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Money in Politics This Week: New York Business Tax Credits Have Increased, Remain Unevenly Distributed

A roundup with the latest news highlighting the corrosive nature of money in New York State politics and across the nation — and the need for public financing and robust campaign finance reform.

  • Syed Zaidi
  • Katherine Munyan
December 13, 2013

Crossposted at ReformNY

The Brennan Center regularly compiles the latest news concerning the corrosive nature of money in New York State politics—and the ongoing need for public financing and robust campaign finance reform. We’ll also be linking to dispatches from around the country highlighting the national scope of this crisis. This week’s links were contributed by Katherine Munyan and Syed Zaidi.

For more stories on an ongoing basis, follow the Twitter hashtag #moNeYpolitics and #fairelex.


Business Tax Credits Have Increased, Remain Unevenly Distributed

A new report prepared for the New York State Tax Reform and Fairness Commission has found that the amount of business tax-credits have increased over the years. The report finds that business-friendly tax “incentives” have grown from 33 credits worth $673 million in 2005 to 50 credits valued at $1.7 billion in 2013. Based on 2009 data, less than 2 percent of corporations and partnerships have claimed one or more business tax credits. “I think it demonstrates the attractiveness to elected officials of spending money through the tax code that you don’t need to appropriate every single year,” said Donald Boyd, a senior fellow at the Rockefeller Institute and one of the report’s authors. Earlier this year, the Brennan Center called attention to 14 tax credits that were repeatedly extended over the last several years and asked the state Moreland Commission to Investigate Public Corruption to review any connections between the scheduled pattern of expiration and extension and campaign contributions to lawmakers by affected industries. The report came out just before recommendations made by the New York State Tax Reform and Fairness Commission, which Governor Cuomo set up to consider potential tax policy reforms for the next legislative session.

Investigation Sheds Light on Potential Pay-to-Play Scheme in Albany

The Daily News claims to have put names and faces to an anonymous story the Moreland Commission cited as an example of potential corruption in its 98 page report. The Daily News says the report’s account matches details concerning Coventry First, a “life settlement” business that purchases life insurance policies and converts them into tradable securities for Wall Street. As the state Insurance Department was considering regulations on the industry, the legislature passed a bill that allowed the industry to remain in business but established some guidelines. In aggregate, state lawmakers received $76,000 from the company during the year the legislation was being considered and the year following—with $25,000 going to the ruling Senate Republican Campaign Committee, $25,000 to the Democratic Assembly Campaign Committee, and the rest to the relevant legislative committee chairs in each house. A Moreland Commission spokeswoman has declined to specify whether Coventry was the company in question.

Fracking Industry Vastly Outspends Opponents in Lobbying

Recent disclosure records examined by Capital New York reveal that the oil and gas industry has outspent environmental activists on lobbying in the state. At issue is the controversial practice of fracking to drill for oil and gas buried deep underground. The American Petroleum Institute spent $ 503,903 on lobbying activities and educational outreach in the first half of 2013, while Constellation Energy, Exxon Mobil and Shell spent $71,089, $62,167 and $30,000 respectively. Anti-fracking activists, led by environmental organizations such as Environmental Advocates and Frack Action spent only $29,277 and $13,817 respectively by comparison. Polls show that New Yorkers are increasingly in favor of banning fracking.

In New York, Imprisoned and Deceased Politicians Can Still Collect Campaign Contributions

New York’s campaign laws allow imprisoned and deceased politicians to continue collecting campaign donations. Senator Carl Kruger (D-Brooklyn), who is serving time in federal prison for bribery related charges, has spent more than $200,000 from his campaign account for legal fees since starting his sentence. As of the latest disclosure filing in July of this year, his campaign account had a balance of $415,753. In its preliminary report released last week, the Moreland Commission found nearly $3.5 million worth of expenses incurred after the election by 40 former candidates. The loose regulations surrounding campaign expenditures allow candidates wide leeway to spend campaign funds on arguably personal outlays like legal fees, travel, meals, pets and parties. Active regulation and independent enforcement are necessary to ensure that candidates don’t spend funds on non-campaign related expenses.



Michigan Legislature Approves Doubling Contribution Limits

This week, the Michigan legislature passed a bill doubling campaign contribution limits. Senate Bill 661 would double campaign contribution limits for state and local candidates. Current law limits individual contributions to $3,400 for a candidate for statewide office, $500 for state Senate and House candidates, and between $500 and $3,400 for local candidates, depending on the municipality’s size.  Political action committees, which can give ten times what an individual can, would also see their contribution limits double. The move comes on the heels of action to raise contribution limits in Washington State. Michigan’s SB 661 also protects the anonymity of donors who pay for “issue ads,” which may attack candidates but do not explicitly endorse a candidate.  The Senate added this amendment to stymie Secretary of State Ruth Johnson’s push for greater disclosure of these donors through administrative rule changes. The bill now heads to Gov. Rick Snyder, who has signaled support for higher contribution limits in the past.

Regulators Approve Strong Volcker Rule Despite Heavy Lobbying

On Tuesday, five federal agencies approved a new regulation, known as the Volcker Rule, that restricts banks with federally insured deposits from engaging in risky investments for their own profit. The final rule is more restrictive than earlier drafts, narrowing loopholes that would have allowed banks to make short-term bets with their own money. The strong regulation passed despite avid lobbying by Wall Street to shape the rules in its favor. Regulators received more than 18,000 comment letters on the proposed Volcker Rule. Financial institutions and representatives penned 93% of these comments. Financial industry representatives met with federal agencies 347 times between the enactment of the Dodd-Frank law that required the rulemaking and the release of the Volcker Rule draft in October – that’s 93.3 percent of all their visits.

New Jersey State Senator Working with State-Focused Super PAC

Voters in New Jersey might be surprised to see who’s spending in elections for local offices like board of education in the Garden State:  a super PAC registered to a PO Box in Washington, D.C. called the Committee for Social Growth and Economic Justice.  The PAC’s local involvement traces back to its close association with New Jersey State Senator Raymond Lesniak (D-Union).  Lesniak’s campaign consultant, Sean Caddle, runs the PAC, which has promoted Lesniak-backed candidates in local school board elections and various mayoral races. He describes his efforts as a counterweight to conservative independent spending: “I’m not going to stand by while the Koch brothers and Sheldon Adelson pour money into campaigns that I don’t agree with.” However, detractors question the relationship between Lesniak’s local campaign influence and the local political interests of his law firm, Weiner Lesniak, which benefits from valuable public contracts. Lesniak claims he will avoid conflicts of interests.