Re: Local Law No. 48 of 1998 §13; Administrative Code §3-703(1) (f), (h), (6), (7), (12); 3-705(5); Campaign Finance Board Rules 1-03(b); 1-04(c) (1), (2) (iv), (n); 1-08(c) (2) (iii), (iv); 2-06(c); Op. No. 1999-1
Questions have been raised formally and informally: (1) whether the Campaign Finance Act permits participating candidates for City-wide office to retain, in a separate account for a runoff primary election, any portion of a contribution received before October 22, 1998 that exceeds $4,5001, and (2) what are the applicable requirements for raising contributions for a runoff primary on and after October 22, 1998.
Until October 22, 1998, $8,500 was the contribution limit prescribed by the New York City Campaign Finance Act for participating candidates for Mayor, Public Advocate, and Comptroller in primary and general elections to be held in 2001. Former New York City Administrative Code §3-703(1) (f) (as modified in 1994 and 1998, pursuant to adjustments based on changes in the Consumer Price Index under Administrative Code §3-703(7)). On October 22, 1998, Local Law No. 48 of 1998 took effect, which, inter alia, lowered the contribution limit for these three citywide offices to $4,500 per campaign (primary and general election combined). Administrative Code §3-703(1) (f), as amended by Local Law No. 48 of 1998 §1. The new contribution limits are retroactive and apply to all funds raised for the 2001 elections:
No contribution accepted prior to the effective date of this local law that exceeds, or which when aggregated with any other contribution or contributions exceeds, the contribution limit applicable under paragraph (f) of subdivision 1 of section 3-703 of the administrative code of the city of New York, as amended by section 1 of this local law, shall be retained or used for elections held after such date. Any such excessive contribution shall be returned to the contributor immediately.
Local Law No. 48 of 1998 §13. See also Campaign Finance Board Rule 1-04(c) (1) (requiring return of over-the-limit contributions).
Candidates for citywide office participating in the Campaign Finance Program may accept additional contributions for a runoff primary election which do not exceed one half the amount of the contribution limit otherwise applicable for the primary and general elections combined (now an additional, $2,250). Administrative Code §3-703(1) (f) 2. Fund raising for a runoff primary is permitted only when a runoff primary is reasonably anticipated. Advisory Opinion No. 1997-2 (May 15, 1997); Advisory Opinion No. 1993-8 (July 20, 1993). Participating candidates have the burden of showing that a runoff primary is reasonably anticipated. Cf. Advisory Opinion No. 1989-21 (May 24, 1989), codified in Rule 1-08(c) (2) (iii) (attribution of spending to primary election spending limit when candidate shows that primary election was reasonably anticipated) 3. The Board expects it would be very difficult to make this demonstration early in the election cycle, when the intentions and likely competitiveness of prospective opponents are less clear.
The acceptance and deposit of contributions exceeding the new $4,500 limit in "segregated accounts" is, in general, prohibited. See, generally, Advisory Opinion No. 1993-8, supra. Rather, excess contributions must be returned to the contributor. Local Law No. 48 §13; Rule 1-04(c) (1). Additional contributions (not to exceed an aggregate of $2,250 per contributor) may, however, be accepted for a runoff primary election that has been shown to be reasonably anticipated, and must be deposited into a separate bank account from which no disbursements, withdrawals, or transfers are made until after the primary election for which the runoff is actually held. Administrative Code §3-703(1) (f); Rule 2-06(c). Indeed, any disbursement, withdrawal, or transfer from a runoff primary account prior to the actual occurrence of a runoff primary election, or on behalf of a participating candidate not on the ballot in the runoff primary, is a prima facie violation of the $4,500 contribution limit. Cf. Advisory Opinion No. 1997-10 (September 18, 1997) (discussing Program requirements when a runoff primary election, apparent from an unofficial Board of Elections vote tally on the night of the primary election, is ultimately not held once the official vote totals are announced by the Board of Elections) 4.
After consideration of the fact that the new lower contribution limits apply retroactively, and the fact that the question whether a runoff primary election may be reasonably anticipated has arisen relatively early in the 2001 election cycle, the Board believes the following conclusions and procedures strike an appropriate balance under the Act.
Pre-Effective Date Contributions. To facilitate compliance with the new $4,500 contribution limit for contributions received before October 22, 1998, the prospective candidate's committee may attempt to demonstrate that it is currently reasonable to anticipate a runoff primary election for a specific party's nomination for election to a specific citywide office that the candidate intends to seek in 20015. If the Board concurs, the prospective candidate's committee (and prospective opposing candidates) may open a runoff primary account, into which it shall deposit immediately up to $2,250 per contributor of such pre-effective date contributions exceeding $4,500. Rule 2-06(c) (2) (i).
If this demonstration is not persuasive, however, the portion of these contributions that exceeds $4,500 per contributor shall be returned to the contributor immediately. Local Law No. 48 §13. In any event, the portion of these contributions that exceeds $6,750 per contributor shall be returned to the contributor immediately, prior to the Board's consideration of an argument that a particular runoff primary is reasonably anticipated. Id.
Post-Effective Date Contributions. On and after October 22, 1998, the prospective candidate may accept contributions of no more than $4,500 per contributor for the 2001 elections; except that, if the prospective candidate has previously demonstrated to the Board that a runoff primary is reasonably anticipated, the prospective candidate (and prospective opposing candidates) may solicit and accept additional contributions for that anticipated runoff primary election, under the following conditions:
1) Until a runoff primary actually occurs, the solicitation of additional contributions for a runoff shall expressly state that the additional contributions are being solicited only for a runoff primary election that may not occur. Cf. Rule 1-04(n) (solicitation of contributions for elections not subject to the Act).
2) Except as is otherwise provided for contributions by the candidate under Administrative Code §3-703(1) (h), and notwithstanding any implication of Rule 2-06(c) (2) (i) to the contrary, no single contribution check shall be accepted in an amount that exceeds $4,500. This division of contributions is necessary so that contributors and the general public will not be misled about the amount of the lower contribution limits that are now applicable under the Campaign Finance Act for participating candidates in the elections that will take place in 2001. Contributions for an anticipated runoff primary election may be accepted only in the form of separate contributions of no more than $2,250 per contributor that shall be deposited immediately into a separate account established and used solely for that purpose, as described above.
3) The disclosure statements the prospective candidate's committee (and prospective opposing candidates) submits pursuant to Administrative Code §3-703(6) and (12) shall include a copy of the most recent bank statement for its runoff primary account.
4) The solicitation and acceptance of additional contributions for a runoff shall cease immediately once it becomes no longer reasonable to anticipate that a runoff primary election will be held for the party nomination to the specific citywide office sought by the candidate in 20016.
NEW YORK CITY CAMPAIGN FINANCE BOARD
1 This question was posed by Mark Guma, Assistant Treasurer of the Friends of Hevesi, by facsimile dated December 4, 1998.
2 Contributions for a runoff primary election are not matchable with public funds. See Administrative Code §3-705(5) (regarding public funds payments in a runoff primary election).
3 The allowance for accepting additional contributions under a runoff primary election limit is not open-ended. If it becomes no longer reasonable to anticipate a runoff primary, fund raising for such purposes is not permitted by the Act. See Advisory Opinion No. 1993-8, supra (footnote 3, in original, and accompanying text) and Advisory Opinion No. 1997-2, supra (footnote 3). Prospective participating candidates may, at any time, present to the Board written arguments about whether it is, or continues to be, reasonable for them, or for their prospective opponents, to anticipate a runoff primary election for a particular party nomination for the office sought.
Because of term limits, the current Mayor, Public Advocate, and Comptroller may not run for re-election in 2001. It might be argued that, in some instances, a large number of candidates may contest a particular political party's nomination in a primary election, creating the possibility that no candidate in that primary would receive at least 40 percent of the vote, in which case a runoff primary would be held pursuant to New York Election Law §6-162. In determining whether it is reasonable for a candidate to anticipate a runoff primary, the Board would look for the prospective candidate to produce evidence of a sufficient number of bona fide prospective opponents for that political party nomination. A history of runoff primaries in a particular party for the office at issue might also be relevant.
4 The additional runoff primary contributions of up to $2,250 may be expended only by candidates actually on the ballot in a runoff primary; all other participating candidates for the same office remain subject to the $4,500 contribution limit. Advisory Opinion No. 1997-10 (September 18, 1997); Advisory Opinion No. 1997-2, supra (footnote 3).
5 Candidates may ultimately decide to seek an office is different from the one originally sought. See, e.g., Advisory Opinion No. 1997-6 (June 24, 1997); Advisory Opinion No. 1993-7 (July 20, 1993). This advisory opinion does not address the disposition required of contributions previously set aside in anticipation of a runoff primary for an office no longer sought by the candidate.
6 In the event that 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 January 12, 2002. See Rules 1-03(b) and 2-06(c) (1) (i); Advisory Opinion No. 1997-2, supra. The return of runoff contributions, however, is permitted if a runoff primary is not held. Rule 1-04(c) (2) (iv).