An opinion has been requested whether certain expenditures made by a political committee authorized by a candidate who is also an elected City official are exempt from the expenditure limits of New York City Administrative Code §3-706(1) and (2). In an advisory opinion request, dated March 2, 1989, the following facts are presented concerning payments made to Daniel Wolf by New Yorkers For Koch 1989, Inc. (the "Committee") and a predecessor authorized committee:
When Mayor Koch took office on January 1, 1978, a close advisor for years, Daniel Wolf began working for the City of New York as a $1 per year advisor without portfolio.
Mr. Wolf has continued in the same position for the past 11 years. His job is to keep his eyes and ears open, sit in on governmental meetings (whether or not the Mayor was also present); and to give his unvarnished opinion, assessment or advice to the Mayor. The key to his effectiveness is that he is not answerable to any governmental official, including the Mayor. He can therefore offer a completely candid point of view without being subject to the pressures inherent in any employer-employee relationship.
Due to changes in his personal financial circumstances by mid-1985, Mr. Wolf was unable to continue to self finance his role in City government. Accordingly the Committee authorized for Mayor Koch's 1985 re-election agreed to pay him $5,000 per month. It did so until some time in 1986 when the 1985 Committee exhausted all of its funds.
In 1987, the Committee was organized and began raising funds. Once a sufficient cash flow was achieved, the Committee started paying Mr. Wolf $5,000 per month.
Mr. Wolf was not involved in Mayor Koch's 1985 campaign; and he is not involved in the present campaign. He does not attend campaign meetings or functions. He does not have any role in the campaign. He does not give any advice to campaign workers or officials.
While Mr. Wolf certainly is aware of the campaign, and occasionally interacts with senior staff, that awareness and interaction derives from his role as a senior "City" advisor. In this regard, he is no different than the First Deputy Mayor, the Chief of Staff, the Mayor's Counsel or his Press Secretary.
In a letter to the General Counsel of the New York City Board of Ethics,1 dated April 21, 1989, the Counsel to the Mayor provided additional information about the work performed by Mr. Wolf:
Since 1978, Mr. Wolf has been an informal advisor to the Mayor, particularly with respect to press and community relations. Mr. Wolf has never been on the city payroll and therefore has never received any compensation from the city either in the form of salary or fringe benefits. He has no operational or decision making authority with respect to city government. Although Mr. Wolf is frequently at City Hall, he does not work according to a regular work day schedule.
Mr. Wolf is a retired editor. In addition to his investment income, Mr. Wolf currently receives compensation in the amount of $5,000 per month from New Yorkers For Koch 1989, Inc. He has received that compensation from the campaign committee and from its predecessor committee for most of the period from 1985 to the present. However, Mr. Wolf does not perform any services in connection with the Mayor's re-election campaign and did not perform any such services during the 1985 mayoral election.
See also Letter of Frederick P. Schaffer, Counsel to the Mayor, dated April 11, 1989.
The Board has issued two regulations which relate to the question presented. Rule 105(a) provides, in pertinent part:
All expenditures made or incurred by...any authorized committee of the candidate for the purpose of promoting or facilitating the nomination or election of the candidate... are subject to the limitations of Section 3-706(1) and (2) of the code.
(Emphasis added). Pursuant to Campaign Finance Board Regulation §102(e), the candidate has the burden of proving that Mr. Wolf is not employed "for the purpose of promoting or facilitating" the candidate's re-election or an opponent's defeat. If proven, the compensation paid to Mr. Wolf would not be subject to the expenditure limits, pursuant to Rule 105(a). The burden of proof is necessarily a heavy one, however, because the Board must presume that any payments made by New Yorkers For Koch 1989, Inc., particularly in the calendar year of the election, are for the purpose of promoting or facilitating the Mayor's re-election.
Indeed, the Board has promulgated a regulation that specifically deals with the issue whether so-called "constituent services" may be exempt from expenditure limits. Pursuant to Section 105(b), such exempt expenditures are limited to:
9... any... expense incidental to the holding of a public office,... for acts undertaken in an official capacity and not for the purpose of promoting or facilitating the nomination or election of a candidate or the defeat of his or her opponent made prior to the first day of January preceding the election for which the candidate chooses to participate in the public financing system...
In promulgating Section 105(b) (9), the Campaign Finance Board declined to extend this exemption into the calendar year of the election, precisely because it becomes increasingly difficult as the election approaches to distinguish between activities incidental to holding office and those which promote or facilitate re-election. This is obvious from the situation presented by Committee payments to Mr. Wolf. At what point does his advice to an elected official improve not only the official's performance as an office-holder, but also the official's performance as a candidate?
The fact that Mr. Wolf "interacts" at all with campaign staff, as stated in the advisory opinion request, buttresses the conclusion that distinctions between "official" and "campaign- related" activities cannot be made in this case. The nature of this "interaction" is not specified. But in light of the presumption of Rule 105(b) (9), the fact that there is any interaction between campaign staff and Mr. Wolf, both of whom are paid by and therefore employed by the Committee, leads to the conclusion that some benefit must accrue to campaign activities as a result of the payments to Mr. Wolf. Because the Committee exists to promote and facilitate the Mayor's election, the Board cannot conclude that Mr. Wolf, a paid employee of the Committee, will carry on activities for which he is paid in an election year without any regard to the Committee's primary purpose, particularly if he is in contact with Committee staff.
Any other assumption would require a searching inquiry into the specific nature and details of all Mr. Wolf's activities. The difficulties inherent in making such an inquiry and drawing clear conclusions are compounded by the representations that Mr. Wolf's responsibilities are rather amorphous, and that he provides advice on a broad, vaguely defined range of subjects. It is because of the extreme complexity of this type of fact-finding, requiring conclusions, for example, about the meaning and effect of even the briefest conversation, that the Board determined to draw, in Rule 105(b) (9), a "bright line" distinction between expenditures on "constituent services" made before the election year and those made in the election year.
The Board is of the opinion that the compensation paid by the Committee to Mr. Wolf in 1989 cannot be sufficiently distinguished from campaign expenditures on the facts presented. Mr. Wolf's 1989 salary is therefore subject to the expenditure limits applicable in 1989.
NEW YORK CITY CAMPAIGN FINANCE BOARD
1 The question whether the compensation paid to Mr. Wolf is consistent with New York City Charter §2607 was referred to the Board of Ethics. The Board of Ethics concluded that Mr. Wolf was not an "officer or employee" of the City and therefore had not violated Section 2607 by his receipt of payments from the Committee for work performed for the benefit of the City. See Letter of Powell Pierpoint, Chairman of the Board of Ethics, dated May 31, 1989.