Transparency bill leaves economic development spending in the shadows

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Texas money

Texas lawmakers were patting themselves on the back recently for passing a bill, SB 943, embracing governmental transparency.

So were a group of advocates for the business community, including the chambers of commerce in Austin, Dallas and the Irving-Las Colinas area of North Texas – but not for a victory in the cause of open government.

Rather, they were happy about a major exception in the law that allows economic development groups, which depend on government funding, to continue to avoid, for the most part, being covered by the state’s public records law.

To qualify for the exception, a group can receive no more than $1 million from a single governmental or political entity, have no elected officials on its board and “to a reasonable degree,” must provide information on any public money it receives.

Those caveats, according to several transparency advocates, can be easily dodged, so that the groups can continue to avoid public scrutiny of their deals with big business.

“My conclusion was that this is the best that they could do,” said Dick Lavine, senior fiscal analyst with the Center for Public Policy Priorities.

The bill was created to address two 2015 state Supreme Court rulings.

One ruling, known as the Boeing decision, expanded exceptions to the Texas Public Information Act that allow governments to withhold records on contracts if vendors claim the documents would reveal trade secrets or proprietary information.

The second, the Greater Houston Partnership decision, found that an economic development group receiving public funding is not necessarily subject to public records law, applying a strict formula that requires nearly full support from public money to make the agency subject to open-records requirements.

Before that decision, a quasi-government entity getting money for performing public services was generally subject to open records law.

The recently passed measure does very little in terms of reversing that decision, despite being proclaimed as a success.

“To me, this looks like a big favor to these economic development groups,” said Nate Jensen, a government professor at the University of Texas at Austin, who co-authored a recent study on handouts from the Texas Enterprise Fund. Released earlier this year, it found that companies have sometimes made false promises in exchange for tax breaks.

The enterprise fund is a state version of economic development groups that operate in cities and counties, approving tax abatements, grants and other favors for businesses in exchange for promises of job creation.

“To read the announcements of [SB 943], I thought they would have figured out a way to make sure any government money that is spent for economic development can be tracked,” Jensen said.

Among the bill’s supporters were the very bodies that gained more secrecy powers with the Boeing and GHP rulings. That included, along with the chambers of commerce, corporations including Pfizer and Boeing.

Numerous chambers of commerce filed amicus briefs in the Greater Houston Partnership case, hoping to allow economic development groups to keep their finances secret, despite having at least part of their money come from the public.

The bill was the work of state Sen. Kirk Watson, D-Austin, and state Rep. Giovanni Capriglione, R-Southlake.

Watson was called the “multi-session champion for transparency” in one newspaper editorial. He did not respond to an email seeking comment for this story.

Capriglione, who also did not respond to a request for comment, carried the House version of the bill. He said during a floor debate that “SB 943 restores transparency … by closing a loophole so big an airline can fly through it.”

Austin attorney Bill Aleshire, who represented the Greater Houston Partnership in the case in question, said SB 943 “lacked the spirit of transparency.”

“If you have a private organization that is dependent on public funding or is performing the functions of a farmed out government function, their records should be public,” he said, regardless of the amount of funding or any of the other caveats included in the new bill.

Joe Larsen, a Houston lawyer and board member of the Freedom of Information Foundation of Texas, said the bill told him just how much sway the business lobby has over state lawmakers.

“Everyone is so cowed,” Larsen said. ”I don’t know what will ever fix GHP … . I don’t think anyone is going to get nailed with the new law on economic development. They are receiving almost complete shelter here, and that’s the way the business lobby wants it. They don’t want taxpayers sticking their nose into what they are doing so they can spring it on them when it’s a done deal.”

Using caveats included in the bill, he said, money can be transferred in increments, moved from one entity to another to ensure the amount for any single entity comes in under $1 million, among many other ways to meet the restrictions and still not fall under the state’s public records laws.

Smaller economic development groups, meanwhile, can be fully taxpayer funded as long as the amount is under $1 million, and still not be subject to public records requests.

The GHP decision stemmed from a 2007 request for GHP check registers submitted by Montgomery County watchdog Jim Jenkins.

In an email, Jenkins said that all the new bill does is add more words to the public records obligations of economic development groups.

“The bill does not promote transparency,” Jenkins said.

Testifying before the House Committee on State Affairs in March, Gary Huddleston, a former board member of the Irving-Las Colinas Chamber of Commerce, said economic development groups already divulge plenty of information to the city.

“The chamber serves the best interest of the community,” he said. He said the chamber performs “arms length” services for the city and provides annual and quarterly reports as well as a yearly audit for the city council.

The state attorney general’s office ruled in 2015 that that chamber’s audit was not subject to public information requests after the chamber argued it was not a public entity.

And those reports in 2012 did not catch the use of advertising revenue from three city-owned billboards to pay for the chamber’s luxury suite at Cowboys Stadium. Tickets bought with public dollars were given to city council members, city employees and their guests.

If signed by Gov.  Greg Abbott, the new law will take effect Jan. 1.

Steve Miller can be reached at [email protected].

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