Nearly $1.5 million in debt, the Minnesota Republican Party is using a line of credit to help it through recent cash crunches.
The party owes $75,000 on a line of credit at Alliance Bank for loans taken out in late October and November, according to federal finance reports filed this month. It owes another $85,000 in other bank loans.
All told, the party had $990,000 in debt in its federal account after the election. As of mid-October, it also had $450,000 in debt in its state account.
Political parties’ finances often dip after elections, but the GOP hole is long-standing. It has been at least $1 million in debt since 2011. Republican Party Chairman Keith Downey, who has led the state party since 2013, says the party is in a far better position than it had been in recent years, during which it was more than $2 million in debt, was unearthing unpaid bills, targeted by campaign watchdog agencies and threatened with eviction for nonpayment of rent.
Now, Downey maintains, “we are on a very manageable path. We got into a position where, financially, we are able to spend money and do everything we possibly could on behalf of our candidates.”
Downey and party treasurer Bron Scherer said tapping the credit line is part of the normal ebb and flow of party business. Scherer said the party does not use the credit line for long-term financing.
“You use a line of credit just to balance out and smooth out those up and downs in cash flow,” Downey said. The credit line carries a 6 percent interest rate, Scherer said.
Pat Shortridge, a Republican operative who led the party after its chairman suddenly resigned in 2011, agreed. When he was chairman in 2012, Shortridge said, the party’s finance history had left it in poor shape. At that point, he said, the Republican Party might not even have qualified for a line of credit.
Shortridge and DFL Party chair Ken Martin noted that national and some state parties often use credit lines.
“It is pretty commonplace, ” Martin said. The DFL ended the election with about $500,000 of federal debt at the end of November. Martin said that could be halved by the end of the year.
The DFL Party does not have any credit-line debt. “It’s not unusual but it is risky,” Martin said. “You are saddling the party with a significant liability going forward.”