By Julie Shapiro
Former Councilmember Alan Gerson is $142,000 in debt after unsuccessfully running for a third term last fall.
Gerson owes money to more than a dozen companies that helped with his campaign, and he also has to pay back loans he took out shortly before he lost the Democratic primary last September. He spent a total of $287,000 on the race, much of which went to consultants, lawyers and campaign literature, but he only raised about half that amount.
Unlike most of his opponents in the five-way primary race, Gerson never received any public matching funds from the city, because of paperwork problems and challenges to his petition signatures.
“Unfortunately, I do not have the bank account of some other elected officials who are millionaires or billionaires,” Gerson told Downtown Express last week. “When you’re not a millionaire or a billionaire and you do not receive public funds, you have to go into debt. We did it in a responsible and reasonable manner. We’re on track and on plan.”
Gerson could still receive up to $88,550 in matching funds from the city Campaign Finance Board, which would put a big dent in his debt but would still leave him owing over $53,000. To make up that money, Gerson said he would either hold a fundraiser or solicit private contributions.
“It’s still in the works,” Gerson said.
Several Downtown political insiders were surprised to hear that Gerson was so far in debt, and they said it could be difficult for him to raise tens of thousands of dollars now that he has already lost the election and ceded the First District seat to Councilmember Margaret Chin. The sources have all worked on Democratic political campaigns and did not want to speak for attribution about another candidate.
Gerson disclosed his debt in a filing last month with the Campaign Finance Board. The C.F.B. is now beginning its post-election audit of all candidates and likely won’t issue results until next year. Gerson’s debt could grow bigger because he may be fined.
The C.F.B. declined to comment on Gerson’s situation, but he appears to have violated at least one campaign finance rule: The contribution limit of $2,750. Prior to the election, Gerson was short on funds so he took out loans totaling over $52,000. Since he did not repay the loans before the primary, the loans counted as contributions, and they were over the limit. Over-the-limit contributions could carry a penalty of thousands of dollars, according to the rules for previous city elections.
Gerson said his lawyers and accountants are dealing with that issue.
The $287,000 that Gerson spent on the primary also exceeded the Council campaign spending limit of $161,000, but candidates are allowed to go over the limit if they have to stave off ballot challenges, as Gerson did.
In addition to possibly facing sanctions from the C.F.B., Gerson also still owes over $100,000 to companies that did work for him during the campaign. He owes over $36,000 to elections lawyer Lawrence A. Mandelker’s law firm; $11,000 to V-Shift, the company that managed Gerson’s campaign Web site; and nearly $5,000 to George Arzt Communications. Those companies and several others declined to comment.
Gerson said all the vendors knew of his money problems in advance and understood that they wouldn’t be getting paid immediately.
“Everyone knows the situation and everyone is cooperating,” Gerson said. “We’re working things out in a fair and timely way. It’s really between the campaign and the vendors.”
Joe Ferris, spokesperson for the Campaign Finance Board, said the board feels the same way whenever a candidate owes vendors money.
“We’re not a collection agency,” Ferris said.
Gerson said his campaign’s funding difficulties reveal a larger injustice in the campaign finance system. One reason Gerson did not receive matching funds during the campaign was because the city Board of Elections took his name off the ballot, based on a technical problem with his paperwork, a decision that a judge later reversed. Gerson also spent thousands of dollars on legal fees to stay on the ballot after a challenge from Pete Gleason, one of his opponents, that was ultimately declared invalid.
“We had to incur debt because of deliberate dirty politics,” Gerson said. “This type of unfairness and ballot shenanigans should not happen…. We still don’t have a system of equal, fair and timely public financing. Until we create that system, campaigns are going to have to incur debt.”