AO 2006-06: Millionaires’ Amendment applied to California special election

For purposes of the Millionaires’ Amendment, candidates running in California’s 50th District special general election must count all personal spending from the beginning of the election cycle to the date of the special general election as expenditures for that election. If a special general election runoff is necessary, it will be held on the same day as the regularly-scheduled California primary election. Given that fact, candidates running in both of those elections must count personal spending between the date of the special general and the runoff/primary date as expenditures for both the special general and the primary. If a runoff election is not held, all post-special general election personal spending will count toward the primary.

Background

Francine Busby, a candidate for Congress in California’s 50th District, is running in both the special general election — to replace former Congressman, Randy “Duke” Cunningham for the remainder of the 109th Congress — and the regularly scheduled primary election for that seat.

The special general election will be held on April 11, 2006. The candidate receiving a majority of the votes in that election will be declared the winner. If no candidate receives a majority of the votes, a runoff will be held on June 6, 2006, which is the same day as the regularly-scheduled primary election. Like Ms. Busby, most of the candidates running in the special general are also running in the primary election.

Millionaires’ Amendment

Under the Millionaires’ Amendment, House candidates may become eligible to receive contributions at an increased limit and may benefit from increased coordinated party expenditures if they are running against an opponent(s) whose personal campaign spending exceeds $350,000¹ during the election cycle. 2 U.S.C. 441a-1(a)(1)(A).

An election cycle begins the day after the most recent election for a given office and ends on the date of the next election for that office. For purposes of the Millionaires’ Amendment only, primary elections and general elections are considered separate election cycles and runoff elections are included as part of the cycle for the election that triggered the runoff.

An expenditure from personal funds made during a particular election cycle is considered to have been made for the purpose of influencing that election, unless designated for another campaign, and counts toward the $350,000 threshold for that election. 11 CFR 104.19.

Application to the California special

The application of the Millionaires’ Amendment to California’s 50th District elections (and, thus, Ms. Busby’s campaign) will differ depending on whether a runoff election is necessary to determine the special election winner.

Special general with no runoff

If a runoff election is not required, the special general election cycle will run from November 3, 2004, to April 11, 2006, the date of the special election. All expenditures from candidates’ personal funds made between those dates will be considered expenditures for the special general election, and will count toward the $350,000 threshold for that election. Candidate spending between April 12 and June 6 will count toward the primary election.

If, under this scenario, Ms. Busby’s expenditures from personal funds exceed the $350,000 threshold during the special general or primary election periods, she would trigger the reporting requirements of the Millionaires’ Amendment. Within 24 hours after exceeding the threshold, her campaign committee would have to file an “Initial Notification of Expenditures from Personal Funds” (FEC Form 10) and would file additional notifications each time her subsequent personal expenditures for that election exceed $10,000. 11 CFR 400.21(b) and 400.22(b). The committee would file a copy of each Form 10 with the FEC and with the opposing candidates in the affected election and those candidates’ national party committees.

Similarly, if Ms. Busby’s committee receives a Form 10 from any of her opponents during the applicable special general or primary election periods, the timing of the expenditures would determine which election threshold would apply. Expenditures from personal funds made during the special general election cycle must not be aggregated with expenditures from personal funds made during the primary.

With that in mind, the Busby campaign would compare the amount of personal spending disclosed on the Form 10 with Ms. Busby’s own personal spending during the comparable period to arrive at an “opposition personal funds amount.” If the calculation relates to primary election spending, the campaign would also need to compare the campaigns’ gross receipts, 1 as disclosed on FEC Form 3Z-1. 11 CFR 400.10(a)(3). If the resulting amount exceeds $350,000, the Busby campaign would qualify for increased contribution and coordinated party expenditure limits and would file FEC Form 11 to disclose that fact. 11 CFR 400.30(b) and 400.31(e).

As an eligible committee, the Busby campaign could solicit and accept contributions of up to $6,300 (three times the individual contribution limit of $2,100) for use only during the appropriate election cycle — i.e., special general or primary. The committee must stop accepting contributions at the increased limit when:

• It raises 100% of its opposition personal funds amount in contributions at the increased limit;
• Ms. Busby’s expenditures from personal funds make her committee ineligible for increased limits; or
• The opposing candidate, whose spending triggered the increased limits, ceases to be a candidate. 11 CFR 400.31 and 400.32.

If at the end of the election cycle — whether special general or primary — the campaign has any excess contributions raised at the increased limit, those funds must be disposed of within 50 days after the election. These excess contributions may not be spent in connection with any other election, nor may they be redesignated for another election. 11 CFR 400.50–400.54.

Campaigns must also take stock of the personal contributions the candidate has made during the cycle. If any portion of those personal funds was not used for expenses relating to that election, the remaining funds may be transferred to a future election, but must be counted as personal expenditures for that election. The committee must use a reasonable accounting method to determine what portion of a transfer is derived from the candidate’s personal funds. 11 CFR 110.3(c)(4).

Special general with runoff.

If a special general election runoff is held, the special election cycle will extend to the date of that runoff, June 6, 2006. Since June 6 is also the date of the regularly-scheduled primary election, the period between April 12 and June 6 also comprises the primary election cycle. As a result, personal spending during that period would count against the $350,000 thresholds for both the runoff and the primary election. This conclusion is limited, however, to the specific circumstances present in California where no candidate running in the special general runoff will be running against the same opponent in both the special general runoff and the primary election.

Accordingly, if Ms. Busby participates in both the special general runoff and the primary election, her campaign must aggregate expenditures from personal funds for both elections to determine whether her spending exceeds the applicable threshold with respect to her special general runoff opponents and thus triggers the requirement to file FEC Form 10. As described above, the campaign must file copies of Form 10 within 24 hours after spending exceeds the threshold with the FEC, opposing candidates in the affected election(s) and those candidates’ national party committees. With respect to Ms. Busby’s opponents in the primary, her campaign must only aggregate expenditures from personal funds made between April 12 and June 6, 2006 to determine whether her spending exceeds the applicable threshold for purposes of filing FEC Form 10.

On the other side of the equation, the Busby campaign would also use her aggregate expenditures from personal funds receipts to calculate the opposition personal funds amount for the special runoff and the primary election. As noted above, only the primary election calculation should include the gross receipt figures disclosed on Form 3Z-1 of the 2005 year-end report. The calculation for the special runoff would merely compare candidates’ personal spending during the applicable period.

The Commission emphasized that Ms. Busby’s committee must comply with all other requirements of the Millionaires’ Amendment regulations, such as the disposal of excess contributions after the election and the repayment of personal loans. 2 U.S.C. 441a-1(a)(4) and 441(a)(j).

Date issued: March 10, 2006 Length: 8 pages

¹ This is the threshold amount for House races. 11 CFR 400.9(b).