Cam Hill, also a contender in the mayoral race, could not be reached for comment about his plans for campaign spending.
Pavao said he will only limit individual contributions to $100.
"I don't think you are going to be corrupted for $100," Pavao said.
He said this has been a tradition since he first ran for Town Council eight years ago.
"I think it's a noble cause on (Foy's) part, but campaigns take different turns as they materialize," Pavao said.
"Two years ago a candidate spent nearly $15,000."
At that time few rules governed campaign finance. Candidates only had to report contributions greater than $3,000.
This changed in 1999 when Foy initiated an ordinance that tightened the reins on campaign spending.
The ordinance limits contributions to less than $200 and required divulgence of all contributors.
But the law did not specify a cap for campaign fund raising nor did it restrict a candidate's out-of-pocket spending.
Foy said unlimited campaign spending created a political class that is only responsive to the people who can dole out the biggest contributions.
"You create a situation where the electorate is not representative of the community," Foy said.
To get the day's news and headlines in your inbox each morning, sign up for our email newsletters.
Both Foy and Pavao said most of their contributions come from local voters. Candidates get the names of potential donors from a list of registered voters and past contributors.
The lists are supplied by the Orange County Board of Elections.
Pavao said he would begin raising funds by sending out letters in the coming weeks.
"In a municipal campaign, if there are enough donors then you can run a reasonable campaign."
The City Editor can be reached at citydesk@unc.edu.