LANSING— The Michigan Republican Party is considering how to deal with “imminent default” on its line of credit, according to a resignation letter from a member of the state GOP’s budget committee.
The message, obtained Thursday by The Detroit News, reveals the seriousness of the financial struggles of a party in a battleground state, a year before the 2024 presidential election. Kristina Karamo, the Michigan GOP’s chairwoman, has struggled to raise money after rising to power in February while railing against the party’s “establishment,” including past donors.
Jessica Barefield of Livingston County serves on the Michigan Republican Party’s state committee, which features about 100 members. She also had been one of 13 Republicans on the influential budget committee, helping to oversee the finances.
“Despite my efforts, it has become evident that the issues within leadership and the committee are deeply rooted and resistant to change,” Barefield wrote in her resignation letter. “It has reached a point where I feel it is no longer safe for me to be associated with this committee as it allows leadership to engage in practices that run counter to my principles and values.”
Barefield said in the letter the budget committee had a Friday “emergency meeting” when the panel “was asked to weigh in on action steps regarding the imminent default on the line of credit,” indicating the party is struggling to meet its obligations to pay back its past debts.
Karamo and Dan Bonamie, the chairman of the budget committee, didn’t immediately respond Thursday to requests for comment. Barefield confirmed Thursday to The Detroit News she had resigned from the panel.
It’s unclear how much debt the Michigan Republican Party currently has. However, in March, Karamo told a group the party had $460,000 in outstanding obligations from the past leadership team. She was elected chairwoman in February. It’s not unusual for the party to borrow money in an election year, like 2022, and then pay it back through fundraising the next year.
But by August, six months into Karamo’s time as chairwoman, the party had about $35,000 in its own bank accounts, a small fraction of the debt, according to internal bank records previously obtained by The Detroit News.
It’s unclear what the specific financial repercussions would be if the party defaulted on its line of credit, which is with Comerica Bank. But the rocky money situation will complicate Karamo’s ability to raise additional dollars and could hinder the party’s efforts to obtain future loans.
Jeff Timmer, a longtime Michigan political consultant who previously served as the state GOP’s executive director, said the situation appeared to represent the “last gasp” before the party became insolvent.
“It really is unprecedented,” Timmer said.
During the Friday budget committee meeting, members of Karamo’s leadership team presented members with the idea of trying to sell the Michigan Republican Party’s former headquarters on Seymour Avenue in a bid to alleviate hundreds of thousands of dollars in outstanding debts.
However, the downtown Lansing building is owned not by the party but by a company controlled by a trust featuring former party chairs. And it appears, according to Ingham County records, that Karamo’s team won’t be able to force the property’s sale on its own.
“They don’t have a legal right to do it,” Ron Weiser, a former chairman of the Michigan Republican Party and a prominent donor whose name appears on the front of the building, told The News earlier this week.
The building is believed to be worth more than $1 million, according to Ingham County tax records.
Barefield said in the letter she “cannot sit idly by or support any intentions of trying to sell the MRP building that I believe is owned by the trust and I won’t be complicit in leadership passing blame to the budget committee for the decision to sell a building.”
“I personally believe MRP has no legal authority to sell,” Barefield wrote in her letter.
Traditionally, the Michigan Republican Party has operated out of the 11,000-square-foot office near downtown Lansing on Seymour Avenue. Karamo’s leadership team chose not to use it.
In March, Karamo contended there were better ways to spend donors’ contributions than paying a trust, run by former party chairs, that controls the headquarters property. It would cost about $12,000 a month to keep operating out of the building, wrote Karamo and her co-chairwoman, Malinda Pego, in a past “update” email to Republican activists.
The past headquarters building was purchased in 2006 for $930,000 by Seymour Street LLC, according to Ingham County records. The records still list Seymour Street LLC as the owner.
The limited liability company is controlled by a trust, led by a group of members, including former chairs of the Michigan Republican Party. The trust setup was used to protect the building into the future, regardless of who led the party.
____
©2023 www.detroitnews.com. Visit at detroitnews.com. Distributed by Tribune Content Agency, LLC.
