Progressives in New York have long criticized Governor Andrew Cuomo for failing to close the so-called LLC loophole, which allows people who own limited liability companies to essentially disregard limits on campaign contributions. While the fact that Cuomo is one of the top beneficiaries from this loophole is nothing new, a report from Politico on Monday reveals the order of magnitude: According to their analysis, the governor raises more from LLCs than every state legislator combined—taking in a reported $16 million since 2011.
The LLC loophole is a top issue for campaign finance reform advocates because it allows wealthy donors—often from the the state’s powerful real estate sector—to funnel millions of dollars into campaigns in secret. Here’s Politico’s explanation of the outdated campaign finance rules around LLCs:
The rules governing LLCs exist largely because they weren’t a type of legal entity when campaign finance limits were put into place years ago. In 1996, the state Board of Elections issued an advisory opinion determining that given the lack of any statute to the contrary, LLCs should be subjected to the same limits as individuals (who can currently give $65,100 to candidates for statewide office over the course of a four-year cycle) rather than corporations (which can donate $5,000 to all candidates combined in a calendar year).
That ruling meant that one type of business entity could give significantly more than another type. But the decision’s effects were amplified by the fact that people can own multiple LLCs. Many real estate developers have one for each property, and can give the maximum $65,100 to one candidate from each of them.
While Cuomo has put forward bills to close the loophole, he’s able to blame the Republican-controlled Senate when they stall out. (Cuomo himself had propped up a bizarre legislative agreement, which he just brought to a close, that handed Senate Republicans the majority in the first place.) But according to Politico, since Cuomo took office in 2011, he has raised $16.54 million from LLCs, which is more than Senate Republicans—and the entire state legislature—took in from those entities combined:
Since Cuomo took office, 574 committees associated with candidates for one of the Legislature’s 213 seats have received at least one donation from an LLC. Combined, these hundreds of individuals have reported raising $16.5 million from LLCs, just slightly less than Cuomo’s total.
And the Senate Republicans who bear the brunt of Cuomo’s criticism? They’ve raised $6.4 million from LLCs, or 39 percent of Cuomo’s total.
For his part, the governor has said he supports changing the rules, and cited “ethics reforms, including campaign finance reform, closing the LLC loophole” in a letter sent last month to state Senator Simcha Felder, a Democrat, urging him to return to the party’s caucus.
“The Governor will continue to lead the fight to close the LLC loophole and is 100 percent focused on flipping the State Senate and forming a Democratic Senate majority so we can enact comprehensive campaign finance reform,” campaign spokeswoman Abbey Fashouer told the site.
In Cuomo’s first term, one donor used the LLC loophole to contribute a whopping $1 million to Cuomo’s committee. As Politico notes, proportionately, “only about 5 percent of the money spent on legislative races comes from LLC donations to candidates. But LLC donations accounted for 20 percent of the money that Cuomo’s committee raised from 2011 through 2014.”
Reform advocates often criticize Cuomo for only paying lip service, rather than putting actual muscle behind closing the loophole. His dependence on LLC donations just miiiight have something to do with that.