Governor Challenges Legislature to Close LLC Loophole

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            Gov. Andrew Cuomo

Earlier today, Gov. Cuomo announced that he is submitting to the Legislature legislation to close the LLC loophole in New York State. The Governor has sent the Legislature eight bills – one that applies to all political offices, and one for each of the state’s elected offices – that would treat limited liability corporations (LLCs) in the same manner that traditional corporations are treated, limiting their political contributions to $5,000 per year.

(The Governor also told reporters that he will be proposing additional reforms, including capping outside income by lawmakers and imposing term limits.)

On the issue of political contributions by LLCs, the Governor said that he allow the Legislature to choose from bills that close the LLC loophole for the following:

  1. Everyone (all candidates for state political office)
  2. Candidates for Governor and the State Legislature
  3. Candidates for Governor and State Senate
  4. Candidates for Governor and State Assembly
  5. Candidates for Governor, the Attorney General and the Comptroller
  6. Candidates for Governor and the Attorney General
  7. Candidates for Governor and the Comptroller
  8. Candidates for Governor

Gov. Cuomo said:

“For years, I have proposed closing the LLC loophole – one of the most egregious flaws in our campaign finance system – and every year the bill has stalled. This year, I am introducing eight different bills to close the LLC loophole – one for each elected office in the state. Pass all of them, or as many as you’d like, but at a minimum, pass the one impacting anyone running for the office of the Governor. I will go first – pass it and I will sign it into law today.”

Senate Majority Leader John Flanagan (R – Suffolk County) does not appear to be receptive to the Governor’s proposal.  He said:

“A proposal to close the LLC loophole is a red herring that fails to fundamentally address the root cause of the problems that exist within our campaign finance system, most notably a lack of enforcement, a lack of transparency, and a lack of full and honest disclosure.”

Senate Minority Leader Andrea Stewart-Cousins (D – Westchester) expressed her support.  She said:

“We stand ready to close the LLC loophole for everyone.  Senate Democrats have been fighting to close the loophole for years only to be rebuffed by our Republican colleagues.  The people of New York deserve a government that they can trust.”

Prior efforts to close the LLC loophole by the State Board of Elections and through the courts have failed.  (Read my prior blog posts here and here.)

Read news coverage of the Governor’s announcement from the State of Politics blog, the Capitol Confidential blog, the Syracuse Post-Standard and Politico NY.