ANALYSIS OF CAMPAIGN CAPITAL INVESTMENT$

SPENDING IN THE 2010

NEW YORK ELECTION 2010
Endorsed by:

Citizens Union of the City of New York

Common Cause of New York
League of Women Voters of New York State
New York Public Interest Research Group
Reinvent Albany

January, 2011
Acknowledgements

Capital Investment$ 2010 was written by Blair Horner, Russ Haven and Bill Mahoney of
the New York Public Interest Research Group (NYPIRG). The authors thank Susan
Lerner of Common Cause New York, Sally Robinson of the League of Women
Voters/N.Y.S., and Dick Dadey of Citizens Union of the City of New York for their
thoughtful comments.

FOR COPIES OF THE REPORT:

NYPIRG
107 Washington Avenue
Albany, NY 12210
www.nypirg.org
 CAPITAL INVESTMENT$ 2010
Executive Summary
New Yorkers sense the impact that big money has on elections, yet their
understanding is likely based on Congressional reports on the issue. However,
given New York’s sky high contribution limits, the state’s campaign finance
system offers even greater opportunities to cultivate influence through the use of
campaign contributions. State law allows huge campaign donations – far in
excess of those allowed in federal elections. The general election donation limit
for each two-year election cycle to an Assemblymember – whose district has only
20 percent the population of Congressional districts – is set at $3,800, while a
general election donation to a Congressional candidate is $2,400. State Senate
candidates can receive $9,500 contributions per contributor for the general
election. Candidates for governor can raise a whopping $37,800 for the general
election – fully 15 times the maximum amount allowed US Senate candidates –
or those running for president. This report examines how the New York
campaign finance system and laws operate and the implications for public policy.
It is written to help better understand the state’s system of campaign finance.

SUMMARY OF FINDINGS
This report examined the most recent election period for statewide and state
legislative candidates. For statewide candidates, the report examines the filing
periods from January 15, 2007 through the 27-post general election report, filed
in November, 2010. For state legislative races, the report examines the filing
period January 15, 2009 through the 27-post election report. The report’s key
findings are:

1. For the 2010 election period more than $246 million was raised for
statewide and state legislative races. New York State’s staggeringly high
contribution limits fuel this fundraising (e.g., contributors may give up to $94,200
to party committees; maximum to statewide candidates is $55,900).

2. Democratic candidates outraised Republicans for seats in both

houses. The typical Democrat running for the Assembly raised nearly twice as
much as the typical Republican candidate. While Democrats in the Senate
outraised Republicans, the averages were much closer, reflecting the razor-thin
majority they held in that chamber during the 2009-2010 session.

3. The Democratic majority legislative campaign committees raised far

more than Republican minority committees. Majority party campaign
committees’ fundraising in both houses was significantly higher than that of
minority parties.

Capital Investment$: 2010 Page 1

4. The Cuomo/Duffy ticket raised significantly more money than any other
statewide candidate or ticket. The Cuomo/Duffy team raised nearly four times
as much as the Paladino/Edwards ticket.

5. Individual contributors accounted for about a third of the total money

raised ($83 million of $246 million); businesses gave more than three times
as much as unions. Individuals and business groups contributed more than half
of all campaign money.

6. Businesses dominated giving to legislative candidates and committees.

With respect to legislative candidates on the general election ballot and party
committees, businesses contributed the largest share of donations. The only
conference that did not follow this trend was the Assembly Republicans, who
received a relatively high proportion of money from individuals.

7. Individuals were the biggest givers to most statewide candidates.

Individuals were the largest donors to statewide candidates other than
candidates Paladino and Wilson whose loans to their campaigns were the largest
donations.

8. Real estate interests top the list of business contributors. Our analysis of
business contributions indicates that real estate and construction were the most
generous business sector.

9. Real estate interests dominated contributions to Cuomo. With the

exception of Attorney General Schneiderman and Comptroller DiNapoli, the four
major statewide candidates got the largest share of their contributions from
businesses from “real estate & construction.” “Lawyers and Lobbyists” were the
biggest contributors to the new Attorney General and Comptroller.

10. Health interests gave predominantly to Democrats, real estate biggest

donors to Republicans. Health interests gave the most to Democratic
candidates on the ballot and legislative campaign committees; real estate gave
more than any other sector to their Republican equivalents:

11. The overwhelming majority of New Yorkers did not donate. A total of
68,059 individuals donated to candidates and parties; 59,350 of them are New
York State residents. 43,154 of these individuals donated to legislative
candidates on the general election ballot, including 39,104 state residents.

12. Eighteen individuals donated $150,000 or more. New York law allows
huge contributions from individuals and individuals used the generous limits to
dominate giving. These 18 individuals are deeply involved in commercial
activities.

Capital Investment$: 2010 Page 2

13. Fundraising is most intense during the weeks before an election and
during “budget season.”

14. The top legislative fundraisers tended to be either leaders or candidates

in close elections.

15. In both houses, incumbents of both parties dramatically outraised

challengers.

16. Candidates who were in close races relied more heavily on transfers
from political party committees.

SUMMARY OF RECOMMENDATIONS
New York’s legislative candidates rely heavily on getting enormous financial
support from a small fraction of the state’s population – typically those
businesses, associations and individuals with the money to fund elections and a
stake in the outcome of decisionmaking. As a result, New Yorkers are presented
with a system is largely underwritten by the wealthy and powerful than supported
by the overwhelming proportion of citizens who do not get directly involved in
political campaigns.

In order for New York’s democracy to become more responsive to the majority of
New Yorkers, it must change. Creation of a new system of campaign financing is
a critical component of meaningful reform. There must be a new system that
relies on the funding of elections by the public, not special interests. We
recommend the governor and the Legislature enact the following solutions:

Solution #1: Create a voluntary system of public financing. Such a system

will give New Yorkers of average means a concrete opportunity to seriously run
for office.

Solution #2: Overhaul existing campaign finance law by: dramatically

lowering contribution limits, closing loopholes, expanding disclosure, and banning
soft money.

Solution #3: Ban the “personal use” of campaign contributions.

Solution #4: Boost campaign finance enforcement.

Solution #5: Clean up the campaign finance database. Our report identified
difficulties in using the State Board of Elections’ database.

Solution #6: Ensure full disclosure of “independent expenditure” efforts.

Capital Investment$: 2010 Page 3

 [PAGE INTENTIONALLY LEFT BLANK]

Capital Investment$: 2010 Page 4

 CAPITAL INVESTMENT$ 2010
New York State’s System of Campaign Finance

“It is necessary that laws should be passed to prohibit the use of corporate funds
directly or indirectly for political purposes: It is still more necessary that such
laws should be thoroughly enforced.”
President Theodore Roosevelt, in the speech “New Nationalism”

Introduction: New York State’s “Capital Investment$”

This report is written to examine how New York State’s campaign finance
system “works,” to shed light on who candidates for statewide and legislative
offices rely on to underwrite their campaigns, show the “winners” and the
“losers,” and to offer the public a roadmap for reform. The report examines how
money flowed from contributors to candidates and political parties in the most
recent election.

One finding is clear: Statewide and legislative leaders raise a huge

amount of campaign dollars and only a few New Yorkers are responsible for the
bulk of the money flowing into the system. These few New York donors are
groups that are interested, in turn, in driving policy. Recent research has
concluded, “Large donors are more likely to indicate that their giving is motivated
by a concern about narrowly targeted benefits for themselves. They are also
more likely to contact lawmakers and their staff members about their business,
job, or industry.”1

Remarkably, one quarter of all campaign dollars donated by individuals

originate from a total of 169 persons. Their donations, on average, exceed
$63,200, and these contributors wrote checks from addresses in the Greater
New York metropolitan area. In addition to these individuals who gave big bucks,
businesses, trade associations and unions provided the lion’s share of campaign
donations.

It is this “political elite” that can exert a huge impact on lawmaking, and the
apparent responsiveness of lawmakers to this elite – too often at the public’s
expense – that is a central reason for the public’s increasing unhappiness with
Albany.

1
Wesley, Y., Malbin, M., et al, “Do Small Donors Improve Representation? Some Answers from
Recent Gubernatorial and State Legislative Elections,” Paper delivered at the 2008 Annual
Meeting of the American Political Science Association, p. 2.

Capital Investment$: 2010 Page 5

 Our report clearly shows that change must come. The state must move to
a campaign financing system in which candidates for legislative office rely on
average New Yorkers for their funds – not powerful special interests.

Capital Investment$: 2010 Page 6

 CAPITAL INVESTMENT$:
Campaign Contributions Election Cycle 2010

1. Overview – State level party committees and candidates

running for office in 2010 received over $246 million in
donations.
Over $246 million was raised by state candidates and state party
committees. As seen below, gubernatorial candidates raised more in the
aggregate than any other group of candidates. [NOTE: For our analysis of the
statewide candidate fundraising, we examined contributions starting in 2007
through 2010. For legislative races, we examined the 2009-2010 period. This
analysis does not include “housekeeping” donations from the second half of
2010. That information is reported in mid-January, 2011.]

Office Total Receipts

Governor & LG $71,821,400.72
Comptroller $12,890,416.44
Attorney General $30,511,049.49
Senate $55,182,413.54
Assembly $27,357,287.12
State level parties $48,464,637.37

2. Democratic candidates outraised Republicans in both

houses.
The average Democrat running for the Assembly raised nearly twice as
much as the typical Republican. While Democrats in the Senate outraised
Republicans, the averages were much closer, reflecting the razor-thin majority
they held in this chamber over the past two years.

Total Raised by Total Candidates

House Party Candidates who Filed Avg. Per Candidate
Assembly Dem $17,054,080.16 131 $130,183.82
Assembly GOP $6,385,557.89 92 $69,408.24
Assembly 3rd $898,342.96 20 $44,917.15
Senate Dem $28,374,153.39 57 $497,792.16
Senate GOP $20,757,626.99 46 $451,252.76
Senate 3rd $682,592.88 5 $136,518.58

Capital Investment$: 2010 Page 7

The above Assembly fundraising numbers are very similar to those from the
2008 election cycle, in which the average Democrat raised $125,030.16,
compared to $75,835.22 for Republicans. In contrast, during the previous
election cycle, Democratic Senate candidates averaged $396,182.91;
Republicans, $565,505.12.

3. The Democratic majority legislative campaign

committees raised far more than Republican minority
committees in both houses.
Majority party campaign committees’ fundraising was also significantly
higher than that of minority parties with the Democrats having raised significantly
more than Republicans in both houses.

Legislative Amount raised by legislative party

2
Conference committees
Assembly Democrats $7,495,305.26
Assembly Republicans $2,520,377.16
Senate Democrats $16,212,748.19
Senate Republicans $10,219,644.35

4. The Cuomo/Duffy ticket raised significantly more money

than any other statewide candidate or ticket.
The Cuomo/Duffy team raised nearly four times as much as the
Paladino/Edwards ticket. Interestingly, former Governors Spitzer and Paterson
reported more total receipts than any other candidates except their successor in
the Executive Mansion over the four year cycle.

Candidate Total Receipts

Cuomo/Duffy $34,758,847.95
Paladino/Edwards $9,739,613.21
Paterson $11,970,791.03
Spitzer $9,838,523.53
Lazio $3,883,755.59
Levy $1,345,374.78
Other Gov/ LG $284,494.63

2
Housekeeping committees do not need to report their transactions from the second half of 2010
until July 15, 2011. Thus, this report does not include donations raised since July 2010.

Capital Investment$: 2010 Page 8

 DiNapoli $4,501,380.35
Wilson $7,119,668.00
Other Comp. Cands $1,269,368.09
Schneiderman $9,051,728.22
Donovan $2,427,560.04
Coffey $7,516,652.01
Rice $6,450,463.24
Dinallo $2,792,773.67
Brodsky $1,961,502.16
Other AG Cands. $310,370.15

5. Individuals accounted for about a third of the total

money raised; businesses gave more than three times as much
as unions.
Individuals and business groups3 contributed more than half of all
campaign money.

Type of Donor Total Given % of All Money

Individual $83,260,511.57 33.81%
Business, LLC or Trade Association $66,900,847.73 27.17%
Other Candidate $25,363,588.19 10.30%
Union $20,924,637.90 8.50%
Loan $20,536,620.46 8.34%
Party $13,685,484.87 5.56%
Candidate or family $6,498,964.63 2.64%
4
Unknown $2,824,625.47 1.15%
Interest & Expenditure Refunds $2,641,275.67 1.07%
Not For Profit $1,813,726.94 0.74%
Unitemized $1,523,516.25 0.62%
Native American Tribes $253,405.00 0.10%

3
Although Limited Liability Corporations are treated as individuals for the purpose of the state’s
campaign finance limits, we included them in the “business” category.
4
This $2.8 million reflects the contributions made by incorporated entities whose nature we could
not identify. This includes large donors for whom a “Google” search did not reveal whether they
were a business, union, or not-for-profit, and smaller donors whose nature was not apparent
based on their name.

Capital Investment$: 2010 Page 9

 6. Businesses and trade associations dominated giving to
legislative candidates and committees.
However, when solely looking at legislative candidates on the general
election ballot and party committees, businesses contributed the largest share of
donations. The only conference that did not follow this trend was the Assembly
Republicans, who received a relatively high proportion of money from individuals.

Assembly Dems Assembly GOP Senate Dems Sen GOP

Business, LLC &
trade association $8,826,348.19 $2,327,559.76 $15,565,372.84 $11,466,406.48
Individual $6,002,623.32 $2,383,029.53 $9,621,602.53 $7,233,479.99
Union $4,733,675.12 $430,945.00 $5,749,824.37 $2,349,501.30
Candidate Transfers $1,287,003.19 $1,166,631.05 $5,118,405.05 $3,979,609.58
Party Transfers $1,786,057.20 $791,391.98 $3,562,006.64 $3,481,055.50
Loans $335,946.31 $1,038,803.27 $2,876,594.94 $419,122.56
Other $1,207,576.55 $526,373.81 $1,225,190.78 $1,391,244.18
Not For Profit $196,082.10 $68,020.00 $642,774.72 $437,285.00
Candidate or family $174,073.44 $173,180.65 $225,129.71 $219,566.75

7. Individuals were the biggest givers to most statewide

candidates followed by business interests.
Individuals were the largest donors to statewide candidates (other than
gubernatorial candidates Paladino and comptroller candidate Wilson, who loaned
themselves money for their respective runs).

Cuomo DiNapoli Donovan Schneiderman Wilson Paladino

Individual $19,974,910 $1,725,952 $1,378,873 $4,186,584 $2,845,402 $1,381,348
5
Loan $550,000 $3,855,000 $6,048,000
Business,
LLCs & trade
associations $11,299,094 $1,160,806 $756,823 $1,465,687 $326,152 $549,139
Candidate or
family $649,700 $950 $1,655,575
Union $2,099,645 $1,171,573 $95,550 $880,742 $500 $1,000
Other
Candidate $760,683 $386,030 $83,014 $1,144,282 $22,825 $24,825
Other $431,935 $30,875 $3,650 $54,925 $33,592 $11,699
Not For Profit $90,600 $11,000 $35,000 $67,110 $5,000 $1,750
Party $9,581 $15,144 $74,650 $52,700 $30,247 $13,225

5
Nearly all of the loans going to statewide candidates came directly from the candidates
themselves.

Capital Investment$: 2010 Page 10

 8. Real estate interests top the list of business
contributors.
We reviewed donors and categorized them below. Our analysis of
business contributions indicates that real estate and construction were the most
generous in that sector. About 76% ($50.9 million) of the $66.9 million identified
within one of fourteen categories6:

Business Sector Amount Donated

Real Estate & Construction $13,873,651.93
Lawyers & Lobbyists $8,095,056.07
Health & Mental Hygiene $8,037,859.67
Insurance, Financial, Banking $6,874,249.72
Food or Alcohol Production $3,506,540.58
Entertainment, Tourism, Restaurants $2,205,322.17
Telecom $2,125,014.82
Transportation, Shipping, Car Dealers $1,970,541.16
Energy $1,359,212.41
Service Sector $1,075,101.65
Miscellaneous Industry $666,996.23
General Retail $558,490.80
Business Association or Chamber of Commerce $540,411.97
Education $57,925.00

9. Real estate interests dominated contributions to

Cuomo.
“Lawyers & lobbyists” was the sector that donated the most money to
Attorney General Schneiderman and Comptroller DiNapoli; the other four major
statewide candidates got the largest share of the contributions from the business
sector from “real estate & construction” interests:

6
These categories are based on those provided by the New York State Commission on Public
Integrity, which categorizes lobbying groups, with some additional changes added by the authors.

Capital Investment$: 2010 Page 11

 Cuomo
Real Estate & Construction $2,632,893.05
Lawyers & Lobbyists $1,528,460.90
Insurance, Financial, Banking $1,014,523.55
Paladino
Real Estate & Construction $186,452.57
Lawyers & Lobbyists $28,223.00
Entertainment, Tourism, Restaurants $17,835.04
DiNapoli
Lawyers & Lobbyists $360,346.85
Real Estate & Construction $204,086.83
Insurance, Financial, Banking $83,375.00
Wilson
Real Estate & Construction $150,550.00
Insurance, Financial, Banking $33,500.00
Transportation, Shipping, Car Dealers $18,000.00
Schneiderman
Lawyers & Lobbyists $400,029.20
Real Estate & Construction $331,318.86
Health & Mental Hygiene $117,808.59
Donovan
Real Estate & Construction $265,839.00
Insurance, Financial, Banking $75,500.07
Lawyers & Lobbyists $58,050.00

10. Health interests dominated giving to legislative

Democrats and real estate to Republicans.

Health interests gave the most to Democratic candidates on the ballot and
legislative campaign committees; real estate gave more than any other sector to
their Republican equivalents:

Capital Investment$: 2010 Page 12

 Assembly Democrats
Health & Mental Hygiene $1,671,523.15
Lawyers & Lobbyists $1,195,998.83
Insurance, Financial, Banking $1,077,505.13
Senate Democrats
Health & Mental Hygiene $2,764,516.72
Real Estate & Construction $2,702,916.29
Lawyers & Lobbyists $1,691,965.62
Assembly Republicans
Real Estate & Construction $392,269.11
Health & Mental Hygiene $271,793.76
Insurance, Financial, Banking $211,514.41
Senate Republicans
Real Estate & Construction $3,147,621.37
Health & Mental Hygiene $1,364,865.64
Insurance, Financial, Banking $1,364,865.64

11. The overwhelming majority of New Yorkers did not

donate.
The percentage of all money received that came from individuals
increased significantly from 2008 (24.78%) to 2010 (33.81%). This is likely due
to the presence of statewide candidates on the ballot. Their ability to receive
checks of up to $55,900 from one person means they are willing to spend a
greater share of their fundraising schedule reaching out people. In 2010,
legislative candidates and parties received only 23.20% of their funds from
individuals, a decrease from two years ago.

The vast majority of the $83,260,511.57 raised from individuals came from
those who gave combined totals of $1,000 or more:

Total $ to All Committees Amount % of $ from Individuals

$1,000+ $72,993,365.12 87.67%
$251-$999 $5,660,598.38 6.80%
$1-$250 $4,606,548.07 5.53%

A total of 68,059 individuals donated to candidates and parties. 59,350 of

them are New York State residents. 43,154 individuals donated to legislative
candidates on the general election ballot, including 39,104 state residents. The
total number of donors to these legislative hopefuls is similar to the 42,038 who

Capital Investment$: 2010 Page 13

 gave in 2008, though the percentage coming from in-state is higher: only 34,916
residents gave in the previous cycle.

12. Eighteen individuals donated $150,000 or more.

Since New York law allows huge contributions from individuals, they
dominated giving. These individuals usually are involved in commercial
activities. It is likely that this list will grow once the housekeeping committees file
their final disclosure statements- New York City Mayor Bloomberg reportedly
donated a substantial sum to Senate Republicans in the final weeks of the
campaign,7 if so that information will become available in mid-January, 2011.
The known large donors are:

Name Total $ Largest donations Biographical Sketch

SRCC, $80,000; Founder and chairman of Caxton Associations, a
SRCC, $50,000; hedge fund. 258th richest American in 2010.
DSCC, $50,000 Chairman of the conservative American Enterprise
Bruce Kovner $283,200 Institute.8
Cuomo, $16,000; Inherited 44% of Rich Foods from his father, a
Schneiderman, $10,000; share worth $1.5B.
David Rich $221,548 DiNapoli, $10,000
DSCC, $50,000; According to Forbes, he is the "most successful of
Paterson, $37,800; all" quantitative hedge fund managers. Runs
Cuomo, $20,000 Renaissance Technologies and is worth $8.7B,
James Simons $217,350 placing him 30th in the country.9
SRCC, $64,200; Founded National Heritage Academies, a national
NYSGOP, $50,000; for-profit network of 67 charter schools, including 4
J.C. Huizenga $214,250 SRCC, $25,000 in NYC, 1 in Buffalo, and 1 in Syracuse10
Paterson, $27,800; Chairman and CEO of BLS Investments, a private
Cuomo, $25,000; investment firm.11
Bernard Schwartz $207,900 Cuomo, $20,900
NYSGOP,$100,000; Real estate investor, national committeeman of
NYSGOP, $25,000; the NYS Republicans.12
Lawrence Kadish $195,550 Lazio, $25,000
Schneiderman $55,9000; Directs reinsurer Greenlight Capital Re and
Dinallo, $37,800; chemical manufacturer BioFuel Energy
David Einhorn $191,800 Cuomo, $25,000 Corporation13
Schneiderman, $25,000; A real estate investor who currently serves as
George Kaufman $183,000 Cuomo, $25,000; chairman of film studio Kaufman Astoria Studios.14

7
Capital Tonight blog, accessed 12/20/10, http://www.capitaltonight.com/2010/12/so-much-for-
bipartisanship/.
8
http://people.forbes.com/profile/bruce-kovner/76236
9
http://www.forbes.com/wealth/forbes-400/list
10
http://heritageacademies.com/our_schools/schools-locator/state=NY
11
http://www.bernardlschwartz.com
12
http://www.nygop.org/page/lawrence-kadish
13
http://people.forbes.com/profile/david-einhorn/11726

Capital Investment$: 2010 Page 14

 Paterson, $10,000
Lazio, $37,800; Investor who is heavily involved with conservative
Paterson, $35,000; groups. A trustee of the American Enterprise
DSCC, $30,000 Institute, chairman emeritus of the Manhattan
Roger Hertog $181,835 Institute, and co-owner of the New Republic.15
Rice, $17,000; Weiss is Of Counsel at Hiscock and Barclay, with
Paterson, $15,000; a focus on public finance.
Jerry Weiss $179,266 Cuomo, $15,000
Paterson, $37,800; “America’s pre-eminent short-seller,” he runs
Dinallo, $36,900; hedge fund Kynikos Associates.16
James Chanos $170,000 Cuomo, $25,000
SRCC, $25,000; Directs investment bank Dillon, Read &
DACC, $25,000; Company.17
Bryan Lawrence $169,500 Wilson, $20,000
DSCC, $25,000; “Chairman of Newmark Knight Frank, a full-service
Paterson, $20,000; commercial real estate firm.”18
Jeffrey Gural $166,225 Cuomo, $10,000
SRCC, $25,000; Owns Red Apple; considered a run for NYC Mayor
Cuomo, $15,000; in 2009.
John Castimatidas $165,835 NYSGOP, $10,000
Wilson, $37,800; Born “into a prominent banking family,” investor in
Cuomo, $20,000; Eagle Capital Management.19
Ravenel Curry $165,200 Paterson, $20,000
Schneiderman, $25,000; Controls UC Rusal, “the world’s second-biggest
Paterson, $25,000; aluminum producer” and Russia’s third largest oil
Cuomo, $25,000 company, which is currently looking to take over
Leonard Blavatnik $153,600 BP. 31st richest American; worth $7.5B.20
Schneiderman, $25,000; Founder and CEO of hedge fund Pershing Square
Cuomo, $25,00; Capital Management. Described as “a value
Coffey, $18,100 investor with an activist bent” who has owned
large shares of Target, Borders, Wendy’s, and
William Ackman $151,500 McDonald’s.21
Schneiderman, $25,000; Founding partner of law firm Constantine
Cuomo, $25,000; Cannon.22
Abby Milstein $150,000 Cuomo, $25,000

14
http://www.kaufmanastoria.com/about_04.html
15
http://news.nationalpost.com/2010/07/21/conrad-blacks-saviour-who-is-roger-hertog/
16
http://www.nytimes.com/2010/01/08/business/global/08chanos.html
17
http://www.nytimes.com/1996/01/28/style/weddings-marilyn-white-bryan-lawrence.html
18
http://www.newmarkkf.com/home/about-our-firm/professional-
profiles.aspx?d=7304&title=Jeffrey-R.-Gural
19
http://www.singlearticles.com/the-utopians-a1323.html
20
http://www.forbes.com/profile/len-blavatnik
21
http://www.streetinsider.com/entities/William+Ackman
22
http://www.law.harvard.edu/news/bulletin/2009/summer/closing.php

Capital Investment$: 2010 Page 15

 13. Fundraising is most intense during the weeks before
an election and during “budget season.”
Incumbent legislators raised most of their money near the end of the two
year cycle. A look at donations from unions, businesses, and individuals reveals
that nearly a fifth of all donations occurred in September and October 2010. For
both calendar year 2009 and the first half of 2010, the month in which incumbent
legislators raised the most money was March, a time of year when the state
budget is theoretically being finalized and special interests attend scores of
legislative fundraisers.

% Interest $ Raised
Year Month Union $ Individual $ Business $ This Month
2008 Dec $59,655.00 $134,080.88 $218,182.20 0.98%
2009 Jan $169,300.77 $190,723.14 $314,190.00 1.60%
2009 Feb $344,450.00 $286,751.85 $741,584.24 3.25%
2009 Mar $455,643.00 $362,665.73 $1,259,481.65 4.92%
2009 Apr $263,110.00 $280,109.50 $655,199.95 2.84%
2009 May $233,674.00 $428,935.03 $795,283.24 3.46%
2009 Jun $244,164.00 $632,332.37 $755,678.76 3.87%
2009 Jul $221,604.00 $547,549.35 $815,210.56 3.76%
2009 Aug $117,700.00 $307,285.50 $480,246.21 2.15%
2009 Sep $176,581.00 $413,083.00 $532,100.01 2.66%
2009 Oct $284,054.00 $522,253.22 $628,554.52 3.40%
2009 Nov $144,059.00 $473,398.30 $482,950.00 2.61%
2009 Dec $143,850.00 $608,447.79 $640,564.25 3.30%
2010 Jan $277,285.00 $869,525.64 $1,073,801.12 5.26%
2010 Feb $317,084.00 $337,646.61 $827,359.23 3.51%
2010 Mar $530,900.00 $753,115.83 $1,438,496.49 6.45%
2010 Apr $225,845.00 $616,155.82 $909,277.41 4.15%
2010 May $242,517.00 $805,237.16 $778,308.06 4.33%
2010 Jun $256,728.00 $820,025.18 $1,012,268.28 4.95%
2010 Jul $395,765.00 $951,900.55 $1,133,351.85 5.88%
2010 Aug $475,398.00 $867,003.31 $970,894.70 5.48%
2010 Sep $622,331.18 $1,072,672.27 $1,239,539.09 6.96%
2010 Oct $853,974.90 $2,053,865.06 $2,307,482.17 12.36%
2010 Nov $154,526.69 $298,083.85 $339,348.04 1.88%

14. The top legislative fundraisers tended to be either

leaders or candidates in close elections.
Of the 15 Senate candidates who raised the most money, six held
leadership positions and seven were in close races, receiving between 45 and

Capital Investment$: 2010 Page 16

55% of the vote. The two exceptions, Lee Zeldin and Brian Foley, ran in a race
that was widely predicted to be close, yet saw the challenger defeat the
incumbent by over 14 points.

Top Senate Fundraisers

Candidate Vote % Total Raised
John L. Sampson 93.40% $2,547,994.98 Democratic Leader
Jeffrey D. Klein 66.94% $2,202,329.87 Democratic Leader
Thomas W. Libous 61.25% $1,798,720.95 Republican Leader
Craig Johnson 49.76% $1,760,869.53 Contested seat (SD 7)
Carl Kruger 73.21% $1,415,402.94 Chair, Finance Cmte
Jack Quinn 45.47% $1,191,394.82 Contested seat (SD 58)
Darrel J. Aubertine 47.41% $1,108,498.23 Contested seat (SD 48)
Bob Cohen 49.60% $1,094,714.69 Contested seat (SD 37)
Greg Ball 51.07% $1,087,361.46 Contested seat (SD 40)
Brian X. Foley 42.92% $1,078,840.13 Contest seat (SD 3)
Malcolm A. Smith 81.52% $1,078,383.25 Democratic Leader
Dean G. Skelos 65.79% $1,044,923.58 Republican Leader
David J. Valesky 52.77% $1,035,560.95 Contested seat (SD 49)
Lee M. Zeldin 57.08% $1,034,477.72 Contested seat (SD 3)
Timothy M. Kennedy 47.23% $1,001,046.56 Contested seat (SD 58)

The same trend is generally true in the Assembly, though a few

incumbents not widely viewed as conference leaders raised enough to crack the
top 15 list:

Capital Investment$: 2010 Page 17

 Top Assembly Fundraisers
Candidate Vote % Total Raised
Sheldon Silver 100.00% $654,476.98 Democratic Leader
Joseph D. Morelle 60.97% $587,294.47 Chair, Insurance Cmte.
Chair, Libraries & Education
Jonathan L. Bing 65.15% $519,601.05
Technology Cmte.
Vito J. Lopez 89.70% $460,680.63 Democratic Leader
Sam Hoyt 53.33% $458,652.10 Chair, Local Governments Cmte.
Grace Meng 100.00% $455,425.57 Finished first term
Timothy P. Gordon 47.12% $447,245.81 Contested seat (AD 108)
David I. Weprin 69.79% $354,380.75 Elected during a special
Albert A. Stirpe, Jr. 48.92% $336,219.31 Contested seat (AD 121)
Marc S. Alessi 49.02% $325,216.30 Contested seat (AD 1)
Peter J. Abbate, Jr. 61.42% $289,404.83 Chair, Governmental Employees Cmte.
Chair, Economic Development, Job
Robin Schimminger 55.01% $286,580.39 Creation, Commerce and Industry
Cmte.
Herman D. Farrell Jr. 90.62% $285,908.13 Chair, Ways & Means Cmte.
Dov Hikind 65.07% $276,644.27 Long-time member
Peter E. Rooney 43.46% $269,000.00 Contested seat (AD 101)

15. In both houses, incumbents dramatically outraised

challengers.
Total Average # Average $
Candidates Average Donations per
Type of Candidate Filing Raised Received Donation
Assembly Challengers 113 $59,005.02 137.65 $428.64
Assembly Incumbents 130 $135,926.26 322.83 $421.04
Senate Challengers 48 $257,249.50 325.79 $789.61
Senate Incumbents 55 $617,270.19 785.58 $785.75
Incumbent Assemblymembers
Running for Senate 5 $703,307.31 944.60 $744.56

Surprisingly, the typical donation received by a challenger was larger than

that received by incumbents. This is perhaps due to the fact that challengers
relied on large checks from other candidates and unlimited transfers from party
committees to a greater degree than incumbents. In the Assembly, incumbents
received 11.36% of their money from these sources; they accounted for 20.07%
of receipts reported by challengers. In the Senate, incumbents transferred in

Capital Investment$: 2010 Page 18

11.74% of their funds while challengers relied on them for a whopping 39.63% of
their money.

16. Candidates who were in close races relied on transfers

from political party committees the most.
Those who received between 45 and 55% of the vote got an average of
30.57% of their money from parties and 5.32% from other candidates. Former
Assemblymember Al Stirpe was the clear leader in this category, getting 72.79%
of his $336,219 in the form of transfers.

Party committees also benefit candidates by spending money directly on

them. These expenditures are reported on “Schedule R” of campaign finance
disclosure forms, and also tend to go to candidates in races perceived as close:

Candidates who received the most as disclosed on Schedule R filings

Party Percentage of
Committee Schedule R $ Candidate Vote

DSCC $581,523.77 Mike Kaplowitz (SD 40) 48.93%

DSCC $561,912.56 Suzi Oppenheimer (SD 37) 50.40%

DSCC $498,819.56 Brian Foley (SD 3) 42.92%

DSCC $397,892.38 Susan Savage (SD 44) 35.80%

DSCC $385,705.23 Tony Avella (SD 11) 54.30%

SRCC $366,724.89 Frank Padavan (SD 11) 45.70%

Andrea Stewart-Cousins
DSCC $343,717.09 (SD 35) 55.68%

DSCC $316,767.24 Mary Wilmot (SD 55) 46.80%

SRCC $280,513.78 Hugh Farley (SD 44) 64.21%

SRCC $272,988.28 Patricia Ritchie (SD 48) 52.60%

Unfortunately, it is difficult to get a complete picture of this outside

spending. The filings of the State Republican party, who spent around $3 million
over the past two years, claim that none of this was spent to benefit candidates.
Numerous local party committees made the same failure of disclosure, as did
various issue groups ranging from the obscure (a PAC called “Common Sense”
that reported spending less than $2,000, yet managed to pay for a mailer to
every registered voter in Assembly district 121) to the well-known (Ed Koch’s
New York Uprising, for example, did not detail its expenditures). In order to get a
full picture of how much money is spent and on whom, the Board of Elections
needs to start enforcing this basic disclosure law.

Capital Investment$: 2010 Page 19

 CAPITAL INVESTMENT$ 2010:
New York State’s System of Financing Elections

New York’s disgraceful campaign finance system.

State lawmakers have long been on notice about the failure of New York’s
campaign finance law. Nearly twenty years ago, the final report of the
Commission on Government Integrity was sent to the Governor and state
legislative leaders. The Commission’s report condemned New York’s lax ethical
standards calling them “disgraceful” and “embarrassingly weak.” In addition, the
Commission scolded state leaders for failing to act saying, “Instead partisan,
personal and vested interests have been allowed to come before larger public
interests.”23

The now-defunct Commission was created in response to scandals that

rocked the political establishment in both New York City and New York State.
The Commission, led by Fordham Law School Dean John Feerick and other
luminaries including former U.S. Secretary of State Cyrus Vance, was charged
by then-Governor Mario Cuomo with examining the way political business is
conducted in New York State and developing a blueprint for reform.24

Twenty years later, New York City now has the most far reaching and
effective system of financing campaigns for city office – in fact a model for the
nation – and it has placed significant limits on the efforts of special interests to
control government decision-making.

Yet in Albany, nothing has changed. By 1990, the Commission had

released 23 reports, including recommendations for sweeping campaign finance
and ethics reforms for both state and municipal governments. State lawmakers
in Albany ignored these recommendations.

Despite the Commission’s statement that “Campaign finance laws in New

York are a disgrace”,25 there have been no significant changes in New York law.
New York still has sky-high campaign contribution limits, allows unlimited
contributions to party “soft money” accounts, permits unfettered campaign
23
New York State Commission on Government Integrity, “Restoring the Public Trust: A Blueprint
for Government Integrity,” Volume 1, December 1988.
24
Executive Order No. 88.1, created The New York State Commission on Government Integrity.
Issued by then-Governor Mario Cuomo, April 21, 1987.
25
New York State Commission on Integrity in Government, “Restoring the Public Trust: A
Blueprint for Government Integrity,” Volume 1, December 1988, p. 6.

Capital Investment$: 2010 Page 20

fundraising during the legislative session, and fails to enforce the state’s already
weak penalty provisions. Not only has the failure of Albany to act left powerful
special interests with a huge say over policymaking, it has become a blatant way
for lawmakers to subsidize their personal lifestyles. Some lawmakers, for
example, now legally use their campaign contributions to lease luxury cars, pay
for country club memberships, and travel abroad.

Biggest problems with New York’s campaign finance law.26

Soft money. The “soft money” loophole (known as “housekeeping” accounts)

allows individuals, PACs and corporations to exceed New York’s already high
“hard” money contribution limits by giving more to the parties. While the law
prohibits the use of these donations directly on behalf of candidates, parties use
these monies to conduct polls, launch get-out-the-vote drives, to fundraise for
more “hard” money and – sometimes – to launch “attack” ads.

Sky-high campaign contribution limits. Unlike federal law and much of the nation,
New York State allows extremely large campaign contributions. Political parties
are allowed to receive annual contributions of $94,200; statewide candidates can
receive contributions of over $55,000 (including $37,800 for the general and up
to $18,100 for a primary) for an election cycle; state senate candidates can
receive $9,500 for the general election (an additional $6,000 for a primary); and
assembly candidates can receive $3,400 for the general (an additional $3,800 for
a primary). In addition, New York law allows for a cost-of-living-adjustment for
contribution limits that will be raised again in early 2011.27

According to the National Conference on State Legislatures, for “contributions

from an individual to a statewide candidate, the national mean is $4,000 per
election cycle; the average is $7,762. For legislative candidates, the national
median is $2,000 per election cycle; the average is $3,784 for a state senate
candidate and $3,412 for a state house candidate. The lowest limits nationwide
are found in Massachusetts and Montana. The highest limits are in New York
and Ohio.”28

26
New York State Election Law, Article 14.
27
New York State Election Law, Article 14.
28
National Conference of State Legislatures, “Median and Average Contribution Limits – 2010
Elections,” 1/20/1010, accessed 12/22/10, http://www.ncsl.org/Default.aspx?TabId=16556. The
NCSL also reports that six states - Illinois, Missouri, New Mexico, Oregon, Utah and Virginia -
place no limits on contributions at all. Another seven states - Alabama, Indiana, Iowa,
Mississippi, North Dakota, Pennsylvania, and Texas - have minimal contribution limits. [NOTE:
Illinois and New Mexico passed contribution limits in the 2009 legislative session. NM's will take
effect the day after the November 2010 elections, while IL's take effect on January 1, 2011.]
Accessed 12/20/10 http://www.ncsl.org/Default.aspx?TabId=16594.

Capital Investment$: 2010 Page 21

Transfers from one political committee to another. On top of the sky-high
contribution “limits,” political parties (state parties, county parties, Senate
Republicans and Democrats, and Assembly Democrats and Republicans create
these committees) are allowed to transfer donations of unlimited size from their
accounts to the candidates of their choice. In this way, political parties can easily
circumvent contribution limits that exist for statewide and state legislative
candidates.

Campaign fundraising during the legislative session. Unlike 28 states, New York
imposes no additional limits on campaign fundraising during the legislative
session, nor does it impose any unique limitations on lobbyists’ involvement in
campaign activities.29 Typically, elected officials hold roughly 200 fundraisers to
raise money from lobbyists and their clients during the state’s legislative session.

Limited disclosure. Unlike federal law, contributors do not have to disclose the
names of their employers or even the names of those who actually delivered the
contributions (a.k.a. “bundlers”).

Poor enforcement. New York State’s Board of Elections is underfunded and

limited by law in its ability to punish election law scofflaws. Campaigns too often
refuse to pay fines and the agency is unable to act quickly on violations. The
Board is unable to even levy serious penalties for repeat offenders.

Use campaign contributions for “personal” uses. While New York forbids
contributions for strictly personal use, candidates can use these monies for any
purchase in their role as a candidate or as a public or party official. Incumbents
often use these donations for junkets, country club memberships, flowers, leased
cars, “legal defense funds,” and other purchases.

Heavy reliance on special interests to fund elections and the extreme difficulties
for challengers to raise money. New York’s combination of huge contribution
limits and the commonplace practice of incumbents holding fundraisers near the
Capitol during the legislative session, promotes a heavy reliance on those with
the financial resources to fund elections – typically special interests with business
before government. Moreover, relying on powerful special interests makes it

29
National Conference of State Legislatures, “Limits on Contributions During the Legislative
Session,” 1/25/2010, accessed 12/22/10, http://www.ncsl.org/Default.aspx?TabId=16544.
According to the NCSL, 28 states place restrictions on giving and receiving campaign
contributions during the legislative session. In some states, the ban applies only to contributions
by lobbyists, principals and/or political committees; other states have a general ban on
contributions. South Carolina bans lobbyist contributions at any time; not just during a legislative
session.

Capital Investment$: 2010 Page 22

extraordinarily difficult for challengers to mount significant challenges, thus
denying voters real choices in elections.

New York’s legislative candidates rely heavily on enormous financial support

from a small fraction of the state’s population. As a result, New Yorkers see a
system that appears to be far more responsive to the needs of the wealthy and
powerful than it is to the huge percentage of citizens that are not directly involved
in political campaigns.

Loophole allowing corporations to exceed the $5,000 aggregate limit. New York
State limits campaign contributions by corporations to no more than $5,000 in the
aggregate in one year.30 However, the State Board of Elections considers each
subsidiary as one corporate entity. As a result, corporations with many
subsidiaries are able to circumvent the state restriction.

Loophole for Limited Liability Corporations. In 1994 the legislature enacted the
“New York Limited Liability Company Law, effective October 24, 1994 (the “LLC
Law”). 31 The LLC Law allows the formation of a limited liability company to
conduct any lawful business and LLCs may be organized with as few as one
person, person being defined to include a natural person, corporation, business
trust or other limited liability company.32

New York’s Election Law was not amended to specifically cover political
donations contributed by this new form of business entity.

In 1996, the New York State Board of Elections issued an opinion that as defined
in the LLC Law, LLCs are not corporations, partnerships or trusts and are not
subject to the corporate contribution limits pursuant to Election Law Article 14.
Instead, the Board followed the determination of the Federal Election
Commission which stated that it would not hold LLCs to the federal ban on
corporate political donations.33

In 1999, the FEC reversed its position on LLC treatment under federal election
law and adopted final regulations (the “FEC LLC Regulation”).34 The FEC LLC
30
New York State Election Law, Section 14-116.
31
Laws of 1994, Chapter 576.
32
New York Limited Liability Company Law sections 102 (m) and 102 (w).
33
It’s worth noting that New York’s campaign contribution limits are significantly more generous
than under federal law. Thus in 1999, treating an LLC like an individual under federal law at the
time of the FEC’s decision meant that an LLC could only give $1,000 per year per candidate per
election; $20,000 in a calendar year aggregate to national committees; and not aggregate more
than $25,000 in any calendar year. See Federal Register, Vol. 64, No. 132, 7/12/99 (p. 37398).
34
Federal Register, Vol. 64, No. 132, 7/12/99 (pp. 37397-37400).

Capital Investment$: 2010 Page 23

Regulation adopted a “check the box” rule. The “check the box” rule treats LLCs
for federal election purposes as the LLC has chosen to be treated under the
Internal Revenue Code. By default, an LLC that does not check the corporate-
status box on its IRS form is treated as a partnership for purposes of both
taxation and federal campaign contribution limits.

However, New York State never followed suit.

In 2001, the New York City Campaign Finance Board addressed the issue of
whether to apply its “single source” rule to LLCs with a common managing
member or separate limited partnerships controlled by a common general
partner. In Advisory Opinion 2001-6, the NYCCFB found that under its rules and
under common management practices for LLCs, a single individual typically “not
only makes decisions and establishes policies for the [LLC] it manages, but also
controls all non-material transactions conducted by such [LLC]. Contributions to
political candidates would generally be considered non-material transactions.”

Accordingly, the NYCCFB found that in the absence of some agreement to the
contrary, LLCs, together with the common managing member or general partner
that controls it, would be considered a single source for purposes of the
contribution limits applicable under the New York City Administrative Code.

New York State needs to treat LLCs as corporations, not individuals.

Capital Investment$: 2010 Page 24

 CAPITAL INVESTMENT$ 2010:
An Agenda for Reform

Recommendation: Enact comprehensive campaign finance reform.

Solution #1: Create a voluntary system of public financing modeled on

New York City. Many states have developed voluntary systems of public
financing – half the states operate some sort of public financing program. 35
However, New York lawmakers do not have to look far for a model of how to
reform its campaign finance system. As The New York Times commented “New
York City’s campaign finance system ranks among the best in the country.”36

In 1988, New York City created a voluntary system of public financing in

the wake of series of political corruption scandals. New York City created a
Campaign Finance Board to be an independent, nonpartisan agency to oversee
the program.

The system grants public matching funds to qualifying candidates, who in

exchange submit to strict contribution and spending limits and a full audit of their
finances. Initially, the program matched every dollar raised by a candidate up to
a total of $1,000 per donation. Over time the program expanded and now
matches $6 for every $1 raised up to $175 per donation. In addition, candidates
running for citywide office (mayor, comptroller, public advocate) must agree to
participate in debates. Corporate contributions are banned and political action
committees must register with the city.37

As a result of this system, New York City now has competitive elections in
which average citizens have a shot at elective office. Moreover, once in office,
those legislators now owe little to rich special interests. It is the model that state
lawmakers should emulate in Albany.

35
National Conference of State Legislatures, “Public Financing of Campaign – An Overview,”
1/6/10, accessed 12/22/10 http://www.ncsl.org/default.aspx?tabid=16591. Arizona, Connecticut,
Florida, Hawaii, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nebraska, New Jersey,
New Mexico, North Carolina, Rhode Island, Vermont, and Wisconsin all provide funding to
candidates. Arizona, Arkansas, Hawaii, Minnesota, Montana, Ohio, Oklahoma, Oregon and
Virginia provide tax credits for contributions. Arizona, Idaho, Iowa, Minnesota, New Mexico,
North Carolina, Rhode Island, Utah and Virginia provide funding to political parties.
36
New York Times editorial, “Questions for Data and Field,” 8/22/09.
37
For more information on the history of the New York City campaign finance system, see:
http://www.nyccfb.info/press/info/history.aspx.

Capital Investment$: 2010 Page 25

Benefit #1: More Competitive Elections.
Key results of the 2009 New York City elections:

 Five incumbents were beaten, “an unprecedented number for a single

election. Other incumbents won by slimmer-than-expected margins. More
incumbents faced primaries, fewer candidates ran unchallenged, and the
average margins of victory were closer than in previous elections.”
 “Under-represented” voters gained significantly in the 2009 election.
“After the 2009 elections, the New York City Council had a non-white
majority for the first time ever.38

Clearly, New York City’s system of public financing is creating a robust,

competitive election atmosphere. The number of candidates is up, the
percentage of participating candidates is up, and the number of matchable
contributions is up. Candidates cannot simply overwhelm their opponents with
truckloads of money. They must compete with “shoe leather” and policy
proposals. In this environment, the public is certainly the big winner. Voters can
choose candidates whose policies they agree with, rather than vote for the
candidate with the greatest name recognition.

Benefit #2: Citizen Empowerment.

In addition, new research on the New York City campaign financing system
documents an additional benefit: Drawing in voters who would ordinarily not
participate beyond voting.

Recent US Supreme Court decisions have eroded the benefits of a public

financing system. The Court’s 2010 decision in Citizens United v. FEC allowed
interest groups, like the U.S. Chamber of Commerce, to spend as much money
as they wanted on behalf of candidates for office. As a result, the Court greatly
diminished the benefits of public financing programs in reducing the influence of
special interests.

So, if the Supreme Court has sharply curtailed the ability of policymakers to
eliminate the flow of special interest dollars, is it beneficial to enact a public
financing system?

There is innovative research that demonstrates additional benefits from a

public financing system. The Washington-based Campaign Finance Institute39
has released a series of data-based reports that have identified a new and

38
New York City Campaign Finance Board, “New Yorkers Make Their Voices Heard: A Report on
the 2009 Elections,” p. 22.
39
For more information on the Institute, see: http://www.cfinst.org/.

Capital Investment$: 2010 Page 26

important benefit of a voluntary system of public financing – enhanced voter
participation.

The Institute has looked at systems that have incentives to get small donors
to participate in elections. Research shows small donors are more
representative of the public at large – not surprisingly, since few can write big
campaign contribution checks. The Institute also found that small donors are
interested in candidates’ positions while large donors are far more interested in
their own commercial or legislative interests. The Institute also found that small
donors are more likely to “buy into” the candidates’ campaigns and that there is
some evidence that such participation leads to greater participation in civic life
generally. 40

In addition, the Institute examined how well small donors are involved in
campaign finance by comparing participation in the New York City system with
New York State. The Institute then showed what impact the City system would
have on the State if such a voluntary public financing system was enacted.

Campaign Finance Institute: Donor Role in New York State Legislative

Races, Current vs. Establishment of NYC-style System41
Donation Current percent participation Participation if New York State
size (Gubernatorial and Legislative Lowered Contributions and Enacted
42
Candidates, 2006). a $4 to $1 match
$1-$250 7% 35%
$251-$999 6% 8%
$1,000+ 33% 20%
Non-party 45% 26%
Party 10% 10%

As the chart above shows, enactment of a voluntary public financing

system modeled on New York City would dramatically increase the participation
of small donors. Moreover, the Institute estimates that such as system would
cost roughly $34 million of public funds. However, if the state got the same

40
Wesley, Y., Malbin, M., et al, “Do Small Donors Improve Representation? Some Answers from
Recent Gubernatorial and State Legislative Elections,” Paper delivered at the 2008 Annual
Meeting of the American Political Science Association.
41
Malbin, M., Brusoe, P., “Should New York City’s Campaign Finance System be a Model for the
State?”, Presentation at the Nelson A. Rockefeller Institute of Government, 12/1/10, accessed
12/20/10 http://www.rockinst.org/pdf/public_policy_forums/2010-12-01-Malbin_slides.pdf.
42
For the purposes of this analysis, the Campaign Finance Institute uses the requirements found
in Assembly bill 8902 (2009) and lowers contribution limits to $4,000 per election cycle for
individuals and limits PACs to $10,000.

Capital Investment$: 2010 Page 27

small donor rate as New York City currently does, the percentage of small donors
jumps to 57% and the cost of the system increases to $68 million.43

And when it comes to civic participation, New York needs a boost. In a recent
survey conducted by Siena College’s Research Institute, New York ranked near
the bottom in “civic participation.”44 And voter participation levels in the last
election placed New York again as one of the nation’s worst.45

Solution #2: Overhaul existing campaign finance law. Moreover, strengthen

existing law for those who opt not to participate in the voluntary system. New
York State can only create a voluntary system of public financing, it cannot force
all candidates to participate. Significant changes must be made to the existing
campaign finance law in order for the benefits of a public financing system to be
realized.

Ban soft money. The federal government now bans “soft money” donations to
the political parties. Yet, the federal law allows state and local parties to continue
to receive these huge donations. New York State should close the soft money
loophole.

Lower contribution limits. New York State’s limits should not exceed those for
Congressional candidates.

Close loopholes. Eliminate the loophole that allows corporations to circumvent

New York’s $5,000 annual aggregate corporate limit by funneling contributions
through subsidiaries as well as the loophole that allows LLCs to be subject to
individual contribution limits, instead of corporate limits. Candidates should be
limited to one committee each. Allowing candidates to maintain multiple
committees serve only to obfuscate their total fundraising.

Expand disclosure. Require disclosure of the name of the employer or the

occupation of the contributor as well as the name of any “bundler” involved in
collecting the contributions. Both New York City and federal laws requires such
disclosures.

43
Malbin, M., Brusoe, P., “Should New York City’s Campaign Finance System be a Model for the
State?”, Presentation at the Nelson A. Rockefeller Institute of Government, 12/1/10, accessed
12/20/10 http://www.rockinst.org/pdf/public_policy_forums/2010-12-01-Malbin_slides.pdf.
44
Siena Research Institute, New York Civic Health Index, 2010, “New York Trails Nation in Two
of Five Civic Health Areas Participation in Civic Responsibilities and Duties Low New Yorkers
Highly Social and Informed; Engagement in Group Meetings and Community Participation
Lacking,” 12/8/10.
45
United States Election Project, “2010 General Election Turnout Rates,” accessed 12/22/10
http://elections.gmu.edu/Turnout_2010G.html.

Capital Investment$: 2010 Page 28

Solution #3: Limit the use of campaign contributions to those activities
directly involved in campaigning. New York State law not only allows the use
of campaign contributions for purposes relating to a candidacy, but also to
spending relating to an official’s role as a public or party official.46 This loophole
allows incumbents – who are rarely challenged in elections – to use campaign
donations for essentially personal uses. This loophole must be closed.

Solution #4: Boost campaign finance enforcement. As mentioned earlier,

New York State’s Board of Elections is underfunded and limited by law in its
ability to punish election law scofflaws. Essentially, the State Board focuses its
efforts on the formidable task of running New York State’s elections.

Therefore, legislation must be enacted that develops more effective

enforcement mechanisms, including: centralized reporting at the state level;
increased civil fines; increased criminal sanctions and criminal fines for willful
violations of Article 14; creation of an independent and nonpartisan entity for
administering both Article 14 compliance and the public funding system fines for
exceeding contribution limits and violations of campaign finance disclosure laws,
as well as appropriate and clearly delineated criminal sanctions. We also believe
that, should you not follow our recommendation and assign administration of the
public funding system to another entity, the State Board of Election must also be
afforded additional resources to be able to adequately enforce the law and any
new responsibilities.

Solution #5: Strengthen the state’s campaign finance database. The State
Board of Elections should perform more comprehensive and thorough checks on
the data supplied by the treasurers. Simple checks include using software to
verify that addresses and zip codes match up and are entered without obvious
typos. Software to provide these checks is readily available and commonly found
in a wide variety of commercial applications.

Candidate and Party committees should be required to record the filer

identification number of the contributing state-registered PAC. This would aid in
the determination of top PAC donors and also help curb the number of
misreported transactions on schedule C.

The database descriptions that are provided with the downloadable ASCII
files need to be updated. They fail to make reference of schedule R’s (money
spent by parties on behalf of candidates) in the data descriptor files. Additionally,
outside parties should record the filer identification number of the committee on

46
New York State Election Law §14-130.

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whose behalf they are spending. Finally, the Board should periodically review
independent expenditures to make sure they are all properly reported.

The Board should require firms paid large sums by candidates to disclose
how they spent this money. There are hundreds of examples of payments being
made to “consultants” where descriptions of how this money is ultimately spent
are vague or nonexistent. In 2010, a major gubernatorial candidate obfuscated
most of his spending by writing large checks to corporations he established, and
providing no itemization beyond these payments.

Finally, the Board should investigate ways in which they can make simple
modifications to their filing procedures to reflect the modernization of campaigns
over the past decade. For example, treasurers are required to select one of
nineteen “expenditure purpose codes” for each transaction leaving their
committees' bank accounts. While there are separate options for radio,
television, and print advertisements, there is no option to identify an expenditure
as an internet ad. Thus, the increasing amount of money spent buying online
ads is nearly impossible to measure.
Solution #6: Ensure adequate oversight of “independent expenditure”
efforts. Earlier this year the US Supreme Court ruled that corporations -- and by
extension unions -- should be allowed to spend as much as they want to support
or oppose candidates. The Court’s decision, known as “Citizens United,” struck
down federal restrictions on corporate spending on candidates and issues – as
long as the spending is not coordinated with those candidates.

Under state law, any individual, corporation, union or other entity that wishes to
spend money to influence an election must file disclosure reports with the Board
of Elections. Sine New York cannot limit spending by independent expenditure
efforts, policymakers must re-examine this area of law to ensure that public
disclosure requirements cover this type of activity.

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 CAPITAL INVESTMENT$ 2010:
Methodology

All the numbers contained in this report are based off of databases available at
www.elections.state.ny.us. These were downloaded on December 8, 2010 –
nearly two weeks after the last filing deadline of the election cycle – and do not
reflect any late or amended filings submitted after this date. Election results were
obtained from the same website on December 15, 2010. One race (Assembly
District 100) was still waiting final results. The validity of all the data is
dependent on the accuracy of committee treasurers and the oversight of the
State Board of Elections.

For legislative campaign committees and parties' reporting committees, the totals
reflect numbers reported in the January 2009 disclosure report (which includes
contributions made on November 28, 2008 or later) through the 27-day post-
general 2010 report (which includes all contributions up to November 25, 2010).
For statewide candidates, the totals include the January 2007 disclosure report
(which includes contribution made on December 1, 2006 or later) through the 27-
day post-general 2010 report.

Several legislative candidates we examined had two elections during the two
year cycle, since they first took office in a special election (Senator Peralta;
Members of Assembly Murray, Montesano, Weprin, Castelli, M. Miller, Gibson,
and Crespo). The numbers from the specials were included if the candidate ran
for the same office in both races.

Contributors from all schedules itemizing receipts were coded according to their
type of organization: business interests, unions, candidate/party committees, not
for profits (interest groups not affiliated with businesses or unions, e.g. NARAL,
NRA, local civic organizations, etc.), unitemized (donors whose names were not
released by campaign treasurers), interest, individual, or “unclear” (representing
about 1% of money, these are contributions where we could not easily determine
the nature of the donor). The names recorded in these fields, at times, contained
typographical errors. When possible we corrected typographical errors, such as
when a name closely matched that of another except for one or two letters and
the addresses were the same (e.g., “Alfonse D’Amato” and “Al Damato”) where
obvious solutions were available. Furthermore, names were researched on the
internet (by both name and address, independently) and were compared with the
names and addresses of PAC’s registered with the state Board of Elections.

Our calculation of estimated individual donors in New York was a total of all the
contributors listed on Schedule A that were marked as individuals, whose first

Capital Investment$: 2010 Page 31

name, last name and zip code were similar enough to appear to be the same
individual. Due to typographical errors in the recording of names and addresses
it is impossible to determine a precise amount of individual donors – even though
we corrected for obvious typos, there were likely hundreds we missed. This
number represents the number of individual donors, as defined above, who
contributed and not the number of contributions made. Additionally, because
campaign finance law allows contributions under $99 to be un-itemized, it should
be noted that there is under-reporting.

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