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We Get What We Pay (Taxes) For – Roads Edition

(Note: This entry was originally published on October 7, 2015.)

It’s that time again!

Congress has waited until the last minute to solve all sorts of avoidable problems – funding the government as mandated by the Constitution, raising the debt ceiling as totally not mandated by the Constitution, and figuring out how to pay for roads and bridges.

Roads and bridges don’t get a lot of love in the press – they’re just not sexy or exciting. But you may have heard recently about the Highway Trust Fund running out of money. Turns out, the federal government collects a special excise tax every time you buy a gallon of gasoline – 18.4 cents to be precise – that helps to pay for new roads and bridges and to repair old roads and bridges. It sounds rather mundane – after all, building and maintaining roads and bridges is one of the most basic functions of governments at all levels – city, state, or federal. Unfortunately, the federal government isn’t collecting enough money through that excise tax to pay for all of the building and repairs that are necessary in a geographically expansive country with a half-century-old infrastructure.

In recent years, Congress has simply transferred funds from its general fund (paid for by our individual and corporate income taxes), and this has plugged the gap. But as any casual observer of Congress will see, funding anything these days is proving to be quite difficult for some of our Representatives and Senators. But why is it turning out to be so hard to keep dollars flowing for something as basic as roads and bridges?

We can actually summarize the problem in a single chart.

gasoline data

Sources: Dept of Energy, Dept of Transportation

What’s going on here? We’ve got four series of data, each of which has been indexed, meaning that the value in each year shows us how much larger or smaller it is relative to some base year. In this case, the base year is 1993. Why? Because that’s the last time the per-gallon tax on gasoline was adjusted. Got it? Great! Let’s dive in, one by one.

I Got the Purchasing Power Blues (gas tax, adjusted for inflation)
The federal gasoline tax has remained unchanged since 1993, which wouldn’t seem like sad a bad thing for taxpayers, because hey! the federal tax we pay on gasoline hasn’t gone up in over 20 years, and that’s a good thing, right? From the perspective of the person paying the tax, absolutely. But from the perspective of the government collecting the tax? Not so great. Because just as the per-gallon tax has remained constant, the prices of, well, just about everything have gone up, which means that the measly 18.4 cents per gallon the federal government collects just doesn’t go nearly as far as it used to. Ask any of my economic principles students, and they can tell you – when prices rise, our dollars lose purchasing power, a loss from which not even the United States government is immune.

If You Build It, They Will Drive On It (vehicle miles traveled, VMT)
People are driving more miles. No surprises there. Ever since the interstate highway system was created way back during the Eisenhower administration, Americans have taken to the roadways in increasing numbers, thanks to a growing population and a greater demand for cross-country travel. In addition, consider all of the products and supplies that are trucked back and forth in giant 18-wheelers each year. All of this driving adds up to more wear-and-tear on existing highways and byways, which leads to more and more money spent on maintaining the roads we already have. You break it, you buy it, And in this case, the “you” is “all of us”, with Uncle Sam and his city/state cousins picking up the tab. While VMT dropped a bit during the most recent recession, and hasn’t yet returned to its most recent peak (in part due to people finding alternative modes of transportation), we’re still driving a lot more than we were back in 1993.

Engines Roar, So Let’s Build MOAR ROADS (system mileage)
Wear-and-tear on existing roads is bad enough, but on top of that, the federal government continues to build new highways, wider highways, bigger more badass highways. This means a huge upfront cost in terms of obtaining right-of-way, clearing land, and actually pouring the cement/asphalt/concrete. And once it’s built, you guessed it…just like a brand new car fresh off the lot, the roads being to depreciate and deteriorate, piling up more maintenance costs on down the road (get it? down the ‘road’?)

GIMME FUEL, GIMME FIRE, GIMME THE FUEL ECONOMY I DESIRE (average fuel economy)
Over the last decade, the average number of gallons of gasoline it takes to get from Point A to Point B has decreased substantially. Some of this increase in fuel economy has occurred ‘naturally’, as consumer seek out cars that get better mileage, and car markers respond by designing more fuel-efficient vehicles. On top of this market push, the federal government has continued to push for higher fuel economy standards, in an effort to decrease dependence on fossil fuels for reasons concerning both the environment and economic security. As vehicles become more fuel efficient, drivers need to purchase fewer gallons in order to travel the same distance, which translates into fewer 18.4 cent payments to the federal government.

To summarize:
– demand for (use of) roads is increasing (VMT is up by over 30%);
– more roads are being built (up 5%), and an aging system will continue to require maintenance;
– per-mile-demand for gasoline is decreasing (in part due to the 25% increase in average fuel economy); and,
– the federal tax on fuel remains unchanged in nominal terms (which means 40% loss of purchasing power).

Even if the tax on gasoline had been tied to the price level when it was last adjusted in 1993, meaning that it was being adjusted for inflation on an annual basis to compensate for a loss of purchasing power, the revenue generated from the tax would still today be insufficient to account for higher levels of required spending needed just to maintain our current system.

So…What to Do?
A number of options are available to Congress, the real question being whether they possess the willingness to do anything other than kick the can further down the metaphorical road.

1) We could hike the fuel tax in one fell swoop, and then chain it to the price level in the future. This would catch us up with 20 years of price fluctuations, and ensure that the fuel tax maintains its purchasing power moving forward. But, just to break-even with the higher price level, the per-gallon tax would need to rise from $0.184/gallon to $0.301/gallon, adding about $0.12 to the current price of every gallon of gasoline. This might sound drastic, but in a world where gas prices swing back and forth by $0.10, $0.20, or $0.30 within a single week or month, this might not be such a bad jolt to the system. Demand for gasoline is relatively inelastic, so there would not likely be a huge dip in gallons of gasoline purchased. After this one-time spike, the tax would rise by an average of 2% in future years, which in dollar terms would mean about an additional $0.01/gallon per year. Not such a bad idea…except for the increase in VMT, the increase in fuel economy, and the increase in system mileage.

2) We could simply scrap the fuel tax and roll highway construction and maintenance back into the general fund. Dedicated revenue/expense budget items can be nice, until the revenue starts drying up and/or the expenses balloon. On top of that, Congress can’t seem to agree to fund anything, and adding highways back into the general fund budget absent any other changes on the revenue side of the equation would automatically increase the annual deficit (SACRILEGE! TREASON!). However, we’re already paying for the highway funding deficit with transfers to the highway trust fund from the general fund. So perhaps the only real challenge would be finding the money form elsewhere if the fuel tax goes away. (I know! I I know! Is funny joke, no?)

3) We could switch from an excise tax on fuel to a vehicle-miles-traveled tax. It makes sense in that construction/maintenance of each mile of road would be funded by a road-user fee. This would account for the fact that more miles are being driven, even as fewer gallons of gasoline are purchased per mile traveled. In more technical terms, rather than taxing a complement to road miles (gasoline), we tax the use of the road itself. This option makes a lot of sense, but it is not without its own challenges: how would we measure VMT, and how would we go about assessing the tax? (I suspect Grover Norquist and Co. would have something to say about this….)

I don’t imagine we’ll be seeing any significant changes in the next few weeks, as Congress will be having bigger arguments over the federal budget in general, and the debt ceiling in particular. It would be nice if we could find a more sustainable method of funding our interstate highway system. It really is an amazing bit of public infrastructure, and it would be a shame to see it crumble. Roads and bridges may not be sexy, they may not get the attention they always deserve, but as citizens and taxpayers, it would behoove us all to pay a little more attention to some of the mundanities of taxing and spending, and encourage Congress to find a more permanent solution to a long-term challenge.

Don’t hold your breath.

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Pushing the Limits – A Case Study of Political Action and Expenditures in Texas

pushing limits

In the wake of the United States Supreme Court’s ruling in Citizens United v. Federal Election Commission that declared limits on independent political expenditures by nonprofit corporations to be in conflict with the First Amendment, there has been much attention paid to so-called ‘super PACs’ and their role in presidential elections. What has received less attention has been the impact of the Supreme Court’s ruling on political activity at the local level. In particular, in recent years we have seen a noticeable increase in the number of non-profit organizations formed to promote the social welfare, but which are allowed to engage in limited political activity. An organization formed in early 2015 in the Dallas-Fort Worth metroplex provides an interesting case study in how the law Citizens United ruling can play out in municipal elections.

The Irving Opportunity Council

The Irving Opportunity Council (IOC) is a domestic, non-profit corporation formed in April 2015, for the purpose of engaging in tax-exempt activities as defined under section 501(c)(4) of the federal Internal Revenue Code. The Austin-based law firm Gober Hilgers PLLC is the organization’s registered agent, with Marvin Randle, W. Joe Mapes, and Scott Yeldell listed as the corporation’s director. Randle and Mapes are Irving residents and local business owners; Yeldell has no apparent ties to Irving other than being listed as a Director of the IOC.

According to Article V of the IOC’s articles of incorporation:

“The Corporation is organized and shall operate exclusively for the purposes of promoting social welfare within the meaning of section 501(c)(4) of the Internal Revenue Code, including efforts to improve life for the citizens, businesses and communities in Irving, Texas by: (i) identifying and analyzing issues that affect Irving and the surrounding areas; (ii) championing issues and causes by educating and mobilizing citizens; (iii) collaborating with businesses, communities, and government; and (iv) providing funding and non-monetary resources to foster positive impacts in the Irving area. The Corporation may also use its membership and financial resources as a means to provide both direct and grassroots advocacy efforts as the Corporation deems appropriate and consistent with its exempt purpose. The assets and property of the Corporation are hereby pledged for use in performing its exempt functions.”

An IRS publication explains that, according to IRS rules, “Reg. 1. 501(c)(4)-1(a)(2)(i) provides that: [A]n organization is operated exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare of the community.” The same publication notes that:

“…the language…comprehends a very broad category of organizations. As stated in the 1981 CPE text, Chapter G, “Social Welfare: What Does It Mean? How Much Private Benefit Is Permissible?”, ‘Although the Service has been making an effort to refine and clarify this area, IRC 501(c)(4) remains in some degree a catch-all for presumptively beneficial non-profit organizations that resist classification under the other provisions of the Code.’” (emphasis added)

Organizations formed under section 501(c)(4) of federal law represent a hybrid of traditional nonprofits aimed at making positive contributions to the community, and political action committees (PACs) aimed at influencing the electoral and legislative processes. While PACs are required to disclose their donors and expenditures, nonprofits are not. As a result, 501(c)(4) organizations are only required to report the organization’s political expenditures; contributions to the organization and expenditures for non-political activities remain confidential and hidden from the public.

The IOC’s Activities

In the week prior to municipal elections in May 2015, a series of mailers was distributed to households throughout the city, bringing attention to the voting records of the Mayor and City Council members on a number of issues. In this initial round of mailers, there was no clear indication that the IOC was endorsing any particular office holder. But the language and graphics of the mailers were such that the IOC seemed, at least tacitly, to be in support of some officeholders and in opposition to others. Of those who were cast in a negative light by the mailer, only Councilman Joe Putnam was up for re-election. Councilmen Tom Spink and Brad Lamorgese, who appeared to have the support of the IOC, were also up for re-election. Ultimately, Spink suffered defeat at the hands of a challenger, while Lamorgese won re-election.

However, in the race for Irving City Council District 4, none of the four candidates vying for office secured a majority of votes, and so a runoff was scheduled for the following month. In the days leading up to the June runoff, voters in District 4 received another round of mailers encouraging residents to vote against the incumbent, Councilman Joe Putnam, stating that it was “time for Joe to go!!!” Putnam was the only officeholder on the ballot during the runoff, and the intent of the mailers sent by the IOC were clear – they were opposed to Putnam, and implicitly advocating for his opponent, retired Irving firefighter Phil Riddle, who ultimately prevailed in the runoff.

While the support for Putnam’s challenger may have been implicit in the mailers, that support was stated explicitly in the IOC’s election expenditures report filed with the Texas Ethics Commission in July 2015:

IOC Riddle

In this filing, the IOC reported six individual political expenditures totaling $8,931.50, all made payable to a single entity, all dated June 12th, for the sole purpose of ‘Direct Advocacy”:

IOC Marathon

As the mailers made their way to mailboxes, and residents began to question who was behind the campaign, Riddle took to Facebook to distance himself from the IOC and deflect accusations that he was working in concert with the organization that had burst so suddenly onto the Irving political scene with its flashy mailers.

Riddle FB 01 Riddle FB 02

It is interesting to note a minor difference in the language printed on the two rounds of mailers sent to voters. Prior to the general election in May, mailers were “Furnished by the Irving Opportunity Council”, while in the lead-up to the runoff election in June, the mailers were a “Paid Political Ad by the Irving Opportunity Council”. A subtle, but important distinction, as will be seen. [Update: As of May 20, 2016, the IOC has reported no political expenditures to the Texas Ethics Commission, and has not appeared to engage in any other public activity.]

The IOC and Texas State Law

Texas law, as a whole, is not necessarily known for being overly zealous, unless the issue involves God, guns, or abortion. Texas campaign finance law in particular is much more permissive than federal law; for example, an individual contributor faces no limits on how much can be donated to one campaign in particular, or to all campaigns in general. But still, there are a great many rules that must be followed, although the degree to which they must be followed may be subject to interpretation.

The IOC is a corporation, as stated in its incorporating documents, and as such, is subject to Title 15, Chapter 253, Subchapter D of the Texas Elections Code. One of the common limitations throughout this subchapter is that a corporation (or labor organization) may only make expenditures during an election “for the purpose of communicating directly with its stockholders or members….” The IOC, as a nonprofit corporation, has no stockholders, and as the IOC states in its incorporating documents, it has no members. The first round of mailers, that did not explicitly advocate for or against any particular candidate, could certainly be seen as an attempt to promote the social welfare, by informing voters city-wide of their elected officials’ voting records on issues of public interest. However, in its second round of mailers, the IOC explicitly called for a “No” vote against incumbent Councilman Joe Putnam. Again – the IOC has no members, and no apparent stockholders, yet this political ad was disseminated to residents/voters living in Council District 4. This begs the question – did the IOC’s second round of mailers violate this prohibition on a corporation’s communications during an election?

Even if the IOC were only communicating with stockholders or members, it might find itself to be in violation of other statutes. For example, Sec. 153.100 of the Texas Election Code prohibits corporations from spending money on “…direct mail supporting or opposing a candidate…” and “voter identification efforts, voter lists, or voter databases….” The mailers prior to the June runoff election were in clear opposition to Councilman Putnam, and were only sent to voters within his district, which means some form of voter or resident identification must have taken place. Did the IOC spend money on identifying voters within District 4 so that they could be targeted with anti-Putnam ads? We don’t know: the IOC’s reported expenditures do not indicate any payments made for the purpose of voter identification, and those reported expenditures only represent some unknown portion of the IOC’s total expenditures, since the IOC is not required to report expenditures on non-political activities.

Assuming the IOC did not spend its own money on voter records, in accordance with state law, how did it come up with a list of voters in District 4 and their addresses? One possibility is that a list was acquired from one of the individuals running for office, who, as political candidates, are required to report every expenditure in detail, and who are permitted to acquire voter lists. Another possibility is that the IOC utilized or relied on data already in the possession of a third party. In addition to the expenditures made directly to city/county agencies and political parties, many Irving city council candidates and a local PAC report payments to a firm in Dallas, typically for the production/mailing of campaign ads. It’s possible that vendors have ready-to-go lists, and tailor their mailings to suit each candidate’s list of targeted voters.

Can anything concrete be inferred from these reported candidate expenditures? No. It makes perfect sense for persons seeking office to have the ability to communicate directly with the voters in their designated constituencies, and to engage third parties in the production and dissemination of campaign literature. What does not necessarily make sense is how a social welfare organization, formed as a Texas state corporation, gains access to such data when it appears to be prohibited from doing so by state law.

To their credit, the IOC did manage to make clear its compliance with one legal requirement, as already noted. Under Texas campaign finance law, no organization or individual can distribute political advertising that does not indicate: that it is political ad;  the name of the person/organization paying for or authorizing the ad; and, the candidate being supported or opposed by the ad. This does not seem to be an issue in the case of the two rounds of mailers sent by the IOC, as the IOC was very careful to distinguish between information “furnished” by the IOC in its initial round of mailers prior to the general election, and the “paid political ads” during the District 4 run-off election.

The IOC and Federal Law

With regard to federal law governing the political activities of tax-exempt or non-profit organizations, the IOC may in fact be crossing the line with its activities to date. An IRS document discussing the tax-exempt status of 501(c)(4) organizations notes that such entities “may engage in germane lobbying activities” and “substantial non-exempt activities”. But, as the IRS notes elsewhere:

“Promoting social welfare does not include direct or indirect participation or intervention in political campaigns on behalf of or in opposition to any candidate for public office. However, if an organization is organized exclusively to promote social welfare, it may still obtain exemption even if it participates legally in some political activity on behalf of or in opposition to candidates for public office. Political activities may not be the organization’s primary activities, however.” (emphasis added)

To date, the IOC’s only apparent activity has been its distribution of mailers prior to the general and runoff elections. Even allowing for the fact that the IOC’s initial round of mailers were “furnished” by the IOC, and did not explicitly endorse or express opposition to any particular candidate, at best, roughly half of the IOC’s activities would likely qualify as promoting the social welfare (although this could be debated, given the political nature of the city-wide mailers). The rest is acknowledged by the IOC to be political activity. Technically speaking, the IOC’s activities, as measured by dollars spent, would appear to be primarily focused on promoting the social welfare. But…dollars spent is hardly the only measure of political and non-political activity, and is not necessarily even the best measure. So far, it is impossible to determine whether the organization’s primary focus is on actually promoting the social welfare, or in engaging in political activity.  If the IOC is engaged in other, non-political activities that make up the majority of the organization’s total activities, it is doing so in secret.

The IOC has been quiet since the June runoff election, so it remains to be seen what form its future activities will take – promoting the social welfare, or attempting to influence the local political process. But if Irving voters are concerned in the meantime that the IOC is engaging in more political activity than is allowed under federal law, their only recourse would be to file a referral to the IRS, and wait.

The IOC’s Directors

What do the IOC’s directors have to say about their organization’s activities? After all, they are legally responsible for representing and overseeing the IOC. When questioned by reporter Avi Selk of the Dallas Morning News about the IOC’s mailers sent out prior to the June runoff election, Randle and Mapes refused to provide information, and claimed ignorance about how to contact co-director Yeldell:

“It’s interested people in Irving politics,” director Joe Mapes said slowly. “I can’t tell you any more about it.”

“You can ask questions; I’m not going to answer any of them,” said former Mayor Marvin Randle, another director.

Randle said the group’s spokesman was its third director, Yeldell. But he said he didn’t know how to reach his spokesman, or who Yeldell worked for.

While this may be their official position on the matter, their names do not appear on the list of the IOC’s directors by chance – the role of director of a corporation is one that an individual must agree to take on: it enlists them as the corporation’s legal representatives. To feign ignorance, or engage in such obvious obfuscation, strains credulity, and invites suspicions of the organization’s actions and motivations.

Mapes and Randle have been no strangers to Irving politics in recent years. Indeed, Randle has deep political roots in Irving, having served on the City Council from 1970 to 1977, and then as Mayor from 1977 to 1981. Both men have made contributions to a local PAC, Irving Voices, that has run ads in an Irving newspaper in support of (or in opposition to) various candidates for local office across several election cycles, in addition to participating in local events such as the annual 4th of July parade. Irving Voices supported Irving Mayor Beth van Duyne during her re-election campaign in 2014, and, interestingly, supported Councilman Putnam during his previous re-election campaign in 2012. To make clear – a PAC that was funded largely by Randle supported Putnam in 2012. Three years later, an organization that listed Randle and Mapes as directors issued mailers in opposition to Putnam, while the PAC neither supported nor opposed Putnam.

Yeldell is also no stranger to the realm of campaign politics, although his involvement with the IOC represents his first identifiable foray into the DFW metroplex. Information on Yeldell is scant, but his employer has been identified as Marathon Strategic Communications of Dallas as recently as 2013 (more on this later). He previously served as Chief-of-Staff to former Congressman Francisco “Quico” Canseco, and gained attention during Rep. Canseco’s re-election campaign for what some viewed as a particularly “digesting, despicable attack” campaign. After Canseco’s defeat in the 2012 election cycle, Yeldell seems to have turned to a full-time career in political campaign consulting, playing no small role in the push to remove barriers to campaign finance in Texas.

In October 2013, the group Texans for Free Enterprise (for which Yeldell serves as director) won a lawsuit filed against the TEC, aimed at making state law consistent with the Supreme Court’s ruling in the Citizens United case. When the TEC later attempted to enforce new disclosure rules in 2014, another group for which Yeldell serves as director, the Lake Travis Citizens Council, filed suit, although the suit was dismissed by a federal judge in March 2016. (A separate lawsuit filed by the Texas Homeschool Coalition is still pending.)

The Lawyers

The law firm of Gober Hilgers has made quite a name for itself in recent years in the effort to reduce restrictions on independent political expenditures, and the firm, through its partners and employees, has spread its tentacles far and wide throughout the American political landscape. [Update: The Gober Hilgers firm has since split into two separate firms, with the Gober Group continuing the political activity work.]

Gober_Hilgers_web

In Texas, the Gober Hilgers firm serves as the registered agent for quite the litany of social welfare organizations and PACs focused on a wide range of issues, from liquor sales to firefighter pensions. Attorney Chris Gober, personally, is listed as a director for Freedom Path Inc., another 501(c)4 organization that found itself embroiled in the controversy surrounding IRS scrutiny of conservative organizations seeking tax-exempt status. Though registered in Texas, Freedom Path engaged in political activity in Utah.

Gober and his firm also have ties to the Beat Reid PAC (a “grassroots” effort to defeat Sen. Harry Reid), as well as a collection of five other super PACs set up during the 2014 election cycle, and whose current treasurer is listed as Adam Schaeffer. [Schaeffer is the founder of a firm called Evolving Strategies, and it appears, to some extent, that this firm utilizes PAC activity as a tool of social science experimentation. The firm’s website indicates it uses “experiments and artificial intelligence to modify (not just predict) human behavior – we get more people to do what you need them to do.]”

Perhaps the attorneys at Gober Hilgers are simply facilitators of the various organizations registered at their office address. Perhaps they simply provide assistance in the filing of legal paperwork and compliance with state and federal law. However, the firm’s relationships and endeavors suggest an active use of the social welfare organization framework to achieve specific political goals, almost as a form of rent-seeking, and in some cases for the benefit of apparent social science experimentation. In the absence of clear public statements by the law firm or its representatives, we can’t necessarily assume anything about the actual beliefs or motivations of these operatives. But, at the very least, we can begin to form an idea of how they view, in the end, voters and citizens, and how they employ the tools of law, public policy, and business to further whatever ends they have in mind.

The Consultant

So what’s the connection between a nationally-recognized law firm, a former Congressional staffer and campaign manager, and political players in a Dallas suburb? It appears to be a Dallas-based political consulting firm, Marathon Strategic Communications (MSC), and its owner, Christopher Homan. Homan himself has ties to Gober Hilger, serving as a director with Chris Gober for the Guardian Fund, and to Scott Yeldell, identified as one of the firm’s employees (who has his own personal ties to Gober Hilgers as noted above). There is not much evidence of what services MSC provides beyond “consulting” and “direct advocacy”, which are the vague activities listed on campaign finance reports, but which come at a steep price.

The Money Trail

As is often said, if you want to know who’s pushing the buttons and pulling the levers behind the scenes, follow the money. Which, in the case of 501(c)(4)s and super PACs, is no easy endeavor, given the ability of these organizations to withhold all information concerning their receipts, and significant portions of their expenditures. Based on publicly available records, a rough sketch of the flow of money starts to take shape:

Irving_money_flow

Randle, in particular, has spent a significant sum funding the activities of the Irving Voices PAC: between April 2011 and May 2015, Randle and his wife contributed over $40,000, accounting for over 90% of the PAC’s total receipts during that period. The Randles’ have also made direct contributions of over $7,500 to the campaign of individual candidates for local office. And while Mapes’ own individual contributions to the PAC (just over $2,000) and local candidates (roughly $1,350) pale in comparison to those of the Randles, the two demonstrate remarkable synchrony in the target and timing of their individual contributions.

It is interesting to note that Marathon Strategic Communications, between June 2011 and June 2015, received payments totaling $40,092.55 from Irving Mayor Beth Van Duyne. While this does not prove conclusively that Mayor Van Duyne has coordinated with the IOC or played a role in directing its activities, it is nonetheless a connection that should be taken into consideration by Irving voters in an environment in which political influence is increasingly exercised beyond the bounds of transparency.

Looking at the money, however, one starts to appreciate the role that Marathon Strategic Communications has played in races for city office in Irving. An  article published on November 7, 2015, in the San Antonio Express-News reports on the use of pass-through expenditures that give the impression of a  “campaign in a box”, in which individual campaigns and political organizations pay large sums to political consultants for a variety of un-itemized services. As the Express-News reports:

Those expenses can be payments for actual consulting services.

However, regulators say they believe that campaigns and PACs are increasingly writing big checks to operatives for a wide range of activities to influence elections — hiring boots on the ground, purchasing mailing lists, paying production costs for ads — and that the details are never reported. That allows a campaign or a PAC to essentially mask who and what it’s paying for by outsourcing expenditures through a consultant, they argue.

Neither Mayor Van Duyne’s nor the IOC’s reported expenditures detail anything more than payments for “Consulting – Strategy” or “Advertising” in the form of “Direct Mail – Direct Advocacy”.  With nothing more to go on, citizens have no idea exactly what is being done with these funds. What seems obvious is that the IOC in particular is clearly engaging in a double-layer of obfuscation – first, by being shielded from disclosing its financial contributors, and second, by making lump-sum payments to a political consultant who is then free to make specific expenditures on behalf of his clients…expenditures which are not subject to any form of required disclosure. Based on what can be observed, it certainly seems likely that Marathon is providing services to the Mayor and the IOC in a form similar to that described in the Express-News report.

[Update: In her most recent campaign finance report filed in January 2015, Mayor Van Duyne lists a payment to Gober Hilgers in the amount of $392.50 for a “Consulting Expense” – another interesting connection in the web of money and political players.]

So What?

To date, the IOC has reported spending a relatively small amount on political activity – just under $9,000, a sum that may not sound like much, especially given the million-plus dollar campaign in the last election for Irving Mayor. At the very least, we know who funded the million dollar campaign for Mayor Van Duyne’s opponent in 2014, and based on that information, we can speculate, with some degree of confidence, on the motivations (link) behind such extravagant political expenditures. But the IOC’s contributions remain a secret, and those legally responsible for its actions refuse to divulge any information not required by law. And for some involved in Texas politics, this is of little concern for voters. From the same Dallas Morning News article by Avi Selk concerning “dark money” in Irving:

“It’s extremely rare in even a statewide elections,” said Matt Rinaldi, who represents Irving in the Texas House. “Less than 1 percent of state expenditures are by these groups.”

Yet Rinaldi wasn’t concerned to see one in his hometown. Last month, he helped fight off other state Republicans’ efforts to restrict them.

“If groups of citizens are acting independent of a candidate, we want to preserve their right to free speech — even anonymous political speech,” he said.

Does it matter whether these secretive groups account for less than 1 percent of total state expenditures? (It should be noted that the IOC spent nearly 30% more than the actual campaign of the candidate they supported.) Is anything less than full disclosure acceptable in an open, democratic society? Or is there perhaps justification for withholding information about individual donors or certain political expenditures?

Again, from Selk’s report:

Two years ago, Texans for Fiscal Responsibility endorsed city council candidates, as it often does in statewide races. The group is one arm of a statewide organization that holds sway in conservative politics. And like the Irving Opportunity Council, its funding is anonymous.

Yet no one in Irving raised a fuss over those endorsements.

Nor should they, said Ross Kecseg, who directs Texans for Fiscal Responsibility’s regional office. What’s derided as “dark money,” he said, stems from a civil rights-era court ruling that let black advocacy groups protect donors from exposure and retribution.

“People may have a suspicion there’s some rich guy in control of politics, but that’s nothing more than a suspicion,” Kecseg said. “And regardless, political speech is protected … Whether it’s a city council race, the civil rights movement or gay rights.”

Is it merely a suspicion that “there’s some rich guy in control”, when one of the IOC’s directors has spent close to $50,000 of his own money to support local candidates, in a city where median household income in 2012 was $49,303 and per capita income was only $26,970?

Irving income stats

Do we really believe that the IOC and other 501(c)4 organizations have been formed to protect certain individuals from civil rights violations in the form of exposure and violent retribution? Is it fair, or even accurate, to compare the IOC’s political speech and activity to that which has advanced civil rights or gay rights, past and present, as suggested by the president of Texans for Fiscal Responsibility ?  It beggars belief…

Sullivan_NAACP

In the new political landscape that has taken shape in the wake of the Citizens United ruling, citizens everywhere should pay careful attention to the monetary machinations at work behind local elections and referenda. With the fiscal floodgates opened wide, an opportunistic legion of political operatives and legal advisors has stepped forward to suckle at the teat of seemingly limitless campaign financing. As the money flows to-and-fro, at times recirculating within a closed loop, all those who value a free and transparent democratic society must stand guard against what has been described by SMU professor Stephanie Martin as an “insidious” development in the political process. Dark money is, for now, the law of the land, and whether or not public life in Texas and the nation faces dark horizons ahead will be entirely up to the citizenry of the great Lone Star State.

[Disclaimer: The author of this article and analysis is not a lawyer, and makes no claims to possessing legal expertise on corporate or campaign finance law. Any questions raised concerning such matters in this article are a matter of speculation based on the author’s reading of the law and observation of public activities and reports.]

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Firearm Frenzy!

(Note: This entry was originally published on August 10, 2016.)

If you’re in the vicinity of Hempstead, TX this Friday, August 12, swing by the Waller County Courthouse for another round of peaceful armed protests.

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Why, you might ask? Surely there must be some compelling argument concerning the infringement of constitutional rights when the organizers are drawing comparisons between a local government and the likes of King George or Santa Ana, right? Here’s their description of the tyranny du jour.

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Oh, the horror! Government thugs demanding an exorbitant amount of money from a helpless defender of freedom! Not quite.

Yes, the county has filed suit against Mr Terry Holcomb, the founder of Texas Carry, but – surprise! – there are important details missing from the narrative being promoted by Mr Holcomb and his supporters.

“There is a process…”

The Open Carry event info points out that there is a process that Waller County officials can use that would not cost taxpayers. This is true – in a number of cases, complaints over signage and the prohibition of firearms by local authorities have been filed with the Office of the Attorney General, and AG Kenneth Paxton has been more than happy to go after the local tyrants. And why wouldn’t he? He’s a Republican in a very red and very gun-friendly state. It’s in his interest to build as much support as he possibly can, especially given his personal legal troubles.

So what’s a local government to do when the odds are not in their favor at the AG’s office? One option is to take it to court, and that is precisely what Waller County District Attorney Elton Mathis is doing. In the court filing, the County requests nothing more than a declaratory judgment from the court, which would settle the dispute (at least at the district court level), and in a much more legally-binding manner than an opinion from the AG’s office.

And guess what! Even if the County doesn’t file suit, and refuses to comply with the AG’s orders and opinions, the dispute will eventually make its way…to court.

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“Fork it over!”

The gun rights activists are also claiming that the county is suing Mr Holcomb for $100,000. This is a bit of an exaggeration. What the court filing actually says is:

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Anyone with a basic understanding of math and logic will recognize that there is a difference between “$100,000” and “less than $100,000”. Now, could the damages in a civil case such as this approach the hundred grand mark? Sure. But the gun rights activists are taking this number and blowing it out of proportion to gin up support for their cause against the Government Goliath.

In Texas, jurisdiction between different levels of civil courts are based in part on the dollar amount of any damages that might be awarded to the plaintiff. Texas law establishes the upper and lower limits for various court levels, with the threshold necessary for a hearing in a district court being set at $500.

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Currently, there is no maximum limit for a district court to claim jurisdiction. So why does Waller County seek “damages of less than $100,000”? I can’t answer that with any certainty, at least not based on the limits set by Texas law. Best guess – Waller County is not sure how much this is going to cost them, so they chose a number that would be more than sufficient. This does not mean that the County is seeking $100,000 from Mr Holcomb, nor are they attempting to sue him into bankruptcy.

So what are they seeking? If you read the court ruling all the way to the last page, it’s pretty clear. In addition to a final say from the court (the declaratory judgment), the County seeks:

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That’s it. “Court costs” and “fees”. And why shouldn’t they seek compensation for their costs? The protest organizers pose a good question in their event description: why should the County be able to sue Mr Holcomb using taxpayer funds? In an ironic twist, perhaps the gun rights crowd should hope for a County victory at court, at which point Mr Holcomb would reimburse the County, thus sparing the taxpayers from footing the bill.

But let’s turn this around. What if Mr Holcomb had sued the County? If the court ruled in favor of Mr Holcomb, he would surely expect the County to reimburse him for his court costs and fees. And how exactly would the County reimburse Mr Holcomb? With taxpayer funds, of course!

“We come in peace! (Or do we?)”

The protest organizers point out that things have been peaceful so far, and they’re right. Mr Holcomb has taken peaceful action to contest local governments’ prohibition of firearms on public premises, and Waller County has responded just as peacefully, taking its case to a court of law.

But this is where it starts to get dicey. The Open Carry event describes the actions of the Waller County DA as “tyrannical”, akin to the abuse of King George with whom “our nation went to war”. They may be calling their protest peaceful, but it’s hard to see a protest over gun rights – a protest at which activists will be openly displaying firearms – as peaceful, especially given the language employed by protest leaders to build support for their cause.

The folks at Open Carry Texas commonly use inflammatory language that hearkens back to the age of revolutions and armed revolts against authoritarian governments. In response to this particular dispute between Mr Holcomb and Waller County, the Open Carry Texas made reference on Twitter to the so-called Battle of Athens.

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Do the gun rights activists have a legitimate complaint? Sure. But is it accurate to compare the prohibition of firearms on government premises to rigged elections and abuse of power? Hardly. Armed revolt, even the hint of it, is wildly disproportionate in the matter of Waller County vs Mr Holcomb.

“Get ready”

An old friend once told me that when the violence inevitably begins, ‘the Left’ will be responsible for most of the bloodshed. I certainly did not doubt that this was his sincerely held belief. But given the rhetoric we’re seeing in Texas when we talk about guns, particularly in a dispute over such minutiae as the placement and meaning of signage, I’m inclined to disagree.

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