The Republican Party of Minnesota is heading into the 2012 elections with massive debt that could be as high as $2 million, party officials disclosed Friday.
A day before Republican delegates were to elect a new chairman, party officials conceded that the obligations include some debts the GOP had not disclosed. That could prompt additional fines from state and federal regulators.
The Big Story Blog is following this story today.
It isn't a surprise that that the Republican Party's finances are bad, but no one expected the numbers to be this bad. Since Tony Sutton abruptly resigned as GOP chairman earlier this month, party officials have suggested that the debt could be as high as $1 million. They disclosed that it could be double that amount at a press conference.
"The debt number is honestly higher than any of us wants it to be," said Jeff Johnson, Minnesota's Republican National Committeeman. "There is some ugly stuff in here."
Johnson and other executive committee members spend the last three months reviewing the party's finances. He said the review intensified after Sutton resigned.
"We really believe that our Republican activists and donors deserve to know exactly where the party stands, warts and all," Johnson said. "There are some warts in here. It's all disclosed and we're not running from it and we intend to meet it head on."
Those warts include nearly $430,000 in debt the party had already reported, $415,000 in previously undisclosed payments and $220,000 in loan payments. The party also has to pay the Federal Election Commission $120,000 in fines for violating campaign finance law in 2007. That fine was for failing disclose the party's total debt — which the party appears to have failed to do again.
Another big chunk is $719,000 in legal bills for the 2010 gubernatorial recount, which party officials say they will contest. To put it in perspective, the party's total debt is roughly a third of what it spent on state and federal races in 2010.
Mike Vekich a businessman and accountant, who led the financial review, said he thinks it can be paid off.
"I have certainly have seen worse," Vekich said. "This is surmountable. Once we know what the total numbers are, once the total leadership is in place on Saturday, we'll start working on a plan going forward."
Party delegates are scheduled to meet Saturday to elect a new chairman. The candidates, Pat Shortridge, Terry McCall and Todd McIntyre did not return calls to discuss how they plan to pay the party's debt.
In a statement, Sutton said the party's debt situation was due to a hard-fought 2010 election and a difficult fundraising environment. He declined further comment.
Former Deputy Chairman Michael Brodkorb, who resigned in October, also declined to comment.
Republican Party officials were careful to note that the financial review was not an audit, and that the recount debt is "under legal review."
When asked if anything illegal occurred, Vekich said, "We have found nothing at this point." That has some Republicans calling for a wider audit of the party's finances.
"It feels like we're on the Titanic and we're just seeing the tip of the iceberg," said Rick Weible, a member of the Republican State Executive Committee. "We know there's a problem but we need to figure out what's in the undercurrent."
Weible said he would to push to have a complete audit done of the party's books to see if there were any [other] improprieties. Weible also said he confronted Secretary Treasurer David Sturrock about the party's finances earlier this week.
In response, Sturrock told the executive committee that he didn't know the true extent of the debt because he didn't have all of the party's financial information, Weible said.
"He basically stated that the invoices were hidden from him, he didn't review them and he didn't review bank statements," Weible said. "And he then threw out a weak argument that distance was an issue."
Weible's comments were confirmed by other members of the executive committee. Sturrock, who lives in Marshall, did not return calls to MPR News.
(Update: Acting MNGOP Chair Kelly Fenton sent out a statement saying Secretary/Treasurer David Sturrock resigned Friday.)
Republicans aren't the only ones facing debt. DFL Party Chair Ken Martin said his party owes roughly $210,000. He said they started the year with debt of about $750,000.