A New Era for the New York City Campaign Finance Board?

Mayor Bloomberg announced today that Father Joseph P. Parkes, S.J., has been appointed as the third chairman of the New York City Campaign Finance Board. Additionally, Preeta Bansal, was appointed to the Board to take Father Parkes’ seat on the Board.

That’s a new chairman, significant changes to the law, and a new executive director, all in the past two years for the CFB.

New York City Campaign Finance Board Proposes Rules

The New York City Campaign Finance Board recently published proposed changes to its rules related to amendments to the Campaign Finance Act contained in Local Laws 34 and 67 of 2007.

The public is invited to submit written public comments by April 22, 2008.  A public hearing will also be held on the proposed changes in the near future.

Governor Paterson, the NYC Campaign Finance Board and Sisyphus

As newly-inaugurated New York Governor David Paterson knows, it is not easy to qualify for public matching funds in New York City.  And it just got harder.

In 1993, David Paterson ran in the Democratic primary for New York City Public Advocate. His campaign committee did not reach the threshold of $125,000 in matchable contributions from 500 or more New York City residents. Thus, his campaign did not qualify to receive any public financing.  He lost that election.

Flash forward to last week. Much as we predicted, the NYC CFB issued a new advisory opinion retroactively reducing the contributions that count toward the threshold for the 2009 election from $250 to $175.

The Board reasoned that retroactive application of a 2007 legislative change in the threshold formula was the approach it took in the 2005 election and that threshold determinations are made only in election years, which necessarily contemplates looking backwards.  But another reason given – that the date of the underlying contribution “has never been relevant” in threshold determinations – is rather odd.

The 2007 law changing the threshold also contemplates that contributions count toward the threshold only if the contributor is not deemed to be doing business with the City of New York at the time the contribution is made.  In other words, the new law directs the CFB to look to the date of the underlying contribution in making threshold determinations – the very circumstance the CFB now says has never been relevant.

Also not explained in the opinion is that the July 2007 amendment to the matching funds formula (from 4:1 up to $250 per contributor, to 6:1 up to $175 per contributor) was expressly made retroactive.  The threshold formula was not changed until December 2007, when its component contributions were reduced from $250 to $175.  While some changes in the December 2007 law were made retroactive, the new threshold formula was not among these.

In Greek mythology, as Sisyphus pushed the boulder up the hill, it continuously rolled back. The result was a never-ending burden. I n laboring to reach the threshold to qualify for public funds, New York City candidates are learning that Sisyphus is no myth.

Second Annual Ch. 271 Disclosure Deadline Approaching in NJ

Pursuant to Chapter 271, a business entity that has received $50,000 or more in government contracts in a calendar year must file an annual disclosure statement electronically with ELEC. The disclosure form requires reporting contract information and reportable contributions the business entity has made. The due date for the second annual disclosure report for calendar year 2007 is March 31, 2008.

As previously reported here, non-profits are excluded from this filing requirement.

20 Years, 20 Laws

February 29 marks the 20th anniversary of New York City’s campaign finance law. In contrast to similar reform efforts elsewhere, NYC’s law has been a dynamic work in progress, the subject of frequent legislative changes.

Indeed, the current law is the product of more than 20 laws enacted over 20 years. A mandate for ongoing change was essentially built into the original law, which requires periodic reviews and reports by the NYC Campaign Finance Board (CFB). But not all legislated changes were originated by CFB recommendations.

To commemorate the first 20 years, below we highlight a few of the notable changes enacted by the NY City Council. (Campaign finance reform has also been a frequent subject of various NYC charter revision commissions, but we’ll leave that subject for another day.)

1988 – Public financing program created. Candidates for citywide office, borough president and City Council may voluntarily “opt-in”, agreeing to contribution and spending limits, and to public disclosure and record keeping requirements, in return for the opportunity to qualify for public funds, paid at a 1:1 matching rate. Campaign Finance Board created to administer program.

1989 – Spending limitations modified to encourage candidates to join the program.

1990 – Numerous changes made in the first post-election overhaul, including contribution limits reconfigured on an election cycle rather than a “per election” basis, increased spending limits, and expanded permissible uses of public matching funds.

1994 – Required candidates (other than Council candidates) to submit pre-opt-in disclosure reports to preserve their matching funds claims.

1996 – A debate program for citywide candidates is established.

1998 – Regulation of donations for transition and inauguration into office initiated. Contribution limits lowered. Corporate contributions prohibited. Political committees must register with CFB for their contributions to be acceptable. Public funds matching rate increased to 4:1.

2003 – Narrowed definition of matchable contribution. Pre-opt-in disclosure reports by Council candidates required. Capped public funds payments based on opposing candidates “competitiveness.” Administrative procedure codified for assessing civil penalties for violations.

2004 – Extended City contribution limitations, corporate contribution prohibition and disclosure requirements to all City candidates, including those not participating in the voluntary public financing program. Increased public funds payable to participating candidates opposed by well financed non-participants. Eligibility for public funds conditioned on payment of all outstanding penalties and public funds repayment claims from prior elections. Restrictions added on transferring funds, candidate eligibility to appear in debates, and the use of government resources for candidate appearances and communications in election year.

2005 – Set standards for when contributions by different labor organizations are subject to a single contribution limit.

2006 – Contributions by lobbyists and other persons listed in lobbyist registration statements are not matchable with public funds.

2007 – Established lower contribution limits from persons defined as doing business with NYC. Increased matching rate to 6:1. Definition of intermediaries subject to public disclosure expanded. Created restrictions on use of campaign funds and expanded restrictions on use of public funds. Revamped standards for capping public funds payments based on indicia of an opponent’s competitiveness. Increased spending limits and narrowed exemptions from spending limits. Set deadlines for post-election audits. Required adjudications for penalty assessments and public funds repayment claims.

The Case Against New York City’s Pay-to-Play Reforms

Earlier this week, the long expected challenge to New York City’s recent campaign finance law amendments was filed in the U.S. District Court for the Southern District of New York. Ognibene v. Schwarz includes free speech, equal protection and Voting Rights Act challenges to the “doing business” contribution limits and other elements of NYC’s campaign finance and lobbying laws. The plaintiffs include candidates, political parties, potential contributors, business owners, lobbyists, limited liability companies, and voters.

One count of the complaint maintains that the doing business contribution limits unconstitutionally burden the First Amendment rights of the family members and employees of lobbyists. Is this true?

In brief (and without the citations), the doing business limits apply to every “lobbyist,” as that term is defined in the NYC lobbying law: “every person or organization retained, employed or designated by any client to engage in lobbying.” But neither the lobbying law nor the campaign finance law extend these contribution limits to contributions by the spouse, domestic partner or unemancipated children of the lobbyist. Nor do these contribution limits cover any of the lobbyist’s employees, or their spouses, domestic partners or children. These persons may be treated as lobbyists under the Campaign Finance Act, but only for the purpose of defining their political contributions as not matchable with public funds – which is a separate cause for complaint in the lawsuit.

Rather than limiting family member contributions, the law directs the Mayor, City Council, and Campaign Finance Board to form a task force to study the feasibility of subjecting spouses, domestic partners and unemancipated children to the doing business contribution limits.

So right now it is a bit premature for the complaint to maintain that the doing business contribution limits reach “even the speech and associational rights of such people as far removed from business dealings with the City as a secretary of a lobbyist, the spouse of an employee of a lobbyist, and the unemancipated child of the spouse of an employee of a registered lobbyist.” While other elements of the law arguably have this effect, the current law’s contribution limits simply do not.

Lawyers Lobbying Municipal Officials

When is it improper for an attorney representing a private client to communicate with a municipal official? This topic was explored at a recent panel discussion presented by the Municipal Law Section of the New York State Bar Association in which I participated.

Lawyers representing private clients often make lobbying communications at the municipal level, which may subject the attorney to registration and reporting requirements of the NYS Lobbying Act and/or applicable local law (such as New York City’s lobbying law). We debated whether a lawyer’s lobbying communications to public officials are, or should be, restricted by the Disciplinary Rule of the Lawyer’s Code of Professional Responsibility that prohibits lawyer contacts with parties represented by another attorney (in this case a municipal attorney or outside counsel retained by the municipal entity).

Under the no-contact rule, the questions to be examined are:

(1) Is the municipal official considered to be a “party” in the matter that is the subject of the communication?

(2) Is the municipal official represented by a lawyer in that matter?

(3) Does or should the private lawyer know that the municipal official is represented by counsel?

(4) Regardless of any of the above, is the communication authorized by law? For example, is it protected under the First Amendment right to petition government?

Implementation or Evolution?

The Campaign Finance Board recently posted materials on its website that summarize amendments to the NYC Campaign Finance Act adopted in 2007. In several instances, we note, the website summary differs from the language of the new law.

For example, most of the legislative changes took effect on December 31, 2007 or January 1, 2008, without provision for retroactive application. One change reduces the portion of matchable contributions that candidates may claim toward the threshold for qualifying to receive public funds from $250 to $175.

The CFB summary states that only the first $175 of a contribution counts toward meeting the threshold – implying that this reduced cap applies to all contributions received for the 2009 election. But according to the law, the reduction applies only for contributions received on or after December 31, 2007. In other words, up to $250 of each matchable contribution received before December 31, 2007 should count toward the qualifying threshold.

In another instance, the summary deviates from the law in describing exemptions from the spending limit, a topic we previously discussed in some detail.

An administrative agency has a duty to follow the law, as does the regulated community. Unfortunately, deviation from this duty often leads to conflict.

Doing Business Database Goes Live

The City’s doing business database (DBDB) has gone live.

As previously reported here, the New York City Campaign Finance Board certified the first phase of the DBDB last month.  As of February 2, 2008, entities and persons listed in the DBDB are now subject to reduced contribution limits and the contributions are not matched with public funds.  The reduced limits are as follows:

  • Mayor: $400
  • Comptroller: $400
  • Public Advocate: $400
  • Borough President: $320
  • City Council: $250

Lobbying in NYC: The First Year (After the New Laws)

The New York City Clerk’s office recently issued a special report commemorating the first year of enforcing the City’s new lobbying laws. Among other developments, the City penalized lobbyists and their clients over $326,000, more than $301,000 of which was for missing reporting deadlines. The report also details the commencement of a Random Audit Program, wherein lobbying firms are randomly selected for an audit. Indeed, 30 firms have been selected for 2008 – notices are imminent.

Below is a calendar of lobbying filing deadlines for the City and the State Commission on Public Integrity.


City Clerk

Commission on Public Integrity

Client Filing

Jan. 1, 2008

  • *

Jan. 15, 2008

  • *

  • *

March 15, 2008

May 15, 2008

July 15, 2008

  • (State Only)

Sept. 15, 2008

Nov. 15, 2008

Jan. 15, 2009

* The City Clerk’s Office has issued an alert advising that these three reports are now due on February 15, 2008.