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1993-8: Treatment of Over-the-Limit Contributions

July 20, 1993

The Board has determined to issue an advisory opinion in order to clarify how candidates participating in the New York City Campaign Finance Program must address contributions that exceed, and thereby violate, the contribution limits set forth in New York City Administrative Code §3-703(1) (f). Campaign Finance Board Rule 1-04(c) (1) provides:

When a participant knows or has reason to know that he or she has accepted a contribution... in excess of the applicable contribution limit, the participant must promptly return the excess portion. A participant, including all political committees authorized by the participant, may not accept any contributions in excess of the applicable contribution limits.

Thus, in general, participating candidates must return any portion of a contribution that exceeds the limit applicable under the New York City Campaign Finance Act1. The only exceptions are those specifically set forth in Board rules adopted for purposes of Administrative Code §3-712, which, inter alia, exempts from the Act's contribution limits contributions accepted for elections in which the candidate may not or does not join the Program. Those exceptions are:

1) Committees Not Involved In an Election Subject To The Program. Contributions accepted by a committee that "does not, at any time, accept contributions, loans, or other receipts, or make expenditures, including expenditures of surplus funds, in" the election subject to the Program, are not subject to the Act's contribution limits. See Campaign Finance Board Rule 1-02, defining "authorized committee"; see also Rule 3-03(c) (3) (ii) (exempting these committees from the Program's disclosure requirements).

Restrictions and detailed disclosure requirements apply, however, to the transfer of funds between a committee that is involved in an election subject to the Act ("1993 committee") and a committee that is not ("non-1993 committee"). See Rules 1-03; 3-03(c) (2) (ii), (iii) ; 5-03(e) (2) . Because attribution to contributions and other previous receipts is not provided for transfers from a 1993 committee to a non-1993 committee, 1993 committees may not use such transfers to address excess contributions, but rather must return any excess portion to its contributor. See Rules 1-04(c) (1) ; 3-03(c) (2) (iii) .

2) Separate Accounts. The contribution limits applicable in primary and general elections do not apply to funds deposited in a separate account held by a 1993 committee exclusively for2:

(a) Surplus funds from previous elections that have been attributed to contributions from those previous elections and that are in excess of the Act's contribution limits. Rule 1-07(e).

(b) Receipts accepted for a runoff election. Rule 2-06(c) 3. If it is not reasonable to anticipate a runoff election, the participating candidate may neither accept nor deposit additional contributions in a runoff election account4.

(c) Receipts deposited in an account maintained for a different election and received on or after:

(i) the first January 12 following the election subject to the Act (January 12, 1994, in the case of elections held in 1993), or

(ii) the day the participating candidate extinguishes the last liability from that election, whichever is earlier.

Rules 1-04(f) (2); 1-05(h) (2); 2-06(b) 5.

In each case, the use of funds deposited in these separate accounts is restricted. Rules 1-03; 1-07(e); 2-06(b), (c) (1). While the return of runoff contributions is not required in the event a runoff election does not take place, return of these contributions is permitted, notwithstanding any possible contrary implication in Rules 1-04(c) (2) and 2-06(c) (1). Otherwise, if a runoff election does not take place, the runoff election account is treated like an account established for an election not subject to the Act6, in that its use in the primary and general elections is proscribed altogether, and the use of the account is frozen until the first January 12 after the election or the day the participating candidate extinguishes the last liability from the election, whichever is earlier. Rules 1-03; 2-06(c) (1) (ii) 7.

In no other circumstance is deposit in a separate account permitted as an exception to the requirement that the excess portion of a contribution must be promptly returned to its contributor.

Moreover, because funds may not be "transferred" between accounts maintained for different elections until after the participating candidate extinguishes the last liability from the election subject to the Act, "transferring" the excess portion to any separate account held by the same committee is similarly prohibited. Rules 2-06(b); 3-02(g). The only exceptions are provided in Rule 2-06(c) (2) 8, which concerns funds exchanged between a primary and general election account and a runoff election account. This rule permits a "transfer" to a runoff election account if that "transfer" is made up solely of funds derived from "single checks representing contributions for more than one election." Rule 2-06(c) (2) (i). To avoid the possibility that the primary and general election contribution limit will be violated by such single checks, this "transfer" must be made immediately after the single check is first deposited in the primary and general election account.


1 Restrictions on returning contributions under Rule 1-04(c) (2) do not apply to the return of excess contributions.

2 Former Board rules generally permitted candidates to deposit the excess portions of contributions in a "segregated account" held by the committee involved in the election subject to the Act. See former Rules 102(q); 401(d); 403. Because of the potential for possible abuse and the complexity associated with these exceptions, those rules were repealed, effective February 10, 1991.

3 See New York State Election Law §6-162. Administrative Code §3-703(1) (f) makes an allowance for participating candidates to accept contributions for a runoff election, subject to applicable runoff election contribution limits.

The Board has issued detailed instructions and separate disclosure forms for reporting funds that are deposited in and disbursed from runoff election accounts. New York City Campaign Finance Board, "Runoff Schedules: Special Instructions" (May 7, 1993).

4 For example, it would appear that a runoff election will not take place if fewer than three candidates file designating petitions for a party nomination.

5 Compare 1-04(f) (the presumption that contributions are accepted for the participating candidate's next following election, which makes no exception for contributions deposited in a separate account) with its antecedent, former Rule 102(q) (expressly permitting candidates to overcome the presumption by depositing the contribution in a separate account).

6 The contribution limit in a runoff election nonetheless continues to be applicable under Administrative Code §3-703(1) (f), until the participating candidate has extinguished the last liability from the primary and general elections that are subject to the Act.

7 If the runoff election does not take place, funds deposited in a runoff election account would not be included in the amount of "unspent campaign funds" that must be repaid to the Board pursuant to Administrative Code §3-710(2) (c). See also Rule 5-03(e) (1).

8 Thus, participating candidates may not "transfer" the excess portion of a contribution to an account the 1993 committee has maintained to pay off debts outstanding from a previous election. Advisory Opinion No. 1993-2 (February 17, 1993) discusses various requirements applicable to 1993 committees maintaining such accounts.