39 Words That Must Be in Governor Cuomo's Annual Message: Rolling Back the Board of Elections on LLC Campaign Contributions

Close-up of US Dollar paper currencies.
Close-up of US Dollar paper currencies.

Mitt Romney famously said that the corporations are people. Well, according to the New York State Board of Elections (BOE), Limited Liability Companies are people too, my friend. In a bizarre opinion issued by the BOE in 1996, Limited Liability Companies, commonly called LLCs, are considered individuals and not corporations for the purpose of campaign contribution limits. When Governor Andrew Cuomo gives his annual State of the State message on January 13, 2016, he should challenge legislators to add 39 words to the Election Law and end the LLC campaign contribution madness.

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In a look-kids-there's-Big Ben-there's-Parliament-like moment, there are rumblings anew that ethics reform is on the horizon on Albany. The contemporary reform talk follows "groundbreaking reforms" less than one year ago and the ironic Clean Up Albany Act of 2011, announced by Governor Cuomo, Speaker Silver and Senate Majority Leader Skelos, that boasted "unprecedented transparency." (Full disclosure, I was a Senior Adviser for Government Reform for the state Senate majority conference from 2009-11 and worked on issues like ethics and campaign finance reform.)

The distinction between individuals and corporate entitles for the purposes of campaign contributions in New York State is enormous. The current limit for corporate contributions to statewide candidates is $5,000, whereas the limit for individual contributions is $60,800 per candidate ($19,700 for the primary and $41,100 for the general election). In light of the 1996 Board of Elections opinion, that means an LLC may contribute $60,800 per candidate, not the limit of $5,000 that applies to corporations. This artificially high LLC contribution limit enables a river of secret campaign cash to flow to elected officials. In Albany's pay-to-play culture that is like opening the floodgates when the river is already over the banks.

(This is often called the "LLC loophole" in error. A loophole is defined as "an ambiguity or omission in the text through which the intent of a statute . . . may be evaded," the 1996 Board of Elections opinion is more accurately called the LLC hatchet job.)

Do the LLC names 280 245 East 40th St or 430 1930 Broadway ring a bell? They do to Shelly Silver, former Speaker of the New Your State Assembly who was convicted of federal corruption charges. Those two LLCs where some of the many paper entities that funneled contributions to former Speaker Silver from Glenwood Management, which figured into one of two of Silver's corrupt schemes for which he was convicted. That company has contributed $10 million to candidates via LLCs according to a Glenwood executive. Filed under #surprisednotsurprised, Glenwood Management also figured into the cases against Dean Skelos, former State Senate Majority Leader, and his son Adam. The Skeloses were also convicted of corruption in federal court. What might Glenwood Management expect in exchange for their largesse? Maybe enlarging a few tax exemptions like the 421-a and J-51 programs. Maybe not. Or, maybe so.

Allowing LLCs to funnel huge amount of cash to political candidates undermines the state's system of campaign finance disclosure, which means that the voters often cannot find out who candidates are accepting money from, like say major real estate interests. And, obviously, with respect to the geniuses who authored and approved of the 1996 BOE opinion, LLCs are not people. With two of his three so-called men in a room awaiting sentencing following federal corruption convictions, Governor Cuomo should challenge to legislators in his annual State of the State: override the Board of Elections opinion that allows LLCs to act as individuals for capping cash--immediately.

The fix is quite simple: adding only 39 words to one subdivision of a section in the Election Law. So simple that legislators who attend the governor's annual address on January 16 could go directly to their respective chambers, pass the legislation and Governor Cuomo could sign the law that very day. The quick passage would send a message that state government is serious, yet again, about ethics.

Just 39 words. That is all it what would take. While gambling may still reign in Albany--and observers may be shocked, shocked to learn that it exits!--ending the LLC hatchet job would take away one game of chance from the casino floor called the New York State legislature.