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1997-2: Application of Spending Limit to Television Commercials When a Runoff Primary Is "Reasonably Anticipated"

Thursday, May 15, 1997

Re: Administrative Code § 3-703(1) (f); 3-706(1) (a), (b), (c); Campaign Finance Board Rules 1-03(b); 1-04(c) (2) (iv); 1-08(b), (c) (1), (d) (1); 2-06(c) (1), (2) (iii); Op. No. 1997-2.

An advisory opinion has been requested on behalf of Friends of Messinger - '97, Inc. ("the Committee"), Manhattan Borough President Ruth Messinger's committee for her 1997 mayoral campaign, regarding the classification and allocation of expenditures and related accounting practices when a runoff primary election is reasonably contemplated1.

The request asks how this concept operates where, in anticipation of a runoff primary election, in order to go "on the air" immediately after the primary, a campaign contracts before the primary for the production of television commercials for delivery and use after the primary in the anticipated runoff primary election. The production fees for these commercials would be invoiced separately and the invoices would be received prior to the primary. The request asks the following questions:

1(a). May a campaign pay for this production work prior to the primary election from its regular account and then, after the primary, reimburse its regular account from its runoff account, assuming there is a runoff in which the campaign is involved?

1(b). What happens if the campaign is not involved in a runoff? May a campaign pay for this production work prior to the primary election from its regular account and then, after the primary, reimburse its regular account from its runoff account?

2. If the answer to either 1(a) or 1(b) is that the payment made for the runoff prior to the primary cannot be reimbursed, how should the campaign classify the expenditure and, against what spending cap should it be charged?

2(a). If there is a runoff, against what spending cap — that for the runoff election or that for the primary election — should the expenditure be charged?

2(b). If the campaign is not involved in a runoff, does the expenditure — irrespective of the election to which it is charged — become an exempt expenditure as one incurred for an election that did not occur?

3. Assuming the same fact pattern as in 1(b) above, except the campaign is not invoiced for the commercial production until after the primary election, from what funds may the invoice be paid (runoff account or general election account) ? If the latter, is the expenditure exempt?

New York City Administrative Code § 3-703(1) (f) permits mayoral candidates participating in the New York City Campaign Finance Program to accept contributions for a runoff primary election. Contributions accepted for a runoff primary election may not exceed one half the amount of the contribution limit otherwise applicable for the primary and general elections combined. As the contribution limit for mayoral candidates for the 1997 election cycle is $7,700, contributions to a mayoral candidate for a runoff primary may not exceed $3,850.

Thus, candidates who anticipate a possible runoff primary may set aside up to $3,850 per contributor (even if up to $7,700 has been accepted from the same contributor for the primary and general elections) in a separate runoff primary account. Receipts accepted for a runoff primary must be deposited into an account from which no disbursements, withdrawals, or transfers are made prior to the day of the preceding primary election. Campaign Finance Board Rule 2-06(c) (1). Receipts accepted for a runoff primary may not be commingled in an account with any receipts accepted for any other election or used for a primary or general election held in the year that the runoff primary election is held or anticipated. Id.

A separate spending limit applies in a runoff primary election equal to one half the spending limit provided for such office in a primary or general election under Administrative Code §3-706(1) (a). Administrative Code §3-706(1) (b). As this spending limit for mayoral candidates for a 1997 primary or general election is $4,732,000, the spending limit for a runoff primary election for mayoral candidates is $2,366,000. Expenditures on behalf of a participating candidate in a primary election made prior to or on the date of the primary election are deemed to have been made for the primary election. Administrative Code § 3-706(1) (c). See also Rule 1-08(c) (1).

An expenditure is made on the date on which the "services, materials, facilities, advertising, or other things of value are received, rendered, published, distributed or broadcast," regardless when the expenditure is billed or paid. Administrative Code § 3-706(1); Rule 1-08(b). Therefore, production expenditures for a television commericial are considered made on the date of broadcast. See also Advisory Opinion No. 1993-4 (June 9, 1993).

The following paragraphs are numbered according to the number of the question to which the opinion is directed. In answering the questions set forth in the request, it is understood that the costs at issue are solely attributable to television commericials that are prepared for the sole purpose of broadcast after the primary election and are, in fact, broadcast only after the primary election. The Board emphasizes that this opinion is limited to this understanding of the hypothetical facts presented.

Candidate is in a Runoff Primary Election

1(a). Rule 2-06(c) (2) (iii) states that funds in an account maintained for a runoff primary may be transferred to a separate account maintained for the primary and general elections (the "regular account"), so that the funds transferred may be spent in the general election. Therefore, if the candidate is in a runoff primary election, the campaign may pay for the runoff television commercials prior to the primary election from its regular account and then, after the runoff primary, reimburse its regular account from its runoff account. The making of such a reimbursement, however, is not required or necessary under the Program.

2(a). If the candidate is in a runoff primary election, the expenditure for a runoff television commercial broadcast after the primary but before the runoff primary would fall under the runoff primary spending limit.

No Runoff Primary Election is Held

1(b). If there is no runoff primary election, the runoff primary election account would be treated like an account established for an election not subject to the Act, so that its use in the primary and general elections is prohibited, and the use of the account is frozen until the first January 12 after the election. See Rules 1-03(b) and 2-06(c) (1) (ii), modifying Advisory Opinion No. 1993-8 (July 20, 1993) 2. Thus, if a runoff primary election is not held and the campaign had paid for the runoff television commercial production work from its regular account, the campaign may not reimburse its regular account from its runoff account3.

2(b). If no runoff primary election is held, the cost of a commercial broadcast after the primary would be subject to either:

i. the general election limit, if the candidate is in the general election; or

ii. no spending limit at all4, if the candidate is not in the general election, except as is otherwise provided in the Act and Board rules for an expenditure that is an in-kind contribution to another participating candidate. Rule 1-08(d) (1).

The Board would require more detailed information about the benefit a campaign derived from a commercial that is produced but never broadcast, because there is no runoff primary or because the candidate is not in the runoff, before determining which, if any, spending limit would be applicable5.

3. The invoice date for the television production work is not relevant to the account from which funds may be drawn to pay the expenditure, nor is it relevant for determining the spending limit that is applicable. Thus, the conclusions in 1(b) and 2(b), above, would not be affected by the invoice date.

NEW YORK CITY CAMPAIGN FINANCE BOARD

1 The request was made by Craig Kaplan, counsel to the Committee, by letter dated April 9, 1997.

2 The return of runoff contributions, however, is permitted if a runoff primary is not held. Rule 1-04(c) (2) (iv).

3 The same conclusion would apply in the event a runoff primary is held but the candidate is not in the runoff. To conclude otherwise would result in a violation of the contribution limit. See Administrative Code §3-703(1) (f) ("candidate... may accept additional contributions over $7,700... for any runoff primary election... in which the candidate seeks nomination for election") (emphasis added).

4 This is not the same as an "exempt" expenditure.

5 If a runoff primary election is held but the candidate is not in the runoff, the candidate may nonetheless attribute the cost of the runoff television commercial to the runoff primary spending limit, if it is broadcast after the primary and before the runoff primary. See Rule 1-08(c) (1), (2) (ii). Such treatment would pertain to situations in which the candidate is on the ballot in the general election, notwithstanding the fact that the candidate will not have the nomination of the party holding the runoff.