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1989-33: Expenditure Limit Exemptions for Certain Compliance Activities

July 19, 1989

Several requests have been made for an interpretation of New York City Administrative Code §3-706(5) (a), which provides that expenditures for "professional services, including legal and accounting fees, made for purposes of complying with the provisions of the New York City Campaign Finance Act or the election law" are not limited by the expenditure limits of the Act. In Advisory Opinion No. 1989-15, the Board stated:

The exemption for compliance costs covers the provision of "professional services." Thus, the salaries, wages, travel, and related expenses of campaign staff who assist in the performance of compliance tasks, but do not provide professional services in performing these tasks, are not exempt from the expenditure limits of the Act. §3-706(5) (a). To the extent that campaign staff must be consulted by those performing professional services, wages reasonably allocated to time spent providing information directly to professionals may be exempt from the expenditure limits.

That opinion did not discuss the range of activities which are covered by this exemption.

In adopting Local Law No. 4 of 1989, the City Council created new exemptions from the expenditure limits and evidenced an intent favoring a broad interpretation of the exemptions originally provided in Local Law No. 8 of 1988. See Report of the Committee on Governmental Operations on Int. No. 1176 (January 4, 1989). The Board thus believes that a broad interpretation of the scope of the compliance activities exemption is appropriate.

The exemption is not limited to the cost of lawyers and accountants. Compliance activities include manual or computerized bookkeeping as well as the preparation of disclosure reports. These activities require a degree of expertise, but not necessarily that of a lawyer or an accountant. The cost of employing persons who have the training, skills, or experience required for the performance of these compliance tasks is exempt from the expenditure limits pursuant to Administrative Code §3-706(5) (a). If these persons are also paid for work which is not related to compliance with the Act or the New York Election Law, the Board will accept a reasonable apportionment of their compensation between compliance activities exempt from the expenditure limits and other activities subject to the expenditure limits.