aggregate campaign contributions as corporations, because the legislation was too narrowly focused.
“Certainly, the No. 1 thing that is important to me is disclosure,” she said.
Corporations are limited to a total of $5,000 in contributions to all candidates in a calendar year, while limited liability corporations have a much higher aggregate limit of $150,000.
The LLC legislation passed the Assembly this session, but did not come up for a vote in the Senate.
Assemblywoman Carrie Woerner, D-Round Lake, a co-sponsor of the legislation, said closing the “LLC loophole” is an “an important first step,” even though it is not a cure-all for the campaign finance system.
“To me it’s not the ultimate step, but it is a step that we (the state) should take and we (the Assembly) did take,” she said.
Assemblyman Dan Stec, R-Queensbury, who voted for the legislation, said he understands the argument of those who voted against the bill because it is not comprehensive enough.
State Sen. Kathy Marchione, R-Halfmoon, who has received two LLC contributions in excess of $5,000 this year, did not return repeated requests to comment for this report.
Stec said some of his Republican colleagues voted against the bill because it did not address labor unions, which have no aggregate contribution limits.
“This bill addresses one problem, but it doesn’t address the other half of it,” he said.
“I don’t know how you can target one group and not target others,” Little said.
Woerner said unions do not contribute to candidates directly but through political action committees, which business interests also can form.
“I’m not saying there shouldn’t be additional reform around political action committees, but I think that the LLC loophole is a step that we need we need to take in reforming how we handle campaign finance,” she said.
Woerner said limited liability corporations should be treated the same as incorporated businesses.
“Let’s make the same rules that apply to all corporations,” she said.
LLCs are unincorporated but shield members from liability.
The state Board of Elections in 1996 ruled the hybrid business entities are subject to the same limits as individuals, not corporations.
The Board of Elections in April voted 2-to-2, along party lines on whether to change the regulation.
The Brennan Center for Justice, an Albany advocacy organization, in conjunction with several state legislators and former state legislators, recently filed a lawsuit asking a state judge to reverse the 1996 Board of Elections ruling.
Critics of the current rule say it provides LLCs undue influence in statewide elections and allows individuals who control LLCs to shield their identities.
Gov. Andrew Cuomo, who has proposed closing the loophole, raised more than $9 million from LLCs in his first term, almost 20 percent of his campaign total, according to The Associated Press.
The issue also has relevance in legislative races.
A corporation can contribute up to $5,000 to a state Senate candidate, so long as the corporation has not contributed to any other candidates for office.
An LLC can contribute up to $10,300 to one candidate, the same as an individual, and up to $150,000 total to multiple candidates. One person can get around even that limit by forming more than one LLC.
Marchione, for example, received a $10,300 contribution from McGregor Village Apartments LLC and $10,300 from Halfmoon Heritage LLC in the first half of this year, according to a campaign finance report filed with the state Board of Elections.
The two apartment corporations are controlled by developer Bruce Tanski, who also personally contributed $10,300 to Marchione’s campaign.
Little, Stec and Woerner did not receive any LLC contributions of $5,000 or more.