Debt Becomes Her?

Don’t look now, but the Texas GOP, the party of budgetary teetotalers, has been piling up debt like a college kid with his first credit card.  

According to Federal Election Commission reports, this isn’t exactly a new development. The Republican Party of Texas has ended every year in the red since 2001. But lately that amount has ballooned from a low of about $70,000 in 2003 to last year’s high of $624,000. Now — a month out from the state party convention where 14,000 delegates will elect the chairman who will guide the faithful for the next two years — the latest FEC report, for the month of April, shows $556,000 in financial obligations. In contrast, the Texas Democratic Party currently carries about $49,000 in debt.

Just who’s responsible for the financial state of the party has flared as a point of contention among the candidates running to be its chair, including the incumbent, Cathie Adams. Adams, whom the State Republican Executive Committee chose in October to replace Tina Benkiser when the then-chair left to work on Gov. Rick Perry’s re-election campaign, says she has put the party's fiscal house in order. “We’re in good shape and getting better,” she says. “With a change of personnel and also with prioritizing our spending, we are not only living within our means but paying down the debt since I’ve been here.”

The numbers above indicate that’s true. But muttering within GOP ranks — in particular from Adams’ two challengers, Steve Munisteri and Tom Mechler — holds that $556,000 isn't the extent of what the party owes. They both accuse Adams of accounting sleight of hand to make the party's debt appear lower before the chair election and say it will likely rise again afterward.

Munisteri says the party has made the debt appear to go down by transferring money out of two party accounts — which are flush — and into a third account where the party books all of its debt. Three transfers, totalling about $60,000, were made on March 31, according to FEC reports. That number is almost equivalent to the party's reduction in debt since the first of the year.

Adams says she had no knowledge of the transfers but that no effort has been made to hide debt and that party financial “watchdogs” ensure the money is handled ethically.

Munisteri and Mechler’s charges center on the party’s handling of money raised to pay for its upcoming convention. The event, the largest state political convention in the nation, is expected to cost about $600,000. To pay for it, the party collects $35 registration fees from delegates, individual donations and corporate sponsorships. Adams’ opponents say the party is also using some portion of that money — they can’t say how much — to make the debt look lower.

"You’re basically taking the money from the convention, the registrations and sponsorship fees, which you can use to pay down the old debt,” Munisteri says. “But then you won't have that money available when the bills come in for the convention, so the debt will swell back up again.”

Adams says the claims are “a lie that they are just totally making up out of thin air” and calls them “a desperate attempt to get a toe hold when [Munisteri and Mechler] must be feeling a total lack of response from the grassroots, who know my integrity because of almost three decades of working with them.”

Munisteri and Mechler say they will have no access to the records of convention fundraising and spending until July, when the party must submit reports to the Texas Ethics Commission. But by then, the election for party chair will be over.

Adams says she does not know the specifics of how the convention money is being raised, spent and tracked, though she says registration fees are kept in a “separate account.” She also assures that experienced party financial staff was keeping a close eye on the money: “There are bills coming due in their time, and money is coming in quite well.”

All involved agree the debt risks making the GOP’s harangues against government deficits look like lip service. Debra Medina — who ran for state party chair in 2006 before she became the dark horse of this year’s gubernatorial primary — says she’d like to see the “party live accordingly to its ideological prescription.”

"We are tripping over ourselves as a party to give those people who we most desperately need on our side, who are ideologically aligned with us, a reason to not actually get out at the base and do the work that we so desperately need them to do,” she says. “They are sick of politics as usual.”

Medina doesn’t lay the blame for the party’s debt fully at the feet of the current chair, however. She blames the party’s executive board — the 62-person executive committee that oversees the party — saying it “has not done its job.” She makes an unflattering institutional comparison: "Ken Lay was responsible for Enron, but he had a board of directors."

Before serving as party chair, Adams was a member of the executive committee, having joined in 2008 while she was still the president of the Texas chapter of Phyllis Schlafly’s Eagle Forum. She says committee members had no knowledge of the debt and no access to financial records. “No one knew, no one could have known” about the debt at the time, she says. "I had no more information than did even the chairman of the audit committee. None of us foresaw or knew or had access to more information than anyone else.” (Anyone interested in the party’s debt — not just anyone on the executive committee, but anyone in the world — can find the information in FEC reports, which are filed by the party monthly.)

Still, Adams says, “The fact is no one knew until I got in there and directed the staff to go through what was in the accounting office, get that in the computer, and then let's be transparent with the executive committee and absolutely let them know where we stand."

The debt is more than just an embarrassment to a party that espouses fiscal restraint. It cramps its practical operations as well — take it from Molly Beth Malcolm, who chaired the Texas Democratic Party from 1998 to 2003, which struggled with what was at one point $650,000 in the hole. She says debt gives donors — already prone to give directly to the candidates they like anyway — a ready excuse to avoid adding to state party’s coffers.

"It is not sexy to give to your state party, whether it be Democratic or Republican,” says Malcolm, adding, “Nobody has to give to a state party. It is a function that is extremely important, but it's like anything else: If a donor is giving money, they want to be sure that where they are giving their money, it's going to be put to good use."