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Grand Prairie

Multiple cities sue streaming services over franchise fees

This has been coming for awhile, it seems.

A lawsuit filed Thursday by 25 Texas cities claims that Disney, Hulu and Netflix have for years stiffed the cities out of dollars the streaming giants are required to pay under state law — and now cities are coming to collect.

Austin, Houston, Dallas and Fort Worth are among the cities that sued the streaming services in Dallas County to recover money they say they has been owed since 2007 and to require the services to pay each year going forward. Under state law, the services have to pay cities a franchise fee — which traditional cable providers also pay — in exchange for using communication lines over public rights of way to transmit their services into homes.

As more people abandon cable subscriptions in favor of streaming services, cities have lost franchise fee revenue — money that goes to fund city services like police and fire protection as well as roads, parks and libraries.

Cities haven’t made up that revenue with fees from streaming services, said Steven Wolens, a former Texas lawmaker and lead attorney for the cities. Even though state law classifies them as video service providers that must pay the fees, the major streamers haven’t paid cities a dime, Wolens said.

“They should have been paying this fee from the very beginning,” Wolens said. “Shame on them because they are using the public right of way that every other company pays the city to use.”

Exactly how much the streaming giants owe Texas cities isn’t known, Wolens said. For a smaller city, the losses could number in the hundreds of thousands of dollars, he said. For a larger city, that figure could be in the millions.

Other Texas cities that joined the lawsuit are Abilene, Allen, Amarillo, Arlington, Beaumont, Carrollton, Denton, Frisco, Garland, Grand Prairie, Irving, Lewisville, McKinney, Mesquite, Nacogdoches, Pearland, Plano, Rowlett, Sugar Land, Tyler and Waco.

The cities are seeking funds dating to when the services launched — Netflix in 2007, Hulu in 2008 and Disney+, The Walt Disney Co.’s streaming service, in late 2019.

The city of Beaumont, which as you can see is involved in this litigation, filed its own lawsuit against these three streaming services in February. I could not find any news about that lawsuit since then, so I don’t know if it has been dropped in favor of the current litigation or if there are now two separate actions. My searching did find that several cities were working on this at least as far back as last year. I’d sure like to see a more in depth story about this, but for now this is what we have. Any lawyers want to offer an opinion on their odds of success? The Chron has more.

Better cut your police budget now while you still can

That’s one possible takeaway from this.

The Texas House on Friday passed a bill to financially penalize the state’s largest cities if they cut their police budgets. The measure was sent to the Senate after two days of heated debate and emotional speeches, with the bill authors calling to “back the blue” and the opposition decrying the bill as political propaganda.

House Bill 1900 comes after a year of civil rights advocates calling on cities to reduce what they spend on policing and to reform police behavior. Those calls were spurred by high-profile deaths at the hands of police like George Floyd’s in Minneapolis and Mike Ramos’ in Austin.

Among Texas’ largest cities, only Austin cut its law enforcement funding last year, though almost all of that decrease came from an accounting shift of money that still allows traditional police duties to remain funded, but potentially in different city departments. Still, the city’s response to some activists’ calls to “defund the police” prompted harsh and immediate backlash from Republican state leaders, who have pointed to fast-rising homicide rates throughout the state and country as a reason to maintain police funding levels.

Gov. Greg Abbott became laser-focused on Austin’s budget and “backing the blue,” making legislation to punish cities that decrease police funding one of his emergency items this year.

After initial passage Thursday, HB 1900 was finally approved on a 90-49 vote Friday and sent to the upper chamber. The Senate’s related bill, which would require an election before cities could decrease police funding, passed out of the upper chamber last month. It’s unclear how either chamber will react to their counterpart’s proposal.

HB 1900 was authored by Republican state Reps. Craig Goldman, Will Metcalf, Greg Bonnen and Angie Chen Button and Democrat Richard Peña Raymond. If a city with more than 250,000 residents was determined by the governor’s office to have cut police funding, the bill would allow the state to appropriate part of a city’s sales taxes and use that money to pay expenses for the Texas Department of Public Safety. Such cities would also be banned from increasing property taxes or utility rates, which could have been used to compensate for the reapportioned sales taxes.

The bill does allow cities to cut police department budgets if such a decrease is proportionally equal to an overall city budget decrease. Cities can also get approval to cut police budgets if expenses for one year were higher because of capital expenditures or disaster response. The bill would also let neighborhoods annexed in the last 30 years to vote to deannex themselves from a city that has decreased funding to its police department.

[…]

Several other Democrats offered amendments Thursday to add exceptions for when a city could cut police department funding. State Rep. Trey Martinez Fischer of San Antonio offered leniency so city council members wouldn’t opt against a necessary increase in police funding for fear they could not turn it back the next year. And state Rep. Jarvis Johnson of Houston filed multiple amendments, including one to not punish cities for cutting civilian positions within law enforcement agencies. He said the Houston Police Department has more than 1,200 civilian jobs, including janitors and other positions he listed off.

“At any given time that Houston Police Department decides we no longer need a car attendant, we no longer need a car attendant supervisor, we no longer need a truck driver, we no longer need a typist, that does not mean that the city of Houston has decided to defund the police,” he said.

The amendments failed, as the Democrats denounced what they called partisan rhetoric and a move for state control over large cities.

On Friday, state Rep. Gene Wu, a Houston Democrat, offered up amendments to first eliminate the 250,000 population cap which Democrats argued only punished larger, more liberal cities. When that failed, he attempted to set the population cap at 50,000, then 200,000. Both amendments failed. His argument that the 250,000 limit was an arbitrary number and goes against the legislative intent of public safety for all Texans could buttress potential legal challenges if the bill is signed into law.

“If we’re true to our word to say why we are doing this … then we should accept this amendment to apply to all 30 million Texans,” he said.

Well, the real reason they’re doing this is because Greg Abbott was mad at Austin, but it’s not polite to bring that up. And not having a significant minimum population requirement means the law might have to apply to places that Republicans represent (*), and we can’t have that. So here we are. By the way, law enforcement agencies from the cities that this bill targets opposed it, and got the same result they got in opposing permitless carry. We have a strange definition of “backing the blue”, it seems.

Anyway. My suggestion in the title is not original to me, I got it from Grits for Breakfast post.

The Legislature gets to write the laws, but even they are not immune from the Law of Unintended Consequences. I don’t think legislators have considered the incentives they’re putting in place in HB 1900 punishing cities that “defund” police department (by which in Austin’s case they mean delaying cadet classes by one year). Going forward, cities that increase police spending can never again lower it. But they often need to do so. Now, cities will decline to spend more, knowing they won’t be allowed to spend less. Bill authors even rejected amendments so that overtime for one-off special events – like a Super Bowl weekend in Houston – would be counted against them the following year. If I’m right about the new incentives facing city councils under this legislation, the result will be to suppress police spending instead of bolster it. I predict that if HB 1900 becomes law, when we look back five years from now the growth rate in police budgets will have flattened, not rallied.

Indeed, the most delicious irony may well come if HB 1900 ends up itself defunding the police!

Note that this is the same logic that led to Harris County Commissioner’s Court proposing a property tax rate increase in 2019 as a way to hedge against the revenue cap law that the Lege passed that year, which would essentially prevent them from ever raising rates in the future regardless of situation or need. (This was only defeated because of an anti-majoritarian quirk in the law that allowed a minority of Commissioners to prevent the vote by breaking quorum.) I don’t actually think any city will take this action for the simple reason that it turns the heat on them in an uncomfortable way, but the incentive is there. I do think Grits is correct that the future effect will be to introduce extreme reluctance to approve any increase in police budgets, because it’s a one-way ratchet that can only have negative effects elsewhere. Indeed, it’s likely just a matter of time before city controllers and city managers start releasing five-year budget projections that warn of various consequences from this bill. Among other things – and I expect this is why the big city police departments opposed this – this will put downward pressure on wages and benefits for police officers, as well as a strong disincentive to approve overtime. Cities are going to do what they need to do. If you don’t like it, go yell at Greg Abbott.

(*) – Technically not true, though the large majority of State Reps from the cities this will apply to are Democrats. That may change in the near future, as places outside the big urban counties like Frisco, Grand Prairie, and McKinney become covered by HB1900. Maybe that will make their Republican representatives more receptive to the idea of modifying or repealing that law in the future, or maybe these cities will follow in the footsteps of places like Garland and Irving and just become Democratic cities themselves. The list on unintended consequences here could wind up being very long indeed.

Whistling past the ICU

Clap louder!

Gov. Greg Abbott and top Texas health officials on Tuesday responded to growing alarm over hospitals now swelling with coronavirus patients, assuring there is still plenty of space available even as some facilities have neared or surpassed capacity.

Speaking on yet another day of record high hospitalizations from the pandemic, Abbott said he is confident the state can continue reopening while controlling the spread of new infections.

“As we begin to open up Texas and Texans return to their jobs, we remain laser-focused on maintaining abundant hospital capacity,” said Abbott, a Republican. “The best way to contain the spread of this virus is by all Texans working together and following simple safety precautions.”

On Tuesday, the Department of State Health Services reported just over 2,500 COVID-19 patients in Texas hospitals, the highest single-day total since the pandemic began and nearly 67 percent more than on Memorial Day in late May. State and local leaders have pointed to the holiday weekend as one likely cause for the increase.

Statewide, there are still thousands of hospital beds and ventilators available. But in some of the largest cities, including San Antonio and Houston, the surge is pushing new limits. In Harris County, some hospitals said late last week that their intensive care units were near or above capacity.

Bill McKeon, CEO of the Texas Medical Center, said their number of COVID-19 patients has nearly doubled from its previous peak in late April. Many of the patients admitted now are younger and generally healthier, but are still susceptible to serious illness or death from the disease.

“If it continues to grow at this rate, we’re going to be in real trouble,” McKeon said of the admissions. He added that while it may not be feasible to reimpose lockdowns or other restrictions, state leaders should consider slowing the reopening if the uptick continues.

The official death count is past 2,000 now, though everyone knows that’s an undercount. On a per capita basis that’s still pretty low, but we’re doing our best to catch up. The idea that we’re “controlling the spread” in any fashion is laughable, except there’s nothing funny about what’s happening. And then we get this:

Abbott remained unwilling Tuesday to allow local officials to enforce their own mask ordinances, even as he acknowledged that many Texans are not wearing them. He instead accused Democratic county judges of not having done enough to punish businesses that fail to comply with other protocols, such as limits on public gatherings.

While they have the authority, Abbott said, many “haven’t lifted a finger.”

Hey, remember when Greg Abbott cravenly flip-flopped on consequences for not following his own executive orders? Good times, good times. What would you like the county judges to use, harsh language? Let’s not forget who’s in charge here.

But local officials are still trying, at least:

The mayors of nine of Texas’ biggest cities urged Gov. Greg Abbott in a letter Tuesday to grant them the “authority to set rules and regulations” mandating face masks during the coronavirus pandemic.

As COVID-19 cases and hospitalizations continue to climb in Texas, an executive order from Abbott bans local governments from imposing fines or criminal penalties on people who don’t wear masks in public. The mayors wrote that many people in their cities continue to refuse to wear face masks and that “a one-size-fits-all approach is not the best option” when it comes to regulating the issue.

The letter is signed by Houston Mayor Sylvester Turner, San Antonio Mayor Ron Nirenberg, Austin Mayor Steve Adler, Dallas Mayor Eric Johnson, Fort Worth Mayor Betsy Price, El Paso Mayor Dee Margo, Arlington Mayor Jeff Williams, Plano Mayor Harry LaRosiliere and Grand Prairie Mayor Ron Jensen.

The letter asks Abbott to consider allowing each city’s local officials to decide whether to require the use of a face covering in order to prevent the spread of the virus.

Mayor Turner’s press release is here, and a copy of the letter sent to Abbott is here. There was no response as of Tuesday afternoon.

Finally, let’s not forget that even as businesses may want to reopen, coronavirus may not let them. It’s almost as if an unchecked pandemic is a hindrance to having your economy run at full capacity. But don’t worry, Greg Abbott has everything under control. Now keep clapping!