Rule 1-08 Expenditures

(a) Expenditures. Expenditures include all disbursements made, liabilities incurred, and in-kind contributions received by a candidate, except disbursements to return contributions, repay loans, return public funds, and transfers. Some expenditures are subject to the expenditure limits of the Act and other expenditures are exempt.

(b) Making an expenditure. As provided and described in §3-706 (1) and (2) of the Code, an expenditure for goods or services is made when the goods or services are received, used, or rendered, regardless when payment is made. Expenditures for goods or services received, used, or rendered in more than one year, including campaign websites, shall be attributed in a reasonable manner to the expenditure limits of §3-706(1) or (2) of the Code, as appropriate.

(1) Expenditures for campaign advertising or other campaign communications shall be attributed to the expenditure limit in effect when the advertisement or communication is distributed, broadcast, or published. For the purposes of this paragraph, “campaign advertising or other campaign communications” shall not include a campaign website. A communication that is mailed shall be considered to have been “distributed” on the date on which it was postmarked.
(2) Expenditures for services performed or deliverables provided over a period that includes both the primary and the general elections shall be attributed in a reasonable manner to the expenditure limits of § 3-706(1) and (2) of the Code, as appropriate.
(3) Notwithstanding the requirements of this subdivision, the Board may require a candidate to demonstrate that an expenditure should be attributed to the expenditure limit provided in §3-706(1) or (2) of the Code, as appropriate, based on the timing, nature, and purpose of the expenditure.
(c) Attributing an expenditure to an election. (1) An expenditure is presumed to be made for the first election (in which the participant, limited participant or non-participant is a candidate) following the day it is made, except: (i) in the case of a State or local election, expenditures made before the first January 12 after an election will also be presumed to be made for that election; (ii) in the case of a federal election, expenditures made before the first January 1 after the election will also be presumed to be made for that election, except as may otherwise be provided under federal law and regulations.

(2) (i) If there is no contested primary election for an office, expenditures made by a participant or limited participant seeking that office are subject to the general election expenditure limit of §3-706(1) of the Code.

(ii) If there is a contested or write-in primary election in any party for an office, every participant or limited participant seeking that office, regardless whether the participant or limited participant is in the primary election, may make expenditures subject to the primary election expenditure limit of §3-706(1) of the Code, provided the participant or limited participant files the three pre-primary and 10 day post-primary election disclosure statements and daily disclosures pursuant to Rule 3-02(c), (d), and (e) in a timely manner. In this case, the general election expenditure limit will first apply after the date of the primary election.

(iii) Notwithstanding subparagraph (i), if a participant or limited participant demonstrates to the Board that for a period preceding the primary election the participant or limited participant had reasonably anticipated a primary election in any party for the office the participant or limited participant seeks, the participant or limited participant may attribute expenditures made before and during that period to the primary election expenditure limit of §3-706(1) of the Code, provided the participant or limited participant files the three pre-primary and 10 day post-primary election disclosure statements and daily disclosures pursuant to Rule 3-02(c), (d), and (e) in a timely manner. In this case, the general election expenditure limit will first apply after that period. In order to demonstrate to the Board that for a period preceding the primary election the participant or limited participant had reasonably anticipated a primary election, the participant or limited participant must file a petition, consisting of an affidavit with supporting documentation, with the Board no later than ten business days following the date the last remaining candidate other than the participant or limited participant was finally disqualified from the ballot as set forth in Rule 5-02(b). The affidavit must specify the period of time during which it was reasonable to anticipate that a primary election would be held, identify the prospective candidate(s), and provide a factual basis for the participant's or limited participant's belief that a primary election was reasonably anticipated during the specified period of time. The supporting documentation must demonstrate that the prospective candidate(s) engaged in activities that would lead a reasonable person to believe that such candidate(s) would participate in the primary election. Such activities may include: (i) raising or spending funds for the primary election; (ii) authorizing a political committee with the Board of Elections for the primary election; (iii) filing a filer registration and/or certification form with the Board; (iv) engaging in petitioning activity, including the filing of petitions with the Board of Elections; (v) producing and/or distributing campaign literature; and (vi) campaigning for office or otherwise publicly declaring an intent to participate in the primary election.

(iv) Once it is determined by petition litigation or otherwise that no primary election will be held for nomination to an office, expenditures made by participants or limited participants seeking that office are subject to the general election expenditure limit of §3-706(1) of the Code.

(v) Expenditures made before the primary election by a participant or limited participant who is a candidate in a contested primary election are subject to the primary election expenditure limit of §3-706(1) of the Code, regardless whether the participant or limited participant has also received the nomination of another party without a primary election.

(3) Candidates have the burden of demonstrating that expenditures made by committees reported not to be involved in the election in which the candidate is currently a participant or limited participant were not made in connection with such election. Failure to meet this burden will result in the application of all Program requirements to these committees for such election.

(4) Special elections. An expenditure is presumed to be subject to the special election expenditure limit on and after the date a special election was first reasonably anticipated, as determined by the Board. Participants or limited participants may present evidence to the Board, demonstrating the date a special election was first reasonably anticipated.

(d) Expenditure limits. (1) All expenditures made by a participant or limited participant for the purpose of promoting or facilitating his or her nomination or election, including expenditures made for the purpose of promoting or facilitating the defeat of an opponent or prospective opponent, are subject to the expenditure limit applicable under the Act. All expenditures made by the participant or limited participant and his or her principal committee shall be totaled to determine the participant's or limited participant's compliance with the applicable expenditure limit. Expenditures made after the last election in an election year in which the participant or limited participant is a candidate, or a special election, are not subject to the expenditure limits for that election.

(2) A participant or limited participant is permitted to make expenditures in excess of the limits of §3-706(2) of the Code, but not in excess of the limits of §3-706(1) of the Code. The limits of §3-706(2) are the minimum amounts that a participant or limited participant must spend during the three calendar years before the election year in order to spend the total aggregate amount the Act and these Rules permit during those years and the time period encompassed by the expenditure limit that first applies to the candidate in the election year, pursuant to §3-706(1) of the Code.

(3) All expenditures made by a participant or limited participant for the purpose of advocating a vote for or against a proposal on the ballot in an election that is also a covered election, regardless whether the expenditures were also made to promote or facilitate the participant's nomination or election, shall be subject to the expenditure limits applicable in such covered election.

(4) Exempt expenses.

(i) The following shall not be subject to the expenditure limits:

(A) expenses made for the purpose of bringing or responding to any action, proceeding, claim or suit before any court or arbitrator or administrative agency to determine a candidate’s or political committee’s compliance with the requirements of this chapter, including eligibility for public funds payments, or pursuant to or with respect to election law or other law or regulation governing candidate or political committee activity or ballot status;

(B) expenses to challenge or defend the validity of petitions of designation or nomination or certificates of nomination, acceptance, authorization, declination or substitution, and expenses related to the canvassing or re-canvassing of election results; and

(C) expenses related to the post-election audit, except as provided in subparagraph (ii) of this paragraph.

(ii) Exempt expenses related to the post-election audit shall include pre-election expenses for organizing and copying existing records in preparation for submission during the post-election audit, but shall not include pre-election expenses for:

(A) Ordinary compliance activities, such as the review of records to identify missing documents, evaluating whether documents meet Board standards, and identifying, preventing, and correcting any potential violation;

(B) Post-election work for which an invoice is issued or paid prior to the election;

(C) Salaries or other payments to campaign managers, finance chairpersons, treasurers, accountants, advisors, or other consultants;

(D) Legal or accounting fees;

(E) Costs associated with record creation and retention;

(F) Costs associated with running an office or business, such as standard bookkeeping, maintaining checkbook registers, petty cash journals, bank records, and loan records;

(G) Bookkeeping for payroll or vendor payments; and

(H) Other standard practices that political committees routinely perform as entities that raise and spend funds.

(e) Expenditure limit relief.

(i) Pursuant to §3-706(3)(a) of the Code, where the Board has determined that a non-participating candidate has spent or contracted or has obligated to spend, or received in loans or contributions, or both, an amount which, in the aggregate, exceeds half the applicable expenditure limit pursuant to §3-706(1)(a) of the Code, then the expenditure limit applicable to participating candidates and limited participating candidates in the election for that office will be increased to one hundred fifty percent of the expenditure limit.

(ii) Pursuant to §3-706(3)(b) of the Code, where the Board has determined that a non-participating candidate has spent or contracted or has obligated to spend, or received in loans or contributions, or both, an amount which, in the aggregate, exceeds three times the applicable expenditure limit pursuant to §3-706(1)(b) of the Code, then the expenditure limit will no longer apply to participating candidates and limited participating candidates in the election for that office.

(f) Independent expenditures. (1) In determining whether an expenditure is independent, the Board may consider any of the factors from the following non-exhaustive list:

(i) whether the person or entity making the expenditure is also an agent of a candidate;

(ii) whether any person authorized to accept receipts or make expenditures for the person or entity making the expenditure is also an agent of a candidate;

(iii) whether a candidate has authorized, requested, suggested, fostered, or otherwise cooperated in any way in the formation or operation of the person or entity making the expenditure;

(iv) whether the person or entity making the expenditure has been established, financed, maintained, or controlled by any of the same persons or entities as those that have established, financed, maintained, or controlled a political committee authorized by the candidate;

(v) whether the candidate shares or rents space for a campaign-related purpose with or from the person or entity making the expenditure;

(vi) whether the candidate has solicited or collected funds on behalf of the person or entity making the expenditure, during the same election cycle in which the expenditure is made;

(vii) whether the candidate, or any public or private office held or entity controlled by the candidate, including any governmental agency, division, or office, has retained the professional services of the person making the expenditure or a principal member or professional or managerial employee of the entity making the expenditure, during the same election cycle in which the expenditure is made; and

(viii) whether the candidate and the person or entity making the expenditure have each consulted or otherwise been in communication with the same third party or parties, if the candidate knew or should have known that the candidate’s communication or relationship to the third party or parties would inform or result in expenditures to benefit the candidate.

(2) Upon consideration of the factors described in subsection (1), the Board may determine by a preponderance of evidence that an expenditure was not independent. Prior to such determination, the candidate and/or the person or entity making the expenditure shall have an opportunity to provide evidence indicating that such expenditure was independent.

(3) Financing the dissemination, distribution, or republication of any broadcast or any written, graphic, or other form of campaign materials prepared by a candidate is a contribution to, and an expenditure by, the candidate, unless this activity was not in any way undertaken, authorized, requested, suggested, fostered, or otherwise cooperated in by the candidate.

(4) An expenditure for the purpose of promoting or facilitating the nomination or election of a candidate, which is determined not to be an independent expenditure, is a contribution to, and an expenditure by, the candidate.

(5) (i) Communication between, or common agents shared by, parties and their nominees will not require a conclusion that all spending by the party's constituted committees and party committees in an election is an in-kind contribution to the nominee. The following expenditures made by party committees or constituted committees are not considered in-kind contributions to a candidate unless it is demonstrated that the candidate in some way cooperated in the expenditure and that the expenditure was intended to benefit that candidate:

(A) materials or activities that promote the party, or oppose another party, by name, platform, principles, history, theme, slogans, issues, or philosophy, without reference to particular candidates in an upcoming election subject to the requirements of the Act.

(B) materials or activities in connection with candidates and elections not subject to the requirements of the Act.

(C) training, compensating, or providing materials for poll watchers appointed by the party pursuant to New York Election Law §8-500.

(D) promoting party enrollment or voter turnout without reference to particular candidates in an upcoming election subject to Program requirements, including research, polling, recruitment of party employees and volunteers, and development and maintenance of voter and contributor lists.

(E) raising funds for the party without reference to particular candidates in an upcoming election subject to the requirements of the Act.

(F) mailing of absentee ballot applications in a special or general election in which an office not subject to the requirements of the Act is on the ballot.

(ii) The Board may require a candidate to demonstrate in any proceeding before the Board that any of the following expenditures that are made by a party committee or constituted committee are not in-kind contributions to the candidate:

(A) expenditures for materials or activity that include an electioneering message about a clearly identified candidate for a covered election.

(B) expenditures for advertisements, broadcasting, mailings, or electronic media for a candidate or against his or her opponent, including a home page on the Internet.

(C) expenditures for which the candidate has, without making public disclosure of an outstanding liability in a timely manner, promised or made reimbursement or other payment to the party committee or constituted committee. These expenditures will be considered in-kind contributions during the time preceding the reimbursement or other payment by the candidate.

(6) If candidates announce they are running together as a "ticket" for which they have chosen to join together in a broad spectrum of activities to promote each other's election, the Board will presume that expenditures made by one candidate's campaign for materials or activities that clearly identify the other candidate are in-kind contributions to the second candidate. The following factors would increase the burden a candidate would have in overcoming this presumption: (i) the campaigns have staff, consultants, office space, or telephone lines in common; (ii) other in-kind contributions, expenditure refunds, advances, or joint expenditures have been made between these campaigns. If the expenditures are in-kind contributions, the expenditures are subject to the apportionment requirements of Rule 1-08(h).

(g) Spending public funds. (1) Public funds may be used only for expenditures by a participant's principal committee to further the participant's nomination or election either in a special election to fill a vacancy or during the calendar year in which the election in which the candidate is a participant is held.

(2) Public funds may not be used for:

(i) an expenditure for any purpose other than the furtherance of the participant's nomination or election;

(ii) an expenditure not incurred during the calendar year of the election;

(iii) an expenditure in violation of any law;

(iv) payments made to the participant or a spouse, domestic partner, child, grandchild, parent, grandparent, brother, or sister of the participant or spouse or domestic partner of such child, grandchild, parent, grandparent, brother, or sister, or to a business entity in which the participant or any such person has a 10 percent or greater ownership interest;

(v) payments in excess of the fair market value of services, materials, facilities, or other things of value received;

(vi) (A) any expenditure made after the participant has been finally disqualified or had his or her petitions finally declared invalid by the New York City Board of Elections or a court of competent jurisdiction, except that such expenditures may be made (1) as otherwise permitted pursuant to §3-709(7) of the Code, or (2) for a different election (other than a special election to fill a vacancy) held later in the same calendar year in which the candidate seeks election for the same office;

(B) any expenditure made after the only remaining opponent of the participant has been finally disqualified or had his or her petitions declared invalid by the New York City Board of Elections or a court of competent jurisdiction, except that such expenditures may be made for a different election (other than a special election to fill a vacancy) held later in the same calendar year in which the participant seeks election for the same office;

(C) any other election, if the public funds were originally received for a special election to fill a vacancy.

(vii) payments in cash;

(viii) any contribution, transfer, or loan made to another candidate or political committee;

(ix) gifts, except brochures, buttons, signs and other printed campaign material;

(x) any expenditures to challenge or defend the validity of petitions of designation, or nomination, or certificates of nomination, acceptance, authorization, declination, or substitution, and expenses related to the canvassing of election results;

(xi) any expenditure for which records required by Rule 4-01 are not maintained or obtained by the participant;

(xii) any expenditure that is not itemized in a disclosure statement submitted pursuant to Rule 3-03;

(xiii) any payment that is not made or reimbursed from an account disclosed by the participant pursuant to Rule 1-11(a)(iv) or 2-01(a);

(xiv) reimbursement for advances, except in the case of individual purchases in excess of $250;

(xv) expenditures made in connection with any action, claim or suit before any court or arbitrator;

(xvi) expenditures made primarily for the purpose of expressly advocating a vote for or against a ballot proposal, other than expenditures made also to further the participating candidate's nomination for election or election;

(xvii) payment of any penalty or fine imposed pursuant to federal, state or local law; or

(xviii) payments for services that were never received, including payments for legal services pursuant to a retainer agreement to the extent payments for such services exceed the value of the services rendered.

(3) It is presumed that the following bills for goods and services are not qualified campaign expenditures: (i) bills for an election that are first reported in a disclosure statement submitted later than the 10 day or 27 day post-election disclosure statement applicable to that election; and (ii) bills first reported in an amendment to or resubmission of a disclosure statement that is made after the last election in an election year in which the participant is a candidate, or after a special election.

(4) A liability that is not reported in a contemporaneous manner is a violation of §3-703(6) of the Code and will not be considered a qualified campaign expenditure.

(h) Joint expenditures; endorsements. (1) In accordance with the Act, nothing in these Rules shall be construed to restrict a candidate from authorizing expenditures for joint campaign materials and other joint campaign activities, including fundraising and campaign communications such as mailings and telephone and other communications, if the benefit the candidate derives from the material or activity is proportionally equivalent to the candidate's expenditures for the material or activity. To the extent a candidate derives a disproportionate benefit, the candidate is considered to have received a contribution and made an expenditure. Among the factors the Board will consider in determining whether the benefit is "proportionally equivalent," are: (i) the focus of the material or activity; (ii) the geographic distribution or location of the material or activity; (iii) the subject matter of the communication; (iv) the references to the candidate or the candidate's appearances therein; (v) the relative prominence of a candidate's references or appearances in the communication, including the size and location of references to the candidate and any photographs of the candidate; (vi) the timing of the communication; and (vii) other circumstances surrounding the communication. The amount spent by the candidate for these purposes is subject to the expenditure limit applicable under the Act, unless it is otherwise exempt.

(2) Notwithstanding the provisions of paragraph (1) above, the following activities in support of another candidate by a participant, limited participant or non-participant shall not be considered contributions to or expenditures by such participant, limited participant or non-participant, except to the extent that such activities are paid for by the participant, limited participant or non-participant for a covered election:

(i) the act alone of endorsing or appearing with another candidate for public office, party nomination or party position;

(ii) the insubstantial communication of such endorsement or appearance described in subparagraph (i), such as where the candidate's name is one of several names appearing on the communication and is of equivalent prominence as the other names;

(iii) fundraising assistance to another candidate in the form of written communications that do not promote the participant, limited participant or non-participant, such as the appearance of the participant's, limited participant's or non-participant's name or signature on a letter soliciting funds for another candidate or the appearance of the participant's, limited participant's or non-participant's name on fundraising material where the participant's, limited participant's or non-participant's name appears alone or with other names and is of equivalent prominence as the other names; and

(iv) a typical communication by a political club to its members, which includes the name of a candidate, provided that the candidate is already a member of the political club, the political club has fewer than 500 members, and the communication does not solicit funds on behalf of or otherwise promote the participant's, limited participant's or non-participant's campaign for a covered election.

(3) (i) The Board may, in its discretion, determine that the benefit to a candidate from references to or appearances of that candidate contained in another candidate's communication, such as campaign literature or an automated telephone call, is of de minimis value to the candidate based on the factors listed in paragraph (1) or other factors.

(ii) Candidates and other individuals or entities may present information to the Board establishing such a de minimis benefit pursuant to Rule 7-01, or in such other manner as the Board may determine, or the candidate may present such information during the post-election audit process.

(i) Expenditures by check. No candidate may expend an amount in excess of $100 except by check drawn on a reported depository and signed by the candidate or person authorized to sign checks by the candidate.

(j) Omitted.

(k) Volunteer services. Candidates may not pay volunteers for services already performed on a voluntary basis for that election, but may hire them as paid employees or retain them as consultants for future services. Candidates may not accept professional services on a volunteer basis from individuals who previously provided, on a paid basis, services of a similar nature to the same campaign during the same election cycle. Candidates may not accept volunteer services from any entity, or from an individual having an ownership interest of ten percent or more in, or control over, any entity that provided paid services to the same campaign during the same election cycle. Notwithstanding the foregoing, after the election, candidates may accept volunteer services from individuals who previously provided paid services.

(l) Expenditure limit compliance. (1) Participants and limited participants shall monitor whether their total expenditures exceed the limit of §3-706(1) of the Code or, if applicable, the limit of §3-706(3)(a)(i) of the Code. The amount of the expenditure limit that applies to the participant or limited participant in the calendar year of the election, pursuant to §3-706(1) of the Code, shall be reduced by the amount by which the initial expenditure limit pursuant to §3-706(2) of the Code is exceeded. Participants and limited participants have the burden of demonstrating that expenditures are exempt pursuant to §3-706(4) of the Code. A participant or limited participant may meet this burden by maintaining contemporaneous, detailed records that demonstrate that each individual expenditure claimed as exempt is exempt in accordance with §3-706(4) of the Code and submitting such documentation as required under paragraph (3) below.

(2) If a participant or limited participant fails to submit documentation sufficient to substantiate an exempt expenditure claim, the expenditure subject to such claim shall not be considered exempt from the expenditure limit applicable to the participant or limited participant under §3-706(1) or §3-706(3)(a)(i) of the Code.

(3) For purposes of this subdivision, in determining whether a participant's or limited participant's total expenditures exceed the amount of the limit applicable under §3-706(1) or §3-706(3)(a)(i) of the Code, the following expenditures shall be excluded: (i) expenditures made in the first three years of the election cycle, to the extent such expenditures do not exceed the limit applicable under §3-706(2) of the Code; and (ii) in the case of the general election expenditure limit, expenditures made not later than the closing date of the 10 day post-primary election disclosure statement, provided that the participant or limited participant was subject to a primary election expenditure limit.

(4) Notwithstanding anything otherwise provided for in this subdivision, the reimbursement of an advance shall not be considered an exempt expenditure.

(m) Fundraising for more than one election. When a candidate makes expenditures for a single event or other activity to raise funds for more than one office sought, and the first election that will be held is:

(1) a covered election, the full amount of such expenditures is subject to the expenditure limits, the contribution limits, and the contribution prohibitions of the Act and the Charter.

(2) not a covered election, a portion of such expenditures will be subject to the expenditure limits, the contribution limits, and the contribution prohibitions of the Act and the Charter in such proportion as the total funds raised in connection with such event or other fundraising activity for the second election bears to the total such funds raised for both elections. Alternatively, the candidate may demonstrate to the Board that a different apportionment is applicable in accordance with Rule 1-07(d).

(n) Fundraising solicitations. Each written solicitation of contributions by or on behalf of a candidate, whether in paper or electronic format, shall include the following statement, written in a conspicuous and clearly recognizable manner: "State law prohibits making a contribution in someone else's name, reimbursing someone for a contribution made in your name, being reimbursed for a contribution made in your name, or claiming to have made a contribution when a loan is made."

(o) Expenditure limit compliance for transfers. In the case of a transfer of funds from a committee not otherwise involved in the covered election, other than another principal committee of the same candidate, the participant must allocate to the transferred contributions any expenditures incurred by the transferor committee during the covered election cycle in connection with raising or administering transferred contributions, and any expenditures incurred by the transferor committee prior to the covered election cycle in connection with raising the transferred contributions. In such a case, the participant has the burden of demonstrating, for the purpose of compliance with the expenditure limits of the Act, what expenditures incurred by the transferor committee were not made in connection with raising or administering the transferred contributions. At the Board's request, the participant shall provide documentation related to any such expenditures, including copies of Federal forms or disclosure statements filed with the New York State or City Board of Elections on behalf of the transferor committee. Expenditures will be applied towards the expenditure limit in effect at the time of the transfer; provided, however, that in the case of transfers made prior to the covered election cycle, expenditures will be applied towards the expenditure limits of § 3-706(2).

(p) Expenditures not in furtherance of the campaign. In determining whether or not an expenditure is in furtherance of a candidate’s nomination or election, the Board may consider any of the factors from the following non-exhaustive list:

(1) the timing of the expenditure;

(2) whether the campaign has already purchased duplicative services or equipment;

(3) the nature of the goods or services purchased;

(4) whether an unusually high proportion of funds was spent on a specific category of expenditure;

(5) whether a high total dollar amount or proportion of payments was made to individuals rather than to entities;

(6) whether the campaign has demonstrated a pattern of making other expenditures not in furtherance of the campaign or impermissible post-election expenditures; and

(7) whether an expenditure made less than one month prior to the election, or after the election, is accompanied by the reporting of a corresponding outstanding liability.