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STATE

Cuomo’s Minimum Wage Nonprofit Through the Lens of His New Regulatory Scheme


mario cuomo campaign for economic justice bus capitol

photos via The Governor's Office on Flickr


Earlier this year, Gov. Andrew Cuomo successfully advocated for the passage of a $15 minimum wage plan with the help of major labor unions and a nonprofit they created called The Mario Cuomo Campaign for Economic Justice. Teaming with 1199-SEIU, the health care workers union, and 32BJ-SEIU, the buildings workers union, Cuomo made campaign stops in an RV paid for by the nonprofit, which was funded largely by unions.

In a complicated confluence of relationships, Cuomo’s government office notified the press about the events and streamed the governor’s appearances at rallies organized by the group; while his reelection campaign spokesperson served in that role for MCCEJ. Cuomo’s office and the MCCEJ at times appeared to be one.

After the state budget agreement reached at the start of April included the $15 wage phase-in, the campaign celebrated success and closed up shop.

Later in the legislative session, in June, Cuomo created and won passage of a package of reforms that define new restrictions on coordination among candidate campaigns, former government employees, and Super PACs; and stricter reporting requirements of donors to Super PACs. Another aspect of the legislation, which Cuomo signed into law on Wednesday, requires more reporting of donors to nonprofit advocacy groups and reporting of some of their previously private communications.

Cuomo calls the bill an historic stand against dark money, the influence of Super PACs, and the Supreme Court’s Citizens United decision that opened up the floodgates for major, secretive political donations.

“New York is taking aggressive action to restore the people’s faith in government and increase accountability and transparency in the electoral process,” Cuomo said in a statement announcing his signing of the bill. “These actions roll back the disastrous influence of Citizens United and prohibit coordination between candidates and independent expenditure committees. Through enhanced enforcement and increased penalties for political consultants who flout the law, this new legislation will root out bad actors and shine a spotlight on the sordid influence of dark money in politics. With this legislation, New York is raising the bar once again – and now it’s time for the rest of the nation to follow suit.”

On the other hand, many reform advocates believe the bill is both a strange mix of regulations and ones that do very little to address areas where there has been real corruption in New York, namely among state legislators.

Robert Perry, legislative director of the New York Civil Liberties Union, says Cuomo has pushed through a confusing bag of proposals and that the way it was presented belies the ways in which the bill will impact small issue-based nonprofits.

“This legislation was touted and marketed as an attempt to address corruption in campaign expenditures - secretly collaborating with candidates in violation of the law - but the bill goes far beyond campaign and coordination,” said Perry. “Context is important. Look at the bill, it is full of broad sweeping provisions and disclosure requirements that have nothing to do with campaign expenditures that include organizations that aren’t even involved in lobbying, but pure issue advocacy. This bill will have a chilling impact on their donors.”

Perry points out that the bill is further confusing because the areas of law regarding political spending by groups like Super PACs and nonprofit advocacy groups are completely separate and yet the bill puts them side by side.

In Cuomo’s not-too-distant past, he aligned himself with a nonprofit formed by business interests to advocate for his agenda, the Committee to Save New York. Like Mayor Bill de Blasio’s more recent Campaign for One New York, Cuomo’s group was shut down amid criticism and controversy. The new regulations would apply to these types of groups in terms of donor disclosure. Cuomo’s group did not disclose its donors; de Blasio’s group did so voluntarily. The Committee to Save New York was not the subject of federal investigation whereas the Campaign for One New York is as authorities probe whether government favors were promised or delivered in exchange for donations to the nonprofit.

Critics have said that the Mario Cuomo Campaign for Economic Justice, like de Blasio’s Campaign for One New York, created a shadow government apparatus, in this case where government employees did work for lobbying groups and consultants were paid for their efforts by the MCCEJ while also representing Cuomo’s campaign.

“Clearly the governor is coordinating with this outside entity, and the governor's political operatives seem to have basically been set up and guiding it,” Susan Lerner, executive director of Common Cause New York, told Politico New York in February. “This is setting up a shadow government and it blurs the line between private campaigning and public policy. The goal is an admirable one, but the way it is being done gives us pause.”

Cuomo appeared to criticize de Blasio’s relationship with the Campaign for One New York while unveiling his reform plan in June. “The collusion, the coordination, the subterfuge, the fraud in the current political system is rampant,” Cuomo said, according to The Observer, without naming de Blasio’s group. When speaking with reporters after the event, Gotham Gazette twice asked the governor for examples of the types of groups he was targeting, but Cuomo declined to name any, saying that he did not want to accuse anyone of illegality at that time.

The new restrictions on coordination would have no impact on the MCCEJ or even the Campaign for One New York - both are nonprofit 501(c)(4) advocacy groups and thus only subject to the additional donor transparency requirements.

Political action committees, or PACs, are tied to candidates, while independent expenditure campaigns, commonly referred to as Super PACs, are not allowed to coordinate with candidate campaigns. Both operate during elections to influence their outcomes - those groups register and report their fundraising to the Board of Elections. New restrictions on coordination and additional reporting requirements will apply to Super PACs.

“The members of 1199SEIU have been proud to be a part of raising the minimum wage to $15 for nearly three million working New Yorkers, and passing the strongest paid family leave law in the nation. We hope that similar efforts are successful throughout the country, so that working people can provide a better future for their families and we can rebuild the middle-class.” said Mark Riley, press secretary for 1199SEIU, in a statement. The union declined to make its president, George Gresham, who served as chair of the MCCEJ, available to discuss how the campaign was coordinated.

Cuomo mario cuomo campaign economic justice speechSources close to the Mario Cuomo Campaign for Economic Justice told Gotham Gazette that the new rules on nonprofit donor disclosure would have had no impact on the MCCEJ as they lower the thresholds for nonprofits to report donors, but donations to the MCCEJ were already covered by the old lobbying law.

Now, more disclosure is required of smaller donors after nonprofits spend smaller amounts of total money on lobbying. The MCCEJ’s donations appear to mostly have come in large sums. But, it will be impossible to know until the MCCEJ’s final disclosure documents are made public by the state regulatory agency they must report to: JCOPE, the Joint Committee on Public Ethics.

So far, all of the reported donations to MCCEJ far exceed the new reporting requirements and therefore were covered by the old law. The SEIU Labor Management Initiative donated $637,781 in February and then gave the same amount again in April; Service Employees International gave $212,594 in January; in March, RWDSU Realty Group donated $63,778 in March; The New York Hotel and Motel Trades Council gave $85,038; and the SEIU1199 New York State Political Action Fund gave $85,038.

New York’s previous lobbying act requires nonprofits that fit under the 501(C)(4) designation of the IRS tax code to disclose donations of over $5,000 and the personal information of those who make such donations if the group has spent more than $50,000 on lobbying in a calendar year. The new bill sets the total lobbying disclosure threshold at $15,000, while requiring disclosure of donations of more than $2,500, as well as those donors’ personal information. The MCCEJ is expected to have spent around $2 million from January to July.

Sources told Gotham Gazette that MCCEJ disclosed its donors to JCOPE in July but the filing has yet to be made public. Most MCCEJ activity occurred in the early months of 2016 when Cuomo and company traveled the state on the $15 minimum wage campaign. The group’s final filing should be available in September.

The new law also requires 501(C)(4) groups to disclose to the Attorney General any communications, whether written, broadcast or otherwise, having to do with legislation, votes on legislation, pending legislation, government action on rules, regulations or the decisions of any legislative or executive administrative body.

A number of issue-focused nonprofits, some that lobby and some that do not, are opposed to the new rules because, unlike the MCCEJ, they do not enjoy a close relationship with the Cuomo administration or other parts of state government.

The MCCEJ would likely have been subject to and impacted by this communication disclosure rule, but the group existed in that fairly unique position - its communications were already likely privy to the Cuomo administration and its donors were not likely to ever fear political reprisal for their support of the group’s lobbying efforts.

“The problem becomes when the law applies to groups that are not sponsored and created by the chief executive of the state,” said Perry.

The NYCLU urged Cuomo to veto the bill, saying that it violates freedom of speech and will temper donations to small issue-advocacy groups because donors will fear being exposed and possible reprisals. “This will have a chilling effect,” said Perry. “This intrusive, burdensome, regulatory scheme where you have to provide a donor's name and address will intimidate donors and reduce their willingness to engage due to the prospect of retaliation from the government, or someone else who disagrees with them.”

Mike Durant, New York State director of the National Federation of Independent Business, a group that lobbied against the minimum wage hike said he found it quite challenging to go up against the combination of Cuomo and well-funded labor groups. Durant’s organization, a national nonprofit, is still reviewing what, if any, impact the new regulations will have on it.

Durant said he is concerned about the new laws and how they might affect dissent and perhaps earn political retribution. “It’s always been a concern with any governor, but with this governor it’s a bit heightened,” he said. “You can't stifle opposition. Government is supposed to be an argument between various sides about an issue and you see where that argument goes. Stifling dissent is not doing the public any favors.”

Doug Kellogg of Reclaim New York, a group focused on government transparency that has been critical of Cuomo in general and this legislation specifically, said that it's almost impossible to gauge how groups will be impacted because it is still uncertain how JCOPE will administer the law.

Kellogg noted that JCOPE can set exemptions for certain groups. “They get to determine whether a donor has legitimate fear of retaliation, and thus does not have to have their name released,” he said. “It's completely twisted to have a government spinoff that's not fully subject to basic transparency law deciding which citizens that fear retaliation for their speech get to stay private, and which have their names published. Until we see it in practice, we can't be sure how awful the law will truly be, but it’s definitely going to be ugly.”

JCOPE approved a set of regulations having to do with the law earlier this month. Many groups are anxiously waiting to see how the new regulations are actually enforced.

Perry of NYCLU and a host of good government groups including Citizens Union, the New York Public Interest Research Group, and Common Cause New York say that the governor has given no evidence that these new disclosure rules for nonprofits will do anything to impact corruption.

They say unlike the convictions of Dean Skelos and Sheldon Silver and the dozens of other legislators who have been removed from their seats, a trend that demonstrates a corruption epidemic in the Legislature, there is no indicator that nonprofits need more regulation.

“As you know, non-profit charities are already tightly regulated by the Internal Revenue Service,” the groups wrote Cuomo in a letter urging him to veto the bill. “These organizations, known as 501(c)(3)s have strict limits on their lobbying involvement – limitations that amount to a small fraction of their budgets. They are forbidden from intervening in political campaigns on penalty of being disqualified as a charity. Yet, with no demonstrated evidence of a problem and no evidence of any meaningful problems in New York State (evidence, which if it existed, you could have brought to light in a public debate) you assert that such a problem exists. As a result, these parts generally harm charitable organizations in the state through their lack of clarity and astoundingly broad reach. Rather than being targeted, the bill would impose onerous requirements on many nonprofits and inhibit contributions to nonprofits seeking to carry out charitable work, and could jeopardize the ability of many nonprofit organizations to operate in New York.”

Asked whether Cuomo had evidence there was corruption or malfeasance among these groups, Cuomo spokesperson Dani Lever forwarded a Times Union article titled “Who Funds New York’s Good Government Groups?” The article says that some groups are not always forthright about their donors, but that on the whole most are; while also noting that at times a group has released a report related to a donor with a particular interest.

Lever also provided a comment that the administration has widely circulated in response to criticism of the new legislation, which Cuomo spokesperson Rich Azzopardi has also tweeted in response to recent articles on the matter: “Everyone is all for transparency, except when it comes to them. We are just surprised to learn that applies to self-appointed good-government groups, too.”

A lawsuit challenging the bill is expected in the coming months - the suit will likely argue the law is an overreach and violates the First Amendment.

Lever did not respond to a question regarding whether Cuomo is concerned about the blurring of the lines between government and nonprofit lobbying as in the case of the Campaign for One New York and the Mario Cuomo Campaign for Economic Justice.

Asked about the new ethics laws on Thursday, Cuomo told reporters that it wasn’t everything he was hoping for, but still important. “The ethics bill is a major step forward,” Cuomo said, according to State of Politics. “Is it everything? No. Ethics in many ways is like other activities in life, right? That old line — you can never be too rich, you can never be too thin. Well, you can never be too ethical. So, you get everything done that you can get done. But you stay at it and you work at. More and more disclosure, more trust.”

Blair Horner, of the New York Public Interest Research Group, said that the law has served as a distraction in a year when Albany has been rocked by the conviction of two former legislative leaders and a federal investigation into Cuomo’s economic development projects. “This is classic Albany misdirection,” said Horner. “Here we are all talking about (C)(4)s and nonprofits and it's distracting us from discussing corruption in the Legislature and Executive. It is absolutely cynical, but it's effective.”

***
by David King, Albany editor, Gotham Gazette
     

Read more by this writer.

Note: Gotham Gazette is an independent publication of Citizens Union Foundation, sister organization fo Citizens Union.



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