WASHINGTON — Long after the votes are tallied and the winners declared, political campaigns’ treasurers keep busy with a different tally: adding up the campaign’s debts and figuring out some way to pay for it all.
Campaign debt is by no means rare or limited to candidates of one party. And it can go on for a long time — there is no legal requirement mandating when and how candidates pay down their debt. For example, Newt Gingrich filed a report Thursday showing him $4.6 million in the hole for his 2012 run. Still, before a candidate can officially close out their campaign, the debts must be resolved.
With end-of-year campaign finance reports due to the Federal Election Commission this weekend, we’ll get an update on the outstanding debts leftover for a handful of Minnesota candidates, ranging from a few thousand dollars in invoices to big loans from self-funding candidates.
McFadden looks for savings
Campaigns have many strategies for paying down their debt, from traditional fundraising appeals to making personal loans to renting out campaign supporter email lists to other candidates.
Another option is to try to negotiate payment terms with vendors.
Republican U.S. Senate candidate Mike McFadden’s campaign manager Carl Kuhl said that’s part of what he’s been doing. After his unsuccessful bid for election, McFadden had invoices from fundraising consultants, legal counsel, online advertisers, banks, caterers and others totaling nearly $140,000. Kuhl said the campaign has been scrutinizing that list to weed out payments the campaign had made previously or bills that were double-counted, and to make sure fundraising consultants, for example, were only getting credit for the donors they actually attracted.
Kuhl said the campaign, which finished the cycle with only $62,000 on hand, has been working to assess its final debt tally before finding ways to pay for it.
Even so, he anticipates closing out the campaign’s debt quickly, possibly as soon as the next filing period in April. That process could be delayed by an FEC complaint against a pair of its vendors. (Democratic groups have accused some Republican vendors of illegal coordination. McFadden’s campaign, and others using the vendors, can’t close down until the complaint has been settled.)
“Whether it’s a close-out report or the quarterly report, our intention is to have this all wrapped up,” he said. “We will have it done. There’s no ifs, ands, or buts about it.”
The forgivable personal loan
For wealthy candidates, the bulk of debt owed by a campaign is often to the candidate themself.
In Minnesota, 8th District Republican candidate Stewart Mills lent his campaign $360,000 for which his campaign hasn’t reimbursed him, and likely won’t. Candidates who self-fund don’t have to reimburse themselves — and many don’t, according to a Center for Responsive Politics analysis of 2010 races — so none of these candidates need to ask donors for cash, unless they have other debt.
Mills, whose stake in his family’s Fleet Farm retail chain is worth millions of dollars, owed three campaign vendors nearly $17,000, a sum he reported paying off in his year-end filing on Thursday. The campaign has less than $300 in its bank account. A message left with Mills’ secretary Thursday was not returned.
Mills wasn’t the only Minnesotan to self-fund: challengers in the 1st District (Jim Hagedorn, $23,000), 2nd District (Mike Obermueller, $32,500), 3rd District (Sharon Sund, $10,500) and 4th District (Sharna Wahlgren, $51,900) all made sizable personal loans to their campaigns.
Of course, candidates can pay themselves back. Rhonda Sivarajah lent her campaign $170,000 before August’s 6th District Republican primary. At the time, she had more than $190,000 on-hand. When she filed her next FEC report in October, she had paid off the loan, and her bank account was nearly emptied out.
Easier for winners
For a winning candidate, the fundraising game is significantly easier.
Take Rep. Tom Emmer — the 6th Distric winner had more than $210,000 in unpaid expenses after his first congressional campaign, the most among successful candidates in Minnesota. Most of that is owed to fundraising and media consultants or advertising companies.
David FitzSimmons, Emmer’s campaign coordinator and chief of staff, blamed part of that on the costs of starting up a campaign — building a team of consultants and advisers and a fundraising network that existing members already had set up — while competing in a contested endorsement process and primary election before even getting to the general. Incoming House freshman are also expected to pay for some of the transitional costs that go into being elected, such as flying to D.C. for new member orientation in November.
Emmer has apparently recognized the need to pay that debt down quickly — in the three weeks immediately following the election, traditionally a quiet period for fundraising wherein four Minnesotans raised $200 or less, he brought in $23,000. FitzSimmons said the plan is to for the campaign to be debt-free well before the heavy lifting of a re-election campaign begins.
In all, Emmer’s campaign wasn’t an incredibly expensive one — he spent $1.8 million on his race last year, which was less than what the two other Minnesota Republicans, Reps. Erik Paulsen ($2.5 million) and John Kline ($2.9 million), spent on their races. Even retired Rep. Michele Bachmann, whom Emmer replaced, spent more than he did during the cycle ($2.2 million, of which $585,000 went toward her presidential campaign’s outstanding debt and legal fees).
“The expense-side is incredibly minimal right now, so we’re able to raise in excess of where we’re at,” FitzSimmons said. “We plan on, after the first quarter [ending March 31], being above the black line.”
Devin Henry can be reached at email@example.com. Follow him on Twitter: @dhenry