Minnesota GOP Chair David Hann said a recently resolved legal dispute with the party’s former chair, Jennifer Carnahan, was costly for the party. (Glen Stubbe, Star Tribune file/The Minnesota Star Tribune)

The Republican Party of Minnesota is still struggling to dig itself out of debt as it heads into a pivotal election year in which it will try to win back control of the state House from Democrats.

State GOP activists have raised alarm about the party's financial situation throughout the year, especially when it reported having only about $54 on hand and about $336,000 in debt at the end of May. While the state party's cash flow has rebounded since — the GOP reported about $145,000 on hand at the end of October — its debt has continued to mount.

The Minnesota GOP had roughly $414,000 in debt as of Oct. 31, according to its latest federal campaign finance report.

"It's been a challenge this year, no question about that," Minnesota GOP Chair David Hann said.

Hann told the Star Tribune in July that he thought the party would pay off all its debts by the end of the year. But in an interview Wednesday, he said it won't be gone by then.

Donor interest dipped after Minnesota Republicans were swept by Democrats in last year's midterm elections, Hann said, and a recently resolved legal dispute with the state GOP's former chair was also costly for the party.

"We've had significant legal costs associated with the lawsuit," Hann said. "Huge problem and unexpected, obviously. That has been something that has been damaging."

The GOP and former chair Jennifer Carnahan agreed earlier this month to drop the lawsuits they filed against each other late last year, without any money changing hands.

Carnahan, who was forced out of her party leadership role two years ago amid allegations she created a toxic workplace, had sued the party alleging her former colleagues disparaged her in violation of a separation agreement and hurt her job prospects. The Minnesota GOP quickly countersued, claiming Carnahan "grossly mismanaged" the party and caused "substantial damages."

Hann said the party's expenses for the legal dispute totaled "six figures." He called Carnahan a "specialist in sowing division and chaos."

In a statement Wednesday, Carnahan accused Hann of taking "cheap shots" at her and attempting "to attribute his embarrassing financial failures to me."

"He has destroyed this party, ruling like a tyrant who will stop at nothing to silence, destroy and eliminate anyone who dares express a different point of view on any matter," Carnahan said.

Her comments echoed those made by some GOP state delegates who recently declared they would like to see Hann and other party leaders ousted.

A group calling itself "Rebuild the MN GOP" circulated a news release earlier this week saying the "urgency for change is palpable" with Hann "plunging the party into debt and overseeing one of the worst election losses in Minnesota history in 2022."

Larry Doose, chair of the Mille Lacs County GOP, is among those calling for Hann's removal. He declined an interview request but told the Star Tribune in an email that "Hann's election was based on misrepresented fundraising prowess and business acumen. It has become evident that he lacks the necessary leadership skills for any organization."

Doose suggested that Carnahan was better than Hann at fundraising and navigating debt.

A federal campaign finance report filed by the Minnesota GOP shortly after Carnahan's exit from the party leadership role in August 2021 showed the party had about $108,000 in debt and $96,000 in cash on hand.

Carnahan "left six figures of debt" and then "sued us for over six figures," said Anna Mathews, the Minnesota GOP's executive director.

"But it's David's fault that we have debt? Not in my book," Mathews said.

Hann didn't seem fazed by Doose and other party activists who want to see him ousted, calling them a "fringe group." He also thinks the Minnesota GOP's debt problem will be resolved — it's easier to raise money in election years than non-election years, he said.

"We are going to be in a very strong position going into next year and we've done a lot of work with our donors," Hann said. "They're going to be with us; we'll be fine."

Star Tribune staff writer Briana Bierschbach contributed to this story.