Published in the Lone Star Report on May 8, 2009

The 2009 legislative session is in its final month, and property tax relief is in serious jeopardy – despite constant growth in voters’ property tax bills. (In June 2008, the Lone Star Foundation,
publisher of this newsletter, released a study showing that — despite record reductions in school maintenance and operation tax rates — much of that relief was swallowed due to appraisal hikes
and city and county tax increases.)

Some lack of tax relief can be attributed to Democratic gains in the House and the actions of Ways and Means Chairman Rene Oliveira
(D-Brownsville), who so far has not allowed the committee to vote on bills that give the voters the ability to limit tax increases.

But taxpayer advocates also lay some blame on the Legislature’s refusal to take meaningful action to stop the practice of using tax dollars to fund lobbyists.

In particular, taxpayer-funded lobbyists and trade associations are fighting giving local voters more power to stop tax increases. SB700
by Sen. Dan Patrick(R-Houston), which eliminates the petition requirement for rollback elections – thus making it harder to raise taxes without obtaining voter approval first, is being targeted by taxpayer-funded lobbyists.

“Counties and cities and other government entities don’t like reform, and they don’t like change,” said Patrick. “… We should not be a government about growing other governments.”

“Taxpayer-funded lobbying distorts the democratic process,”said Peggy Venable,Texas director of Americans for Prosperity. ”While citizens are hard at work, taking care of their families, volunteering in their communities, and paying their taxes, they should not have to worry that some of those tax dollars are going
to lobby against taxpayer interests.”

Local government lobbyists and trade associations defend what they do as helpful to taxpayers because they fight unfunded mandates
and other bills that make city government less efficient.

Fred Hill, a former state representative who now lobbies for cities and counties, noted that in this session about 1,800 bills affect cities and counties.

“And the vast majority of them would affect local governments in a negative way. So it’s a pretty busy job, simply trying to keep up with all the different types of legislation that are filed — that would appear on the surface to be good ideas, but when you drill down to the core of the issue you find that the law is being misapplied, or is costing the taxpayer a lot of money.”

What is wrong with government-funded lobbying?
Michael Quinn Sullivan, president of Texans for Fiscal Responsibility, pointed to an article last summer in the Denton Record-Chronicle noting the City of Denton’s renewal of its lobby contract with the Austin-based Hillco Partners. The article, Sullivan said, quoted city officials who praised Hillco for
stopping bills that allow voters to rein in local tax increases and limit government spending.

“That should tell us all we need to know about the problem with government-funded lobbying,” Sullivan said. “The taxpayers in Denton who had several thousand people turn out at tea parties demanding tax relief… got home that night, saw their property tax appraisal bill, and probably didn’t know that their tax dollars paid to the City of Denton being used in Austin by Hillco to lobby against them. That’s immoral”

Sullivan has conducted an auto-dial campaign to about 150,000 targeted Texas homes focusing on the lack of property tax relief and
government-funded lobbying. He has also delivered more than 10,000 online petitions sent through texastaxpayers.com to lawmakers. Sullivan cited, as an example of taxpayer-funded lobbying abuse,
a Senate-passed bill(SB 855) that allows local government to propose a variety of tax and fee increases to voters. Several North Texas local governments hired Hillco to push for the bill during Senate consideration in April.

“This just gives these local officials new ways to get in to people’s wallets,” Sullivan said. “Here are taxpayers’ dollars being used to give greater authority to tax them without accountability.”

Officials with the Hillco Partners defend the use of taxpayer dollars to lobby. Snapper Carr of Hillco characterized local government lobbyists as extensions of the staff, often working to save taxpayers’ money.

“You would have issues with revenues, and unfunded mandates,” Carr said. “…Labor laws in the state would have a pretty big hit, as cities are continually having to be the counter to union initiatives that are brought to Austin, whether it be mandated
benefits or other costs the taxpayers end up ultimately picking up. Those are just a snapshot of some of the things you would see [were it not for city lobbyists].”

Carr cited SB361, a mandate for the City of Dallas water utility that would have cost taxpayers $10 million a year. The original bill required cities to ensure that their water systems are
prepared for emergency services during hurricanes. It was amended to apply only to areas where hurricanes are likely to strike.

“That was something that they obviously opposed, because they do it where they believe, locally, where the most need is,” Carr noted.

Hill in particular has come under fire from Patrick and Sullivan. He served in the Legislature from 1989-2009 and led the fight against lower caps on appraisals or other restrictions that would require voter approval before county and city tax increases.

Patrick has filed a bill banning the revolving door between the Legislature and the lobby by making former legislators wait two terms before lobbying.

“Take the case of Fred Hill,” Patrick said. “He spent years as chairman of [the House Committee on Local Government Ways and Means] fighting on behalf of TML [the Texas Municipal League] and TAC [the Texas Association of Counties] not to grant any type of property tax relief for his constituents, my constituents, and every home owner in Texas. And now he’s making somewhere between $400,000 and $700,000 a year [from local governments in lobbying contracts]."

Hill said he provides a valuable service that helps taxpayers. “I can’t think of any legislation that I’m involved in that is seeking funding from the state,” Hill notes. “… Cities and counties don’t get any money from the state. They have to raise their own revenue locally. And when these pieces of legislation affect us locally, they impose more obligations on the local taxpayers. So my agenda is simply to try to protect the local taxpayer from this sort of thing.”

Hill also noted that sometimes lawmakers pass or amend bills that impose costs on local taxpayers through unfunded mandates.

“Every time something passes in Austin that is not funded, it forces the property tax up… Sometimes they happen in strange ways, like when someone is tweaking a bill … they pass it without thinking where the money is coming from,” Hill said.

Hill noted the high number of bills that impact local government and noted that city staff has local services to provide.

“So there’s an advantage to local governments and local taxpayers
to have someone in Austin looking out for their interests in addition to their local elected state representatives.”

Several taxpayer advocates don’t feel advantaged.
Sullivan said, “If I were a taxpayer in Richardson who finally got rid of Fred Hill as the state representative, I’d be pretty offended
to find out my tax dollars are being used to pay this guy to come work against my interest at 100 times that he was making previously [as a legislator].”

Rep. Ken Paxton (R-McKinney), one of the leading opponents of SB855, notes that city and county governments don’t even have to
disclose the total amount they spend on lobbying.

“If taxpayers are paying the bill, it should at least be disclosed,” he said, noting he filed a bill to that effect last session that couldn’t get out of committee.

“There is not a level playing field,” said Patrick of the ability of taxpayer-funded lobbyists to use mandatory taxpayer dollars to fight tax cuts. “Lobbyists for cities and counties should never, never — in capital letters and bold type — be allowed to take taxpayer dollars to lobby against any kind of tax cut for taxpayers. That is a pure, direct conflict of interest. It’s not right.”

Added Venable: “We taxpayers should not be forced to fund the “other team,” referring both to payments made directly to lobbyists as well as to membership dues for organizations such as the Texas Municipal League and the Texas Association of Counties."

So far, taxpayer protections are on life support. Patrick said SB700 is being held up by Senate Democrats and its House companion,
HB1575, by Rep. Carl Isett (R-Lubbock), by Oliveira in committee.

But this issue could resurface in the 2010 campaigns. Anecdotal evidence suggests that, despite the economic slowdown, property taxes may well go up. (Official statistics on appraisals
usually come out in August, with tax rates set sometimes thereafter.)

If taxpayers do revolt, Sullivan and Venable will be working to make sure restrictions on taxpayer-funded lobbying are part of that equation.