Political Intelligence


The House Always Wins

GRUSENDORF’S GAMBLE As House members consider how to provide an extra $3 billion for public schools, legal gambling seems to be a strong contender. Seventeen bills have emerged in the House to allow everything from electronic games on boats to betting in bars. Of these bills, 11 would let venues operate video lottery terminals (VLTs), which resemble slot machines. Most of the VLT bills have been referred to the Ways and Means Committee, where one influential member appears to have a financial stake in their outcome. Rep. Kent Grusendorf (R-Arlington) sits on Ways and Means in addition to being chairman of the Public Education Committee. In a legislative session focused on funding education, Grusendorf is the House leadership’s go-to guy. Though he is best known for his education legislation, Grusendorf also filed six unsuccessful bills during the last special session that would have legalized VLTs. While doing so, he held stock in Alliance Gaming Corporation, a Las Vegas-based VLT and slot manufacturer that does business in 25 states and overseas. According to financial statements filed with the Texas Ethics Commission, Grusendorf has owned between 1,000 and 4,999 shares of Alliance stock since 2003. No other Ways and Means committee member appears to be in a position to gain personally from a VLT company’s profits. Grusendorf may have more than one connection to Alliance Gaming. Last summer, a small scandal ensued when the state hired a former executive of the company, along with a Vegas law firm, to help draft gambling legislation. The Houston Chronicle reported that Grusendorf was a friend of the former executive and recommended him to the governor’s chief of staff, Mike Toomey. “I’ve got stocks in all kinds of things,” Grusendorf told the Observer. (In a biographical section on the House website, the chairman listed “investments” as his “occupation.”) Grusendorf asserts that his holdings do not influence his legislation. He wouldn’t say whether he plans to vote to legalize casino games or how, as a member of the leadership, he thinks the House might deal with gambling. Though he may be the only committee member with VLTs in his portfolio, Grusendorf is not the only one to receive campaign dollars from gambling interests. A May 2004 Lobby Watch report by Austin-based campaign watchdog, Texans for Public Justice, showed that the racing and casino-machine industries donated at least $4.1 million to Texas PACs and candidates since 2000. All Ways and Means committee members except Reps. John Smithee (R-Amarillo) and Al Edwards (D-Houston) accepted money from the top donors that TPJ identified. Rep. Mike Villarreal (D-San Antonio), the committee’s vice chairman, accumulated the most ($8,200) from donors on the list. Among Republicans, Grusendorf led the pack, receiving $4,750, which is $3,150 more than the chairman, Rep. Jim Keffer (R-Eastland), collected. Including five additional contributors (a Multimedia Games executive, and lobbyists Elton Bomer, Russell Kelley, Joe Garcia, and Nora del Bosque) who didn’t give enough to make TPJ’s list, Grusendorf received at least $13,686.66 from the gambling industry and its lobbyists. Rep. Kino Flores (D-Mission) has filed some of the legalization bills that Grusendorf and his fellow committee members will examine this time around. He believes the smart money is on at least a partial win for gambling this session. “We will be somewhere between VLTs and full-blown casinos,” Flores predicts. “It’s too much money out there to just let it sit there while it’s leaving your state.” CONFLICTED AT THE TOP If you’re looking to hire a lobbyist at the Texas Capitol these days, your options are plentiful: more than 1,500 have registered for the 2005 session. If you want your legislation to actually pass, however, your choices are rather limited. Only a handful of firms—well connected to the state’s Republican leadership—are the most likely to shepherd your pet bill through the process. Some Capitol watchers say lobby power hasn’t been this tightly concentrated since the 1970s, when a few of the most powerful business interests in the state crafted public policy in secret. A good indicator of just how concentrated and powerful the lobby has become is the prevalence of conflicts of interests at the most sought-after firms. Potential clients scramble to hire the three or four best-connected lobbyists, even if their legislative opponents have tapped the very same firms. Texas law requires lobbyists who become aware of a conflict of interest to notify their clients within two days and to file a conflict of interest statement with the Texas Ethics Commission within 10 days. The agency refuses to release these documents, but it will disclose a list of the number of conflicts reported by each lobbyist. The names at the top won’t surprise close observers of Texas politics today. Heading the list in 2004 was the Texas Lobby Group, a collection of four heavy hitters with strong GOP ties: Bill Messer (who served on House Speaker Tom Craddick’s transition team in 2002), Lara Laneri Keel (a Texas Association of Business board member), Mike “the Knife” Toomey (Gov. Perry’s former chief of staff), and Ellen Williams (Toomey’s longtime business partner). In 2004, Messer filed 44 conflict-of-interest reports, Keel had 41, and Williams 32, according to the Ethics Commission’s records (Toomey was still on the governor’s staff in 2004). Those were by far the three highest totals; only one other lobbyist filed more than 18 conflicts. And this year? Messer, Keel, and Williams have filed zero conflict reports for 2005, according to the Ethics Commission, even though their client lists are very similar to those from 2004. Contacted by the Observer, Williams said she was reasonably sure that her staff had filed conflict-of-interest statements with the commission this year, and she couldn’t understand why those statements didn’t appear in the commission’s records. Messer and Keel didn’t return calls for comment. Toomey also hasn’t filed any conflict-of-interest statements in 2005. Under legislation passed in 2001, the Ethics Commission can fine lobbyists up to $2,000 and revoke their registration if they fail to declare conflicts. Ethics Commission officials say, however, that the agency has never taken such action. Another firm with numerous conflict-of-interest filings is HillCo Partners, led by Neal “Buddy” Jones, one of the most influential lobbyists in Austin, and consultant Bill Miller, a confidant of Speaker Craddick. Jones has declared 13 conflicts so far in 2005, according to the Ethics Commission. For a firm with as many clients as HillCo, conflicts are unavoidable. It’s particularly hard this session, Miller says, because the Legislature is overhauling the state’s tax structure. Tax bills can affect every client a lobbyist has. “We let the clients know [about a conflict], and they make the decision if they want you to continue to represent them,” Miller says. “You can’t split the baby.” GAME ON This past March 9, Travis County District Judge W. Jeanne Meurer ruled that the Texas Commission on Environmental Quality (TCEQ) can move forward with a scheduled hearing in El Paso. The contested-case hearing, set to begin on July 11 before an administrative law judge, will help determine whether the TCEQ renews the air-quality permit for a copper smelter operated by ASARCO, located near the center of the city. The facility has been offline since 1999. ASARCO asserts that the permit renewal should not be subject to review and that the hearing represents an undue financial burden on the company. The beleaguered smelter company has become the focus of intense criticism in El Paso for what some charge is more than a century of polluting the city. For almost two years, El Pasoans have debated whether they should petition the Environmental Protection Agency to declare their city a Superfund site because of extensive lead and arsenic contamination. (See “Clean Up or Cover Up?,” October 8, 2004.) A broad-based opposition movement that includes homeowner groups, environmentalists, and even the United Steelworkers of America has called for the hearing, which could stretch over several days. A number of the groups who want to prevent ASARCO from resuming operations recently won approval to testify as interested parties in the contested-case hearing. ASARCO officials are still deciding whether to appeal the recent ruling, according to the company’s lawyer, Eric Groten, with the Bracewell and Patterson law firm. Groten characterized it as “extremely” unlikely that an appeal could be heard before the hearing in July.