Sutton resignation puts focus on state GOP debt, discord

Party is conducting internal review of debts as it searches for a new chair

In late November, a group of roughly two dozen Republican activists gathered at a residence in Edina to discuss the future of the state Republican Party. The meeting included a broad cross-section of the GOP’s notoriously fractious base. Among the attendees were former Long Lake Mayor Randy Gilbert; libertarian talk show host Sue Jeffers; Katie Nadeau, the business manager of the Minnesota Business Partnership; Dan Nadeau, principal aide to Hennepin County Commissioner Jeff Johnson; blogger Mitch Berg; and Mike Downing, a moderate from White Bear Lake.

“I wanted people who weren’t used to being in the same room together in the same room together,” said John Gilmore, an attorney and GOP activist who helped organize the gathering.

It quickly became apparent that everyone present shared a deep concern about the state of the party’s finances and how the debt might hinder election efforts in 2012. Some attendees were angry about Chairman Tony Sutton’s salary, which he had requested only after successfully winning re-election in April, a move that some activists found distasteful. Others were alarmed by a $170,000 fine that the party had agreed to pay to the Federal Election Commission after FEC officials accused them of running afoul of campaign finance rules.

But out of that meeting eventually came a united plan: They would push for tabling the proposed 2012 state party budget at the upcoming gathering of the state central committee. The activists didn’t believe they had sufficient information — most significantly an authoritative accounting of how much debt the party carries — to pass judgment on the proposed budget. “I thought it was a very positive thing,” Gilbert said. “We came up with a plan. We’re going to ask questions about the budget. This is not a witch hunt.”

The debate over the budget was poised to be a contentious topic at the state central gathering. But less than 24 hours before delegates were scheduled to meet in Bloomington, Sutton stunned political observers by resigning from his post.

His resignation has thrown the GOP into disarray. It followed the departure in October of Deputy Chairman Michael Brodkorb, who stepped down to work on state Sen. Mike Parry’s congressional campaign. The upheaval at the top of the party has brought renewed scrutiny to the party’s financial state, with $519,000 in debt heading into the crucial 2012 election cycle, a figure that does not include $105,000 still due to the FEC. It has also raised questions about roughly $450,000 in additional unpaid legal bills incurred by an independent organization set up to fund the 2010 gubernatorial recount.

The next month will be crucial in determining how much of a role the beleaguered state party will play in the 2012 elections. In the coming weeks, party activists are expected to select a new chair, draft a budget for 2012 and scrutinize the findings of a much-anticipated internal financial review.

Party finances and personal attacks plagued Sutton

In a letter to GOP activists announcing his resignation, Sutton cited three regrets from his time as chairman. First, he wrote, the party jumped into the 2010 election too soon, anticipating more financial support from the business community. He also cited the loss of the state’s political contribution refund (PCR) program, which former Gov. Tim Pawlenty unallotted from the 2009 budget. Sutton estimated that the party lost $2 million in 2010 and $1 million in 2011 due to the elimination of the small-donation program. Finally, Sutton said he wished the party had never gotten involved in the costly 2010 gubernatorial recount effort on behalf of Republican nominee Tom Emmer.

But by the account of most observers (Sutton did not respond to a request for comment), the timing of Sutton’s resignation — on the eve of the budget-focused GOP gathering — signaled that the party’s unpaid bills were the main reason he stepped away from his post.

The state GOP is mired in debt. At the end of October it had unpaid bills of more than $500,000, according to the party’s most recent FEC filing. That includes a $162,000 loan from Alliance Bank; $72,000 owed to the GOP fundraising firm FLS Connect; and $52,000 owed to the Bryan Cave law firm. That doesn’t include the FEC fine, which the party must still pay more than $100,000 to settle. In addition, the state GOP listed its cash on hand at a negative $121,000, suggesting significant cash flow issues.

David Sturrock, the party’s secretary/treasurer, says the situation is not as grim as it appears. “We don’t intend to have that kind of number for long,” Sturrock said, speaking of the negative cash on hand balance. “The amount of money that we have in the bank on any given day is different from that.”

But he acknowledges that finances have been tight in recent months, with layoffs and reductions in pay for party staff. Executive Director Ryan Griffin will no longer have a job in 2012, and Communications Director Craig Westover is not receiving a salary for the month of December. “There have been challenges,” Sturrock said. “We’ve had to make some tough choices.”

But those explanations aren’t satisfying some party activists, who see Sturrock as at least partly responsible for the financial disarray. “He’s next,” Jeffers said of the recent turnover among party officials. “We need to have a thorough cleaning. People are furious. They want full disclosure; they want accountability … They’re not getting any of that.”

In addition to the debt listed on FEC filings, several news reports noted an additional $500,000 in unpaid legal bills accrued from the 2010 gubernatorial recount. Sturrock puts that figure closer to $450,000. He also says the party is not legally obligated to pay that money back, as the recount fund was set up through a separate corporation, Count Them All Properly Inc., but he added that he believes the party still bears some responsibility. “It is a separate organization,” Sturrock said. “We have a responsibility for working with others in the party to help find a solution to the problem.”

Brodkorb echoes that characterization. “It is not connected to the party, not tied to the party, and it is an entirely separate legal entity,” he said. “It’s associated with the GOP’s candidate for governor, not the Republican Party of Minnesota.”

David FitzSimmons, a member of the executive committee and former Emmer campaign manager, said the decision to establish a recount fund was never reviewed by the executive committee. “It was something that was a couple times brought up in committee very early on,” he said, “and it was basically stated that it was separate from everything we were doing at the party, and that seemed to be the accepted statement. That was repeatedly and emphatically stated to us.” (Emmer did not respond to a request for comment for this story.)

Still, some Republicans say they are uneasy about the recount debts and who is on the hook to pay them back. That question is part of the internal review being conducted by six members of the state executive committee. “They are supposed to be completely separate entities that the party’s not even involved in,” said Republican Party of Minnesota executive committee member Pat Anderson, who is also an RNC committeewoman. “It doesn’t seem that the arm’s length was fully there. That’s part of what we’re looking at, too.”

Most GOP activists said they were astonished to learn the total cost of the four-week recount battle. The party enlisted Tony Trimble, a veteran of the 2008 U.S. Senate recount, and high-profile Washington, D.C., attorney Michael Toner to help with the effort. Toner was chairman of the FEC under George W. Bush and served as general counsel to the Bush-Cheney transition team. Former Minnesota Supreme Court Chief Justice Eric Magnuson was also involved as the lead litigator for the Emmer campaign.

“Those lawyers don’t come cheap, and when you have a team of them, the meter runs quick,” GOP operative and former House staffer Gregg Peppin said.

In the weeks leading up to the state central committee meeting, Sutton attempted to chip away at the debt by boosting fundraising efforts. “It was not going to be a very pleasant meeting on Saturday, so I know they were doing a lot of fundraising in the last month trying to get their numbers up so that wouldn’t look quite so bad,” longtime GOP lobbyist John Knapp said.

Sources also point to accumulating personal tolls that led to Sutton’s resignation. Sutton, who like any chairman had his fans and critics within the ranks, was seeing an uptick in angry calls in the last two months from delegates and activists who complained about his public bravado and the increasing debt load, said Rick Weible, an executive committee member.

“He was getting some calls from some of the activists that weren’t happy with his style and especially the debt,” Weible noted. “It was hard, and there were some personal attacks. When he and his wife were members of CAGE [Citizens Against Gambling Expansion], people weren’t very considerate of him, and they were conspiratorial and were saying he was getting paid secretly, and he wasn’t. A lot of that was unfair. There were a couple of things that were coming to a head, and I think he just lost his heart for it.”

Sources also suggest that Sutton was disheartened by the resignation of Brodkorb, who ran alongside Sutton as a team in the summer of 2009 and again this year.

“To be blunt I am depressed by the loss … I feel as though I have lost my right arm,” Sutton wrote in an email to members of the executive committee after Brodkorb’s announcement in October. “To be honest, I tried very hard to talk him out of it … (I even avoided opening his email with the resignation letter for several hours Sunday evening hoping for a different outcome.)”

The toll on Sutton’s family was another theme emphasized in his letter of resignation.
“I have always put politics first in my life and rationalized it by thinking I was doing this for the greater good,” he wrote. “My four-year-old daughter came to me a couple of weeks ago and said she feels like she doesn’t have a father anymore because I am gone so much.”

Brodkorb slams Emmer for 2010 loss

Saturday’s gathering was expected to be a contentious affair. The prospect of a protracted budget debate and a five-way contest for the deputy chair post held out the potential for significant discord among activists. But Kelly Fenton sailed to victory in the deputy chair contest, garnering 54 percent on just the second ballot. In addition, the budget was tabled on a near-unanimous voice vote after some grilling of Sturrock about the details.

But that doesn’t mean the gathering was without controversy. Brodkorb set off a firestorm by personally attacking Emmer for running an inept campaign and losing the gubernatorial election in the best year for GOP candidates since the Watergate scandal. “I think Republicans nominated the one candidate who couldn’t possibly win in 2010,” Brodkorb told reporters. He then went on to further criticize Emmer in an interview with conservative blogger John Gilmore and on a talk radio program, “The Late Debate.” Brodkorb’s attack was an uncharacteristic rejection of the supposed 11th commandment of GOP politics: “Thou shall not speak ill of any fellow Republican.”

“The sniping that we get from the former regime is not helpful, and it hurts in electing Republicans,” said Scott Dutcher, an attorney and executive committee member. “What hurts about Michael’s comments is he is really attacking our delegates. This wasn’t some individual who endorsed Tom Emmer; this was 1,000-plus delegates who elected him with 60 percent of the vote.”

Regarding Brodkorb’s motives for speaking out, one veteran GOP observer and operative speculated that “it was partly a matter of defending the Sutton/Brodkorb legacy — reminding people that this is the team that brought Republicans to control of both chambers of the Legislature. Also of defending his power base against new people in the party who are wary of insiders. And I suspect it was also partly personal. Things got pretty bloody between election night and the end of the recount.”

Others also say Brodkorb’s remarks were partly the result of intraparty tensions that have been building the last several years. That includes lingering animosity between factions divided between Emmer’s and former House Minority Leader Marty Seifert’s 2010 gubernatorial campaigns. Some are still bitter about the party endorsing Emmer over Seifert, who was considered the safer, party establishment candidate. That dynamic played out during the RNC committeeman race in April, in which Emmer — whose victory was considered a foregone conclusion by many — lost in a stunning upset to Johnson, the Hennepin County commissioner.

Another possible explanation for Brodkorb’s public criticism of the Emmer campaign: to distract observers from the party’s poor financial shape. “I think that he is hoping the party implodes, and it would make it look like he and Sutton were the glue that held it together,” said one GOP activist, speaking on background.

Brodkorb adamantly denies that party finances had anything to do with his decision to step down as deputy chairman. “I ran for re-election knowing the financial situation the party was in,” he said. “The financial situation of the party had zero, zero, zero to do with me resigning as deputy chair.”

Field for party chair still unclear

In the days immediately after Sutton’s resignation, Republican activists seemed more eager to rule themselves out of the running for party chair than to throw their names in the mix.

FitzSimmons, Brodkorb, Fenton, Seifert, former state Rep. Paul Kohls and party finance chairman Bill Guidera all quickly said they had no intention of running. Former House Speaker Steve Sviggum all but closed the door. “I haven’t thought about it at any length, and my inclination is not to run for the state chair position,” he said.
And onetime Republican gubernatorial candidate and former RNC committeeman Brian Sullivan has likewise disavowed any interest in the post. “I’m not running,” he told Capitol Report Wednesday morning.

In the absence of a clear front-runner, activists readily started floating other names, including former state Reps. Laura Brod and Mike Osskopp and businessmen Mike Vekich and Brandon Sawalich. Jeffers says she is also considering a run. Vekich, in particular, has been at the top of the list of preferred contenders because of his reputation as a business turnaround specialist. Another prominent name in the mix: Pat Shortridge, a veteran political operative who served as chief of staff for former U.S. Rep. Mark Kennedy. (Visit our Briefing Room blog at politicsinmn.com for more details on the race as they become available.)

Despite no clearly defined field, most activists stress that the next party chair must be a first-rate fundraiser with strong ties to business. One longtime activist said the next chair needs three qualities: “It’s got to be a rainmaker, somebody who can generate money right away. It’s got to be someone diplomatic enough to be able to shuttle back and forth from faction to faction — the social conservatives, the fiscal conservatives, the gun people, the abortion people. And it’s got to be someone with the strategic skill to put resources where they can be most useful in an important election year.”

“We are looking for someone who can quickly restore the confidence that is not currently there,” FitzSimmons said.

Executive committee members say the new party chair, according to the GOP bylaws, would have to be elected within 30 days of Sutton’s resignation. That would put the deadline at the end of the year. Weible said they are even considering holding their convention on New Year’s Eve: “It could just be the case that we say, ‘Happy New Year, here’s your title.’”

Party struggles could open door for independent groups

The Republican Party’s financial troubles are not likely to ease anytime soon. Even after the selection of a new chair and the adoption of a 2012 budget, the GOP will almost certainly be paying old bills for months, if not years. That prospect has some party activists worried that it will not be able to provide adequate support for candidates in a crucial election year that will include the presidential sweepstakes and re-election campaigns for all 201 state legislators.

“Today we’re in an extremely poor position to be able to compete, but we’re still 10 months out from the election,” Anderson said. “Today the party is in no position, but it could be turned around in a period of time.”

Anderson and others suggest that if the party is unable to lead the charge financially, independent political groups could play a larger role in underwriting campaigns at both the state and federal level. Last year’s U.S. Supreme Court decision throwing out limits on political spending by corporations and unions opened the door to a significantly larger role for such entities. In last year’s gubernatorial contest, a trio of labor-backed, liberal advocacy groups was widely credited with critically wounding Emmer’s campaign through attack ads.

“This is all symptomatic of the rise of the independent expenditures groups. People don’t have to put their money in the party anymore,” Knapp said. “Going into next year, you’ve got so much more you have to raise money for: redistricting, the independent caucuses, the pro- and anti-gay marriage groups and an effort around the right to work. They will be raising some significant money. I don’t think it looks good going forward … I don’t know if they will be able to raise the money that they need to.”

But Sturrock cautions that independent groups have not typically engaged in the unglamorous, grass-roots, get-out-the-vote work that is crucial to any successful election effort. Instead such entities have largely focused on the air wars. “Is that necessary? Yes. Is it sufficient for victory? No, it isn’t,” Sturrock said. “Anybody in politics will tell you if that’s all you do, you’re not going to win.”