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1993-2: Treatment of Matching Funds and Expenses from Previous Elections

Wednesday, February 17, 1993

The New York City Campaign Finance Act permits candidates participating in the Campaign Finance Program to use political committees that took part in a previous election to raise and spend funds for a current election. This advisory opinion explains how certain Campaign Finance Program requirements apply to authorized committees that had or have debts (bills and/or loans) outstanding from a previous election, if those committees have been or will be involved in the 1993 elections1. These committees will be referred to as "continuing 1993 committees."

Funds received and expenditures made by a continuing 1993 committee on or after the first January 12 following its last election are presumed to be for the 1993 election. Campaign Finance Board Rules 1-04(f); 1-05(h)2; 1-08(c). Each of the committee's financial transactions from that day onward must be reported in disclosure statements filed with the Campaign Finance Board. Rule 3-03(a). In light of this presumption, Campaign Finance Board disclosure forms do not readily permit a continuing 1993 committee to show that any particular contribution, loan, payment, or bill actually relates to a previous election.

Contributions used to pay expenses or retire debt from a previous election are not matchable contributions for the 1993 elections because such use signifies that the contributions were not made for the 1993 elections. New York City Administrative Code §3-702(3). To facilitate monitoring whether such use has occurred, continuing 1993 committees must identify in the relevant disclosure statement, the particular expenses and debts, as well as payment and debt totals, that relate to a previous election. The Board will provide special instructions to enable participating candidates to distinguish these payments, unpaid bills, and outstanding loans.

The Campaign Finance Act permits participating candidates to use a single authorized committee for more than one election cycle, or alternatively, to authorize a separate committee for each election cycle in which the candidate seeks office. (The Board has generally urged candidates to authorize a separate committee for each election.) It is fundamental that Program requirements be applied to all participating candidates in an equal manner, regardless of the number of committees a candidate uses for a given set of financial transactions.

If a candidate uses one committee for a 1993 election ("1993 committee") and a separate committee for a previous election ("previous election committee"), the payment of expenses and retirement of debt for the previous election will affect the amount of matchable contributions for the 1993 elections if the 1993 committee transfers funds to the previous election committee. Thus, to protect against invalid matchable contribution claims and to protect against the misuse of public funds, the amount of public funds to be paid is reduced by the amount of these transfers, which are presumed to consist entirely of contributions claimed to be matchable. Rule 3-03(c)(2)(iii). These transfers are prohibited altogether once public funds have been paid to the candidate for the 1993 elections. Id.; see also Rule 1-03; 5-03(e)(2) .

The following procedures are necessary to provide equal treatment for similar financial transactions occurring within a continuing 1993 committee:3

1) total payments made for previous elections will be presumed to consist entirely of contributions claimed to be matchable and so will be deducted from the amount of public funds to be paid4; and

2) continuing 1993 committees may not make payments for expenses or debt for previous elections once public funds have been paid to the candidate for the 1993 elections, except as otherwise provided in Rules 1-03 and 5-03(e)(2).

NEW YORK CITY CAMPAIGN FINANCE BOARD

1 This advisory opinion does not apply to any committee that had surplus funds from its last election, as determined pursuant to Campaign Finance Board Rule 1-07(a), and did not incur any debt or expense for a previous election subsequent to the first January 12 thereafter. Further, it does not apply to committees last involved in a federal election or to committees that will not take part in any way in an election subject to Campaign Finance Program requirements.

2 Campaign Finance Board Rule 3-02(g) describes when Campaign Finance Program disclosure requirements for an election are concluded.

3 The continuing 1993 committee must maintain separate bank accounts for contributions and other receipts accepted for these different elections. Rule 2-06(b).

4 This presumption does not apply to outstanding debt that is not repaid, to payments made before the first January 12 following the previous election, or to payments made after all required public funds repayments for the 1993 elections are made. See Administrative Code §3-710(2); Rules 1-03; 5-03.