Assembly continues to back closure of “LLC loophole”

ROCKLAND COUNTY TIMES 

A bill to close the limited liability corporation (LLC) campaign finance loophole has passed the Assembly (A.1926) for the third straight session. The LLC loophole allows individuals who own LLC corporations to circumvent campaign contribution caps and funnel limitless donations to political campaigns.

“Voters have made it clear they’re sick and tired of big money in politics,” said Assemblyman James Skoufis, who co-sponsored the bill, which enjoyed bipartisan support. “This measure helps stop special interests from coming between the voice of the people and their representatives.”

State Senator Daniel Squadron, a main protagonist of LLC loophole reform, said, “Here’s one real solution to the massive corporate contributions that drown out the voice of everyday New Yorkers in government — a response to many of the ethics scandals we’ve seen rock Albany’s halls. The Assembly has passed it, the governor has said he would sign it the day it passes, and good government groups and editorial boards across the state support it. The Senate? It continues to refuse to even bring the bill to the floor.”

Under current law, anyone can set up any number of LLCs and make campaign donations beyond the $5,000 limit placed on other corporations. Because the Board of Elections treat LLCs as individual donors, they are not subject to the same limits. As a result, one person can set up multiple LLCs and exert considerable pressure on the political process while hiding behind different company names.

The bill passed by the Assembly extends the $5,000 donation limit to LLCs and requires that individuals with membership interests be disclosed. Skoufis said, regulating the amount of money that can be donated via LLCs and shining a light on the people behind them will help end the pay-to-play culture fostered by the loophole.

One example of pay-to-play fostered by the loophole was when $250,000 of LLC money – from one, single developer – flowed to the re-election campaign of Governor Cuomo following the governor’s veto of Kiryas Joel annexation oversight legislation in 2015, Skoufis noted.

In addition to legislation passing that would close the LLC loophole, Skoufis said legislation he authored to increase transparency when LLCs buy or sell real estate has passed the Assembly Ways and Means Committee and will soon be headed to the full body for a vote. The bill would require real estate LLC owners be clearly identified and that the information be available to the public on the Department of State website. This legislation passed the Assembly last year; Skoufis is again urging the Senate to take up this important measure.

“Real estate transactions can have a huge impact on a community,” Skoufis said. “Residents and local governments have a right to know who’s buying and selling property in their neighborhood, period. This legislation ensures individuals would no longer be able to hide behind shadowy LLCs during these dealings.”

While the state works on the LLC transparency legislation, the Town of Orangetown has taken the issue into their own hands, drafting a bill that would require the real owners of LLCs in the town to be clearly identified.