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A00776 Summary:

BILL NOA00776
 
SAME ASSAME AS UNI. S01101
 
SPONSORSimon (MS)
 
COSPNSRLavine, Heastie, Buchwald, Miller MG, Thiele, Ortiz, Niou, Fahy, Dinowitz, Gottfried, Santabarbara, Glick, Seawright, Magnarelli, D'Urso, Montesano, Arroyo, Mosley, Cahill, Zebrowski, Abinanti, Barnwell, Blake, Carroll, Barron, Taylor, Galef, Lupardo, Steck, Rosenthal L, Wallace, Rozic, Ryan, Jaffee, Burke, Cruz, Eichenstein, Epstein, Fall, Frontus, Griffin, Jacobson, Lifton, McMahon, Otis, Reyes, Weinstein, Bronson, DenDekker, Romeo, Gantt, Lentol, De La Rosa, Fernandez, Rosenthal D, Stern, Ramos, Simotas, Hunter, Vanel, Kim, Weprin
 
MLTSPNSRCook, Englebright, Nolan, Perry, Sayegh
 
Amd 14-116 & 14-120, El L
 
Relates to political contributions by limited liability companies; requires limited liability companies that make expenditures for a political purpose to file with the state board of elections, the identity of all direct and indirect owners of the membership interests in the limited liability company and the proportion of each direct or indirect member's ownership interest in the limited liability company.
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A00776 Actions:

BILL NOA00776
 
01/10/2019referred to election law
01/14/2019reported referred to codes
01/14/2019reported referred to rules
01/14/2019reported
01/14/2019rules report cal.5
01/14/2019ordered to third reading rules cal.5
01/14/2019passed assembly
01/14/2019delivered to senate
01/14/2019REFERRED TO RULES
01/14/2019SUBSTITUTED FOR S1101
01/14/20193RD READING CAL.7
01/14/2019PASSED SENATE
01/14/2019RETURNED TO ASSEMBLY
01/14/2019delivered to governor
01/24/2019signed chap.4
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A00776 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A776
 
SPONSOR: Simon (MS)
  TITLE OF BILL: An act to amend the election law, in relation to poli- tical contributions   PURPOSE: This bill would add Limited Liability Companies (LLCs) to section 14.116 of the election law, so that LLCs are made subject to the existing contribution limits for corporations. ThiS bill would also increase transparency by requiring disclosure of the identity of individuals with membership interests in LLCs and attribute contributions to members of LLCs.   SUMMARY OF SPECIFIC PROVISIONS: Section 1 of the bill adds LLCs to Election Law § 14.116 to provide that LLCs are subject to the aggregate contribution limit of $5000 that applies, to corporations. Section 1 also requires disclosure of the identity of all direct and indirect owners of the membership interests in the LLC and the proportion of each direct and indirect member's ownership interest in the LLC. Section 2 amends § 14-120 of the Election Law by requiring all contrib- utions made to a campaign or political committee by a LLC be attributed to each member of the LLC in proportion to the member's ownership inter- est. In addition, the State Board of Elections shall enact regulations that prevent the avoidance of the established rules. Section 3 of the bill establishes the effective date.   JUSTIFICATION: Current law, as interpreted by the State Board of Elections (SBOE), allows a single individual to make multiple contributions to the same candidate or committee through separate LLCs. Often it is difficult to know who is ultimately directing the contributions. The election law does not explicitly address contributions by LLCs. Instead, pursuant to a 1996 SBOE decisiOil, each LLC is treated as a separate contributor even if many of them are controlled by the same person. Aa a result, LLC contributions are governed in a way that is inconsistent with all other types-of campaign contributions. The contridution'limits that apply tocorporations do not apply; the assign- ment of contributions '.to.meMbers required 'of partnerShipSoes not exist; and the transparency and protection against anindividual contrib- uting above the legal limits is absent. In April, 2015, in the face of public outcry and despite the support of two. of the four SHOE members, the board declined to revisit its 1996 decision, leaving it up to the legialature to act: Thereafter, the Daily News reported that the LLC loophole was used to contribute $25 million to state politicians over the past decade and that LLCs linked to one individual have used it to contribute $132 million since .2000 (Bill HaMmond; NY Daily News; April:28, 2015, www,nydailynewacomfopinion/bill-harnmond-bending-cash-article-1.2202 -628). Contrary to the current approach, the Federal Election Commiasion treats LLCs as corporations or partnerships rather thinindividtalsfor Campaign finance purposes. This bill would apply to LLCs the provisions that already apply to corporations, under New YOrk law:. It would also increase transparency by requiring disclostte of the identity of indi- viduals with membership interests in LLCs. Finally it would ensure that the loophole is fully closed by attributing LLC contributions to each LLC member in a manner similar to that ptovided for under current law for partnerships. These changes would clarify the election law with respect to LLCs, provide uniformity, and close an egregious loOphole that has allowed certain individuals to evade limits that other contributors adhere to.   FISCAL IMPACT ON THE STATE: None.   IMPACT ON REGULATION OF BUSINESSES AND INDIVIDUALS: Subjects LLCs to the same campaign finance regulations as corporations, rather than treating them as individuals, and attributes LLC contrib- utions to each LLC member.   PRIOR LEGISLATIVE HISTORY: 2018:A9758-A(Simon) - Passed Assembly 2017:A1926 (Kavanagh) - Passed Assembly 2016:A6975C (Kavanagh)- Passed Assembly 2015:A6975B (Kavanagh)- Passed Assembly 2014:A5067 (Millman)-On the floor 2013:A5067 (Millman)-On the floor   EFFECTIVE DATE: This act shall take effect on the seventh day after it shall have become a law.
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A00776 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
            S. 1101                                                   A. 776
 
                               2019-2020 Regular Sessions
 
                SENATE - ASSEMBLY
 
                                    January 10, 2019
                                       ___________
 
        IN  SENATE  --  Introduced by Sens. KAVANAGH, ADDABBO, BAILEY, BENJAMIN,
          BIAGGI,  BRESLIN,  BROOKS,  CARLUCCI,  COMRIE,   GAUGHRAN,   GIANARIS,
          GOUNARDES,  HARCKHAM,  HOYLMAN,  JACKSON,  KAMINSKY,  KAPLAN, KENNEDY,
          KRUEGER, LIU, MARTINEZ, MAY, MAYER, METZGER, MONTGOMERY, MYRIE,  PARK-
          ER,  PERSAUD,  RAMOS,  RIVERA,  SALAZAR,  SANDERS,  SAVINO, SEPULVEDA,
          SERRANO, SKOUFIS, STAVISKY, STEWART-COUSINS, THOMAS -- read twice  and
          ordered  printed, and when printed to be committed to the Committee on
          Elections
 
        IN ASSEMBLY -- Introduced by M. of A. SIMON, LAVINE, HEASTIE,  BUCHWALD,
          M. G. MILLER,  THIELE,  ORTIZ, NIOU, FAHY, DINOWITZ, GOTTFRIED, SANTA-
          BARBARA, GLICK,  SEAWRIGHT,  MAGNARELLI,  D'URSO,  MONTESANO,  ARROYO,
          MOSLEY, CAHILL, ZEBROWSKI, ABINANTI, BARNWELL, BLAKE, CARROLL, BARRON,
          TAYLOR,  GALEF,  LUPARDO,  STECK,  L. ROSENTHAL, WALLACE, ROZIC, RYAN,
          JAFFEE, BURKE, CRUZ, EICHENSTEIN,  EPSTEIN,  FALL,  FRONTUS,  GRIFFIN,
          JACOBSON,  LIFTON,  McMAHON, OTIS, REYES, WEINSTEIN -- Multi-Sponsored
          by -- M. of A. COOK, ENGLEBRIGHT -- read  once  and  referred  to  the
          Committee on Election Law

        AN ACT to amend the election law, in relation to political contributions
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. Section 14-116 of the election law, subdivision 1 as redes-
     2  ignated by chapter 9 of the laws of 1978 and subdivision 2 as amended by
     3  chapter 260 of the laws of 1981, is amended to read as follows:
     4    § 14-116. Political contributions by certain  organizations.  1.    No
     5  corporation  [or], limited liability company, joint-stock association or
     6  other corporate entity doing business in this  state,  except  a  corpo-
     7  ration  or  association  organized  or maintained for political purposes
     8  only, shall directly or indirectly pay or use or offer, consent or agree
     9  to pay or use any money or property for  or  in  aid  of  any  political
    10  party, committee or organization, or for, or in aid of, any corporation,
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD01804-02-9

        S. 1101                             2                             A. 776
 
     1  limited liability company, joint-stock [or], other association, or other
     2  corporate entity organized or maintained for political purposes, or for,
     3  or  in  aid of, any candidate for political office or for nomination for
     4  such  office,  or  for  any  political  purpose  whatever,  or  for  the
     5  reimbursement or indemnification of any person for moneys or property so
     6  used. Any officer, director, stock-holder, member,  owner,  attorney  or
     7  agent  of  any  corporation [or], limited liability company, joint-stock
     8  association  or  other  corporate  entity  which  violates  any  of  the
     9  provisions  of this section, who participates in, aids, abets or advises
    10  or consents to any such violations, and any person who solicits or know-
    11  ingly receives any money or property in violation of this section, shall
    12  be guilty of a misdemeanor.
    13    2. Notwithstanding the provisions of subdivision one of this  section,
    14  any  corporation or an organization financially supported in whole or in
    15  part, by such corporation, any limited liability company or other corpo-
    16  rate entity may make expenditures, including contributions,  not  other-
    17  wise  prohibited  by  law,  for  political purposes, in an amount not to
    18  exceed five thousand dollars in the  aggregate  in  any  calendar  year;
    19  provided  that  no  public  utility shall use revenues received from the
    20  rendition of public service within the state for contributions for poli-
    21  tical purposes unless such cost is charged to the shareholders of such a
    22  public service corporation.
    23    3. Each limited  liability  company  that  makes  an  expenditure,  or
    24  contribution,  for political purposes shall file with the state board of
    25  elections, by December thirty-first of the year in which the expenditure
    26  is made, on the form prescribed by the state  board  of  elections,  the
    27  identity  of  all direct and indirect owners of the membership interests
    28  in the limited liability company and the proportion of  each  direct  or
    29  indirect member's ownership interest in the limited liability company.
    30    §  2.  Section  14-120  of the election law is amended by adding a new
    31  subdivision 3 to read as follows:
    32    3. (a) Notwithstanding any law to the contrary, all contributions made
    33  to a campaign or political committee  by  a  limited  liability  company
    34  shall  be  attributed to each member of the limited liability company in
    35  proportion to the member's ownership interest in the  limited  liability
    36  company.
    37    (b)  If,  by  application  of  paragraph  (a)  of  this subdivision, a
    38  campaign contribution is attributed to a limited liability company,  the
    39  contributions  shall be further attributed to each member of the limited
    40  liability company in proportion to the member's  ownership  interest  in
    41  the limited liability company.
    42    (c)  The state board of elections shall enact regulations that prevent
    43  the avoidance of the rules set forth in paragraphs (a) and (b)  of  this
    44  subdivision.
    45    § 3. This act shall take effect on the seventh day after it shall have
    46  become a law.
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