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Bill of the Week

Rep. Dutton proposes to cut taxes for sexually-oriented business

By Richard Whittaker, April 17, 2015, News

House Bill 1785

Author: Rep. Harold V. Dutton Jr., D-Houston
Filed: Feb. 23. Referred to Ways and Means Committee: March 13

Has the Republican Party of Texas finally met a tax cut it won't back? It seems so, because it's taxing the one thing they hate more than adequately funding state services, and that's sin. Funny thing is, this is one we can probably blame on Houston Democrats. It all goes back to 2007, and HB 1751. Sired by the Texas Association Against Sexual Assault, and authored by then-Rep. Ellen Cohen, D-Houston, it put a $5 surcharge on every person who entered a sexually oriented business. That's legalese for strip joints, and the cash it raised was to be split between the Sexual Assault Program Fund (though Cohen was careful to not say strip joints cause rapes) and the Texas Health Oppor­tunity Pool.

The Lege passed it, but it's become a running sore. First, passing a bill generally mocked as the "pole tax" is bad PR. Second, the bill's definition of sexually oriented business (anywhere where alcohol was served, around either full or partial nudity) was so vague that it could include experimental theatre, burlesque, or even fashion shows. Third, it's been a bitter disappointment financially: Rather than the $87 million Cohen boldly predicted for the 2008-09 biennium, it produced around a quarter of that. Fourth, the amount collected was a joke compared to the real need for funds for survivors of sexual and physical abuse. Fifth, that money couldn't be spent anyway, because the Texas Enter­tain­ment Association (the trade association for strip clubs) was challenging the bill in the courts. In 2008, District Court Judge Scott Jenkins ruled it unconstitutional (See: "Topless Tax Terminated," April 4, 2008), sparking a six-year cycle of appeals and counter-appeals.

The expectation was always that Jenkins' ruling would stand: In 2009, both Cohen and Rep. Senfronia Thompson, D-Houston, proposed fixes for the malfunctioning bill. By 2011, lawmakers were accepting that the law was untenable, with both Republicans and Democrats proposing bills that would suspend collection of the fee. None of these passed, because the lawsuits were still playing out. As everyone watching school finance reform knows, Texas lawmakers would generally rather the courts force them to fix something than take the initiative.

But, rather surprisingly, last May the Texas 3rd Court of Appeals ruled the tax constitutional. However, another Houston Democrat, Rep. Harold Dutton, is proposing at least cutting the tax, from $5 to $2. Hey, who doesn't love a tax cut? So far, the GOP isn't biting: Both HB 1785, and a second Dutton-authored bill on the surcharge, HB 1805, are languishing in the House Ways and Means Committee with no sign of a hearing. As the session calendar slips away, it seems less and less likely either will be hitting the stage.

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