Rules for Big Spenders

The city’s Campaign Finance Board just released a draft of their advisory opinion on the issue of how changing the city’s term limits law will impact contribution and spending limits for active candidates.

As I and other reporters have noted, if term limits are extended, a number of ouncil members running for higher office will wind up running for their old seats, for which the spending and contribution limits are lower.

The C.F.B. offered two solutions:

"Freeze" the current accounts and create a new campaign committee for the 2009 races. Money from those "frozen" committees can be transferred to the new accounts. Money spent running for higher office won’t be counted toward the spending limit for the 2009 races. But the money transferred from that "frozen" account would mean less in matching funds in the future.

Or candidates can just keep their current campaign war chests, return any contributions that are over the limit and keep on running.

It seems, to me, like a win for incumbents, who spent and raised lavishly, and who now get the chance to use the huge sums of money they raised, basically, any way they want.

The real question now is how much more they’ll need to spend on getting re-elected to their seats if they vote in favor of changing term limits.

Here are the C.F.B.’s proposals:

The Board’s advisory opinion will address the impact of campaign finance laws on two groups of candidates in the event term limits are extended.

GROUP 1: Previously term-limited candidates who anticipated running for a higher office but will decide to seek re-election to their current office in 2009

These candidates would have two options.

Option A: Start a brand new committee for 2009; “freeze” the old committee until 2013

Candidates could choose to open a new campaign committee for re-election to the candidate’s current office in 2009. These candidates must “freeze” their original 2009 committee for higher office until January 12, 2010. No activity beyond the costs of maintaining the account, like bank fees, would be allowed until January 12, 2010. (Note: with two exceptions—see discussion of transfers and durable goods below.)

The deadline for candidates to choose this option would be January 11, 2009—the end of the current disclosure period.

Contributions

· Candidates could accept contributions to the new 2009 committee up to the applicable limit, even if such contributor has already contributed to the “frozen” committee.

· Contributions that remain in the “frozen” committee could be matched with public funds for the 2013 election. The appropriate contribution limit for the 2013 election could be applied to contributions remaining in the candidate’s “frozen” committee.

Expenditures

· Campaign spending made prior to the date of the advisory opinion would not count against the candidate’s spending limit for the 2009 election. Nor would old spending be counted against the spending limit for the 2013 election, except as described below.

· Any spending made between the date of the advisory opinion and the date the new committee is opened (no later than January 11, 2009) would be counted against the 2009 spending limit.

· A 15 percent fundraising allocation for spending (approximating the cost of raising those funds) would be made against the funds in the “frozen” committee as determined by cash-on-hand on January 11, 2009. This total would be counted against the candidate’s “out-year” spending limit for the 2013 election.

· If a candidate’s total spending is less than 15 percent of cash-on-hand, then only the lower total would apply.

· If the new 2009 committee uses durable goods, such as computer equipment or other office supplies, purchased by the “frozen” committee, the 2009 committee would report an in-kind contribution from the “frozen” committee, or reimburse the “frozen” committee for the cost of those goods by January 11, 2009.

Transfers

· The candidate may transfer funds from the “frozen” committee to the new 2009 committee, but as always, any transfer is presumed to consist entirely of matching claims. With the $6-to-$1 matching rate, a $100,000 transfer from a “frozen” 2013 committee to a new 2009 committee could reduce the amount of public funds available to the candidate in 2013 by $600,000.

· If candidates transfer funds from the “frozen” committee to the new campaign committee, 15 percent of the total transferred would be counted against the 2009 spending limit. (A transfer would reduce the fundraising allocation counted against the candidates’ 2013 spending limit by the same amount.)

· If a candidate chooses to transfer any of the money from the “frozen” committee to the new committee, contribution limits for the appropriate office must be observed. Any over-the-limit amounts can remain in the “frozen” committee. Transferred funds cannot be matched with public funds.

Option B: Maintain the same committee for 2009

Candidates could also choose to keep their current committee and run for re-election to their current office instead of running for higher office.

Contributions

· The campaign must abide by the contribution limit for the office he or she seeks in 2009. (See the CFB website for contribution limits by office.) For any contributions that exceed the applicable limit, the over-the-limit portion must be returned to the contributor.

· Contributions returned by the candidate on his or her own would not be subject to findings of violation by the Board.

· Assuming the candidate meets the qualifications, eligible contributions remaining in the committee would be matched with public funds for the 2009 election.

Expenditures

· Spending made before the date of the advisory opinion would not be counted against the candidate’s spending limit for the 2009 election.

· A 15 percent fundraising allocation for spending (i.e. the cost of raising those funds) would be made against the candidate’s cash on hand as of January 11, 2009, less the amount of refunded over-the-limit contributions. This total would be counted against the candidate’s spending limit for the 2009 election.

· If a candidate’s total spending is less than 15 percent of cash-on-hand, then only the lower total would apply.

Eligibility

In order to take advantage of one of these two options, candidates must show they were seeking a higher office. If they have not declared an office to the CFB, they could show other materials, such as a solicitation for contributions as large as $4,950 (or $3,850 for borough president), or previous public statements of the intention to run for higher office.

GROUP 2: Candidates who choose not to run in 2009, but may plan to seek office in 2013

Maintain the same committee for 2013

These candidates may choose to use their existing committee for the 2013 election. (Note: This guidance assumes the candidate does not use their 2009 committee to run for office in an intervening election, e.g., if they run for state office in 2010.)

Contributions

· All contributions for a 2013 campaign would be subject to the 2013 contribution limits.

· Contributions to the committee would be eligible for public matching funds for a 2013 election.

Expenditures

· Spending made for the aborted 2009 election would not count towards the 2013 spending limit. Only spending from January 12, 2010 onwards would count towards the limit for the 2013 election.

· A 15 percent fundraising allocation for spending (i.e. the cost of raising those funds) would be made against the candidate’s cash on hand as of January 11, 2010. This total would be counted against the candidate’s out-year spending limit for the 2013 election.

· If a candidate’s total spending is less than 15 percent of cash-on-hand, then only the lower total would apply.

The Board will not issue a formal advisory opinion unless and until legislation affecting term limits is enacted. Until that time, the Board welcomes written comments from all interested parties. Comments should be submitted via email to info@nyccfb.info, or via mail to Sue Ellen Dodell, General Counsel, New York City Campaign Finance Board, 40 Rector Street, 7th Floor, New York, NY 10006.