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Mike Hamilton

RIP, HB602

Dammit.

Texans won’t be buying liquor on Sunday and the state’s 29 brewpubs won’t be competing with their out-of-state rivals on local grocery shelves.

And Texas breweries or liquor distillers still can’t sell a 12-pack of beer or a souvenir bottle of bourbon to tourists, as the Legislature has killed all bills related to changes in state laws on beer and liquor retailing.

“We got railroaded,” said Dan Garrison with Garrison Brothers Distillery, a Hill Country distiller who wanted the ability to sell a souvenir bottle of his bourbon to tour groups.

Garrison’s comment could sum up the frustration of the smallest players in the state’s beer and liquor industry that is controlled by giants.

Rep. Mike Hamilton, R-Mauriceville, chairs the House Committee on Licensing and Administrative Procedures, where most of the alcohol-related bills died this session.

He said it’s difficult to change decades-old laws without affecting someone’s financial interest.

Translation: It’s difficult to give small brewers and distillers an even break because doing so might put a tiny dent in the massive, oligarchic profits of the big distributors.

Most attempts to change beer or liquor laws eventually bump up against the state’s post-Prohibition rules that maintain distinct boundaries between manufacturers, distributors and retailers, in what is commonly called the three-tiered system.

House Bill 660 would have allowed brewpub owners to sell their beer through distributors at retail outlets. The brewpubs said they would expand and create jobs.

The Beer Alliance of Texas and the Licensed Beverage Distributors supported the bill, while the rival Wholesale Beer Distributors of Texas opposed it. That was enough to kill it in Hamilton’s committee.

Likewise, Rep. Jessica Farrar’s House Bill 602, which would have allowed microbreweries to sell 12-packs of beer to tour groups, fell victim to competition between two distributor groups.

And once again, the deciding factor in this debate is what’s good for the distributors, and not for the customers. The customers always lose. On the one hand, legislation to allow microbreweries to sell their product onsite made it farther than it had before, and given the way the Lege works you have to hope that this represents progress. On the other hand, to come this far and see it fall just short is that much more wrenching because you could see the finish line. I’m sure I’ll feel hopeful again in time for the next session, but for now I’m just pissed off. Lee Nichols has more.

UPDATE: Here’s the Chron story.

Saint Arnold Brewing Co. founder Brock Wagner, one of the driving forces behind this and two previous legislative efforts, said he was “annoyed” at the continued failure to pass a bill that had no other organized opposition.

“We just got outgunned,” he said.

“The laws in Texas need to be changed,” he said. “Right now, the laws in Texas are biased against in-state craft breweries. It makes no sense.”

I couldn’t agree more.

Nothing is dead, and nothing is certain

The deadline for passing House bills on second reading was midnight Friday last week, which means that tons of bills are technically dead, as they can no longer be brought to the House floor for a vote. However, bills can still be attached to other bills that are eligible for consideration as amendments, so nothing can be ruled out at this stage.

“As long as the budget is alive, any fiscal measure is still alive,” said Rep. Todd Hunter, R-Corpus Christi, chairman of the influential House Calendars Committee, which determines which bills go to the House floor for debate.

“I think gambling is still alive because it’s a revenue measure and, as the budget process is alive, so is any revenue measure.”

A watered-down gambling bill to allow slot machines at racetracks and Native American reservations moved out of the House Licensing and Administrative Procedures Committee last week

“There’s not enough interest on the House floor — at the moment,” said Rep. Mike “Tuffy” Hamilton, R-Mauriceville, the committee chairman who moved the gambling bill.

Support for the gambling bill could build later — perhaps in a summer special session, he said, as members look for more non-tax revenue. The limited gambling bill could raise about $3 billion, he said.

You knew gambling would come up in this conversation, right? There are still big disagreements about how much money the Lege will actually spend this session, and how cuts to public education will be distributed, and these issues are not close to being resolved.

The House and Senate each has passed its own budget plan, with the Senate spending $4 billion more state dollars than the House in order to mitigate proposed spending cuts to education, nursing homes and other priorities.

The two sides now have little time to hammer out a compromise , and they’re struggling to reach common ground. The Senate thinks the House cuts are too deep, and the House thinks the Senate is unrealistic about how much money is available.

“It’s going to be real tough to get to a compromise,” one high-level legislative staffer said Friday, speaking on the condition of anonymity as to not further disrupt the negotiations.

Senate finance chief Steve Ogden said on Friday that a special legislative session on the budget is “pretty likely.”

Anything can happen, but I’d put my money on a special session. The question is whether another thirty days would be enough to resolve the disagreement, since what that really means is who capitulates. There, I’d be putting my money on the Senate finally giving in to the fanatics in the House. At which point we’ll have the budget the Republicans have been dreaming about for years. What happens after that is up to us.

Some gambling advances in the House

It’s probably too little too late, but you never know.

A Texas House committee surprised the casino lobby Friday night when it voted out legislation that would allow video lottery terminals — slot machines — at state racetracks and Indian reservations. The casinos were left behind.

Casino interests wanted any legislation approved by the House Licensing and Administrative Procedures Committee to also allow destination casinos in major cities and on the state’s barrier islands.

Rep. Mike “Tuffy” Hamilton, R-Mauriceville, said he still doesn’t have the 100 votes required in the House to advance the constitutional amendment his committee approved.

[…]

The bill approved by the committee includes a constitutional amendment and the legislation putting it into effect if it passes. Those bills, by Rep. Beverly Woolley, R-Houston, would allow VLTs at dog and horse tracks and on reservations and would raise $548.2 million for the next budget.

The legislation in question is HJR111 and HB2111. I still don’t see any evidence that the Senate is willing or able to pass similar legislation, and without assurance of at least a vote in the Senate it’s not clear that enough House members will commit to voting for it. So as always, I don’t really expect anything to happen. Click over to the link to see statements from the casinos (short version: boo!) and the racetracks (short version: yay!) about this development.

House says it may be close to approving expanded gambling

This would be as far as they’ve gotten in recent sessions.

Rep. Mike “Tuffy” Hamilton, R-Mauriceville, who chairs the Licensing and Administrative Procedures committee, said he is close to having enough votes to pass his ever-morphing gambling bill.

As Hamilton seeks to gather a comfortable number of “aye” votes, he and his committee members have been working to change the bill to make it more palatable for on-the-fence lawmakers who might oppose slot machines at race tracks and full-scale casinos at various places across Texas.

“I think that we have a really good chance right now,” Hamilton said. “We’re really close in the numbers.”

One way to gain support in this revenue-hungry Legislature is to promise to feed the state coffers.

Hamilton said he expects the bill to add about $3 billion of general revenue in the 2012-2013 biennium. The bulk of the money would come from $2.4 billion in licensing fees from groups seeking to slots at race tracks and would-be casino operators.

Hard to know what that means. I guess we’ll find out when and if it gets voted out of committee. Of course, Sen. Robert Duncan says there’s no support for gambling in his committee, so this may all be academic. My expectation is the same as before, that ultimately no action is taken.

From the “Capitalism is scary!” files

If you’ve been following the brewpubs’ efforts to get a bill passed that would allow them to sell their wares elsewhere in Texas then this Statesman story doesn’t bring much new to you. What it does do is cleanly capture the absurdity of the arguments against giving brewpubs and microbreweries greater access to the market in Texas.

The [Wholesale Beer Distributors of Texas] is very protective of the state’s post-Prohibition alcoholic beverage laws, which divide the industry among breweries, distributors and retailers and bar anyone from owning businesses in more than one category.

That means anyone wanting to sell outside of his own premises to consumers has to go through the distributors.

There are minor exceptions, including the legalization of brewpubs in Texas in 1993. Texas regulators consider brewpubs to be retailers, even though they also brew beer.

It’s a tiny industry. In 2009, Texas brewpubs produced 12,755 barrels of beer and grossed $31.9 million in sales, according to a report commissioned by Texas Beer Freedom.

But Mike McKinney, a lobbyist with the Wholesale Beer Distributors, says too many exceptions might invite industry giants to lobby the Legislature to change the system.

“We don’t want Anheuser-Busch to own a chain of grocery stores or nightclubs,” McKinney said.

[…]

Both sides cite the Texas wine market, which allows wineries to sell both to consumers at the vineyards and to wholesalers for distribution in stores, in their arguments about HB 660.

McKinney says the wine market is “chaotic.”

Scott Metzger, an economist who also owns Freetail Brewing Co. in San Antonio, says the number of Texas wineries jumped from 46 to 181 after the Legislature loosened the regulatory restraints.

[…]

The key to passing HB 660 is the House Committee for Licensing and Administrative Procedures, where the bill was pending while both sides lobby behind the scenes.

The chairman, state Rep. Mike “Tuffy” Hamilton, R-Mauriceville , echoes McKinney’s concerns that the bill could “open the door” to unintended consequences.

You mean like something resembling a free market? Oh noes! Whatever will we do? Very simply, the distributors have a nice little setup for themselves that guarantees them eternal profits, and they don’t want that to change in any way. It’s all about them trying to maintain a status quo that serves their interests a lot better than anyone else’s. Brewed and Never Battered has more.

Gambling interests tout job creation benefits

From the inbox:

REPORT OUTLINES 77.5K JOBS BY REGION, SECTOR CREATED BY SLOTS BILL

Confirms Texans Continue To Spend Billions Gaming in Neighboring States

AUSTIN, Texas – Win For Texas released a new report today outlining the specific regions and sectors of the 77,500 new, permanent jobs that will be created when slots are allowed at Texas horse and greyhound tracks and recognized Indian reservations. TXP, a Texas economic policy consulting group, prepared the study.

The study also details the $2.7 billion dollars Texans spend on gaming in a seven state region every year. TXP estimates that $2.2 billion of this “leakage” could be kept here simply by allowing slot machines at existing racetracks and Indian reservations.

“TXP estimates that approximately $2.4 billion in gaming revenue (and $3.8 billion total) would appear in-state by the end of 2013,” said TXP President, Jon Hockenyos. “This in turn would create $8.5 billion in total economic activity, $2.6 billion in earnings, and about 77,500 permanent jobs.”

The new report breaks down the specific economic and job creation into five regions: Austin Area, DFW, Houston and the Rest of Texas.

“The economic benefits of implementing slots are well-distributed across the state, as Dallas-Fort Worth and Houston each stand to gain close to 20,000 permanent jobs, Austin and San Antonio will realize approximately 10,000, and the balance is distributed across the rest of Texas,” said Hockenyos.

The legislation that would bring this proposal to Texas voters to decide is HJR 111/ SJR 33. The enabling legislation that details the implementation and oversight are HB 2111/ SB 1118.

The study was commissioned by Win For Texas and is attached in its entirety. For more information about this proposal or Win For Texas, please visit www.winfortexas.com.

Please see the report for your region’s specific benefits. The TXP report is attached and may also be downloaded here: http://www.winfortexas.com/TXP_Regional_Impact_Slots_Tracks_Spring_2011.pdf

I will simply note that TXP issued a similar report in 2009, which I blogged about here. I’ll leave it to you do compare the two and see what differences there are. Hey, we’ll need something for all those soon to be unemployed people to do.

As for the ubiquitous question of gambling’s prospects in the Lege, it doesn’t look any clearer now than it did before the session. The good news for gambling interests is that a consensus bill may emerge from the House.

A Texas House committee will listen to several gambling proposals at a hearing today , and in the coming days, the chairman of the committee will take all the proposals and roll them into one measure.

The forthcoming piece of all-encompassing legislation by Rep. Mike “Tuffy” Hamilton, R-Mauriceville, could lead to seven new Las Vegas-style casinos, slot machines at 13 horse and dog tracks across the state, slots at a few Indian reservations and slots at bingo halls across Texas, he said.

“Something for everybody,” Hamilton said. “We’ll put them all together.”

But there are competing gambling interests in Texas, and getting them to work with one another could prove difficult; casino proponents and the group wanting slots at tracks have not been able to work together this session or in sessions past.

There are also pro-gambling groups representing bingo halls and Indian reservations.

Hamilton, though, said he can get them all together.

Asked how he’d reach a consensus among the competing groups, Hamilton said, “Because I’m the chairman, and there will be just one bill passed out of committee.”

Whether that’s a bill that makes the casino interests, the racetrack interests, and the Indian tribes happy or one that makes some or all of them feel disgruntled remains to be seen. It’s also not clear that this consensus bill, or any other gambling bill, will get a hearing in the Senate.

While a new statewide poll shows that 86 percent of Texans believe the public should vote on whether to legalize casinos, an influential state Senate chairman with jurisdiction over gambling said Monday he has no intention of advancing the necessary legislation.

“There is no support in my committee,” said state Sen. Robert Duncan, R-Lubbock. “I just don’t think there are the votes in the Senate. I don’t see any chance of passage.”

Duncan’s opposition signals almost insurmountable odds for the expansion of gambling in Texas, despite the industry’s hopes that lawmakers would look favorably upon casinos this year as a solution to the state’s fiscal crisis.

So far, Lt. Gov. David Dewhurst has referred all gambling resolutions and bills filed in the Texas Senate to the State Affairs Committee, which Duncan chairs.

His spokesman, Mike Walz, said Dewhurst also likely would refer all “stand-alone” gambling bills passed by the House to Duncan’s committee. He noted that the issue could be attached to other significant legislation that traditionally is heard by other committees.

So the door isn’t completely closed, but it’s far from wide open. I thought gambling’s odds may have improved somewhat after the terribly austere Pitts and Ogden budgets first surfaced, but this doesn’t lend support to that thesis.

As for the poll mentioned in the story, there’s no details or references to the poll data, and I’m not interested in seeking them out. We’ve seen plenty of polling data that suggests Texans support the idea, so this is no revelation. I still think the fundamental issue is a lack of legislators that support it. If Hamilton’s “consensus” bill never makes it to the House floor, that will tell you all you need to know. The Trib, Texas Politics, and Postcards have more.

More on the microbrew compromise

Brewed And Never Battered gives its report from the House Licensing and Administrative Procedures Committee hearing yesterday.

Briefly on HB 602: No one expressed opposition, not even the Wholesale Beer Distributors of Texas, who have opposed the bill in the past. There is some forthcoming compromise on that bill that apparently everyone is happy with and it looks like you’ll be able to take beer home after a brewery tour later this year.

HB 660 had a tremendous number of supporters, and the roll of names read into the record as supporters of the bill was long and impressive. Among those in support but not wishing to testify were a number of beer distributors and the Texas Restaurant Association.

As you may have read, we’ve gained the support of the other tiers through thoughtful discussion with interested stakeholders. Beer distributors were concerned about self-distribution for a business type that already sells directly to the consumer, and we understand their points. Self-distribution has been removed from the bill. We also lowered the annual limit for aggregate production to 15,000 barrels per brewpub. A number we are very comfortable with. I’m pleased that we were able to come up with a bill that all three tiers really like.

We did have one person oppose our bill, however. Keith Strama, representing the Wholesale Beer Distributors of Texas, stood up and presented a semi-coherent rambling about how we should allow these kind of changes to the code because… well, just because. Seriously. Strama did present some other barely comprehensible argument, which was called onto the rug in short order by Committee Vice-chair Chente Quintanilla of El Paso. Video of the entire hearing, which you can find here, proves quite entertaining. Strama should have just stuck to “Uh… just because” – turns out that was a better argument than the one he was trying to make.

[…]

What’s Next.

With the WBDT exposed, the ball is back in our court. We have one or two weeks at the most to earn the votes of the committee, after that it will be too late to advance this session. Right now I think we have 4 votes. We need 5. Time to turn up the pressure and continue to urge members of the committee that this the right thing to do. Continue those calls and emails (I’ll post a sample follow up letter tomorrow).

The link to find committee members is here – you can search for the Licensing & Administrative Procedures committee, or just take my word for it that it contains the following members:

Chair: Rep. Mike Hamilton
Vice Chair: Rep. Chente Quintanilla
Members: Rep. Joe Driver, Rep. Charlie Geren, Rep. Roland Gutierrez, Rep. Patricia Harless, Rep. John Kuempel, Rep. Jose Menendez, Rep. Senfronia Thompson

It would be especially helpful for you to express your support for HBs 660 and 602 if one of these folks is your Representative. There clearly is a lot of support for this bill, but until the committee votes it out, that doesn’t mean anything. Lee Nichols has more.

Open beaches

Got the following email from a colleague and thought it was worth mentioning:

Very late Sunday night a “deal” was made in the Texas legislature to make an exemption in the Texas Open Beaches Act – the law that guarantees public access to our beaches.

Rep. Wayne Christian of Center, Texas use to have a beach house on Bolivar. Hurricane Ike destroyed it. I feel badly for him and the thousands of others who lost property. But state law prohibits construction of houses on the public beach. Why? Because its the PUBLIC BEACH, not private beach.

Anyway Rep. Christian wants to build a new house on what is now PUBLIC BEACH, and he snuck a law through that exempts front-row owners in Bolivar to build new houses on our beach. That is bad public policy. Beaches are like public parks, you can live near them but not in them.

Right now, please phone Gov. Perry and respectfully ask him to “veto HB770, building houses directly on the public beach will cost us billions of dollars in the next storm”.

512-463-2000

Rep. Christian was on the conference committee for HB770, which is (I presume) where this amendment was added. The Galveston News had a story about HB770 on Monday.

House Bill 770 started as a bill to allow homeowners whose houses were destroyed by a hurricane to maintain their homestead exemptions — even if a final decision on whether to rebuild hadn’t been made.

But the law also appears to have exempted houses along the Bolivar Peninsula from the requirements of the Texas Open Beaches Act for four years.

Under existing law, buildings must be behind the line of naturally occurring vegetation.

The bill would exempt from state open beaches laws a house “located on a peninsula in a county with a population of more than 250,000 and less than 251,000 that borders the Gulf of Mexico.” Only one area in the state meets that description — the Bolivar Peninsula.

The bill, which was co-authored by Galveston County’s state representatives, Craig Eiland, D-Galveston, and Larry Taylor, R-Friendswood, won unanimous approval in the state House and easily earned passage in the Senate. One of Galveston County’s two state senators, Mike Jackson, R-La Porte, was the bill’s sponsor in the Senate.

Texas Land Commissioner Jerry Patterson, whose agency is responsible for managing the open beaches laws in Texas, blasted the law.

“I don’t think building houses on the beach, with the waters of the Gulf beneath them, is a good idea or good public policy,” Patterson said. “This bill is so poorly drafted that will happen.”

Here’s the bill text. I agree with Commissioner Patterson on this, and think a veto is not a bad idea. And according to today’s Chron, he plans on sticking to his guns.

Land Commissioner Jerry Patterson has asked Gov. Rick Perry to veto the bill containing the amendment. The bill has not yet crossed the governor’s desk, and he will not make a decision until he sees it, said Perry spokeswoman Katherine Cesinger.

“I don’t think building houses on the beach, with the waters of the Gulf beneath them, is a good idea or good public policy,” Patterson said.

If the governor signs the bill, Patterson vowed that he would not enforce the amendment. “My option is just to say, ‘Screw you, Wayne Christian,’ because the Legislature didn’t pass this, one guy passed this,” he said.

Patterson said the Legislature would have to impeach him if lawmakers wanted the provision enforced.

That would be going too far – filing a lawsuit strikes me as the better way to stop enforcement of that law – but at least we know where he stands. Christian, for his part, says this wasn’t about him:

Christian said his vote for the amendment benefited other peninsula property owners and therefore was not a breach of ethics. “If I were to pass a law that affected only Wayne Christian, that would be a conflict,” he said.

At least 12 of his neighbors want to rebuild but can’t without the amendment, Christian said.

The amendment will keep property on the tax rolls that otherwise would be taken off if left undeveloped, Christian said. He also insisted the amendment is “not mine,” because it was put forward by Rep. Mike “Tuffy” Hamilton, R-Mauriceville.

“I did sign with him because I approved the concept,” Christian said. The amendment targeted the Bolivar Peninsula because it bore the brunt of the storm, he said.

He denied that it was improper to add the amendment to a bill so close to the end of the session. “This is not an unethical, deceptive method of doing anything,” Christian said. “This is the way it’s been ever since government was invented.”

Well, that much is certainly true. As has also been the case since government was invented, sometimes these last-minute deals contain unpalatable provisions. And so here we are.

You’ll be hearing more about the Open Beaches Act this November, as the passage of HJR102 means there will be an amendment voted on to make the Open Beaches act part of the Constitution instead of an ordinary law that could be changed by a majority vote in the Lege. The above-linked story, and this Chron story from last week have more info about that.

The push to protect public access comes in the wake of lawsuits challenging what is public and what is private along the 367 miles of mostly wild Texas coastline.

The Open Beaches Act prohibits houses seaward of the vegetation line, which crawls steadily landward as the beaches erode.

While trophy houses, subdivisions and hotels have sprouted along the Gulf of Mexico, rising seas, sinking land and storms have led to the rapid erosion of Texas coastline. By some estimates, as much as 10 feet of beach front washes away each year.

As the sandy shore shifts over decades, a barrier island, such as Galveston, may look the same, but it will be farther landward. Houses that once stood hundreds of feet from the surf will be encroaching on the Gulf.

In some cases, the Texas General Land Office, which is responsible for the coastline, has sued to remove houses from the beach.
Jerry Patterson, the state’s land commissioner, suggested that the proposed amendment wouldn’t change anything along the coast.

“We work every day at the Texas General Land Office to ensure the public’s right to access the beach,” he said.

Property owners contend that the existing state law tramples on their rights and that a constitutional amendment would make matters worse, according to the House’s analysis of the pros and cons of the bill.

J. David Breemer, a Pacific Legal Foundation attorney who is challenging the land office’s enforcement of the Open Beaches Act, said he doesn’t believe a constitutional amendment would insulate the state from lawsuits.

“The issue is how the law is used, not the intent,” Breemer said. “The easement keeps rolling over land that the public hasn’t ever walked and development has already happened.”

Still, beachgoers and environmentalists expressed enthusiasm over the proposed amendment, which cleared the state House on a 140-1 vote and the Senate on a 29-2 vote.

Ken Kramer, director of the Sierra Club’s Lone Star chapter, said the environmental group would campaign in favor of the ballot measure.

“It’s a great issue to elevate people’s awareness of coastal protection,” he said.

This KHOU story has more on that lawsuit. I’ll be voting for this proposition, and I look forward to seeing how the Supreme Court deals with it when that lawsuit, which has been sent its way by the Fifth Circuit Court of Appeals, comes before it.

UPDATE: Land Commish Jerry Patterson keeps pushing this, with a press conference tomorrow in Galveston. From his release:

Texas Land Commissioner Jerry Patterson will hold a press conference at 10:30 a.m. Friday on the beach in Galveston to rally Texans to demand Governor Perry kill a proposed law that would exempt the Bolivar Peninsula from the Texas Open Beaches Act.

The press conference will be on the beach in the Pirates Beach subdivision in Galveston, just seaward of the 4200 block of Ghost Crab Lane.

“Call Governor Perry now and let him know you want to keep Texas beaches for the enjoyment of the public,” Patterson said. “An eleventh hour amendment to HB770 would allow an elite few to rebuild their houses on the public beach or even in the surf. That’s not just a bad idea, that’s bad public policy.”

Patterson urged Texans who love the beach to call Governor Perry’s office at (512) 463-2000 and ask him to veto HB770.

The amendment was covertly slipped into the bill without any public debate on the first day of the 2009 hurricane season, which was the last day of the 81st Legislature.

“As Gulf Coast residents were thinking about the next storm, a few lawmakers were actually sneaking an amendment on to a bill that would allow their neighbors to rebuild their houses on the public beach or even in the surf zone of the area hardest hit by Hurricane Ike,” Patterson said. “That’s just unthinkable.”

Far as I know, there’s been no public comment from Governor Perry yet. He probably won’t say anything until he takes action on the bill, but it’s possible he could telegraph his intent.