GOP blocks attempt to close LLC loophole

Republican lawmakers blocked a Democratic effort last week to close a loophole in Orange County’s campaign finance law by bringing a surprise resolution to Legislature floor.

The Democratic minority has been trying since last year to add three words to the county’s 2013 Pay-to-Play Law to make clear that campaign donations from limited liability companies should be treated like those from any other businesses under the law. The law allows companies that hold or seek county contracts to give County Executive Steve Neuhaus no more than $4,000 per term, but the county’s attorneys have taken the position that limited liability companies, or LLCs, don’t count because the law doesn’t specifically list that common form of business organization.

When Democrats sought to close that loophole last year, the administration reacted by arguing the entire law was an illegal modification of the state’s limits on campaign contributions, and also suggesting the law was unconstitutional. Republican lawmakers then tried to repeal the $4,000 limit, but retreated when they couldn’t muster enough votes.

Democrats have asked since then for the Legislature to take up closing the LLC loophole, but Republican leaders – who hold a 15-5 edge over Democrats – have refused. So Democratic Leader Mike Paduch tried a roundabout approach at last Thursday’s Legislature session, introducing a resolution to create a special committee that would look at the LLC loophole and make recommendations. Republicans shot down the idea in a 14-6 vote, with Independence Party member Michael Amo joining the five Democrats in support.

“Either you want to eliminate the possibility of corruption in county government or you don’t,” Paduch said in a statement afterward. “Apparently that doesn’t matter much to the Republicans in the Orange County Legislature, and that’s a shame to all taxpayers in Orange County.”

Legislature Chairman Steve Brescia, a Montgomery Republican, told the Times Herald-Record that members of his caucus still believe the Pay-to-Play Law is illegal and therefore don’t want to amend it in any way. “The Republican consensus is to not mess around with the law unless the state takes the lead and does something else,” Brescia said. “We think the state should take some sort of action, if that’s going to happen.”

It was unclear if he meant waiting for state lawmakers to set statewide restrictions on pay-to-play contributions or to close the LLC loophole. The state has a different kind of LLC loophole, in which limited liability companies are treated as individuals rather than businesses for the sake of contribution limits. Democrats in Albany have tried to close that loophole by law, but Senate Republicans have blocked the effort.

Brescia said a few members of his caucus support closing Orange County’s version of an LLC loophole, but want the state to take action. He said the county’s law “hasn’t been challenged, but it could be challenged, and that’s the concern.”

County Legislator Mike Anagnostakis, the Town of Newburgh Republican who initiated the law and successfully pushed for its passage, said he disagrees that the law somehow exempts LLCs, but supports amending it if necessary. “If a perceived LLC loophole exists, it should be closed – here in Orange County, everywhere in New York State,” Anagnostakis said.

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