Common Cause/NY, NYPIRG, & the LWV-NYS Wrap Up Session w/Campaign Finance Reform Analysis

ALBANY, NY (06/18/2013)(readMedia)-- Common Cause/NY, NYPIRG, and the League of Women Voters of New York State offered an end of session wrap-up and analysis of campaign finance reform efforts in the Legislature, and called on the Senate and Governor not to declare defeat and instead seek results this session. In the final forty eight hours before the 2013 legislative session concludes, good government groups reviewed the corrupting influence of money in politics by highlighting some of the most egregious features of New York State's campaign finance laws:

• High contribution limits
• The LLC loophole
• Housekeeping/soft money accounts
• No oversight

The groups emphasized that influence seekers exploit New York law by targeting their resources through both political contributions and lobbying. The system breeds corruption which accounts for the overwhelming slew of indictments and convictions of various elected officials, as well as the legal bribery which is simply par for the course in Albany. The groups made clear that the success of the session would be measured by results and that the continued stalemate in the Senate was a failure of leadership driven by self-interest, not the public interest.

"Comprehensive campaign finance reform remains stalled in the Senate which refuses to consider any legislation despite widespread public support. Maybe that's because entrenched lawmakers benefit from the status quo and seem loath to change a system which serves their interests. But New Yorkers need results now and they won't accept any more excuses. Our legislative leaders have 48 hours to deliver on their promises and still call the session a success. The public can not watch as their elected officials continue to be led away in hand cuffs," said Susan Lerner, Executive Director of Common Cause/NY.

"The crime wave that rocked the Capitol this spring is further evidence that significant changes to New York's political process are urgently needed. Legislators must not end what will be known as the "scandal session" without taking significant steps to address the dysfunction that has been a plague on both their houses for far too long. In the past seven years, more state-level elected officials (31) have been caught up in scandals than have lost in general elections (19). Enough is enough," said Bill Mahoney, Legislative Operations and Research Coordinator, NYPIRG

"The League believes a comprehensive approach to campaign finance reform could significantly reduce the influence of money in state politics, change the culture in Albany, and restore people's faith in government. No action from the legislature on this reform represents a systemic failure to stem the tide of corruption in Albany. New Yorkers deserve the transparent, responsive, and ethical state government they overwhelmingly want." Barbara Bartoletti, Legislative Director, LWVNYS

Contribution Limits: Big Money vs. Little People

The current system favors large dollar donors. According to NYPIRG, in 2011 lobbyists donated nearly 70,000 times as much money, per capita, as individual New Yorkers. In contrast, only 23.46% of the money received by legislative candidates and their party committees in 2012 came from flesh-and-blood human beings. Moreover, most of this money came from large donors, with only 2.6% from donors giving less than $250. Similarly, there are few limits on what lawmakers can do with their campaign cash. Since 2004, legislators have spent $7M in campaign funds on their own legal defense. Other expenditures include $132K in one election cycle on flowers, $195K on cars, and $454K on golf.

• Statewide Candidates:
  Individual donor may give up to $60,800 in a single year
  ($19,700 primary, $41,100 general)
• State Senate:
  Individual donor may give up to $16,800 in a single year
  ($6,500 primary, $10,300 general)
• State Assembly:
  Individual donor may give up to $8,200 in a single year
  ($4,100 primary, $4,100 general)
• Party/Constituted Committee:
  Individual donor may give up to $102,300 in a single year

The LLC Loophole

The LLC loophole treats a corporate subsidiary as an individual with its "own limit", allowing a corporation to simply skirt the contribution limits by setting up multiple LLC's through which to donate more money. The real estate industry is a major offender with Glenwood Management, run by Leonard Litwin, leading the way. Since 2005, Glennwood has donated $7.25 million through 47 separate LLCs. That's 181 times the intended $5,000 annual corporate limit.

Housekeeping Accounts aka "Unlimited Money"

Housekeeping or "soft money" accounts allow any corporation, individual, union, or other interest to circumvent campaign contribution limits and give unlimited sums of cash. Soft money is not supposed to be used to support candidates and their campaigns but that provision is routinely ignored. "Non-campaign" soft money housekeeping expenditures regularly peak in the months prior to an election, indicating that much of the spending is campaign related. The election season spikes in housekeeping expenses are correlated to sharp increases in spending on advertising and mass-mailings, as well as hiring of political consultants.

Senate Republicans are by far the largest beneficiaries of soft money, handily out-raising their Democratic counterparts in the Assembly nearly three times over. Although the Republican State organization used to be the leading recipient of soft money among party organizations, it is now outpaced by both the state Democratic and Conservative Parties. By far the largest category of soft money donors is business, which accounts for $45.4 million (52%) of all soft money contributions from 2006-2012. Individuals comprise the next largest category of donors at $23.3 million (27%). Soft money donations from political committees account for $9.4 million (11%) while labor unions come in a distant fourth at $7.7 million (9%).

Read the full report from Common Cause/NY here: www.commoncause.org/ny/Hskpg2013

Money Follows Power

Influence seekers understand that power is tightly consolidated in New York State which is why committee chairs, legislative leaders, and Governors tend to raise money from relevant interests.

The gambling industry exemplifies this principle perfectly, strategically doling out dollars to key leaders from 2005-2012:

• $716,000 to Governor Cuomo
• $1.8 million to Senate Republicans, $936,000 to Senate Democrats
• $1.1 million to Assembly Democrats, $101,000 to Assembly Republicans
• Committee Chairs Win Big
• $95,000 to Eric Adams (D), $80,000 to John Bonacic (R), Senate chairs
• $103,000 to J. Gary Pretlow (D), nearly 30% of his total funds raised

Read the full report from Common Cause/NY here: www.commoncause.org/ny/stackingthedeck

Generally donors are driven by power, not political ideology. According to NYPIRG, in 2012 business gave nearly four times more to the Senate GOP than Senate Democrats, and three times more to Assembly Democrats than to the Assembly GOP. Similarly unions gave nearly twice as much to the Senate GOP than the Senate Democrats, and nearly eight times more to the Assembly Democrats than the Assembly GOP.

No Oversight

Every candidate for state level office must file an itemized disclosure statement with the New York State Board of Elections (BOE) listing their donors and the amount raised. The Board is technically responsible for overseeing and enforcing the state's campaign finance laws. However, due to its partisan structure and a lack of staff there are no longer any investigators left to execute the task. Perhaps related, in the past two years, there have been at least 103,805 violations of the NYS campaign finance law according to NYPIRG. Similarly, there are 2,328 active committees – nearly 40% of the total active committees with money in the bank –which missed the July 2012 filing deadline. The money in those accounts totaled $31,181,363.85.