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fees

Fee for all

Fees are part of the answer for Texas’ pressing infrastructure needs, but they aren’t and cannot be the whole solution.

To help keep the Texas business climate robust, lawmakers should double state fees on motor vehicle registrations and impose a new fee on every water meter in the state, the state’s largest business lobbying group said Thursday.

Economic development competitors are using Texas’ lack of investment in water resources and roads against it, and the fees could help the state address those issues, Bill Hammond, president of the Texas Association of Business, told a special committee of lawmakers and business leaders.

Other states are telling companies, “Don’t go to Texas. They’re not investing in infrastructure,” Hammond told the Select Committee on Economic Development. The committee is studying how to encourage continued business development.

[…]

The business group is suggesting a $1.50 monthly fee on every water meter as well as every irrigation well in a water conservation district. Hammond estimated that the fee would raise $150 million a year to encourage local governments to develop new water resources.

Likewise, Hammond said, increasing the motor registration fee would raise more than $1 billion a year for highway construction. That money, according to the Texas Association of Business report, could be leveraged into $14 billion to $16 billion in bonds for new roads.

Most motorists now pay $50.75 per vehicle to the state and another $5 to $11.50 in local fees.

Hammond said, “The business community feels so strongly, we are willing to offer a specific solution.”

That solution, however, has critics.

Dick Lavine, a fiscal analyst with the Center for Public Policy Priorities, said he agrees that the state needs to invest more in transportation, water and education. But he disagrees with using fees that hit well-off people the same as the poor people.

“They pretend that everyone has the same ability to pay,” Lavine said. “We’d like something so those who can afford more, pay more.”

Hammond countered there is little appetite in the Legislature for raising taxes.

Usually when there is a pressing need for something that isn’t popular, functional societies rely on something called “leadership” to make it happen. You know, the whole “doing the right thing” thing. Regressive though they may be, I don’t have any abiding objections to these fees, but let’s get real: Neither will raise nearly enough money to solve the problems. Raising the gas tax is still the best option, and if done right could just about wipe out the transportation funding deficit. The water issue is somewhat more intractable, but hey, that’s what we elected these people to figure out. It’s on them to get it done, and it’s on them if they don’t.

Still more dedicated funds not being dedicated

I keep wondering when we’re going to discover the last dedicated fund that is not being used for its original purpose but for general revenue. All I know is that we keep finding more of them, in this case fees collected from defendants in the criminal courts.

While courts assess fines to punish defendants, in theory, the dizzying array of fees and court costs, which can reach more than $600, is meant to ensure that those who use the judicial system help pay for it. But an American-Statesman analysis shows that’s not the case.

Over the years, legislators have used tens of millions of dollars collected from criminals to fund a slew of projects, many with only the faintest connection to the courts. Texas judicial administrators estimate that 1 in every 3 dollars raised through such state fees is spent on projects outside the court system — a practice critics say amounts to an undeclared tax on the state’s poor that might violate the law. Cities and counties whose courts raise much of the state money, meanwhile, complain that their courts are drastically underfunded.

Today, court costs pay for the rehabilitation of patients with head injuries. They fund research on obesity among minority children in Houston and cover the salaries of game wardens. They support three academic centers at state universities and after-school programs for kids. And they were used to pay a private company $2 million to install cameras along the Mexico border so citizen “virtual deputies” could watch online and report illegal crossings.

Last year, elected officials raided a $20 million pot collected from criminal defendants to pay for state employee pensions.

Thanks to such maneuvering, in Texas courts, a “DNA collection fee” does not necessarily pay for DNA tests, a “breath alcohol testing fee” does not always cover breath alcohol tests, and people judged guilty of victimless crimes contribute millions of dollars every year to “victims compensation.”

“We have a ‘school crossing fee’ that nobody — nobody — can tell me what comes of it,” said state Sen. John Whitmire, chairman of the Senate Jurisprudence Committee.

Some say requiring defendants to cover so many expenses makes sense because crime creates broad social costs encompassing police work, prisons and social programs.

“Courts do not stand alone,” said Rep. Jim Jackson, R-Carrollton, chairman of the House Judiciary and Civil Jurisprudence Committee.

And nobody disputes that many of the programs are worthy of government support.

At worst, though, such under-the-radar diversions of so-called dedicated court money could be against the law. Some judges have ruled that using fees for purposes other than that for which they were collected is unconstitutional. At that point, the money is more accurately described as a general tax.

At the very least, it is dishonest for the government to tell taxpayers it is collecting money for one thing and then use it for another, said Jim Allison of the County Judges and Commissioners Association of Texas.

“If we’re not going to use a fee for a particular purpose,” he said, “we shouldn’t collect it.”

Of course, we do this all the time. See once again the System Benefit Fund that gets frozen, hunting and fishing license fee funds, the sale of specialty license plates, and red light camera funds. I’ve beaten this horse over and over again, so other than the specifics of this case – you should definitely read the story for the details – there’s nothing new here. The budget is all sleight of hand and misdirection because the Lege is desperate to avoid having to confront the real problems, our tax system is screwed up, and people are paying for things they’re not getting. Same story, different dedicated fund. Grits has more.

The biennial budget shuffle

In addition to billions of stimulus dollars, the budget this year relied on some old tricks to get certified as balanced.

Nearly $3.7 billion in levies collected for everything from fighting air pollution to helping low-income people with their electric bills to funding trauma care will instead help balance the state’s upcoming two-year budget.

The money, for the most part, is collected through fees and fines that legally are dedicated for a particular purpose. If lawmakers do not spend the money on the dedicated purposes, however, the balances become available to spend on other programs.

“It’s kind of like having your (household) budget laid out and spending part of your food money on entertainment, or vice versa,” said Dale Craymer, chief economist of the Texas Taxpayers and Research Association, who has worked for a state comptroller, two governors and as the Texas House fiscal analyst. “It’s a backdoor way to undedicate the money.”

It’s pretty much the same thing every two years. We have a bunch of dedicated funds, which levy fees on certain things that are supposed to pay for certain specific items, then for a variety of reasons we decide to use some of that money for other things. It would be more honest to dedicate the money to general revenue, and it would be fairer to admit that we do this sort of thing because we refuse to adequately fund the things we want to pay for via the taxes we already collect and to deal with that, but we don’t. And so the shell game keeps getting played.

In some cases, unspent balances in dedicated accounts have grown to hundreds of millions of dollars over years.

For example, the System Benefit Fund has accrued more than $670 million. The program imposes a fee on electricity customers in competitive retail markets, including Houston, Dallas-Fort Worth and most of the Rio Grande Valley, to provide a May-September discount for low-income customers.

[…]

“We’re generating funds for a good purpose. We’re diverting the funds, without telling people, for general purposes. And then we say we’re not taxing. Well, government is lying,” said Rep. Sylvester Turner, D-Houston, who called such levies amount to “a tax by misrepresentation.”

Turner is a big advocate of the System Benefit Fund, which he tried but failed to restore full funding to in 2007. Especially in a summer like this one, it would have been nice for there to be help available for folks who can’t afford their utility bills, but as has often been the case, it wasn’t a priority.

Senate Finance Committee Chairman Steve Ogden, R-Bryan, said he understands the argument, but “if you are going to criticize that, then go tell me what other parts of the budget I’m supposed to cut. … The choice to complain about it is just hot air.”

Alternatives, he said, would be raising general taxes or dipping into the state savings account known as the rainy day fund, which budget-writers expect to need in the future.

“The long and short of it is, we have to do this in order to balance the budget,” Ogden said. “I guess this was the least objectionable of the four alternatives.”

The situation points up a major public policy issue, he said.

“Our tax and revenue system is pretty messed up, and a case can certainly be made for a major overhaul of our tax structure,” Ogden said.

I would have argued that the rainy day fund was the right way to go, as I was arguing for the budget in general before the stimulus funds saved the day. But Sen. Ogden is correct that our system is broken and needs fixing. He’s not the guy I want fixing it, mind you, but he’s right about the problem. As with many other things, that isn’t going to happen until we get a change not just in leadership but in our philosophy of governing. I can’t say I see that happening any time soon.

Alternate strip club fee bill passes House

I didn’t realize there was another bill dealing with the strip club fee out there, but there is, and it passed in the House.

Sexually oriented businesses, including adult video stores and nude dancing clubs, would pay a 10 percent tax on their entry fees under a bill tentatively passed today on a voice vote in the House.

The revenue generated is expected to be significantly less than the clubs alone would have paid under last session’s bill that added a $5 per-patron fee. The clubs have successfully attacked that law as a violation of the First Amendment because much of the money was earmarked for low-income health care. The state’s appeal is pending at Austin’s Third Court of Appeals.

The 10 percent tax would raise up to $8 million, compared to an estimated $40 million that budget analysts anticipated from the 2007 law (only $11 million has been paid to Texas so far, and is being held by the state comptroller pending the outcome of the legal challenge).

Rep. Senfronia Thompson, D-Houston, offered a bill backed by the Texas Entertainment Association, which represents the clubs. The bulk of the money would fund services for sexual assault prevention and victims’ services.

“We’re going to be able to end the lawsuit and allow the state to be able to spend $11 million,” said Thompson.

Rep. Thompson’s bill is HB982, and it passed the House by a near-unanimous vote of 142-1. Rep. Ellen Cohen voted for this bill, but is still pushing her alternative as well.

Cohen has dozens of co-authors on her own replacement bill, which she says would address the courts’ concerns by reducing the per-person charge to $3 and making sexual assault prevention programs the sole beneficiaries. Cohen, whose bill is in committee and has not yet come up for a House vote, said Thursday she would vote for Thompson’s bill – as a supplement to hers and not a replacement. A recent University of Texas study estimated Cohen’s $3 fee would raise between $16 million and $18 million annually, while Thompson’s 10 percent admissions tax would raise between $500,000 and $1.2 million. Thompson says that number is low, and that her bill would raise between $4 million and $6 million annually.

“What we need to do is make sure whatever we’re doing raises the most amount of money for the greatest amount of good,” Cohen said.

Rep. Cohen’s bill is HB2070, and it’s pending in the Ways and Means committee right now. I’m curious about the different financial projections given in these two accounts. There’s a huge gap between “$500,000 to $1.2 million” and “up to $8 million”, or even “$4 to 6 million”. Here’s one possible reason for the discrepancy:

Critics of the bill say topless clubs could simply circumvent the law by removing or reducing cover charges. And, they add, many adult bookstores do not charge an admission fee.

“House Bill 982 is a bill pushed by the strip club industry as a supposed compromise. It raises very little, if any, money,” said Torie Camp, deputy director of the Texas Association Against Sexual Assault.

Well, okay, but I suspect most strip clubs charge a cover fee to raise revenue for themselves, so it’s not clear to me how reducing or removing that fee in order to circumvent a tax would be good business for them. And the original bill didn’t include adult bookstores, so I don’t quite get the objection there, either. Be that as it may, this bill has passed the House while Cohen’s is still in committee, and at this point of the session, with so much more to be done, I think that has to be taken into account, because this may be all that can get done.

We want more regulation!

Here are some words I never thought I’d hear in Texas, at least while the current regime is in charge.

Texas regulatory agencies could get as much as $41.2 million more over the next two years to better do their jobs keeping an eye on everything from banks to investment advisers to doctors.

The spending is recommended by Senate budget writers, partly in response to the national economic crisis.

“A lot of the problems that are going on in our country now appear to have been related to lax regulation and lax enforcement,” said Senate Finance Committee Chairman Steve Ogden, R-Bryan. “And so one of the issues in here is to make sure that our regulatory agencies have the adequate resources so that they can go do their job, and hopefully, at least in Texas, we won’t have as many problems because we had sufficient oversight and regulation going forward.”

The money would be used for such things as more frequent inspection of investment advisers by the State Securities Board; salary increases for financial examiners to prevent federal agencies from luring them away; more people to handle complaint investigations involving doctors; and more people addressing fraud, complaints and solvency monitoring at the Texas Department of Insurance.

The cost would be covered mostly by fees paid by those who are regulated.

Now that’s the kind of gittin’ tuff on crime I can believe in. Martha has more.