An advisory opinion has been requested concerning the applicability of the requirements of the New York City Campaign Finance Act to certain contributions and expenditures. The following questions have been raised:
1) If the committee authorized by Mr. Dinkins for the 1989 election ("1989 Committee") has excess funds remaining after payment of all obligations for the 1989 elections, other than making repayment to the New York City Election Campaign Finance Fund ("Fund") in connection with public funds previously received by the 1989 Committee, may such excess funds be used for transition and inaugural expenses before making repayment to the Fund and without being subject to the expenditure limits for the primary or general elections?
2) If the 1989 Committee has excess funds remaining after repaying to the Fund an amount equal to the amount of public funds received by the 1989 Committee, may those excess funds be used for transition and inaugural expenses without being subject to the expenditure limits for the primary or general elections?
3) In the event the answer to either question 1 or 2, or both, is yes, can a contributor who has made the maximum permissible contribution to the 1989 Committee for both the primary and general elections make an additional contribution to the 1989 Committee where the additional contribution will be used specifically for transition or inaugural expenses?
4) If a new committee ("New Committee") is now formed on behalf of Mr. Dinkins which does not now elect to participate under the Act but which may subsequently elect to participate under the Act for a subsequent election, will contributions received by the New Committee and which are used to pay expenses in connection with the 1989 transition and in connection with activities for Mr. Dinkins' 1990 inauguration be subject to any contribution limits under the Act, and will such expenditures be subject to any overall expenditure limits imposed by the Act for the future election for which the New Committee may elect to participate under the Act?1
5) If undeposited contributions received by the 1989 Committee before, on, or after the date of the general election (November 7, 1989), are first deposited in a new bank account established by the New Committee, will those monies be subject to the contribution and expenditure limits and excess fund repayment requirements of the Act applicable to Mr. Dinkins' 1989 mayoral campaign?
The contribution limits of the Campaign Finance Act apply to contributions accepted by a candidate and the authorized committees of the candidate "for each election in which he or she seeks to be qualified" for optional public financing under the Act. New York City Administrative Code §3-703(1) (f). The expenditure limits of Administrative Code §3-706(1) apply to "all expenditures made by a candidate and his or her authorized committees on or after January 1, 1989... in each primary election and in each general election held in 1989..." Administrative Code §3-710(2) (c) provides, in relevant part:
If the total of contributions and payments from the Fund received by an eligible candidate and his or her authorized committees exceed the total campaign expenditures of such candidate and committees for all elections held in the same calendar year, such candidate and committees shall use such excess funds to reimburse the Fund for payments received by the authorized committee from the Fund during such calendar year... No such excess funds shall be used for any other purpose, unless the total amount of the payments received from the Fund by the authorized committee has been repaid.
Contribution Limits
The inquiry is whether the contributions used for transition and inaugural expenses following the 1989 election were originally accepted for the 1989 primary or general election. If so, the amount of these contributions will be subject to the 1989 contribution limits.
Generally, the Board presumes that contributions accepted "after the date of an election and the date on which the net debts outstanding of the candidate and all authorized committees of the candidate from prior campaigns for election are reduced to zero" are accepted for the next following election in which the candidate seeks nomination or election. Campaign Finance Board Rule 102(q). This presumption may be overcome by first depositing a contribution into an account established for a particular election. Campaign Finance Board Rule 403(a) (1). Indeed, the act of deposit demonstrates that a contribution has been accepted by the candidate. See Campaign Finance Board Rule 102(m). Contributions deposited in bank accounts established for the 1989 primary and general elections, pursuant to Campaign Finance Board Rule 401(a), are subject to the contribution limits applicable in those elections and may not be used for any other election unless and until the candidate and his or her authorized committees have made all required repayments to the Fund. Campaign Finance Board Rule 102(t). Monies deposited in separate accounts established for other elections, pursuant to Campaign Finance Board Rule 401(d), are not subject to the contribution limits applicable in the 1989 elections. See Administrative Code §3-712. These monies may be subject, however, to contribution limits applicable in subsequent elections in which the candidate chooses to participate in the Campaign Finance Program, pursuant to Campaign Finance Board Rules 102(q) and 403(a).
Expenditure Limits
The issue is whether expenditures for transition purposes and the inauguration following the 1989 election are made "in" the 1989 primary or general election for purposes of the expenditure limits of Administrative Code §3-706(1). Expenditures are presumed to be made for the election in which the candidate seeks nomination or election next following the making of the expenditure. Campaign Finance Board Rule 102(e). See also Campaign Finance Board Rule 105(f) (regarding the time that an expenditure is deemed to have been made). Furthermore, the Board has determined that the expenditure limits of the Act cover expenditures made "for the purpose of promoting or facilitating the nomination or election of the candidate..."2 Campaign Finance Board Rule 105(a). Transition and inaugural expenditures are made on behalf of a candidate only once the candidate has been elected. These expenditures do not in any way promote or facilitate a nomination or election that has previously occurred. Thus, transition and inaugural expenditures made following the date of the 1989 general election are not subject to the expenditure limits applicable in the 1989 primary and general elections.
Under New York Election Law §14-130 campaign contributions may be "expended for any lawful purpose", but may not be "converted by any person to a personal use which is unrelated to a political campaign or the holding of a public office..." It would appear that, because transition and inaugural expenditures are incurred only if the candidate is elected, these expenditures relate to the holding of a public office and not to the conduct of a political campaign for election to that office. Because transition and inaugural expenditures relate primarily to the holding of a public office, they are not "campaign expenditures" in the 1989 elections for purposes of Administrative Code §3-710(2) (c). Therefore, contributions accepted for the 1989 elections by a candidate who has also received public funds may not be used for transition or inaugural expenses until after the candidate repays the Fund the amount required pursuant to Administrative Code §3-710(2) (c).
Excess Funds Repayment
Unlike the contribution limits, which, as noted above, apply only to contributions that are "accepted" for a primary or general election, the repayment requirement of Administrative Code §3-710(2) (c) covers all contributions that are "received... for all elections held in the same calendar year." (Emphasis added.) "Receipt" is, of course, a necessary pre-condition of "acceptance." It is also, however, a broader term, encompassing both accepted and unaccepted contributions. Although the act of deposit demonstrates the fact of acceptance, it is not relevant to a determination that a contribution has been received.
Clearly, the repayment requirement of Administrative Code §3-710(2) (c) was intended to minimize the cost to the taxpayer of the Campaign Finance Program. Public monies are made available to candidates only to the extent they are unable to raise monies from private sources to meet obligations incurred in their election campaigns. A candidate who receives contributions and public funds in excess of the obligations he or she incurred in the 1989 elections is thus required to repay the Fund the excess amount.
For the foregoing reasons, the candidate carries a heavy burden in demonstrating that undeposited contributions received by the committee he authorized for his 1989 elections were not in fact received for elections held in 1989, for purposes of the repayment requirement of Administrative Code §3-710(2) (c). The Board will presume that only the following contributions are not subject to the excess funds repayment requirement, because they were not received for elections held in 1989 covered by the Act:
a. Contributions deposited prior to the date of the general election in an account established for an election that is not held in 1989, in the case of a candidate who sought election in the general election;
b. Contributions deposited prior to the date of the primary election in an account established for an election that is not held in 1989, in the case of a primary election candidate who did not seek election in the general election;
c. Contributions deposited in an account established for an election that is not held in 1989, if the candidate demonstrates that these contributions were received in response to a solicitation that specified that the contribution was not being solicited for the 1989 elections, see Campaign Finance Board Rule 107;
d. Contributions deposited in an account established for an election held in 1989 in which the candidate did not seek nomination or election to an office covered by the Campaign Finance Program, see Advisory Opinion No. 1989-46, dated September 21, 1989; and
e. Contributions returned to contributors or deposited in a segregated account in order to comply with the contribution limits of Administrative Code §3-703(1) (f).3
Based on the foregoing analysis, the contributions and expenditures described above would be regulated as follows (the following paragraphs are numbered according to the number of the question to which the opinion is directed) :
1, 2) The 1989 Committee may use excess funds from the 1989 elections for transition and inaugural expenses only after Mr. Dinkins and his authorized committees have repaid to the Fund the amount required under Administrative Code §3-710(2) (c). Transition and inaugural expenditures are not subject to the expenditure limits applicable in the 1989 primary and general elections.
3) The 1989 Committee may accept an additional contribution from a contributor who has previously made the maximum contribution permitted under Administrative Code §3-703(1) (f) for the primary and general elections, provided that the additional contribution is not commingled with monies accepted for the 1989 elections and is not used to pay liabilities incurred in those elections. In addition, as noted above, the Board will presume that these additional contributions, deposited in a segregated account in order to demonstrate compliance with the contribution limits, are not subject to the excess fund repayment requirement. These additional contributions would, however, be subject to the Act's contribution limits in the next election in which the candidate seeks office, if he participates in the Campaign Finance Program. See Campaign Finance Board Rules 102(q); 403(a).
4) The New Committee is an "authorized committee", as defined in Administrative Code §3-702(7), if Mr. Dinkins has authorized it to aid or take part in an election, including future elections to the office of mayor. See Administrative Code §3-702(10) (definition of "election"). Assuming that the New Committee does not accept any contributions for the 1989 elections, the contributions it accepts and the expenditures it makes will not be subject to the contribution and expenditure limits applicable in the 1989 elections4. If Mr. Dinkins chooses to participate in the Campaign Finance Program in a future election, the contribution limits in that election would apply according to the presumptions of Campaign Finance Board Rules 102(q) and 403(a). The fact that the contributions are used for transition and inaugural expenses does not change the effect of those presumptions. The expenditure limits of the Act would not be applicable to expenditures made before "the calendar year preceding the year of the future election", Administrative Code §3-706(2), except as may otherwise be provided by a regulation adopted by the Board pursuant to Administrative Code §3-706(6) 5.
The Board will presume that contributions received by the New Committee are not subject to the excess funds repayment requirement if the contributions were received in response to a solicitation that specifies that the contribution is not being solicited for the 1989 elections. Language in the solicitation to the effect that the contribution will be used solely for transition or inaugural purposes is sufficient for giving rise to this presumption.
5) The undeposited contributions are not subject to the 1989 contribution limits until they are deposited in an account established for a 1989 election or otherwise expended or used for a 1989 election. Campaign Finance Board Rule 102(m). These undeposited contributions are, however, subject to the excess funds repayment requirement, unless the candidate demonstrates that these contributions were not received for elections held in 1989. Merely depositing these contributions in a separate account established by the New Committee does not, by itself, demonstrate that these contributions were not received for the 1989 elections. If the candidate demonstrates that these contributions are not subject to the excess funds repayment requirement, the amount of such contributions used for inaugural and transition purposes would not be subject to the expenditure limits of the Act.
NEW YORK CITY CAMPAIGN FINANCE BOARD
1 The decision to participate in the Campaign Finance Program for a particular election is made by the candidate, not by his or her authorized committee. See Administrative Code §3-703(1) (c); Campaign Finance Board Rule 201. The Board thus construes this question as relating to a candidate's, and not a committee's, decision to participate.
2 The propriety of using campaign contributions for transition or inaugural purposes under State election law is beyond the scope of this Advisory Opinion.
3 Contributions returned to contributors prior to the date of this advisory opinion may be excluded from determining the amount subject to the excess funds repayment requirement.
4 Contributions accepted for future elections are, however, subject to reporting requirements under Campaign Finance Board Rule 312.
5 At this time the Board has neither adopted nor proposed expenditure limits applicable in the first two years of the four year election cycle.