Off the Kuff Rotating Header Image

sexually oriented businesses

Supreme Court re-upholds strip club tax

Technically, they declined to re-review it, but practically speaking I figure it’ll amount to the same thing.

The Texas Supreme Court on Friday declined to review whether a $5-per-patron fee at live nude entertainment clubs is an occupation tax in disguise, letting stand a lower appeals court ruling that found alcohol-serving Texas strip clubs must pay up when it comes to the “pole tax.”

Last May, the Texas Third Court of Appeals ruled that the fee was not an unconstitutional occupation tax and must be paid by Texas strip clubs that serve alcohol.

[…]

It is not clear whether the clubs will continue their legal fight. A call seeking comment from a lawyer for the Texas Entertainment Association, which represents many of the roughly 200 strip clubs in the state, was not immediately returned.

See here and here for the background. The clubs have now lost twice in court. Hard for me to see what the value proposition is for them to give it a third try rather than just collecting and paying the fee at this point, but that’s up to them. I have a feeling there will be another chapter in this story eventually.

It was a bad week for the strip clubs

Another adverse court ruling.

A state appeals court on Friday upheld the legality of the state’s so-called “pole tax” on nude entertainment clubs, the latest decision in a six-year battle by Texas officials to collect the $5-per-customer fee from more than 200 strip clubs.

In a 16-page decision, the 3rd Court of Appeals overruled a challenge by the Texas Entertainment Association contending the law violated the Texas Constitution because it is an occupation tax from which 25 percent of the collections must go to public schools. The appeals court ruled that it is an excise tax that could be spent however the Legislature wishes.

[…]

In its decision, written by Justice Scott Field, the appeals court rejected the clubs’ argument that the fee was an occupation tax and, as such, was unconstitutional because it did not allocate a quarter of the revenue collected to public schools as mandated in the Texas Constitution.

The court also dismissed arguments that the tax violated the state Constitution’s “equal and uniform” requirement by covering only nude-entertainment business where there is an audience of two or more, and not other adult businesses, such as lingerie modeling studios or adult movie arcades that cater to single customers.

“We conclude that the sexually oriented business tax’s classification is not unreasonable because limiting the tax’s applicability to businesses with audiences of two or more reasonably relates to adverse secondary effects that the tax is intended to address,” the ruling states. “Given that the (Texas) supreme court has already concluded that the sexually oriented business tax does not violate the First Amendment of the United States Constitution, we likewise conclude that it does not violate the free speech clause of the Texas Constitution.”

The decision notes that the Texas Supreme Court upheld the fee because it “was imposed to address the adverse secondary effects of combining nude entertainment with alcohol consumption, both by discouraging the activity through higher taxation and by generating revenue for programs designed to address the social harms that result.”

Businesses offering adult entertainment to one customer at a time do not have the same adverse effects, it states.

First the Comptroller’s demand for payment, now this. The original suit was filed on First Amendment grounds but lost at the Supreme Court. This was a different tack, but so far not any more successful. I’m sure this will be appealed to the Supreme Court, so maybe by 2016 we’ll have a final resolution, assuming the clubs don’t have some other argument in their back pocket in the event this one fails. The Trib has more.

More reactions to the city’s settlement with the strip clubs

Not everyone likes it.

Bob Sanborn, CEO of the nonprofit organization Children at Risk, and other advocates against human trafficking said on Wednesday that they should have been consulted before a deal was struck.

Mayor Annise Parker, who brokered the agreement, said it ended a lengthy lawsuit and gives the city more funds to fight trafficking.

“We settled a 16-year-old lawsuit and it’s unfortunate that they don’t agree with my decision,” Parker said. “I don’t think we should get sidetracked by those folks who simply don’t like the adult entertainment industry.”

Sanborn said his group wants to make sure the city is committed to going after traffickers, even if they are connected to those topless clubs making yearly payments to the city. Children at Risk also wants the city to license or close almost 300 other unlicensed sexually oriented businesses, like some massage parlors and cantinas.

“Houston is a hub for human trafficking; some would say we are ‘the hub’ for trafficking,” Sanborn said during a news conference. “This is the wrong deal and it’s certainly the wrong city.”

See here and here for the background. I don’t think the city was required to consult with anyone on the settlement terms of this 16-years-long litigation, and if their goal was to bring that case to a reasonably satisfactory close then the last thing they would want to do is involve more parties in the negotiations. That said, the city clearly did at least run the terms of the deal past the other groups that were present at their own press conference. I don’t know if the city included Children at Risk on the list of those it notified about the settlement or not – perhaps they did and C@R chose not to attend that press conference, and perhaps they had a smaller list of invitees in mind. I think the terms are acceptable, and I think it makes sense for the city to try to get the bigger clubs to voluntarily cooperate so they can concentrate on the more marginal players. Licensing and enforcement is a matter of resources, and the city hopes that this settlement will allow it to deploy its resources more efficiently. Check back in a year or two and we’ll see how that’s going. As for the complaints raised by some Council members about the settlement, well, that’s just how it is. As there was no payout to be made by the city in the deal, there was nothing for Council to approve, so there was no role for them to play. There’s not much more to it than that.

One more thing:

Sanborn noted that Harris County Sheriff Adrian Garcia and District Attorney Devon Anderson support Children at Risk’s anti-trafficking efforts and read statements from each.

“Prostitution is not a victimless crime,” according to Garcia’s statement. “It’s a greedy industry that thrives on forced labor, drug addiction and sometimes even illegal imprisonment.”

The story, especially the headlines, gives the impression that Sheriff Garcia and DA Anderson were standing with Sanborn, C@R, and the other groups in criticizing the settlement. We don’t know what Anderson said, but that clip from Garcia’s statement isn’t specific to the deal. Out of curiosity, I contacted the Sheriff’s office to ask about this, and was informed that Sheriff Garcia was not making a comment on the city’s deal with the strip clubs, and has not made any comment on that deal. Like I said, that wasn’t clear – to me, at least – from the story, so now you know.

Evaluating the strip club settlement

Some interesting feedback on the city’s recent legal settlement with area strip clubs.

South Texas College of Law professor Matthew Festa said the payments are not his central concern, noting cities often condition building permits on a business planting trees or building sidewalks. Festa said the deal presents a separation of powers issue, however, in that Mayor Annise Parker’s administration is selectively enforcing city rules. It also raises a due process issue by creating a two-tiered approach to enforcement, he said.

The ordinance remains in force as written for clubs not involved in the settlement. In addition to the three-foot rule, the ordinance requires that such businesses operate at least 1,500 feet from schools, day cares, parks and churches.

“ ’You close down the private rooms, and we’ll back down on the three-foot rule.’ Those are great examples of compromise and deliberation that are supposed to be made and decided on by the legislative body, which is the City Council,” Festa said. “The settlement may, in fact, reflect a good judgment about what the law should be, but until that becomes what the law is, it’s problematic for the city to not enforce it uniformly.”

Kellen Zale, a professor at the University of Houston Law Center, had fewer concerns about two-tiered enforcement. She said the outcome strikes her as similar to grandfathering, which happens regularly in all cities, particular zoned cities where businesses that exist before land use rules change can operate under the old rules.

“The local government is exercising its police power and saying, ‘In exchange for you helping with our vice requirements, we can help with your, I guess, clothing requirements,’ ” she said. “It’s within their police power to make these arrangements that change the land use requirements or the business operation requirements for a particular business.”

Amy Farrell, a Northeastern University criminologist and human trafficking expert, found the settlement surprising. Small charges for such things as violating the three-foot rule can be useful for police, she said, helping them gain leverage for a wider trafficking probe.

“There certainly have been cities in the U.S. that have created agreements with businesses, but those were more on the regulation side and didn’t have this explicit pay-back system,” Farrell said. “We hope that communities would provide the resources to pursue these cases without needing to make bargains with strip clubs.”

Still, Farrell said, the information sharing between businesses and police, and the money to fund additional officers, could be valuable.

Mary Burke, executive director of the nonprofit Project to End Human Trafficking, refers to Houston as city that is making progress on human trafficking, but said the settlement “feels slimy.”

“I have mixed reactions. Are we somehow colluding with the perpetrator by taking this money?” she said. “That’s really fantastic to see that much money go to a human trafficking unit. I hope some of that money is given to groups who help survivors.”

Burke said she is among those who believe all sex businesses exploit and objectify women, and said she is concerned the elimination of the three-foot rule could lead to more dancers being touched or grabbed in unwelcome ways.

This story said that only five sexually-oriented businesses agreed to the deal; the original story and the Mayor’s press release said there were 16. I’m not exactly sure what accounts for the difference, but my guess is that it means five more besides the original 16 plaintiffs. Just a guess. Anyway, my impression was that it’s a reasonable deal, and it does have the effect of resolving this ridiculously long series of lawsuits and appeals. I gather that something like this hasn’t been tried anywhere else, so we’ll see how it goes. I think it was worth trying. Check back in a year or two and we’ll see if the parties involved still feel that way.

County settles with Treasures

It’s over, at least for now.

When city of Houston lawyers settled a public nuisance lawsuit against Treasures last December, Harris County attorneys continued to pursue the jointly filed case, saying they needed more assurances from the strip club that it would operate above board.

Under a late-Monday settlement with the club, however, county attorneys all but pointed to the city settlement and added, “What they said.”

The agreement comes even as the plaintiffs acknowledge Treasures has violated its agreement with the city four times since December.

[…]

Just as club owner Ali Davari will pay the city $100,000 to assist the Houston Police Department in efforts to combat human trafficking, the latest agreement also will see Davari pay $100,000 to cover the county attorney’s costs. The settlement achieves enforcement beyond the city’s stipulations, First Assistant County Attorney Robert Soard said, noting Treasures must add an additional manager for weekday day shifts and for night shifts every day.

The settlement also requires Treasures managers to attend a class on human trafficking, and the club must amend the paperwork it gives independent contractors – typically, dancers – by adding language about trafficking, including a hot line victims can call.

“Yet again, they put all the responsibility on the victims, an impossible situation if they are being exploited,” said Dottie Laster, a New Braunfels-based human trafficking expert who said she is frustrated by both settlements. “It sounds like a fairy tale agreement, that the signatories are choosing to believe people aren’t being exploited, that it’s more likely everyone in there is willing.”

I don’t really know what to say to that, so let me point you to Dottie Laster’s website for more information. Look around a little and you’ll find a link to this story about the time Ann Johnson, Democratic candidate for HD134 last year, successfully argued before the State Supreme Court that minors should not be prosecuted for prostitution. Worth your time to look around Ms. Laster’s website and see what resources she has.

San Antonio strip club lawsuit

If you’re a lawyer representing strip clubs these days, you sure don’t lack for business.

More than a dozen strip clubs have sued the city of San Antonio over amendments to ordinances requiring entertainers to wear bikinis, claiming the changes are another heavy-handed attempt to shut the cabarets down.

The federal lawsuit resembles one at the center of a court battle almost 10 years ago when the city amended its human display ordinance to, among other things, bar nude dancing, set greater restrictions on lap dances and prohibit small, private and unsupervised VIP rooms in all strip clubs. It ended in a settlement.

Many of the topless clubs got around those restrictions, and greater regulation, by having entertainers wear pasties, while clubs that offered nude dancing challenged citations individually.

The ordinance pertaining to sexually oriented businesses and the human display ordinance were amended last year, with the changes meant at tightening technicalities.

The changes are set to take effect in the coming two months.

“They did a number of things, most of them were technical provisions, but of note, they changed the definition so if you are wearing less than a bikini you’re a sexually oriented business,” City Attorney Michael Bernard said. “It gets rid of this whole pasties thing.”

“The effect is to tighten up the definition of a sexually oriented business,” Bernard said. “If your business is sexually oriented, you are going to be sexually oriented under the law. Before, there were loopholes in which they avoided that.”

This sounds very similar to the original SOB ordinance in Houston that triggered a lawsuit that was finally resolved in the city’s favor more than a decade later, but a bit more restrictive. Houston has taken a somewhat different approach to policing its strip clubs these days, but it’s not out of the question that what happens in San Antonio could get imported here. So we may as well keep an eye on it.

City settles with Treasures, county still on the case

Noted for the record.

Martha approves of pole dancing

Prominent strip club Treasures, hauled into court as an alleged public nuisance and haven for crime by city and county attorneys seven months ago, has agreed to put $100,000 in a nuisance abatement fund as part of a settlement with the city of Houston, City Attorney David Feldman said.

Harris County attorneys, however, say they plan to proceed with the case. A trial was scheduled to start Monday, but has been delayed until February. If State District Judge Alexandra Smoots-Hogan declares Treasures a public nuisance, the club would close for a year.

The suit, filed jointly by the two governments in May, seeks to close the club at 5647 Westheimer for allegedly harboring prostitution, drugs, illegal weapons and sexual assaults. The club’s attorneys deny the allegations.

Feldman said the terms of the settlement are to be kept confidential to the extent possible. The Houston Chronicle late Monday submitted a Texas Public Information Act request for the settlement agreement.

Feldman said the agreement allows the city to achieve its aims in filing the suit, and then some.

“The parties have committed to work together to abate any nuisance activities which might occur in Treasures and have joined together to eliminate certain illegal activities in the city of Houston, including human trafficking,” Feldman said. “The agreement … puts procedures, verification and a fund in place that provide an opportunity for abatement in the short and the long term, which goes beyond what litigation might achieve.”

[…]

The County Attorney’s Office, which technically is representing the state of Texas in the suit, remains unsatisfied.

First Assistant County Attorney Terry O’Rourke said the city’s decision to settle does not weaken his case.

“The idea that this agreement would remain secret is preposterous,” O’Rourke said, adding his office was not even given a copy of the agreement. “This case is going to trial. We will get them.”

I’m not qualified to address the secrecy question – it seems strange to me, but I’m not a lawyer – so I don’t really have a point to make. I just figured that after all the drama and intrigue, I ought to at least stick around to see how it all turns out. I suppose after funneling all that money to his opponent, Vince Ryan has no particular incentive to be accommodating. Along those lines, I will simply note that Judge Alexandra Smoots-Hogan, who was also targeted by Team Treasures, was the top vote-getter among Harris County judicial candidates, with 581,309. Her opponent, Bud Wiesedeppe, was the low scorer among judicial candidates, with 550,095 votes. There’s nothing illegal or unethical about a party to a legal action targeting the prosecutor or the judge politically. But perhaps the outcomes here will provide a small measure of disincentive for the future.

Council adopts strip club fee

Here it comes.

Seeking a solution to the bedeviling problem of untested rape evidence that is in some cases decades old, council imposed a $5-per-customer fee on strip clubs Wednesday so it can buy speedier lab work.

That simple solution, however, may come with complications of its own, starting with court costs.

“Houston has now bought itself the certainty of ongoing litigation,” said Los Angeles-based attorney John Weston, who represents the Association of Club Executives of Houston. Councilwoman Ellen Cohen said she believes the city is on solid ground because the Houston ordinance she championed is based on a $5-per-customer statewide fee she authored as a state representative. That fee was upheld by the Texas Supreme Court last year.

[…]

Cohen has said the Houston fee would raise $1 million to $3 million a year for rape evidence testing.

Collections in Houston will depend, in part, on who has to pay. Cohen estimated that about 30 clubs would be covered by her ordinance. The state has collected from 20 clubs in the city. A local attorney for the clubs said only a handful fit the city’s definition of a sexually-oriented business, while an additional 50 clubs’ entertainers wear just enough clothing to skirt the classification.

In the end, Cohen sold the ordinance to her colleagues as she declared, “We have waited long enough.” Council passed it by a vote of 14-1.

The need to clear the rape kit backlog was cited by CMs Oliver Pennington and CO Bradford as justification for their vote in favor. Given the certainty of litigation and the fact that the state-collected fee has not yet been appropriated because of that, it’s not clear to me that this will actually shorten the wait to get this done. I suspect the main question to be argued before the courts is which clubs are truly on the hook for this fee. It won’t surprise me if it’s a few years before we get an answer to that.

Council defers on strip club fee

Tagged for a week.

Consideration of a $5-per-head fee on customers of strip clubs to pay for reducing the city’s backlog of untested rape kits has been delayed for a week.

Council members Melissa Noriega and Al Hoang both tagged the item, a parliamentary maneuver that puts off an agenda item for one week, no questions asked.

Neither Noriega nor Hoang said they were against the plan but wanted more time to consider the measure, which was introduced a week ago by Councilwoman Ellen Cohen.

I suspect this will go through in the end. The clubs themselves are unsurprisingly not happy at the prospect, but their main argument against is unlikely to strike fear in anyone’s heart.

Al Van Huff, lawyer for several Houston-area strip clubs, said the city can expect a court fight.

“It sounds great if you’re a politician,” Van Huff said. “The reality of the situation is, it’s going to be expensive for the city to attempt to impose such a tax on these businesses.”

Enforcing a city ordinance also could be complicated. Cohen estimated that about 30 clubs would be affected. Van Huff said fewer than a handful of clubs fit the city’s definition of a sexually oriented business, while an additional 50 clubs’ entertainers wear just enough clothing to skirt the classification.

The fee unfairly targets clubs with the intent of making them unprofitable and forcing their closure, Van Huff said. The clubs already are responsible for taxes as well as the state fee, he said.

The State Supreme Court upheld the legality of the state fee, and the US Supreme Court declined to hear an appeal of that ruling. That case isn’t the be-all and end-all, it was strictly about the constitutional free speech issue, so the clubs may find a more promising avenue for litigation, but again the historical record is against them, as their suit against the 1997 SOB law ultimately went nowhere. Whether or not you approve of the idea, I don’t see litigation as a big threat to it.

Meanwhile, another budget item moves forward.

City Council‘s Ethics, Elections and Council Governance Committee will consider a charter amendment ballot proposition to change term limits from six to 12 years.

Councilman Andrew Burks proposed doubling Council terms from two to four years and keeping the three-term limit in place. Houston voters would have to approve a ballot measure to change current term limits, which are more than two decades old.

The committee would review ballot language, which Burks says will save the city $3 million each two years by reducing the number of elections for the mayor, 16 Council members and controller. Councilwoman Wanda Adams is a co-sponsor of the Burks proposal, which was submitted last week as a budget amendment.

The full Council would have to act by Aug. 20 to place language on the November ballot.

Burks said two-year terms are so short that “We really can’t get anything done” because Council members need to campaign for re-election. Extending terms “improves upon the ability of Council members and mayor to do a better job,” he said.

Councilwoman Helena Brown and Oliver Pennington voted against sending the matter to a Council committee.

“Four years is too long a time for change-out if we’re not doing our job right,” Brown said.

My thoughts exactly, Helena. If this gets approved, it will be yet another referendum on the fall ballot. Get ready to do a lot of voting, y’all.

And finally, there was the plastic bag issue.

Council has approved a budget amendment ordering city officials to consider doing something about the litter problems presented by plastic bags or even to phase them out.

Councilman Ed Gonzalez’s original amendment called for preparing an ordinance within a year that would address a bag ban. Gonzalez spoke of looking to Austin, where a plastic bag ban is in effect, as a possible model.

Numerous speakers criticized the proposal at Tuesday’s public session. The amendment was watered down Tuesday night to say the city should only ”address phasing out plastic bags” and deleted mention of an ordinance. At the Council table today, Councilman Oliver Pennington further softened the proposal by adding language calling on the city to “address littering by plastic bags or phasing out plastic bags.”

Not really sure what that amounts to, but we’ll see. I’m still perfectly fine with the idea of charging a fee for plastic bags and using that money to clean up trash around the city.

UPDATE: In the end, the budget was approved, along with a few other amendments.

Budget amendment time

Now that Mayor Parker has formally submitted her proposed budget for fiscal year 2013, it’s time for Council members to submit their amendments for consideration. I’m going to start at the bottom of the story with the two proposals that intrigues me the most.

Two members called for a November election to amend the city’s term limits law, which forces council members, the mayor and controller from office after three two-year terms. [CM Wanda] Adams proposes two four-year terms; Councilman Andrew Burks proposes three four-year terms.

Councilman Ed Gonzalez has proposed a ban on plastic bags in Houston. Specifically, his amendment calls for the city to draw up an ordinance within a year that would phase out the use of the bags. Brownsville has banned the bags, and a ban goes into effect in Austin next year.

“We have a number of bayous, and they’re littered with plastic bottles and plastic bags,” which conservation groups spend hundreds of thousands of dollars a year removing, Gonzalez said. He referred to trees on the banks of bayous with bags snagged in their boughs as “urban Christmas trees.” He said he does not envision the city offering businesses a financial incentive to abandon plastic bags.

As you know, I don’t like term limits at all, but if we have to have them I’d rather put the limit at 12 years rather than 6, for the simple reason that I don’t think six years is enough time to really accomplish much as a Council member. As such, I’d take Burks’ proposal over Adams’, though hers is still better than the status quo. However, I would prefer even more to have six two-year terms instead of three four-year terms. My argument for having two year terms instead of four year terms can be summed up in four words: Council Member Helena Brown. Four years is an awful long time to have to wait to correct an error like that.

As for the bag ban proposal, you know I’ve been following developments around the state and wondering when Houston might get in on the act. About time for it, I say. I don’t have a strong preference for any specific approach to this, whether a ban by fiat or by imposition of a tax on bags, perhaps to be replaced later by a full on ban. As long as the city engages all the stakeholders and gives plenty of opportunity for feedback, I’m sure the end result will be fine. All of these proposals assume Mayor Parker supports them, as they are unlikely to get very far if she doesn’t. We know she’s no fan of the current term limits system, and I’ll be very surprised if she doesn’t back up her Mayor Pro Tem on this one.

Council members Stephen Costello and Wanda Adams both call for giving $160,000 to the Houston Food Bank to help it enroll more people in SNAP, the federal program formerly known as food stamps.

One of Councilman Mike Sullivan’s amendments would eliminate funding for affirmative action monitoring on city contracts. Councilman Larry Green proposes increasing it.

From Councilman Jack Christie came a fill-it-or-kill-it plan that would have Council consider eliminating any position that remains vacant for three months.

First-term Councilwoman Ellen Cohen proposed a Houston version of the so-called “pole tax” she shepherded into law as a state legislator. The state law imposed a $5 per customer fee on strip clubs to raise money for sexual assault victims.

In order:

– I approve of the Costello/Adams proposal. Ensuring children have adequate nutrition is one of the best investments you can make. It is, to coin a phrase, a big effin’ deal.

– Sullivan may have won his Republican primary last month, but between this and some of his other amendments, which include a five percent pay cut for the Mayor and Council members, I guess he isn’t finished wooing those voters. I don’t expect them to go far, and as Campos notes, his colleagues who hope to be on Council longer than Sullivan intends to be probably aren’t too thrilled by this.

– I see some merit in Christie’s proposal, but on the whole I’d prefer to err on the side of more flexibility for department heads.

– I’m a tiny bit ambivalent about Cohen’s SOB proposal. No question, clearing the rape kit backlog is a huge priority, and with the favorable resolution of the lawsuit over the state “pole tax” law (that Cohen authored), this is the obvious vehicle for that. I just feel, as I did about the state law, that sexual assault is everyone’s problem and everyone’s responsibility, and as such it feels a little pat to put the entire burden for funding these needed items on strip clubs and the like. It’s a minor quibble, not enough to make me oppose Cohen’s amendment, I just felt like someone had to say that.

There’s more proposals than just these, of varying levels of seriousness and likelihood of adoption. In addition to her pension default tomfoolery, CM Helena Brown has a variety of no-hope amendments, including one to switch the city from a strong mayor system to a city manager system. There are pros and cons to each approach, and without commenting on the merits of one system over the other, I’ll just note that this would be a ginormous, fundamental change to how we do things, and as such would need a ton of discussion and engagement culminating in a charter referendum. All things considered, it’s hard to see this as anything but another attack on the Mayor by her political enemies. Stace has more.

SCOTUS declines to hear strip club tax case

The end of the road for this particular bit of litigation.

The U.S. Supreme Court will not take up the adult entertainment industry’s lawsuit against the state’s $5-per-patron strip club tax, justices decided Monday.

“Texas is now one step closer to a sustainable source of funding for rape crisis centers, and most importantly, for supporting sexual assault survivors in their recovery,” said Annette Burrhus Clay, executive director of the Texas Association Against Sexual Assault.

That means the Texas Supreme Court’s ruling — that the fee does not violate the First Amendment — stands. But it doesn’t mean that the industry, years into its legal battle, can’t file yet another suit against other elements of the tax.

The story doesn’t go into what other grounds there may be for litigation, and I don’t care to think about it at this time. Here’s a reminder of the timeline in this case, which first got a ruling from a district court judge in 2008. As I recall, it took about a decade for all the lawsuits over the city of Houston’s SOB ordinance to be resolved. Check back in 2018 or so, I guess.

The strip club tax is on the table

Among the things that conference committee members will be discussing as they try to finalize the budget is a reworking of the strip club tax that was first passed in 2007.

This session, while awaiting a ruling on the case from the Texas Supreme Court, lawmakers attempted a preemptive strike. Fearing, as lower courts have suggested, that linking strip clubs to health insurance was too big of a stretch, they easily added language to a large health reform bill directing all of the strip club fee’s revenues — originally estimated at $87 million over two years — to sexual assault victims and prevention. That measure, Senate Bill 23, died on the clock in the House.

The strip club language is back in the special session — first on Senate Bill 7, a sweeping health reform bill, and now as an amendment to Senate Bill 1, a fiscal matters bill that contains the state’s school finance plan. But it’s in trouble.

Sen. Robert Duncan, R-Lubbock and the author of SB 1, says the purpose of the bill is to fund state government and schools, not to be a landing pad for controversial legislation. He said his colleagues in the upper chamber are lobbying hard on both sides of the issue and that he doesn’t see the provision sticking as lawmakers work out their differences in conference committee.

“I’m trying to be a traffic cop,” he said. “I’m trying to keep a lot of things off of it.”

But supporters of the strip club fee say all kinds of other controversial amendments have been added to SB 1 and don’t seem to be at risk of being killed.

“The courts reviewing the bill … have made it clear that [using the revenue for health insurance] is not a good fit,” said Mica Mosbacher, an advocate for the Texas Association Against Sexual Assault and a sexual assault survivor. “SB 1 provides a remedy.”

Maybe if it were linked to abortion somehow, that would break the stalemate. The House wants this in, the Senate is dithering as you can see. Speaking of which, the State Supreme Court heard the appeal of the strip club tax lawsuit in March of 2010, which is to say 14 months ago. You just can’t rush these things.

The impending budget cuts will affect you in ways you don’t realize

Here’s a bit from that big Chron story last weekend about Houston’s ongoing battle against sexually oriented businesses that masquerade as massage parlors and how the budget debacle will make that battle a little harder for the city.

Regulating massage parlors is a dubious task. They often change names and ownership, if they register with authorities at all.

The job of licensing and inspecting them falls to Texas Department of State Health Services, but the state relies heavily on local police to enforce the regulations. There is just one full-time state investigator assigned to routine inspections of licensed businesses. Five investigators, shared with other state programs, review and investigate complaints against licensees.

But department spokeswoman Christine Mann said it’s likely the state will cut the massage licensing program to meet budget requirements.

“One of those options is to eliminate our massage therapy licensing program, worth $1.5 million over the 2012-2013 biennium,” Mann wrote in an e-mail.

This is the sort of thing that happens when state agencies are ordered to cut their budgets by ten percent because of a looming multi-billion dollar shortfall. Enforcing regulations, even a little bit, costs money. Not enforcing them “saves” money, at least in the sense of not being a line item in the state budget. What it really means is that someone else winds up paying for it, one way or another. Just another thing to look forward to when the 2011 Legislature convenes.

City takes aim at more SOBs

Eight months ago, the city of Houston succeeded in closing down a strip club, its first such victory after finally getting a favorable verdict in the lawsuit to overturn the 1997 ordinance that more strictly regulated sexually-oriented businesses. They’re now hunting more game.

Lawyers for the city filed a lawsuit Friday to close a Galleria-area topless club for not having a sexually oriented business license, the beginning of a City Hall crackdown on dozens of unlicensed clubs across Houston.

The lawsuit followed the arrest Thursday evening of nine employees of All Stars Men’s Club, 2688 Winrock, including six dancers charged with solicitation of prostitution.

The suit asks 113th District Judge Patricia Hancock to issue a permanent injunction, arguing the club would not qualify for a required license because it is located 800 feet from a church and is closer than 1,500 feet to an area more than 75 percent residential.

“This is part of a bigger effort by the White administration to use the powers that are available to the city to protect and improve the quality of life in the city’s neighborhoods,” said private attorney Patrick Zummo, who was hired by the city to help enforce its sexually oriented business ordinance.

“We are working on another lawsuit that would include many of those businesses that are operating illegally, and which will probably be filed in the next couple of weeks.”

Better visit ’em while you still can, fellas. I’ll bet the city has spent the intervening time getting its ducks lined up, so barring a surprise these are the last day for the All Star Club, and whoever is in the city’s sights after it.

“We know from both Houston’s experience, and the experience in cities across the country, that sexual oriented-businesses are associated with higher rates of crime in the area around them and with lower property values,” Zummo said. “That’s why the federal courts allow reasonable regulation of these businesses.”

Again with the claims about increased crime, though I note that this time Zummo didn’t say “violent crime”. Seems to me that an investigation, by a professional news-reporting enterprise, as to the veracity of such claims would be a good idea. Maybe some day.

City scores another SOB victory

That makes two, and counting.

Houston won a major victory Thursday in its efforts to stamp out sex-related businesses that operate near neighborhoods or turn a blind eye to criminal activity in their facilities.

The city won a unanimous verdict against the El Rondo Motor Lodge, at 8016 Livingston in Sunnyside, in its first attempt to confront in court what Mayor Bill White has called “hot sheet” motels. Police and nearby residents testified throughout the trial, which began Monday, that the hotel was a haven for prostitution, one where condoms were sold at check-in and rooms rented by the hour.

“I am so happy, I don’t know what to do,” said James Nash, pastor of the St. Paul Baptist Church, three blocks from the hotel. “This thing has been a problem for years, one I had approached the owners about myself….We don’t want to put people out of business, but we don’t want this kind of business in our community.”

I have my qualms about the city’s war on strip clubs, but they don’t apply to this. The more the city’s focus is on this kind of business, the better as far as I’m concerned. Houston Politics and Miya have more.

More on the alternate strip club tax

After publishing about the alternate strip club tax that passed the House yesterday, HB982, I had some correspondence with the offices of Rep. Ellen Cohen and Rep. Senfronia Thompson about the revenue estimates, which I noted seemed quite divergent. Rep. Cohen’s office sent me the following documents:

HB 982 revenue estimates (PDF) – This is a summary of the UT study referenced in the DMN story, which pegged the revenue totals in the $500K – $1.2M range.

Estimates for HB 2070 (PDF) – This is a similar study, by the same folks at UT, for Cohen’s bill that modifies the existing law that was struck down by the district court in Austin, HB 2070. This projects $16.5M in revenue annually from HB 2070.

TEA-Judgment (PDF) – This is a copy of the judgment the strip clubs won against the current law, which was HB1751 from last session. Rep. Cohen’s office asserts that HB2070 addresses the issues that the court specified in its ruling for the plaintiffs.

Rep. Thompson’s office sent me the following statement, which is taken from three separate emails:

The revenue estimate is based on a review of the books of 60 of the 175 strip clubs in Texas. The 60 clubs based on their actual collected cover charges for 2008 would have produced over $3 million. Taking into account the size and revenues of the other clubs it was projected that the clubs alone would produce $4 -$8 million dollars. Because no one is sure what revenue the other SOBs will produce that amount was not included in our estimate. This is a low ball estimate since the previous projection on HB 1751 was so much higher than actual revenue produced.

There is absolutely no reason the money already collected can’t be spent as soon as the AG drops the appeal of HB 1751. If HB 982 doesn’t pass the State is on the hook for more lawyers’ fees ($500,000 for the plaintiffs so far and $180,000 for the AG) plus interest on all money collected by the state so far. The plaintiffs in the suit had committed to Rep. Thompson that if HB 982 passes they will not further pursue the lawsuit against HB 1751 and will drop their tax protest when the AG drops his appeal of HB 1751, allowing the money already collected to be distributed this biennium. Further, the plaintiffs have told our office and Representative Cohen’s office that they will file another lawsuit if HB 2070 passes. It generally takes over a decade for a civil suit to progress from State District Court to a final U.S. Supreme decision. Rep. Thompson’s position has never been that HB 982 will raise more money than HB 2070, but that it will deliver money to these long underfunded programs this year, not next decade.

We would like to point out that Rep. Thompson passed the legislation that established the Sexual Assault Fund in 1993 that all the bills are intended to fund. She successfully fended off two attempts to roll the Sexual Assault Fund into general revenue in 1995 and 1997. She also passed the Omnibus Protective Order bill and the legislation that made the National Domestic Violence hotline possible. Rep. Thompson has a long record of standing up for women’s issues. Rep. Thompson’s concern all along has been that the state stop wasting money in court cases on unconstitutional taxes and concentrate on finding a source of revenue for these programs that will help this year not after a decade long court battle.

So there you have it.

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.