Spin Cycle

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Updated: NYC: How 'rival' McDonald's lawsuit could help Lhota

Republican Joseph Lhota's mayoral campaign cleared a big credibility hurdle this week by reporting that he raised a robust $730,000 in the two months after he announced his candidacy.

Now Lhota, the former MTA chairman and executive with Madison Square Garden and Cablevision, Newsday's parent company, faces a new funding crossroads. He must decide by June whether to accept matching public funds under the city's strictest-in-the-nation finance rules, and in doing so agree to cap his overall spending. Campaign aides say that if he signed on to the program, the matching funds would add some $270,000 to the $730,000.

This is where some interesting strategic twists come in. Regardless of whether a candidate chooses to apply for matching funds, the rules limit contributions to a total of $4,930 per donor in both the primary and the general election, and to only $400 for those who do business with the city.

But another GOP mayoral candidate, long shot George McDonald, is suing to void those contribution caps so candidates can accept the state's much higher maximum contributions -- $19,700 per donor for the primary and $41,100 for the general election. So far, a state judge has ruled McDonald, founder of the nonprofit Doe Fund for the homeless, may raise the money but cannot spend it pending the case's outcome.

And Lhota advisers say that outcome could determine the next phase of Lhota's fundraising strategy. Bottom line: If McDonald succeeds in court, it could help Lhota -- by allowing him to draw more from a developed field of contributors. Since McDonald's mayoral chances are seen as much slimmer, his action may in the end benefit Lhota's campaign more than his own. And, if McDonald wins in court, it will not have been Lhota who blew up* the campaign-finance system touted by good-government groups as a model.

*Update: McDonald's camp calls my "blew up" characterization off the mark. To be fair, his argument is that his success in court would NOT explode the system -- there would still be matching funds available for the typical pol running and a Bloomberg-type candidate could still spend at will, without matching funds.

But if McDonald prevails the especially-low city contribution limits would not be imposed on candidates such as himself who opt out of the match. McDonald argues that this part of the current system wrongly works against outsider citizen candidacies such as his own and notes it was not how it worked in the city between 1988 and 2004.

As to who could benefit if he wins, McDonald spokesman David Catalfamo adds, interestingly:

"It's more than a little ironic that George McDonald is solely carrying the political and financial costs for challenging a law that state Conservatives and Republicans oppose philosophically and in practice, and the leading GOP candidate would benefit most from."

An important part of this overall GOP funding scenario: A third Republican candidate, billionaire John Catsimatidis, plans to shun spending limits, as did Mayor Michael Bloomberg. Catsimatidis aides say he has put $1 million of his own into the race, and contend Lhota's fundraising can only be assessed in light of how he spends it and what it gets him. "Can he sustain that level of fundraising? It takes a lot of energy and time. John can write a check whenever he needs to," said one.

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