In this episode of "ZacCast," we stray into the political minefield known as the Bonnen Tapes. Does the Texas Legislature have it out for cities and counties? Is there reason to be optimistic about a détente moving forward? And how can the Dallas Cowboys Cheerleaders help us understand Texas politics? This is "ZacCast" episode two. Here we go. Hey, Pat.

Hey, Chad. What's up, man?

Thought we'd take a slightly different turn, at least, uh, at this stage of the podcast from what I was expecting, and talk about some current events that are a little bit important for cities these days, and that is, uh, specifically with regard to the state legislature's view of cities. So D Magazine recently posted an article, and there's been a lot of reporting on this. The article was titled "What Can Texas Cities Do When State Legislatures Admit They Hate Them?"

Yes.

A little bit, uh, a little bit hyperbolic maybe, or is it?

No, I mean, I think, I think in the broad term of Texas, if you look at the last legislative session, there's no way to get around the fact that the legislative session really targeted cities, right? Uh, we now just have confirmation in, you know, what's referred to as the Bonnen Tapes or Bonnen Gate, right? We now just have this confirmation that, that that's the truth, that, that we had that issue.

So in this tape, Dennis Bonnen, who is now the former speaker of the house-

Well, he technically has not resigned yet. He just said he's not going to run for reelection.

Oh, okay. So he will not be in the legislature next time.

Correct, because in, in Texas politics, the weird thing is it was, it would be... I'm gonna get this wrong, but I think it's the pro tem which, uh, historically is always the opposite party or sometimes to be friendly is the opposite party, so they're not gonna allow, like, a Democrat to take that seat, right?

Gotcha.

So it's important to talk about.

In this recording, which if you are not familiar with the r- recording, it's a whole story unto itself.

Mm-hmm.

Um, but Dennis Bonnen is recorded saying, "In this office, in the conference room at that end, any mayor or county judge who's dumbass enough to come meet with me, I told them with great clarity, my goal is for this to be the worst session in the history of the legislature for cities and counties." Uh, Dustin Burrows follows that up saying, "I hope the next session is even worse," and Dennis Bonnen replies, "And I'm all for that."

Burrows being the, the chairman of the caucus, right? Like, the lead Republican outside of the speaker.

If we didn't already kinda know this was the operating principle, it certainly manifested itself in a variety of ways with the legislation that was actually considered and some, in some cases approved.

Very much so, yeah.

Um, and this is not a new thing. I mean, we've been looking at things like property tax "reform" quote unquote for-

Right

... time immemorial. But to see it actually in print or to hear it, uh, actually stated, however candid and, uh, you know, that discussion was intended to be. You know, he didn't think that he was being recorded, but that probably makes it even worse.

Correct, and, and I think, I think what's important to note is, is, you know, before this recording was, was released, 'cause there was, like, this long period of time between, "I have the recording," "You've gotta believe I've got the recording," and the recording gets released, most people were concerned about the 10 legislators that were named that Bonnen wanted targeted, right? Um, and from Bonnen's perspective, I think he thought that was survivable, like he was gonna be fine with that. W- the interesting turn in Texas politics is, uh, uh, what's happened is, is that when this tape got released, it really wasn't the 10 legislators in the tape, uh, that were the problem for Bonnen, it was the local control issues. Uh, because Texas is a very conservative place, even at the mayor rank, even though they're nonpartisan, still conservative mayors, uh, conservative county judges.

At, at least in terms of this concept of separation of powers, of federalism-

Very much so

... even as it applies... I mean, you may have liberal or Democratic mayors-

Correct

... whether they're elected in a nonpartisan election or not.

Mm-hmm.

But in Texas, this concept of local control and, and federalism, even at the state level, is still very important. It's still a very Jeffersonian community in that regard.

Wow, we just got really nerdy right there.

Yes.

Pulled out the word Jeffersonian.

So I have told this story many times. It's one of the few stories that I actually like to tell because I'm not a big talker. Um, in my undergrad, I had a, uh, constitutional history class, so the discussion was not relevant or germane to the, to the class itself, but, uh, my professor said, "In order to understand Texas politics, you have to understand and hold in your head two things at the same time: the Southern Baptist Convention and Dallas Cowboys Cheerleaders. If you can hold those two things in your head, then you can understand the sort of cognitive dissonance that pervades Texas politics."

Yes.

And the same, and I can probably go a little bit further than you can since I'm on my own now, but -

Uh-huh

... we have a very conservative state-

Mm-hmm

... politically, at least purportedly, but when it comes to actually implementing this concept of limited government and separation of powers, that's not the case.

We throw that right out the window.

Yeah.

Yeah.

We are very happy to have our state legislatures ram through whatever they can to keep cities from doing the things that their residents are voting for.

That's correct.

Um, the beauty of our system across the board is that it intended to put control as close to the people as possible.

Mm-hmm.

We don't need to get into a whole lot of, you know, theory or politics, but the s- the way that our Constitution structured this federal government is that the states had more responsibilities than the federal government, and generally, the cities were supposed to have even more than the states.

Correct.

We are, have moved so far j- just from a theoretical standpoint in Texas. I try to keep up with all sides of the aisle, and certainly on the conservative side, the discussion these days is how can we use the state to ram through or force citiesTo not do things.

Yeah, and I, I think it's important, uh, to say, I, I mean, I don't 100% step back and say that some cities haven't done some goofy things, right? There are some things out there where cities may have stepped over their constitutional or statutory line, and the legislature has to kind of, you know, build a box, right, on some of those things. Texas is set up in a very interesting way where you have general law municipalities and you have home rule municipalities, and we're set up that way for a reason, because as bigger cities get larger, the thought process is, is that they, they need to take more local control over what happens and what the impacts of larger cities may be versus smaller cities. Um, but what's, what's really interesting in this is just what came out on the Bonnen tape was just the utter dislike for local government. Doesn't matter if you're the size of Dallas or you're the size of Hudson Oaks, right? It's just the, the utter dislike for the directly elected official of a city council member or mayor or a county judge. That, to me, is what came out of this whole recording. The big question being, are we gonna see a change in the next legislative session? Are we gonna go from a point of where state politics are controlled by few to where sta-state politic-tics start to be controlled by the bottom up? Um, we, we don't know. It's, it's a really interesting conversation that's being had. And, and I wanna be clear 'cause obviously I'm still in the career, right? I work with a lot of local legislators on the ground, uh, and, and we have great local representation in, in Hudson Oaks. There's no doubt. Listens to us, talks to us, um, you know, passes bills that we need passed, d- does everything we need him to do. But at the... I- in, in the position of leadership, the leadership really has been pushing through things that are anti-local, uh, and now I think that's what's scary for the cities, for the city managers that are out there, uh, 'cause we, we have huge, uh, boxes that we've been placed in that are gonna have really far-reaching negative impacts, right? I mean, the biggest being, you know, there's no way to get around this, the biggest being, uh, the three and a half percent cap on, on property growth, property tax growth, uh, in local cities. Doesn't impact Hudson Oaks 'cause we're one of the few cities that doesn't have one, but it impacts a lot of friends of mine that are in, in city government. And the problem is the cost of services in many different areas, especially public safety, is rising faster than that.

And I think on property tax in particular, you have so many different components. You have new value-

Mm-hmm

... and you have growth in existing value, right? And these kind of... The way that the truth in taxation system works is, is really kind of funky, and it's anything but truth in taxation.

Mm-hmm.

Uh, it's just so convoluted that it's, it's very difficult to understand how it works. But you would never see the state legislature restrict its own revenue growth, even though its primary revenue source, which is sales tax, has multiple components, including new population and inflation.

Correct.

So as inflation creeps up the cost of goods and services that are taxable, the amount of tax revenue that comes in also increases.

Correct, and city governments no longer, no longer will have that.

Right, and you-

Yeah

... but you, uh, would never see them, uh, apply the same standards to their own revenue sources.

So then you have to ask yourself the question, like, if, if you look into the magic ball, right? What, what's gonna happen 10 years down the road, uh, when cities aren't able to keep up with levels of services? I mean, that's a whole other podcast, right? But, um, you'll... It, it... The, the problem is, is we, we probably just don't do a good job of, uh, of educating those legislators, and I'm not sure the legislators have historically done a good job of listening to the locals. Uh, this is a really good opportunity for a reset, right? Uh, anytime you have a big fight, no matter who you're having a big fight with, y- every party has to sit back and, or step back and say, "Okay, hey, maybe we need to do a better job of this. Maybe I need to understand those issues a little better." Uh, I tend to be the positive side to that argument, that I think we're actually gonna get some good things out of this process. Not everybody I talk to is that way, to be clear. Um, but y- what are, what are we going to see out of the state legislature when we come through? Is it going to change some elections in a year? I mean, are we, are we gonna see a, a state house that changes because of, of these anti-local sentiments? I, I, I don't know, but should be pretty interesting.

Yeah, I don't really know that this moves the needle a lot for the general public, because just the rhetoric behind things like the property tax reform, it's a very easy thing to sell. For one thing, people don't really even know how their property taxes are calculated.

That's correct. I mean, yeah, absolutely.

And, uh, you know, everyone is protesting their appraisal and mad at the appraisal districts for literally appraising the property as close as they can, ostensibly at least-

Mm-hmm

... to the real market value. Uh, but they have limitations too. They can only actually grow the taxable, uh, appraisal by 10% a year.

Correct.

So you have this gap between actual market value and taxable value, which totally screws things up when you-

And if that gap is too large, school districts lose funding.

Y- Right.

Right. Yeah.

And when you have, uh, a downturn-

Mm-hmm

... and your total market value is going down, but your taxable value is still going up, it's extremely confusing.

Correct, yes.

Uh, the appraisal districts don't set the tax rates.

Correct.

Right? So you ha- this very distributed system, and in some ways that makes sense. That's fine to have a central appraisal district so that every city and taxing entity doesn't have to do its own appraisals. That's fully understandable.

Mm-hmm.

Um, but the system is very complicated, and it's very easy to say, "We're just gonna cap your growth, so you won't, you won't pay more than three and a half percent in, in property taxes."

Well, and, and, and to be fair, that doesn't necessarily mean that I'm not gonna pay more than three and a half percent extra-

On average

... in property tax rate. On average, yeah. So, um, I, I don't, I don't think there's any doubt that the property tax system is, is super convoluted. It's why I love a consumption tax so much. It's why I like sales ta- You know, I'm a big sales tax proponent. I would love to see that, uh, but... And, and try to reduce property tax by as much as weAs we can through a consumption tax. But the r- the reality of it is, is that people don't truly understand how we tax them, uh, in, in properties. I, I can't tell you how many highly educated friends I sit around a, a dinner table with and explain property taxes and, and they, they don't understand it. They don't understand the difference between an M&O rate or an I&S rate. Um, here in Texas, they- obviously they don't understand how school taxation works, that really the school tax itself, the M&O rate of a school district in Texas, um, has nothing to do with how much money your actual local school district gets. Uh, we have a school funding formula that does that by per student. It has nothing to do with what their tax rate is. So imagine being a school board member who's accountable to a tax rate that you can't move, you can't adjust, you can't do anything with, and oh by the way, it has nothing to do with the actual amount of money that you get.

So what you end up seeing is a lot of school districts are moving what really should be operational expenses into their debt service.

Yeah, anything they can control, they move to I&S-

Mm-hmm

... because that's all local money, and it's fully controlled by the school district.

Like, is there any reason why a school district should purchase an iPad with 20-year debt?

No, probably not. But what they do is they structure that 20-year debt to where it's shortened, right, on the front end. I mean, we all know in city government, most people listening to the podcast probably are city government people, they structure it towards the front end is what they would say, right? But no, you are absolutely correct. But if you buy that with M&O side money, right, or state-funded side money, you actually have to reduce a teacher's salary in order to do that, 'cause you can only use the, the, the state-funded side of the tax rate, uh, for certain expenditures.

To be fair, you could reduce the administrative side.

You could, absolutely, 100%. Uh, th- there's no doubt that you could. Um-

So this is totally, totally out of, uh, left field, but-

Yeah

... how do you feel, and this is like unrelated to what we do on a day-to-day basis-

Mm-hmm

... but about school district consolidation as a means to reduce administrative overhead?

Wow. Um, I mean, that goes right back to local control though, right? Like, if, if one community identifies as a specific place, can you really merge them with a different political culture? I mean, just, just taking into account, I mean, you know, the city I work for is such a juggernaut when it comes to sales tax for the amount of residents we have. Uh, you know, very high per capita sales tax generation. Um, and every city around us would, would probably love to merge with us, right? 'Cause we've got all this revenue and we don't have to provide a ton of services with it, and we're able to do some really cool things because of it. Um, but the cultures are different. They just are. And sometimes you need, in my opinion, sometimes you need different school districts or cities or, you know, whatever that may be, uh, governmental entities, because you are different. That's what makes local control so cool is that it's your residents who identify who you are gonna be. They set the strategic plan or the conference plan or whatever that may be, and it may be different than a city that's a mile down the road. So I mean, you could say that in cities too, it just doesn't work because politics aren't in the equation of efficiency all the time.

Yeah.

Right.

And I think a school district is responsible for educating the children.

Correct.

Right?

Yes.

It's, it's a little bit more narrowly focused.

It is. Yeah.

But you do have different priorities in terms of arts or academics or-

Correct

... uh, athletics and-

The district my kids go to, 88% of those kids go to college, right? Not all districts are gonna be set up that way.

Right.

Uh, and so, you know, I, I think we... Y- you, you have to, you have to identify with... Some, some districts may have a higher mechanical need because they have manufacturing in their town or something like that. So there, there's a lot of those local issues that are there too, but it is more narrowly focused than a city.

So yeah, you may be a little bit more optimistic, generally speaking. I'm not sure that, that the politics across the state is, despite this revelation, uh, conducive to, um, an argument that cities should be able to raise their property tax revenue more than three and a half percent.

Yes. And I, look, I, I don't, I don't think that's gonna change. I mean, let's, let's be clear. I mean, that, that got passed. Uh, school districts are capped at two and a half percent, uh, under this new law, which really means the state's gonna have to pull a bunch of funding in as well. But, um, I, I, I don't, I don't think the state's gonna go roll that back. But let's, let's talk about something I do think that is a strong possibility the state rolls back, which is a local control issue, which is building facades. Um, you know, that was one of those things where we may have had a couple bad apples out there that were requiring a specific brick to go on a building or whatever that may be, or that's at least the claim that was made from the other side. But the legislature passed a bill, very far-reaching bill, that basically said cities cannot regulate the facade of buildings any longer in the state of Texas. So you could live in a half a million dollar neighborhood that requires brick to be placed on an exterior garage, and all of a sudden now, uh, you could have a metal building that goes up that's pink, right? Uh, that's, that's where we are. You still... You know, and people will say, "Well, you've got HOAs for that." Well, we've pretty much tried to destroy HOAs in, in Texas for the last few years.

We should.

And, and I mean, it, who- whatever, Chad takes very strong responses on things like that.

So-

And, and that's possible. We-

But this is the conflict, right?

Right.

'Cause the libertarian in me is, uh, struggles with this.

Mm-hmm.

Um, as a property owner, should I be able to do what I want with my property? Versus this idea that we live in communities, and we organize in communities, use those communities to set certain standards.

Correct. And l- I mean, let's talk, let's talk beautiful cities in the state of Texas, right? I mean, just, just think of it that way. There are certain cities out there. My wife and I took a f- a trip to Fredericksburg a couple weeks ago for three days. That city has some fantastic standards that that community has decided on what those standards are, and it's special. It generates all that tourist traffic because it has those standards, right? It's, it's a special community because of that. Um, I don't take it too far from your libertarian stance, though. I mean, I, I wanna be, I wanna be clear. I think that cities put standards out there when it negatively impacts the value of an adjoining property. You're right. You should be able to do what you wanna do on your property, unless it negatively impacts your neighborWhen it negatively impacts your neighbor, it's not okay to play your stereo at, you know, three times the limit of what's reasonable for a person, right? Uh, that's where I kind of have to step in and say, "Okay, it's, it's okay to be libertarian and do what you wanna do on your property, but if you build that pink building, your neighbor's house may have just dropped in value." And should we really require your neighbor to take you to civil court to figure that out when everybody kind of logically knows that's the truth anyways? That's where local control matters.

And there's also this sort of strong towns, uh, aspect to the argument-

Mm-hmm

... though, uh, 'cause I fully a- appreciate that argument-

Yeah

... and don't disagree with it in principle. Um, and-

Basically what you said, if I, I have finally changed you.

No, I just... We choose to live, in many cases, where we choose to live, knowing, or at least with the opportunity to know ahead of time, what those guidelines are.

Yeah, absolutely, 100%.

Um, I mean, when I bought my house, I knew it was in an HOA, and I knew it had certain restrictions on what I could or couldn't do.

Mm-hmm.

I didn't think that it was allowed to build a 60-foot wind turbine overnight.

In your backyard.

But turns out that it was.

Yes.

So.

Not in your backyard, but your-

Not in mine

... neighbor's backyard, yes.

Uh, so now it sounds like, uh, uh, whirlybirds all night-

Mm-hmm

... especially at this time of year when wind starts to pick up. But there's always gonna be these competing interests. But it's the same thing with the, the sort of cognitive dissonance of, that we talked about earlier. Is using the state government to implement what would be called conservative ends, conservative government, um, in Texas-

What would be called that, 'cause I don't actually believe that it is

Right.

Let me be clear.

That, yeah, that's my question.

Yeah. Okay.

Um, or is, as a conservative state generally, is it more conservative to let those localities have different opinions about the way they should live?

Wow, it's such a big question, uh, because the thing about Texas is a huge state.

With extremely diverse populations and geography and weather.

Correct. And if you don't-

And industry.

You know, I think sometimes, uh, you know, I've got family that lives on the East Coast. Uh, nothing against the East Coast, but it's cold, and I don't wanna be there. Uh, but the reality is, is they don't, they don't come to Texas. They don't really know how diverse we are. You know, I grew up in Houston, extremely diverse. Um, and, and I think people forget that we have very different cultures, very different people. Um, and because that state is so big, I think you, you absolutely have to have local control. It also does create, though, as a conservative state, it creates very different veins of conservatism in different areas of our state, right? Different opinions. West Texas conservatism is very different than West Houston conservatism, right? I mean, those are, they're just really different. Goes back to what your professor said, right? You're just trying to merge all those crazy things, and wow, you've got cheerleaders. Yeah, I mean, you're just... It's, it's crazy what you're dealing with in order to understand the differing opinions. It's one of the great things about Texas and, and honest to goodness truth, I think it's one of the reasons why the founders of our state decided we were only gonna meet in the legislature every two years, 'cause we could screw things up so often, right? Um, and I, I, I really truly feel, Chad, that at the end of the day, the only way Texas survives as a great state is if we allow for those local control issues. If you wanna live a crazy life, and you want the city to tell you everything you have to do in certain areas, there are cities in the state that you can go and do that in, right?

Yeah, and Austin's a beautiful town.

And Austin's a beautiful town. It's the People's Republic of Travis County, and it's, it's a lot different. Um, you know, but the reality is, is-

Great university there.

Eh, you know, s- I, I don't know how great that is. Uh, but I will tell you, it's a great town to visit, uh, and it's a great town to live. There's no doubt. It's very talented. Um-

But the thing too is if you wanna live in a cult, you can move to College Station.

It's a great place, College Station. It's the metropolis of College Station, uh, where I will retire and watch Aggie baseball games for the rest of my life one day. But the, the, the reality is, is that these are very different cultures. You look at just UT and A&M, those campuses are so different.

Could not be more different.

Could not be more different.

100 and what? 50 miles apart?

150 miles apart, and they are different worlds, uh, altogether. If you told people in College Station, uh, the things that people in Austin have to do, it, it just, it wouldn't work. The town wouldn't work. The city wouldn't work. So I, I think it's important that we have that local control issue. And, and frankly, I, I think it's what our state legislators have lost is, is that issue, right? How do we get it back? I don't know, right? I, I don't know how you fix it at this point. The, the cat's out of the bag, um, and, and I got... You know, genie's out of the bottle, and we gotta figure that out. We, we have to work together to figure that out. I think what's gonna happen, 'cause historically in Texas, the other thing that we've had is, is that mayors and city council members, and even county judges, they can't get involved really by law. Uh, but county commissioners, whoever that may be, have not gotten involved in state level politics, right? They've controlled their own, uh, issues, their own local issues, and they've just used their state legislators as a support network when they need things from them. But they've never really truly been involved in the politics of those state legislators. Uh, and, and I think that's what's gonna change. I think you're gonna see a lot more mayors that are sending text messages and phone calls to those legislators that we didn't before. Um, and, and that's where things are, are gonna change, 'cause our voter turnouts are just as high as theirs are, right? They, they have their own electorate. Um, and great thing where I work is, is that you've got a council member down any street, and he knows everybody, and we turn out in droves. It's why our city's been so stable is because of our historic voter turnout. Um, but I think we're gonna see that in the state side as well.

And there's no reason that we have to be adversaries.

No, not at all. And in fact, where we are, where I am, we're not. We're, we're very close, great relationships at the federal, state level, uh, all, all fields. But, um, the leadership has been, you know... It, it, it seems like in order to get into the leadership in the last couple legislative sessions, you had to be adversaries, uh, unless you were the previous speaker who basically got kicked out because he was trying to be that brick wall, right? Um, and I think we all saw it coming, and even though local government saw it coming, we didn't do a good job to prepare for it or to defend ourselves. And we just, honestly, we just didn't message well. Uh, and now we don't... It's not necessarily that we have to message well. The message has already been sent, you know. And, and people have to ask themselves, "Do I want the state telling me as a resident of this city what I can and cannot do?" Uh, and, and I think the fact that Bonnen's not running for re-election is a resounding no. Uh, he realizes that it's, he's got to leave in order to heal, and that's, that's where we are today.

Well, Pat, this has been fun. I don't know that we'll get quite as into the politics in the future, at least not as much, but-

Correct, yes

... this is, uh, quite an important issue for cities across the state, so it's good to talk about.

Yeah, absolutely. A little detour for us guys, no doubt. Uh, but this is a major issue in the state of Texas, and we felt like we just had to talk about it.

So show notes will be available at ZacCast.com/2. Thanks for listening. We'll see you next time.