An opinion has been requested whether particular campaign expenditures are covered by the dollar limits on expenditures for the year 1988 (New York City Administrative Code §3-706 (2)) or by the dollar limits on expenditures for primary and general elections to be held in 1989 (New York City Administrative Code §3-706(1)). Examples of campaign expenditures made by a prospective candidate holding an elective public office have been described:
1) Office-Related Expenses
This category includes expenses incurred as a consequence of the candidate's position as an office-holder and public person. These expenses are as follows:
a. Flowers
This includes flowers sent by the candidate to staff members, friends, and community leaders, on occasions such as illness or death.
b. Office receptions and special events
These expenditures relate entirely to the staff of the public office held by the candidate, and include the costs of receptions for departing employees and a special luncheon on Secretary's Day.
c. Office meetings
These expenditures involve meetings of the staff of the public office, and sometimes include non-staff as well. The meetings concern public business, such as charter revision and pedestrian and traffic safety.
d. Staff conferences
Each year, the candidate convenes a two-day staff conference and retreat for senior staff to examine the issues facing the city and the office, and to develop planning initiatives for the coming year.
e. Personal expenses; other
These are generally reimbursements of personal expenses incurred by staff of the public office in carrying out their duties on official government business. These expenses include payments for taxi fares, parking tickets, and meals.
2) Fundraising Expenses
All the expenses involved in the raising and solicitation of contributions made to the authorized committee of the candidate are within one of the following two categories:
a. Fees and expenses paid to the fundraising consultant
Since taking office, the candidate has employed the same consultant to coordinate all campaign committee fundraising. The consultant is paid on a "project/ event" basis, although payments are generally made monthly during the periods of employment. The consultant has again been retained in connection with 1989 fundraising plans. Most of the expenditures paid to the consultant are for her fees; a portion, however, includes certain incidental expenses passed on to the committee.
b. Fundraising expenses paid directly by the Committee
These include all expenses associated with fundraising events, other than the consultant's fees, which are paid directly by the committee. These expenses include payments for: catering, entertainment, printing of letters and invitations, graphic design of printed materials, photography, rental of sound and other equipment, postage, and other suppliers. In each case, the Committee tends to use the same person and companies to do the work or provide the goods and services. As with the consultant, the suppliers are employed on a "project/event" basis.
3) Contributions to Other Candidates or Committees
These expenditures are made either for the purpose of attending a fund raising event of another candidate or committee, or in making a contribution to the candidate or committee. Some of the recipients are "political committees" subject to the reporting requirement of the New York Election Law; others are candidates and committees located outside of New York State.
4) Payments to Political Clubs and Organizations
These are expenditures, made on an annual or other repetitive basis, which are primarily for the purpose of attending fund raising events held by organizations. These organizations are not "political committees" authorized to aid or take part in the election of candidates within the meaning of the New York Election Law. Rather, the recipient-organizations are voluntary, unincorporated associations that are not-for-profit (though not necessarily "non-profit" for federal or state charitable contribution purposes). A small portion of these expenditures is for membership dues. Most of the recipient-organizations are within the geographic area currently represented by the candidate as a public office-holder.
5) New York Telephone
These expenses have been incurred in connection with a private telephone line installed in the candidate's public office. Approximately seventy-five percent of the use of this line is for official confidential business of the candidate as a public office-holder; the remainder was for personal use.
6) Poll
Expenses were incurred in conducting a poll to determine the candidate's viability as a mayoral candidate. The poll, according to the poll-taker, would not be suitable to determine the candidate's viability as a candidate for reelection to the office currently held.
7) Computer Expense
This category includes the purchase of hardware, programming services, and repair services, all of which have been received in 1988. The primary purpose of this equipment is to provide record-keeping of campaign contributions. This record-keeping will assist the accounting function which enables the candidate to comply with applicable laws and regulations.
8) Rental Expense
A one-time expense was incurred in December for renting a facility for the purpose of announcing the results and findings of the poll.
9) Accountant
The committee engages an accounting firm to conduct an annual review of receipts and disbursements, to review the filings sent to the Board of Elections as required by the New York Election Law, and to prepare annual financial statements.
The opening paragraph of Administrative Code §3-706(1) and paragraph (a) of that subdivision provide:
The following limitations apply to all expenditures made by a candidate and his or her authorized committees on or after the first day of January preceding the election for which such candidate chooses to participate in the public funding provisions of this chapter and to expenditures made at any time prior to such date for services, materials, facilities, advertising or other things of value received, rendered, published, distributed or broadcast on or after such date:
(a) Except as provided in paragraph (b) of this subdivision, in each primary election and in each general election, expenditures by an eligible candidate for one of the following offices and his or her authorized committees shall not exceed the following amounts:
| mayor: | $3,000,000 |
| president of the city councilor comptroller: | $1,750,000 |
| borough president: | $625,000 |
| member of the city council: | $60,000 |
(Emphasis added). Subdivision two of Administrative Code §3-706(2) provides:
The following limitations apply to all expenditures made by a candidate and his or her authorized committees in the calendar year preceding the year of the election for which such candidate chooses to participate in the public funding provisions of this chapter and to expenditures made at any time prior to such date for services, materials, facilities, advertising or other things of value received, rendered, published, distributed or broadcast in such calendar year. Such expenditures by such a candidate for one of the following offices and his or her authorized committees shall not exceed the following amounts:
mayor, president of the city council or comptroller: $150,000
borough president: $100,000
member of the city council: $50,000
(Emphasis added). Section 3-706(5) of the Administrative Code provides:
Expenditures for professional services, including legal fees and accounting fees, made for the purpose of complying with the provisions of this chapter or the election law...shall not be limited by the expenditure limitations of this section.
Campaign Finance Board Regulation Section 105 provides, in relevant part:
a. All expenditures made or incurred by a candidate who seeks to be qualified to receive public funds or by any authorized committee of the candidate for the purpose of promoting or facilitating the defeat of his or her opponent or prospective opponent are subject to the limitations of Section 3-706(1) and (2) of the code.
b. The following expenditures are not subject to the limitations for a candidate and his or her authorized committees set forth in Section 3-706(1) and (2) of the code:
* * *
9. expenditures for constituent services or any other expense incidental to the holding of a public office, which are 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.
Campaign Finance Board Regulation §105(f) provides:
f. For purposes of the limitations imposed by Section 3-706(1) and (2) of the code, an expenditure for a service, material, facility, advertising, or other thing of value is made during the calendar year in which the service, material, facility, advertising, or the thing of value is received, rendered, published, distributed, or broadcast, regardless when the payment for the service, material, facility, advertising, or thing of value, or promise to make such payment, is made. Expenditures for services, materials, facilities, advertising, or other things of value received, rendered, published, distributed, or broadcast in more than one year shall be attributed in a reasonable manner to the expenditure limitations of Section 3-706(1) or (2) of the code, as appropriate.
It is therefore the opinion of the Board that the expenditures in the examples described above would be covered by the §3-706(2) and §3-706(1) limitations as follows (the following paragraphs are numbered according to the number of the example to which the opinion is directed) :
1) The "office-related" expenses as described generally appear to be expenditures "incidental to the holding of a public office, which are for acts undertaken in an official capacity..." Campaign Finance Board Regulation §105(b) (9). The expenses incidental to the "office meetings" described, however, because they involve the presence of non-staff, would be subject to specific review to determine whether these meetings were clearly "not for the purpose of promoting or facilitating the nomination or election of the candidate..." Id. Although the Board is of the opinion that the other expenses as described fall within Campaign Finance Board Regulation §105(b) (9) and are therefore not covered by the expenditure limits contained in Code §3-706(1) and (2), the Board would of course have to examine specific facts to make a final determination with respect to each expenditure. It should be noted that under §105(b) (9), these expenditures are exempt only if made before January 1 of the year of the election (in this case 1989).
2) The Campaign Finance Act contains no reference to fundraising and therefore provides no specific guidance on the issue how fundraising should be treated under the Act. The Board takes notice that a difference of opinion exists concerning the City Council's intent with respect to the applicability of the expenditure limits in Code §3-706(1) and (2) to the costs of fundraising.
The Board also takes notice that in the first year governed by the law (1988), the Board's regulations were not yet fully in place. Potential candidates may have engaged in fundraising activities in 1988 without specific guidance concerning the applicability of the expenditure limits to these expenditures.
Finally, the Board notes the peculiar nature of costs incurred in fundraising: they benefit a candidate over a much longer and indeterminate period of time.
In light of the lack of clear legislative guidance for the Board, the lack of regulatory guidance for potential candidates in 1988, the special nature of fundraising, and the public interest served by encouraging candidates to participate in the public financing program, the Board believes that a flexible approach to the attribution of fundraising costs is warranted. The Board is therefore of the opinion that the fundraising costs described may be attributed entirely to the expenditure limits of Code §3-706(1) (1989); Code §3-706(2) (1988); or reasonably attributed between the two sets of limits in a manner proposed by the candidate and approved by the Board.
3) These expenditures are clearly not exempt from the expenditure limits. The Board, after a public hearing in which comments were solicited and received on the issue, determined that an exemption from expenditure limits for contributions to other candidates and political committees was not warranted under the Campaign Finance Act. These contributions must be attributed to the expenditure limit applicable to the year in which the contributions were made.
4) These expenditures, like the expenditures in example 3 above, must be attributed to the expenditure limit applicable to the year in which the expenditure was made.
5) These expenses appear to be "incidental to the holding of a public office", Campaign Finance Board Regulation 105(b) (9), and are therefore not covered by the expenditure limits if made prior to January 1, 1989, (if the candidate seeks election in 1989).
6) The mayoralty poll is clearly a campaign-related expense. The cost of the poll is governed by expenditure limits applicable to the mayoralty race, if the candidate chooses to run for mayor. On the facts presented, which show that the poll results are statistically unreliable for preparing campaign strategy with respect to a non-city-wide office, the poll expenditures would not be governed by expenditure limits applicable to non-city-wide offices should the candidate choose to run for a non-city-wide office.
7) Because the computer expense appears to be related partly to compliance costs and partly to campaign expenditures, the Board would accept a reasonable attribution of portions of these costs to (A) the expenditure limits under Code §3-706(1) or (2); and (B) expenditures for compliance costs (exempt from these limits pursuant to Administrative Code §3-706(5)).
8) This rental expense is subject to the expenditure limits under Code §3-706(1) and (2). Although related to the mayoral poll, an occasion for announcing poll results appears to be a campaign activity, such as a press conference, that may be "for the purpose of promoting or facilitating" a candidate's campaign for any office.
9) The costs of engaging an accountant to comply with applicable laws are clearly exempt from the expenditure limitations pursuant to Administrative Code §3-706(5). See also Campaign Finance Board Regulation §105(b) (1).
As noted in Advisory Opinion Nos. 1988-1, dated December 2, 1988, and 1988-2, dated December 22, 1988, the Section 3-706(2) and Section 3-706(1) limits are mutually exclusive, so that an expenditure, or portion thereof, covered by the 1988 limit is not also covered by the 1989 limits.
NEW YORK CITY CAMPAIGN FINANCE BOARD