Image: Assistant County Attorney B.D. Griffin (left) argues for secrecy in tax abatements before the Montgomery County Commissioners Court on Tuesday, August 22, 2017, as Tax Assessor-Collector Tammy McRae (right) listens.
Conroe, August 25 – Montgomery County Tax Assessor-Collector Tammy McRae, Assistant County Attorney B.D. Griffin, and the entire Commissioners Court follow a policy of secrecy, rather than openness and transparency, when it comes to proposed tax abatement agreements into which the County intends to enter. The policy clearly violates the Texas Open Meetings Act as well as the applicable provision of the Texas Tax Code.
The Commissioners Court’s secrecy policy for proposed tax abatement agreements flared up briefly during the Court meeting on Tuesday, August 22, 2017, when Tax Assessor-Collector Tammy McRae asked the Court members to approve a proposed tax abatement agreement with Bauer Manufacturing, a Schrobenhausen, Germany-based company that has already done 10 years of business in Montgomery County in the Conroe Industrial Park area. The agenda and Commissioners Court packet failed to identify the name of the company to receive the proposed tax abatement. The public had no information whatsoever about the company, the terms of the proposed abatement, or the potential economic benefit, if any, of the abatement.
Secrecy and openness
While former United States Supreme Court Justice once said, “Sunlight is the best disinfectant,” Rip Van Winkle said, “Darkness always tries to hide the truth!” Danish physicist and Nobel laureate Niels Bohr wrote, “The best weapon of a dictatorship is secrecy, but the best weapon of a democracy should be the weapon of openness.”
“The best weapon of a dictatorship is secrecy, but the best weapon of a democracy should be the weapon of openness.” – – – Niels Bohr, Danish physicist.
There was a serious problem with the proposed tax abatement agreement. By failing to disclose even the name of the company which would receive the proposed tax abatement agreement, both the public and the Commissioners Court (which seems to rely upon the public for information about the County government since County Judge Craig Doyal enforces a strict policy of keeping everything about the internal operations of the County a secret from the other Commissioners Court members) could easily just agree to the agreement blindly without proper consideration or deliberation.
The secrecy of the proposed Bauer tax abatement would seem to have benefitted Bauer and essentially no one else (other than possible recipients of political contributions from Bauer executives).
The Bauer Manufacturing agreement
McRae, Doyal, and Precinct 1 County Commissioner Mike Meador proposed a 6 year tax abatement agreement which would reduce the property taxes of the German company by $4 million over the proposed period. Bauer’s existing $37 million appraised-value facility would be subject to property taxes. Only the new 57,000 square foot assembly building Bauer intended to construct at the Conroe Industrial Park would enjoy the tax abatement.
Meador noted that he was “pleased you [Bauer] have chosen to make Montgomery your home.”
Precinct 4 County Commissioner Jim Clark, however, asked the question that the proponents of the sweetheart deal didn’t want in the open when he said, “How many additional employees will this deal bring?”
McRae answered, “They’ve already got a payroll of around 100 jobs. This addition will bring 25 new jobs with a total annual payroll of $410,000 per year!”
In other words, $410,000 per year divided by 25 jobs = $16,400 per job per year, the minimum wage! In return for bringing 25 minimum wage jobs to Montgomery County, the Commissioners Court would give Bauer a $4 million tax abatement.
As the Pew Research Center noted in a 2013 study of the econometrics of minimum wage jobs, those jobs tend rarely to bring economic benefit to the localities where they are, as the workers have little disposable income, cannot afford anything but minimal staple goods, and often must enroll in social welfare programs, such as free medical care like the Montgomery County Hospital District. While the arrangement might increase the property tax rolls of the County slightly, in actuality the private citizens of Montgomery County stand little to gain from the expansion of Bauer Manufacturing.
Why the secrecy?
Precinct 3 County Commissioner James Noack asked McRae during the August 22 meeting, “Why can’t you put the name of the company on the public agenda?”
In response, Assistant County Attorney B.D. Griffin stepped forward to argue for secrecy.
“Let me address that – under the Tax Code, certain matters of a company seeking abatement are to be confidential…Not everything about the company is confidential, but descriptions of processes of manufacturing are…Out of an abundance of caution, my policy has been to keep everything confidential if you’re keeping anything confidential,” Griffin told the sleeping Commissioners Court while the shocked citizens in the audience watched the proceedings and even gave groaned loudly as a group.
Mr. Griffin, you’ve turned the law on its head
Griffin has turned Texas law on its head. At least the other 253 counties in Texas have a law called the Texas Open Meetings Act the purpose of which is to enable public access to and and to increase public knowledge of government decision making, according to a 1991 Texas Supreme Court decision in the case of City of San Antonio versus Fourth Court of Appeals. To effectuate this purpose, the Texas Open Meetings Act requires advanced written notice of all meetings held by a government body, such as the Montgomery County Commissioners Court.
Granted that Doyal and Precinct 2 County Commissioner Charlie Riley would argue that the Texas Open Meetings Act does not apply to them, but Texans generally follow and are subject to laws which the Texas Legislature passes and the Governor signs into law.
There is a very limited exception to the “openness” policy of the Open Meetings Act with which Griffin apparently has trouble. Section 312.003 of the Texas Tax Code, the lovely section of the statute which governs how the government may enslave citizens through the collection of property taxes, states that
“Information that is provided to a taxing unit in connection with an application or request for tax abatement under this chapter and that describes the specific processes or business activities to be conducted or the equipment or other property to be located on the property for which tax abatement is sought is confidential and not subject to public disclosure until the tax abatement agreement is executed. That information in the custody of a taxing unit after the agreement is executed is not confidential under this section.”
In other words, if a company has trade secrets or propriety information about equipment or related property for which it requests a tax abatement, that information is not subject to public disclosure until the tax abatement agreement is executed.
Nothing in the Texas Tax Code would authorize the Commissioners Court to withhold the name of the company seeking the tax abatement. Only in the world of Griffin, Doyal, Riley, and Meador, where secrecy is the fundamental policy of governance, is there a presumption of secrecy.
Even in Montgomery County, with respect to the tax abatements, McRae, Griffin, Doyal, and their colleagues should follow the policy of “openness” and transparency which the Texas Legislature has made statewide policy (for all Texans except Doyal, Riley, and local political boss Marc Davenport).
Local Tax Guidelines
Since some readers must be wondering, it’s important to note that the Montgomery County “Guidelines & Criteria for Tax Abatement” track the language of Tax Code Section 312.003, so they don’t provide any cover for hiding the identity of companies seeking proposed tax abatements either. Section 4(g) of those Guidelines only protects trade secrets and proprietary information, not public information such as the name of the company, its location, its basic business concept, or other similar information about which the public has the right to know.