The Independent View: NY LLC Donations Loophole Stalls in Committee

On Tuesday, May 12, 3015, the New York State Assembly passed a bill to close the controversial LLC loophole.

Good government groups issued a statement praising the bipartisan passage of the bill in the Assembly. “With the passage of A.6975-B, the Assembly has sent a strong bipartisan signal, and is taking an important step to uphold the public interest and rebuild confidence through the passage of one of many needed ethics reforms,” said the statement from a coalition of groups including The New York Public Interest Research Group, Common Cause, The Brennan Center, Reinvent Albany and Citizens Union. “We encourage the Senate to follow suit and let New Yorkers know they are serious about addressing the pervasive culture of corruption plaguing Albany.”

Brooklyn Democratic State Sen. Daniel Squadron's goal of getting a state committee vote on a bill to close the controversial "LLC loophole" was quashed Tuesday and is quite possibly finished for the year.

Squadron had sent a letter Monday to the Chairman of the Senate Committee on Corporations, Michael Ranzenhofer, stating a vote was required on the bill according to Senate rules, as this was the committee's second meeting since the legislation had been referred from the Senate Elections Committee. Ranzenhofer said he had received the letter Tuesday, and the deadline had passed to get the bill on the meeting's agenda. "I just got it today, so let me take a look at it," Ranzenhofer said. Ranzenhofer said Tuesday's meeting had intentionally featured a "very aggressive schedule" and he had not planned to meet again before the legislative session ends in June.

Squadron said the bill clearly was on the Republican radar and should have been on the committee's agenda, because the "rules by any other interpretation are absurd."

The hearing was held late in the afternoon in the Legislative Office Building, which Squadron construed as an attempt by Republicans to downplay it.

The Squadron bill would treat LLCs like corporations or other joint-stock entities, which have $5,000 annual donation limits. Under a state Board of Elections ruling, each of a developer's LLCs can give up to $150,000 each annually, the same as a single individual.

Senate Democrats strongly support closing the loophole, but the chamber's Republicans do not appear eager to go on record with a vote.

Opponents of the LLC loophole see an opening because its biggest user, Long Island developer Glenwood Management, has played a role in the charges against two fallen legislative leaders, former Assembly Speaker Sheldon Silver and Sen. Dean Skelos, who stepped down as Senate majority leader on Monday.

Glenwood has been a major donor to Senate Republicans, who maintain a narrow majority.

Gov. Andrew Cuomo also favors closing the loophole, although he too is a major recipient of LLC donations.