Mayoral candidate Lhota at funding crossroads

Given the ability of political money to talk, swear and wail, the credibility of Republican Joseph Lhota's mayoral campaign cleared a big hurdle this week by reporting that he raised $730,000 in the two months since he announced his candidacy.

Lhota's ex-boss Rudy Giuliani contributed, along with several of his former aides who have been out of the public eye for years -- names from the City Hall past such as Howard Wilson, John Gross and Dennison Young. There were still other names from ex-Gov. George Pataki's former administration, including former aides John Cahill and Charles Gargano. Big business and real-estate donors included Mitchell Modell of Modell's Sporting Goods and New York Mets chief operating officer Jeffrey Wilpon. Lhota also tapped family and friends.

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.

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 in a crucial twist, another GOP mayoral candidate, 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.

Lhota advisers say that outcome could determine the next phase of Lhota's fundraising strategy. If McDonald succeeds in court, it could help Lhota -- by allowing both of them to draw more from their field of contributors.

An important part of the 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.

So far, Catsimatidis also has gotten support from some party officials in Manhattan, Queens and Brooklyn, and "we have a shot at the Bronx," said the aide. Thursday, Pataki also endorsed him.

All the Democrats in the mayoral primary thus far are expected to take part in the campaign-finance program. In Albany, Gov. Andrew M. Cuomo has proposed to replicate the city program on a state level, although Republican lawmakers have resisted authorizing the use of public funds for campaigns.

Giuliani's public bid to help Lhota raise money recently took the form of a warning that the city could regress if the wrong choice is made in the mayor's race.

"If you don't think the city can slip back to its unmanageable, ungovernable ways, just listen to Joe's Democratic opponents," the former mayor said in a recent email blast. "He will stand up to the destructive policies of tax-and-spend politicians who put New York and America in peril."