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1998-2: Corporate Contributions and the Appointment of Board Members

October 23, 1998

Re: Charter §1052(a) (1); Administrative Code §3-703(1-a); 3-705(2) (b); 3-706(3) (b) (ii); 3-708(1); Op. No. 1998-2

Pursuant to action of the City Council, amendments to the New York City Campaign Finance Act (Int. No. 344-A) were enacted into law on October 22, 1998. The new law includes two provisions that address matters also covered in amendments to New York City Charter Chapter 46 proposed by the New York City Charter Revision Commission. This advisory opinion sets forth the Board's interpretation of how these portions of the new law would apply in the event that the proposed Charter amendments are adopted by the voters in the November 3, 1998 general election1.

Contributions by corporations

Newly adopted New York City Administrative Code §3-703(1-a) provides:

To be eligible for optional public financing at the higher matching rate set forth in Administrative Code §3-705(2), a participating candidate must accept and maintain compliance with the following additional condition: the participating candidate must not accept and any political committee authorized by such candidate must not accept, either directly or by transfer, any contribution, loan, guarantee, or other security for such loan from any corporation, other than a corporation that is a political committee as defined in Administrative Code §3-702(11), for all covered elections held in the same calendar year in which he or she is a participating candidate. The participating candidate's acceptance of this additional condition shall be set forth in the certification filed pursuant to Administrative Code §3-703(1) (c).

Further, Administrative Code §3-705(2) (b) provides that candidates who qualify shall receive public funds payments of, in the case of participating candidates who accept and are in compliance with the additional condition set forth in Administrative Code §3-703(1-a), four dollars for each one dollar of matchable contributions, up to one thousand dollars in public funds per contributor...

See also Administrative Code §3-706(3) (b) (ii) (5:1 payment rate in certain circumstances).

Proposed Charter §1052(a) (12) provides:

Notwithstanding any other provision of law, the board shall prohibit candidates participating in the voluntary system of campaign finance reform from accepting, either directly or indirectly, a campaign contribution, loan, guarantee or other security for such loan, from any corporation. The board shall promulgate such rules as it deems necessary to implement and administer this provision.

The proposed Charter amendment would convert the prohibition on the acceptance of corporate contributions from an optional additional condition for participating candidates to a new mandatory condition of Campaign Finance Program participation. It would also extend the prohibition to contributions made by incorporated political committees. The remaining question is whether the proposed Charter amendment would trigger the 4:1 matching rate for all candidates who choose to participate in the Campaign Finance Program or whether it would in effect override the 4:1 matching rate2. The Board concludes that the Charter amendment would trigger the 4:1 matching rate for all participating candidates.

Aside from other legislative objectives in support of the 4:1 matching rate, the Council intended the increased rate to serve both to induce candidates to accept a corporate ban and to result in increased public funds payments that would help offset the loss of corporate contributions. As stated in the report of the Council Committee on Governmental Operations:

Under the proposed amendments..., more citizens will be encouraged to run for public office and such amendments will help eliminate the appearance of undue influence in the political process. Int. No. 344-A gives candidates major incentives to ban corporate contributions...

Int. No. 344-A establishes a higher matching rate of public money (4:1) if a participating candidate does not accept and maintains compliance with the following condition: the participating candidate must not accept... any contribution... from any corporation...

Report of the Committee on Governmental Operations on Int. No. 344-A (August 18, 1998) at 2, 4-5. In short, the coupling of the corporate ban and the 4:1 matching rate was intended to promote Program participation without resulting in a net loss of available campaign funds.

Should the Charter proposal pass, a conclusion that the 4:1 matching rate cannot be triggered would be a misinterpretation of the law. Such an interpretation would effectively repeal the additional financial benefit the Council intended for all participating candidates who accept a ban on corporate contributions. Negating Administrative Code provisions in a manner that would serve to discourage Program participation is clearly not the intent of the Charter Revision Commission.

On the contrary, the Commission has specifically disclaimed any intent to address the level of financial support for participating candidates, and has stated its deference to the Council and Administrative Code on this subject:

The approach of the voluntary... Program... has resulted in effective limits on the amount of contributions, meaningful restraints on spending, disclosure of campaign finance information, financial support of candidates, and voter education. Further improvements in these areas have been proposed and the Commission determined that it should leave these issues to the legislative process.

Report of the New York City Charter Revision Commission (August 20, 1998) at 9.

The Commission's proposals, like the Council legislation, seek to promote Program participation precisely because a high level of participation is essential for these proposals to be made effective. This broad goal of ensuring that the Program, as embodied in the Administrative Code, remains effective is underscored in a separate Charter proposal that authorizes the Board to adopt rules to implement other Charter provisions, only after consideration of the following criteria:

(1) the effectiveness of the voluntary system of campaign finance reform, (2) the costs of such system, (3) the maintenance of a reasonable balance between the burdens of such system and the incentives to candidates to participate in such system.

Proposed Charter §1052(a) (11) (c).

These are all factors that the Council considered in adopting Int. No. 344-A, which strikes a balance between burdens and incentives with respect to corporate contributions. To reconcile the language and intent of both the new law and the Commission's proposal, it is paramount that the Board not reach for an interpretation that effectively overturns this "reasonable balance" between the Program's burdens and incentives, unless such a conclusion is required by a clearly stated intent on the part of the Charter Commission or the City Council. No such intent is evident. Indeed it would be illogical and contrary to the purposes of both the Council and the Commission to conclude that the Charter proposal to mandate the burden of a corporate ban would also effectively withdraw financial incentives and off-sets the Council has devised for promoting Program participation.

Thus, the Board concludes that adoption of the proposed Charter ban on corporate contributions would trigger the Administrative Code provisions for 4:1 (and 5:1) matching rates for all Program participants3.

Appointments to the Board

This section explains how a new provision in the Administrative Code concerning appointments to the Board would be construed if the Charter proposals are adopted. Newly adopted Int. No. 344-A adds the following sentence to Administrative Code §3-708(1) :

In the case of a vacancy in the office of a member for which a member is holding over after expiration of the term for which the member was appointed, an appointment to such office made after June 1 in a year in which covered elections are scheduled shall not take effect prior to December 1 of that calendar year.

This subject is also addressed in a proposed amendment to the corresponding Charter section, which states:

Upon expiration of the term of a member, if the mayor or the speaker, as appropriate, shall fail to appoint a member within one hundred twenty days of the expiration of such term, the member whose term has expired shall be deemed appointed for an additional term of five years, provided, however, that if the expiration of such term occurs in a year in which elections, except special elections, covered by the voluntary system of campaign finance reform are scheduled, the member whose term has expired shall be deemed appointed for an additional term of five years if the mayor or the speaker, as appropriate, shall fail to appoint a member within ninety days of the expiration of such term.

Proposed Charter §1052(a) (1).

One Board member's term expires every year on March 31. Charter §1052(a) (1); Administrative Code §3-708(1). Pursuant to Public Officers Law §5, a Board member is authorized to:

hold over and continue to discharge the duties of his office after expiration of the term for which he shall have been chosen, until his successor shall be chosen and qualified; but after the expiration of the term, the office shall be deemed vacant for the purpose of choosing his successor.

Should the Charter proposal become law, in a year elections covered by the Program are regularly scheduled4:

1. The appointing authority would have 90 days from April 1 to appoint a successor to a Board member who is holding over.

2. If the appointing authority acts to appoint a successor between June 2 and June 29 (the ninetieth day following the expiration of the term), the member holding over may continue to serve through December 1, at which time the new appointment would take effect.

3. Failure to make an appointment by June 29 would result in the member holding over being deemed appointed for an additional term.


1 This advisory opinion is intended to provide guidance for voters on the effect that the proposed Charter amendments would have, in the view of the Board, on recently adopted amendments to the Campaign Finance Act (Int. No. 344-A). The interplay between the proposed Charter amendments and the new law has been the subject of public speculation and comment. The question whether the proposed Charter amendments will actually appear on the general election ballot has been the subject of ongoing litigation.

2 Neither the City Council nor the Charter Revision Commission has addressed this specific question.

On the one hand, it can be argued that the Charter proposal would, in effect, override the 4:1 matching rate since participating candidates would no longer have an option of joining the Program and accepting contributions from corporations. Under this view, the 4:1 matching rate would simply never be triggered because the optional ban set forth in the Administrative Code would be overridden by the Charter's mandatory ban. On the other hand, the Charter proposal could have the effect of triggering a 4:1 matching rate for all participating candidates, since in joining the Program each candidate will be signifying acceptance of a ban on corporate contributions that the Council had intended would trigger a 4:1 matching rate.

The Board recognizes that other constructions are also arguable, based both on differences in the language of Administrative Code §3-703(1-a) and proposed Charter §1052(a) (12) and on differences between their effective dates, October 22, 1998 and January 1, 1999 (if adopted), respectively. Moreover, proposed Charter §1052(a) (12) broadly authorizes Board rulemaking on this subject, thus offering another potential means of reconciling these Administrative Code and proposed Charter provisions.

3 The conclusions reached in this section are consistent with testimony the Board submitted to the Commission shortly before it approved final Charter proposals for the ballot. See Letter of Laurence Laufer to Elizabeth Dvorkin, dated August 20, 1998.

4 The Board's view is that the Charter Revision Commission likely intended for the 90 day period to apply only in years in which primary and general elections covered by the Program are regularly scheduled (e.g., 2001, 2003, 2005, 2009) and that the 120 day period would apply in all other years, including those in which primary and general elections are held to fill vacancies pursuant to state law or Charter §§24(c); 25(b); 81(e); 94(c).