In Texas, state lawmakers have set up a corrupt system where school boards can craft crony deals to favor some businesses with lower property taxes. This corruption has created an entire industry that profits off of cronyism.
Compounding the little guy, everyday property taxpayers are being crushed by ever-increasing property taxes.
Throttling The Taxpayer
In a recent interview with Dr. Jordan Peterson, Israeli Prime Minister Benjamin Netanyahu described the struggles of the once-socialist, high-taxing Jewish State back when he was finance minister in the early 2000s. He likened national economies to a race with one man—the public sector—sitting on the shoulders of a thin man—the private sector. “In our case, the public sector became too big, and we were about to collapse,” he said.
Netanyahu’s plan involved putting “the fat man”—the public sector—on a diet by cutting government spending. It also involved filling the lungs of the thin man—the private sector—with oxygen, which meant cutting taxes while removing obstacles—burdensome regulations—in front of him.
“Well, as a result of the changes that I put forward, and I described in [my biography], Israel became, in per capita income, wealthier than Japan, France, Britain, [and] Germany. [We] actually outstripped them all,” Netanyahu stated.
Using Netanyahu’s analogy for Texas’ situation, state lawmakers have refused to put the fat man on a diet and fill the thin man’s lungs with oxygen for decades. Instead, they’ve given the fat man even more food while putting an oxygen mask on the thin man that only gives parts of his body just enough oxygen to keep going.
The result is a man (the taxpayer) who can barely shuffle forward, struggling under the immense weight sitting atop him. On the outside, it looks like he’s moving, and parts of him are doing well, but as a whole person, he’s not moving as far or as fast as he could if unencumbered.
High taxes that keep the taxpayer thin are partly the result of the corrupt Chapter 313 tax savings system.
While this corrupt program expired in December, lobbyists and state lawmakers are scrambling to rebrand and revive it.
And, while taxpayers languish, an entire industry set up to facilitate these corrupt deals is eager to see the Texas Legislature restart the grift.
The Grift Is On
Negotiating and making these deals involve bringing in third parties to cement everything. One such instance was found with the Taylor ISD deal with Samsung.
A document Texas Scorecard obtained showed the firm of Moak Casey was involved in this deal.
This document appears to calculate the net financial benefits of this deal for both Taylor ISD and Samsung Austin Semiconductor.
A search of the final agreement between the school district and the corporation failed to find what Moak Casey was paid. What is in the agreement are details about third parties. “All calculations under this Agreement shall be made annually by a qualified and experienced third party … approved each year by the district,” it states in Section 4.3 on page 116. It continues in Section 4.6 that “the Applicant shall pay any amount determined by the Third Party to be due and owing to the District,” and that “the Applicant shall also pay any amount billed by the Third Party, plus any reasonable and necessary legal expenses paid by the District to its attorneys, auditors, or financial consultants” of paperwork made and filed associated with the agreement.
Taylor ISD is in the district of State Rep. Caroline Harris (R) and State Sen. Charles Schwertner (R). Neither responded to a request for comment on this deal before publication nor on whether or not monies made by third parties like Moak Casey in these deals should be made public.
Similar wording was found in Baird ISD’s special property tax cut deal with Ranchland.
A third party revealed in those records was KE Andrews. They produced reports encouraging this deal to go forward. The agreement also states that “all calculations under this Agreement shall be made annually by an independent third party (the “Third Party”) selected and appointed each year by the District, subject to approval by Applicant in writing, which approval shall not unreasonably be withheld.”
The agreement also requires the company to pay the third party in this deal and to reimburse Baird ISD’s attorneys, auditors, or financial consultants for paperwork. In other words, to enjoy the favor of lower taxes, this business has to grease the palms of multiple people, not just the school district itself.
In a further sign of how corrupt this creation of the Texas Legislature is, in both of the agreements above, if the company disagrees with the Third Party’s calculations, they may appeal first to the Third Party itself and after them to the School Board Trustees. Essentially, this mafia system has third parties in name only and locks companies in a situation where the judge and jury are the very people they’re doing business with.
With A Little Help From My Friends
This side industry that has sprung up to benefit from this mafia system has been noted for a while. Below is a sampling of some of the businesses Texas Scorecard came across over the course of this investigation.
Texas Scorecard found a well-known third-party beneficiary on page 36 of the Baird ISD deal.
Jigsaw School Finance Solutions, a Limited Liability Corporation, gave a financial analysis supporting the special crony deal for the Ranchland Wind Project.
According to Open Corporates, Jigsaw’s registered address is in Baytown, Texas, roughly 355 miles southeast of Baird ISD.
Jigsaw is no stranger to these kinds of deals. A 2021 article from the Fort Worth Business Press states that the company was started by Barbers Hill ISD Superintendent Greg Poole “to broker deals between school boards across the state and companies.” According to the Texas Comptroller, Barbers Hill ISD, as of December 2022, has 35 Chapter 313 special property tax cut deals and one application for a deal.
According to data from Transparency USA, since 2015, Barbers Hill ISD has hired lobbyists for the state Legislature, spending a minimum of more than $563,000 to a maximum of more than $1.2 million. This data shows that lobbyists A Craig Eiland and Lynette Kilgore were retained until the end of 2022.
Eiland was a former Democrat state representative from 1997 to 2015. In 2009, Eiland was Speaker Pro Tem in the Texas House, the first year of Republican Joe Straus as Speaker. Kilgore was Eiland’s chief of staff from 2005 – 2015.
From 2015 to the present, Eiland’s total pay as a lobbyist ranges from more than $1 million to more than $3 million. Barbers Hills ISD is his most prominent client. Kilgore’s total pay during the same time frame ranges from more than $90,000 to more than $582,000.
Eiland’s law firm has also hired Eiland and Kilgore as lobbyists.
As for Jigsaw, they do get around. Not only did they show up in the Baird ISD deal, but the Hillsboro Reporter found them in their neck of the woods, roughly 240 miles northwest. They were reportedly hired to assist Hillsboro ISD in a solar company’s application for a special property tax deal.
Last year, an investigative report by the Houston Chronicle found that since 2013 more than a dozen school districts in the state had paid Jigsaw close to $1.2 million. Superintendent Poole is allowed under state law to profit off these special deals with school districts, including his own, after hours as long as the school board approves it. The Houston Chronicle could not find any such vote since April 2020.
That was an exceptionally profitable year for Poole’s Jigsaw, too. They collected $313,000 in payments from school districts, compared with $74,000 in 2021.
Texas Scorecard sent an inquiry on this subject to Greg Poole. No response was received before publication.
“It’s an apparent conflict of interest in my mind that is permitted under the status quo and, at a minimum, needs to be addressed in the next legislative session,” James Quintero of the Texas Public Policy Foundation told Texas Scorecard. “This is an abuse of public trust. You would expect that the wolf shouldn’t be guarding the henhouse, but in this case, it is.”
Texas Scorecard asked Quintero if school district employees must declare such conflicts of interest and if such declarations are publicly available for citizens. “My understanding is that much of this information is available through the Public Information Act process, with some redactions,” he replied. “But the fact that a taxpayer must petition their governing body to learn how their public money is being spent in the first place is a little troubling, especially when these agreements are negotiated behind closed doors, and none of the information is posted online.”
Texas Scorecard asked State Reps. Harris, Wilson, Lambert, and State Sens. Schwertner, King, and Creighton if they’d address such conflicts of interest in any deal to revive and rebrand Chapter 313. No response was received before publication.
Superintendent Poole is one among others who’ve come up to take advantage of this shady system. Moak Casey is another company that was discovered in the special property tax cut deal between Taylor ISD and Samsung Austin.
But who are they?
“Moak Casey serves school districts across Texas, big and small, urban and rural. Our smallest district client has approximately 35 students, while our largest has approximately 210,000, and we are experienced in meeting their unique needs,” their website reads. “We also work with many of the 20 Regional Educations Service Centers.” Among the services, Moak Casey lists are Economic Development.
Whereas with Jigsaw, a school district employee is involved, with Moak Casey, it’s a state lawmaker. Former State Rep. Dan Huberty (R) is on the company’s board. On December 19, 2022, Corey DeAngelis, Executive Director of the Educational Freedom Institute, called out him and other members of the Texas Commission on Special Education Funding for defending the status quo in Texas’ Education System. Huberty joined Democrats in voting against a “recommendation to consider funding students instead of systems.” It passed four to three.
DeAngelis highlighted Huberty’s hypocrisy. “Representative Dan Huberty (“R”) went to a private school. His high school accepts students using private school vouchers. He just voted against school choice for kids with special needs,” he tweeted.
Moak Casey originally did not respond to a media inquiry about their involvement with the Taylor ISD deal with Samsung Austin.
Texas Scorecard approached Huberty at the state Capitol on January 10 but asked us to try contacting him by email. In the end, Katherine McLane of the Mach 1 Group, Moak Casey’s public relations firm, responded to our questions directed to Huberty.
Texas Scorecard asked which of the parties in the Taylor ISD deal with Samsung was Moak Casey’s client, how much they were paid, and how many such deals Moak Casey was involved in. McLane referred us to Moak Casey’s website. “MoakCasey is a private for-profit organization, and it is not our policy, nor are we under any obligation, to discuss our agreements with or proprietary work product for clients.”
Texas Scorecard also asked Huberty how beneficial his status as a former legislator was to the company, if he was talking with legislators about reviving and rebranding this corrupt system, the nature of these conversations, and who specifically they were with. “Chairman Dan Huberty joined the organization as an unpaid board member in July 2022. Following his retirement from the Texas House of Representatives this January, Mr. Huberty joined the firm full-time as Chief Operating Officer,” McLane replied. “Given his deep experience in the Texas House of Representatives, as Chair and a member of the House Public Education Committee, and as a member of the Commission on Public School Finance, he provides strategic counsel to clients focused on education policy and funding.”
Not surprisingly, Moak Casey has lobbyists in the Texas Legislature. One of them is very well connected.
According to Transparency USA, from 2015 to the present, they have spent a minimum of more than $106,000 to a maximum of more than $363,000 on lobbyists. Their top two paid lobbyists are Dan Pearson and Neal T. Jones Jr. Both were retained during the 2022 election season.
Neal Jones, also known as Buddy Jones, has been around for a while as a lobbyist. Texas Scorecard previously reported on him as one of the lobbyists Dallas City Council hired in 2009 as part of their more than $500,000 spent on lobbyists. Jones, a former state representative in 1981, is a lobbyist and co-founder of HillCo Partners, “a full-service public and government affairs consulting firm, providing services in the lobbying, public policy, communications, and regulatory arenas.” Texas Scorecard previously reported in 2014 that HillCo is a favored taxpayer-funded lobby firm that represents many large city and school district officials in the capitol.
Transparency USA reports that from 2015 to now, Jones has been paid more than $6 million to more than $22 million. His clients include the Dallas Cowboys and Frisco, Arlington city governments, and more. Simultaneously, the HillCo Political Action Committee donated more than $4.3 million to Republicans and Democrats in Texas. This includes Gov. Greg Abbott (R), Lt. Gov. Dan Patrick (R), Speaker of the House Dade Phelan (R), and State Sen. Borris Miles (D). HillCo Partners has received $273,000 in contributions during that same time frame.
Then there’s KE Andrews in the Baird ISD deal with Ranchland.
Founded in 1978, they claim to have “a strong national presence in the State and Local Tax and valuation fields, with more than 130 people on staff, and offices in Houston, Dallas, and Denver.
“Our practice began [sic] centered around ad valorem property tax, but over the years, we have added services at the request of clients to continue to serve their business needs,” KE Andrews’ website states.
Their president is Mark Andrews, and according to Transparency USA, since 2015, he has donated more than $20,000 to State Rep. Justin Holland (R–Heath). Holland did not respond to a media inquiry about this connection before publication.
Texas Scorecard sent an inquiry to KE Andrews regarding the Baird ISD deal. No response was received before publication.
While Quintero opposes the Texas Legislature reviving and rebranding the corrupt Chapter 313 and the mafia system it created, he does have a recommendation should state lawmakers decide to forge ahead to keep the corrupt system alive. “They need to make the system more transparent and more easily engaged by the average person so that people can have a really good understanding about how their money is being spent.”