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Legislative Memo

Ken Pokalsky
Vice President of Government Affairs
T 518.465.7511
www.bcnys.org

BILL:

S.101 (Squadron) / A.696-A (Lancman)

Support

SUBJECT:

Requires that corporate contributions to a political candidate or party committee or in support or opposition be approved by a majority of shareholders

 

DATE:

March 2, 2012

 

This legislation would require corporations formed under the business corporation law, the cooperative corporation law, the not-for-profit corporation law, the railroad law, the transportation corporations law, the banking law, the religious corporation law, and the limited liability corporations law to obtain prior shareholder approval before making any political donations in New York. 

The sponsor’s memo states that the legislation is in response to the United State’s Supreme Court decision in Citizen’s United v. Federal Election Commission. 

Using this Supreme Court decision as a rationale for this legislation is misplaced and indicates a misunderstanding of the decision.  The result of the holding in Citizens United v. Federal Election Commission is to permit independent campaign expenditures by corporations, and did not create a change in New York Law that necessitates placing a new restriction on the ability of business entities to make any political expenditure. 

Corporations are affected by political regulation and ought to have the right to try to participate in the political process. 

To require shareholder votes relating to political spending in New York is unworkable, and designed simply to deter speech.  The vast majority of shareholders in many of the Corporations subject to this proposal would have no relationship with New York State, and in many instances a large percentage of shareholders are institutions, not individuals.  Requiring even an annual approval vote of a budget for political expenditures will likely result in an end to corporate participation in the political process, in that the Corporation would have to know which issues and races it intended to weigh in on as far as a full year in advance, when many of the issues and candidates may not yet be known. If enacted this year, this legislation may effectively prohibit businesses incorporated in New York from participating in this year's election cycle insofar as the effective date is August 1 of the year succeeding its passage.

This legislation, if enacted, would impermissibly chill political speech by creating a burden that is not narrowly tailored, in fact, it would apply to matters that relate to one state but require participation of shareholders with little or no knowledge or relationship to New York politics.

New York is a State that already permits independent campaign expenditures, yet the vast majority of funders of independent expenditure committees are unions, not corporations.  In fact, in a report issued by NYPIRG on April 26th, 2010, an analysis of the top 10 entities of influence spenders included 5 Union organizations that expended over $12 million to influence the legislature in 2009.

While the amended version corrected a technical problem with the original legislation (the original required a majority of shareholders approve the expenditure, this requires a majority of shares cast), the bill should be held for the reasons stated above.