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1992-1: Transition Expenses and Reimbursements to the New York City Election Campaign Finance Fund

Tuesday, January 21, 1992

An advisory opinion has been requested concerning post-election expenditures made by a successful City Council candidate for transition costs related to taking office. The candidate participated in the New York City Campaign Finance Program, his campaign qualified for and received public funds, and he was elected to the New York City Council. Specifically, the Councilmember-elect has inquired about the following types of expenses:

  • Rent for the portion of the Councilmember-elect's law office being used for activities directed toward assuming the elected office;1
  • Secretarial staff at the law office, who assist the Councilmember-elect in communicating with City agencies, constituents, and others respecting matters related to assuming office;
  • Moving to an office in the Council district where he will work as a Councilmember;
  • Expert advice to help him prepare for hearings and press conferences he attends as a Councilmember-elect;
  • Thank-you notes for campaign workers; and
  • Thank-you notes for constituents.

The request poses the following questions:

1) May a political committee authorized by the candidate for the Council election campaign spend campaign funds after the election for the purposes described above?

2) If the campaign committee spends campaign funds for these purposes, will these expenditures be subject to the Campaign Finance Act's expenditure limit for the 1991 general election or a future election?

USE OF CAMPAIGN FUNDS

New York City Administrative Code §3-710(2)(c) provides, in relevant part:

if the total of contributions, other receipts, and payments from the fund received by a participating candidate... exceed the total campaign expenditures the candidate... shall use such excess funds to reimburse the fund for payments received... No such excess funds shall be used for any other purpose, unless the total amount of the payments received from the fund has been repaid.

(Emphasis added.)

1. Law Office Rent, Secretarial Staff, Moving Expenses

As described, the portion of the law office rent, the secretarial staff, and the moving expenses clearly relate to the office the candidate is about to assume. These costs may therefore be considered "transition expenses." Because transition expenses relate primarily to the holding of public office, they are not "campaign expenditures" for purposes of Administrative Code §3-710(2)(c). Thus, a Councilmember-elect may not use left over campaign funds2 to cover the cost of transition expenses prior to reimbursing the New York City Election Campaign Finance Fund (the "Fund"). Advisory Opinion No. 1989-55 (December 5, 1989). Compare Advisory Opinion No. 1989-57 (December 19, 1989).

2. Campaign Worker Thank-You Notes

In Advisory Opinion No. 1989-56 (December 19, 1989), it was determined that the cost of sending holiday cards after the election to past contributors and campaign volunteers may be a "routine activity involving nominal cost associated with ‘winding up' the... election campaign", and is therefore a "campaign expenditure" for purposes of §3-710(2) (c). Similarly, sending thank-you notes to campaign workers also appears to be routine, nominal, and associated with winding up the previous election campaign. Thus, a Councilmember-elect may expend campaign funds to cover the cost of sending thank-you notes to campaign workers prior to reimbursing the Fund.

For the reasons discussed on page 5, however, the Board will presume that expenditures made on January 1, 1992 or later are not for the purpose of winding up the previous election campaign. Thus, the candidate has the burden of demonstrating that expenditures made on or after January 1, 1992 are wind-up costs for which 1991 campaign funds may be used prior to reimbursing the Fund.

3. Expert Advice and Constituent Thank-You Notes

Because the precise purpose of the expenses incurred for expert advice and sending thank-you notes to prospective constituents is not clear, the Board is unable to determine whether these expenses should be characterized as campaign-related, transitional, or constituent services.

EXPENDITURE LIMITS

1. Transition Expenses

Post-election transition expenditures are not subject to the expenditure limits applicable in the preceding election. See Advisory Opinion No. 1989-55. See also Advisory Opinion No. 1989-57. The Board has not previously determined, however, whether post-election transition expenses paid by a campaign committee may be subject to the expenditure limits applicable in a future election.

The Board presumes that an expenditure is made for the first election in which the candidate runs following the day the expenditure is made. Campaign Finance Board Rule 1-08(c) (1); see also Administrative Code §3-706(1)(c) (pre-primary election expenditures deemed to be for the primary election). Council candidates who join the Campaign Finance Program for the 1993 election are subject to a $40,000 limit for calendar year 1992. Administrative Code §3-706(2) 3. This limit applies to:

all expenditures made... in the calendar year preceding the year of the election... and to expenditures made at any time prior to such date for services, materials, facilities, advertising or other things of value received, rendered, published, distributed or broadcast in such calendar year.

(Emphasis added.) According to this provision, an expenditure will be subject to the 1992 expenditure limit only if its value is "received" in 1992. Thus, if the value of the transition expense is received by the Councilmember-elect in 1991, the Act's expenditure limits for the 1993 elections will not apply5. See Advisory Opinions Nos. 1988-2 (December 22, 1988), 1989-2 (January 3, 1989), and 1989-3 (January 25, 1989).

If the value of the expenditure is received in 1992, the transition expenditure will be exempt from the Act's expenditure limits pursuant to Campaign Finance Board Rule 1-08(e) (5), which exempts:

expenditures for constituent services or incidental to the holding of a public office, which are for acts undertaken in an official capacity and not for the purposes of promoting or facilitating the nomination or election of a participant or the defeat of his or her opponent made prior to January first in the election year.

Transition expenses are incurred in relation to taking office in the period immediately preceding or following the taking of office. They are therefore, if reasonable and timely, "incidental to the holding of a public office" and "undertaken in an official capacity." They are also incurred because of the holding of an office and not because the candidate is seeking re-election. Thus, bona fide transition expenses incurred during 1992 will be exempt from the expenditure limits applicable in 1992.

2. Campaign Worker Thank-You Notes

The issue is whether post-election campaign expenditures are subject to the Act's expenditure limits for either the preceding or a future election. This question was noted but not resolved in Advisory Opinion No. 1989-56, footnote 1.

As stated above, expenditures are ordinarily presumed to be for the next following election. Campaign Finance Board Rule 1-08(c)(1). This presumption can be overcome in the case of expenses to wind up a previous election.

Campaign Finance Board Rule 1-08(d) provides that the Act's expenditure limits cover expenditures made "for the purpose of promoting or facilitating the nomination or election of the candidate...". However, a candidate may show that certain expenditures were not made to promote or facilitate his election, and are therefore not subject to the Act's expenditure limits. See Advisory Opinions Nos. 1989-28 (June 27, 1989) and 1989-55 (December 5, 1989). Although the cost of sending post-election thank-you notes to campaign workers does not fall within any of the Act's express exemptions, this type of routine, nominal, post-election activity does not appear to be for "the purpose of promoting or facilitating" the candidate's past nomination or election, but merely to thank the campaign staff for previous efforts as part of the winding-up process. Therefore, the expenditure limits for the 1991 elections are not applicable to these expenditures.

As noted above for transition expenses, if the value of a post-election campaign expenditure is "received" in 1991, the 1992 and 1993 expenditure limits will not be applicable. Proximity to the preceding election is an important factor for judging given expenditures to be genuine post-election wind-up costs, rather than expenditures incurred to promote or facilitate the next election campaign. Both the new term of office and the period covered by the expenditure limits for the 1993 elections begin on January 1, 1992. Thus, if the value of an expenditure is "received" on this date or later the Board will presume that it is not a wind-up cost for the previous election. The candidate has the burden of demonstrating that expenditures made on or after January 1, 1992 are post-election wind-up costs that were not incurred to promote or facilitate the next election campaign. Unless this demonstration is made, if the candidate next runs for office and participates in the Campaign Finance Program in 1993, these expenditures will be subject to the limits applicable in 1992 and 1993.

Expert Advice and Constituent Thank-You Notes

As stated above, the precise purpose of these expenses is not clear. Nonetheless, if the value of expenditures for these purposes is "received" in 1991, the 1992 and 1993 expenditure limits will not be applicable. Administrative Code §3-706(2). Without more information, however, the Board cannot determine whether expenditures for these purposes for which value is first "received" in 1992 or later will be covered by the expenditure limits in effect for the 1993 elections.

* * *

To summarize: the 1991 campaign committee may not use campaign funds left over from the 1991 elections for transition expenses until all required reimbursements to the Fund are made. Left over campaign funds may be used only for 1991 campaign expenditures until all such reimbursements are made. The candidate has the burden of showing that expenditures made after 1991 were for winding up the 1991 election campaign and not for a future election. Reasonable and timely transition expenses incurred in 1991 or 1992 will not be subject to the expenditure limits for the 1991 or 1993 Council elections. The costs incurred in 1991 for sending 1991 campaign workers thank-you notes after the election will not be subject to the expenditure limits for the 1991 or 1993 Council elections; if they are incurred subsequently the Board will presume them to be subject to the expenditure limits for the 1993 election, should the candidate next run for office and participate in the Campaign Finance Program in the 1993 election.

NEW YORK CITY CAMPAIGN FINANCE BOARD

1 The Councilmember-elect has apportioned the use of his law office between his private law practice and activities directed toward taking office, attributing 90 percent of his time, and therefore 90 percent of the rent, to transitional activities and the remaining ten percent to his legal practice. For purposes of this advisory opinion only, the Board will assume this attribution is reasonable.

2 For a general election candidate, contributions and receipts through November 28, 1991 (the closing date of the first post-general election disclosure statement) are considered to be surplus from the 1991 elections. See Campaign Finance Board Rule 1-02, defining "surplus funds" and "surplus public funds." These funds are subject to the public fund reimbursement requirements and use restrictions of Administrative Code §3-710(2)(c). Generally, subsequent contributions received by a committee involved in the 1991 election will not be considered in determining the amount of surplus public funds to be returned to the Fund for the 1991 elections, but their use remains restricted until all required repayments of public funds are made. Campaign Finance Board Rules 1-03, 5-03(e)(2). These restrictions do not apply to committees that are not involved in the 1991 elections. The propriety of using campaign contributions for transition expenses under New York State Election Law §14-130 is beyond the scope of this Advisory Opinion.

3 In 1993, $105,000 per election expenditure limits apply to participating Council candidates. Administrative Code §3-706(1).

4 Under current law, for the 1993 election, expenditure limits do not apply before 1992 (the calendar year preceding the year of the election).