© 2023 WRVO Public Media
NPR News for Central New York
Play Live Radio
Next Up:
0:00 0:00
Available On Air Stations

LLC loophole bill stalls in NY State Senate

Karen DeWitt
Sen. Dan Squadron, far right, makes the case for closing the LLC loophole at the Senate Elections Committee meeting. Chair Fred Akshar is at center, to his right, Sen. Martin Dilan

State Senate Republicans in the Elections Committee cast a vote on closing a campaign finance loophole, which has played a role in recent corruption trials of the former leaders of the legislature. But the act could doom the measure for the 2016 legislative 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 sentenced to 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 Gov. Andrew Cuomo.

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

Sen. Dan Squadron, a Democrat who represents lower Manhattan and parts of Brooklyn and the sponsor of the bill, made the case for it at the Senate Elections Committee meeting Monday. He said the measure requires that LLCs be more transparent, and that the founders of multiple LLCs 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, 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 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 LLCs, 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, Sen. Michael Nozzolio of the Finger Lakes- Rochester region, recently had open heart surgery. Squadron says he doesn’t hold out much hope.

“I have not heard from 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 loophole. 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. 

Karen DeWitt is Capitol Bureau Chief for New York State Public Radio, a network of 10 public radio stations in New York State. She has covered state government and politics for the network since 1990.