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2008-2: Clarification of Expenditure Limits for Contributions Made by City Council Candidates for the Purpose of Election to the Position of City Council Speaker

Thursday, April 10, 2008

Re: New York City Charter § 44; New York City Administrative Code (“Admin. Code") §§ 3-702(21)(a)(2), 3-705(8), 3-712; New York City Campaign Finance Board Rules 1-04(f), 1-08(c)(1), 5-01(n)(1), (2); and Advisory Opinion Nos. 2001-4, 2007-3, 2007-4; Op. No. 2008-2.

The New York City Campaign Finance Board (the “Board") is issuing an advisory opinion in order to clarify the application of the expenditure limits to spending in the form of campaign contributions made by candidates for member of the City Council from their campaign1 for the purpose of furthering these candidates' election to the position of Speaker of the City Council (“Speaker").2 Such contributions will be counted towards the expenditure limit3 applicable to the current covered election.4

All non-exempt expenditures5 reported for a covered election are included in a participant's6 expenditure limit unless the Board determines that the expenditures are either “non-campaign-related" or that the expenditures were made in furtherance of a different election and were incorrectly reported in the participant's disclosure statements for the covered election.

When the Board has reason to question whether an expenditure was campaign-related, it will conduct a fact-based inquiry. An expenditure found by the Board to be non-campaign-related will not count towards the participant's expenditure limit because it was by definition made for a purpose other than to further the candidate's nomination or election. See Advisory Op. No. 2007-3 (March 7, 2007). Non-campaign-related expenditures are prohibited under the Act and candidates making such – expenditures whether or not they join the Program are subject to monetary penalties based on the amount of the non-campaign-related expenditures.

However, pursuant to Administrative Code § 3-702(21)(a)(2), contributions by participants to other candidates are presumed to be made in furtherance of the participant's nomination or election and therefore also are presumed to be campaign-related7 unless the recipients of the contributions are persons “associated with" the candidate.8

Pursuant to Board Rule 1-08(c)(1), expenditures are presumed to be made for the candidate's next election. This presumption, however, may be rebutted in the case of a candidate who is simultaneously running in a State or Federal election, and the Board, again, will in appropriate circumstances conduct a fact-based inquiry to determine the proper attribution of a given expenditure, notwithstanding the manner in which the expenditure was originally reported. See Advisory Op. No. 2007-4 (May 9, 2007). See also Admin. Code § 3-712.9

The Board notes that the Speaker's race is not considered an “election" pursuant to the Election Law.10 As a consequence, there is no other election to which contributions for the Speaker's race could be attributed, and no logical basis for further factual inquiry.

Therefore, contributions made by a Program participant running for member of the City Council for the purpose of furthering that participant's election to the office of Speaker of the City Council (or for any other purpose) will be presumed to be made for the participant's current covered election and will count towards the expenditure limit for that election.11

NEW YORK CITY CAMPAIGN FINANCE BOARD

1See Advisory Opinion No. 2001-4 (May 17, 2001) (finding that “political committees authorized or otherwise controlled by a participant by definition operate on the participant's behalf, and thus contributions to or expenditures by the political committee may be contributions to and expenditures by the participant, subject to the Act's limits.")

2 See New York City Charter § 44: “The council shall elect from among its members a speaker and such other officers as it deems appropriate."

3See Admin. Code § 3-706(1), (2).

4 A “covered election" means “any primary, runoff primary, special, runoff special, or general election for nomination for election, or election, to the office of mayor, public advocate, comptroller, borough president or member of the city council." Admin. Code § 3-702(10).

5 Expenditures that are exempt from the expenditure limits are enumerated in Admin. Code § 3-706(4)(a).

6 The expenditure limits set forth in the Campaign Finance Act (the “Act') apply only to candidates who have chosen to participate in the Campaign Finance Program (the “Program"). See Admin. Code §§ 3-702 (definitions of “participating candidate" and “limited participating candidate"), 3-706(1), (2).

7 Admin. Code § 3-702(21)(a)(2), added by Local Law 34 of 2007, applies to “contributions to candidates and political committees subject to the provisions of section 3-705(8)." Admin. Code section 3-705(8) creates a safe harbor that allows participants to make limited contributions to other political committees ($3,000 in the case of candidates for City Council) without reducing the amount of public funds for which they would otherwise be eligible. Pursuant to Rule 5-01(n)(1), contributions to other candidates in amounts greater than the amounts specified in Admin. Code section 3-705(8), transfers and other disbursements from a political committee that is involved in an election to a political committee that is not involved in that election, payment of debt for a previous election, and loans to or spending for other candidates, political party committees, or political clubs are deemed to consist entirely of contributions claimed to be matchable. At the current $6-to-$1 matching rate, a $1,000 deduction in matching claims could lead to a $6,000 reduction in the total amount of public matching funds received, unless disbursement is made from a segregated bank account pursuant to Rule 5-01(n)(2).

8 Pursuant to Admin. Code § 3-702(21)(a)(2), “persons associated with a candidate" include “the candidate's spouse, domestic partner, child, parent, or sibling or a person…with whom…the candidate has a business or other financial relationship."

9 Admin. Code § 3-712 states:

Contributions, loans, guarantees and other security for such loans used and expenditures made toward the payment of liabilities incurred by a candidate in an election held prior to the effective date of this section or in a campaign for public office other than one covered by this chapter, shall not be subject to the requirements and limitations of this chapter.

10See Election Law § Section 14-100(11):

“Election" means all general, special and primary elections, but shall not include elections provided for pursuant to the education law, special district elections, fire district elections or library district elections.

11 Similarly, there is a rebuttable presumption that any contributions received are for the candidate's next election. Such contributions must be deposited into the candidate's principal or authorized committee established for that election. See Board Rule 1-04(f).