Minn. GOP looks to recover from $2M debt

Minnesota Republican Party leaders are trying to restore confidence among donors and rank-and-file party members who are troubled by financial mismanagement over the last two and a half years.

GOP officials say they're putting a system in place to get a better control of the party's spending. A 14-member committee met late Thursday to discuss the party's finances, which are burdened by $2 million in debt.

A Minnesota Public Radio News investigation found that former GOP Chairman Tony Sutton awarded hundreds of thousands of dollars in party contracts to state lawmakers, party insiders and attorneys. Sutton resigned Dec. 2 after GOP leaders and delegates started raising questions about the party's budget.

A LONG, HARD LOOK

Pat Shortridge, who was elected the party's chairman late last month, said GOP leaders want to ensure that there is appropriate oversight of the budget.

"It's our job to really make sure that going forward that the system and the controls internally are sound," he said.

Shortridge also has appointed committees to review how party money was spent in the past. The Republican Party's bylaws give the party chairman unilateral authority to sign contracts, borrow money and hire staff. Shortridge said he expects the party's executive committee will now have a greater say in spending.

"We have to look long and hard at how are we handling things that are not in the usual budget process which is where some of the problems popped up in recent years," he said.

The party's spending under Sutton included more than $1 million to lawyer Tony Trimble, who unsuccessfully represented the party in recounts for U.S. Senate in 2008 and governor in 2010. As of last month the party no longer employs Trimble.

More than $220,000 went to a public relations firm with close ties to Sutton. Its job was to remake the party's image, but some party leaders say they never saw the final product. The two consultants who work for the firm declined to comment citing a confidentiality agreement.

Sutton distanced himself from the spending.

"I wasn't handling every invoice; I wasn't handling every detail," he said. "I was spending my time raising money and trying to do what we had to do to win elections."

Sutton said he accomplished his goal when Republicans took control of the House and Senate for the first time in nearly 40 years. But for the first time since 1978 the party also doesn't hold a statewide office. At one point last summer, Sutton — who earned headlines with his harsh attacks on Democrats and Republicans he considered disloyal — resisted party leaders when they suspected the finances were out of whack.

Republican National Committeewoman and former State Auditor Pat Anderson told MPR News earlier this week that party leaders pressed Sutton for more details.

"What we were getting from the treasurer and the chair in reports did not match up with what you could easily find online with FEC reports," Anderson said. "There was a lot of suspicion even back then about the size of the debt and whether the reports were accurate."

CONSEQUENCES TO BIG DEBT

The debt creates a significant hurdle for candidates running this year. The November ballot will include the U.S. Senate race, every member of Congress and every seat in the Minnesota Legislature. Some candidates say they aren't banking on the Republican Party to organize statewide fly-arounds and large voter drives.

"Whoever our endorsed candidate is, is not going to enjoy some of those perks," said Anthony Hernandez, one of the candidates who hopes to face DFL Sen. Amy Klobuchar in the 2012 U.S. Senate race.

"The debt's not going to be paid off before November," Hernandez said.

Some office holders and candidates also received money from the party under Sutton. That's not against the law, but Mike Dean, executive director of the government watchdog group Common Cause Minnesota, said he believes it's improper.

"This practice doesn't meet a smell test in terms of what is ethical," Dean said. "There should be a clear bright line that says candidates for office should not be paid by other candidates for office or political parties."

State Sen. Dave Thompson, R-Lakeville, is one of the lawmakers who was paid by the party. Thompson, who lost his bid for party chairman against Sutton in 2009, has been paid $70,000 since 2009. Thompson said his job was to teach candidates how to deal with the media and to write opinion pieces. He defended his work.

"I guess I never saw that as being any kind of conflict and still don't to this day," Thompson said. "The one thing I would say is that my initial contract ended, and they asked that I stay on and continue to do work for them."

Sutton also defended the practice, saying running for office should not disqualify someone from earning a party paycheck. The state DFL Party has a policy of not paying candidates.

PUZZLING EXPENSES

The state Republican Party also paid a company that markets medical products more than $10,000 to research whether medical marijuana is effective.

Anderson, the national committeewoman, said she was shocked to hear about that contract because party officers told her money was tight during the 2010 campaign when she ran unsuccessfully for state auditor.

"I was a candidate at the time and the party was dead broke," she said. "We're trying to win races and the party doesn't have money to help campaigns hardly at all and we're spending money [to research medical marijuana]," she said.

Sutton blames the party's financial problems on poor fundraising from donors who gave in small amounts. He said the end of the state's Political Contribution Refund was a drain on the party's coffers. That state program, which was eliminated in 2009, allowed donors to claim a tax refund of $50 when they contributed to political parties.

Fundraising reports support Sutton's claim. In 2006 — the last time every member of the Legislature and every constitutional officer were on the ballot — the party collected $1.8 million in donations that were $100 or less. In 2010, the party raised $255 from small donors.

Sutton said he thought he could make up for the loss by tapping wealthy donors for cash. But he concedes he should have scaled back spending to keep the books balanced.

"My mistake at the end of the day was not reacting to the change aggressively enough," Sutton said.

Sutton's mistakes may haunt Republicans this year. Some party leaders are worried that loyal donors — small and major givers alike — will be so angry that they'll refuse to contribute more money, compromising GOP efforts in this year's elections.

One of Sutton's chief critics was Rick Weible, the co-chair of the GOP's 3rd Congressional District. After Thursday night's meeting, Weible said he's pleased that the party is going to review its finances and improve controls over future spending.

"I was very excited, very happy with how far the party has come along and the work that we're continuing to do," Weible said. "It's very exciting on all levels to deal with the issues of the past and to prepare for anything else that can come up regarding anything. I think we've got the right people in the right place."

Weible said he believes new chairman Pat Shortridge will put the party back on track in time for November's elections.

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