Open records law limited
Court: Publicly funded groups can stay quiet
The Texas Supreme Court on Friday limited the public’s right to know about private groups that get government funds.
In a 6-3 opinion, the court sided with the Greater Houston Partnership, agreeing that GHP doesn’t have to open its check registers even though it received funds from the city of Houston and other local governments worth about $1 million per year.
Open government advocates slammed the decision to curtail the reach of the Texas Public Information Act.
“Now GHP and groups like it that tap the spigot of public funding may draw the curtain against citizens examining how those funds are spent,” attorney Paul Watler wrote in a statement for the Freedom of Information Foundation of Texas.
GHP hailed the decision as a protection against unwarranted intrusions on private business.
“With this ruling, economic development and chamber of commerce organizations like the Partnership can continue to work on behalf of their communities without being mischaracterized as governmental bodies,” President Bob Harvey wrote in a statement, saying those protections are now also extended to other private organizations that contract with the government.
Earlier this year, GHP canceled its contracts with the city in light of lower court rulings. Friday’s decision could pave the way for new agreements.
The case stemmed from a 2007 request by Jim Jenkins of Montgomery County, who wanted to see how
GHP spends the city’s money. GHP, the region’s major economic development group, argued it wasn’t a governmental body for the purposes of the act, and eventually sued to block disclosure of its finances.
The Texas Attorney General, a trial court and an appellate court each previously ruled that GHP must open its books because, although it runs primarily on membership dues, it performs work for the city that makes it, in essence, an extension of the government. GHP plays a significant role in Houston’s economic development programs, courts new business for the city and plans mayoral business recruiting trips. It also analyzes business prospects to help City Council determine whether to offer incentives.
Jenkins, a small business owner, complained that there is too much money and politics at play in the way businesses get taxpayer-funded incentives, creating a field of “haves” and “have nots” based on political access. He argued that GHP’s expenditures would shed light on that process.
If the city “can just give money to a private entity like that with no accounting, we’re all in trouble,” Jenkins said.
For decades, it has not mattered how much government money a private entity like GHP receives — even the smallest contribution of public funds could mean that it was required to release public information, if it passed a series of legal tests. Those included determining whether the entity functions as an arm of the government.
For example, a nonprofit water supply corporation had been subject to the public records law because it performed services traditionally provided by the government.
But with this ruling, the court has said that an organization — or the part of an organization supported by public money — is not a governmental body unless it receives enough funds that it couldn’t exist without them. The entity must be “sustained” — not merely “supported” — by the government to qualify as a public body, the majority reasoned.
Joe Larsen, another Freedom of Information Foundation attorney, said the court’s new test could have the effect of allowing government to easily outsource its functions. For example, a corporation with $200 million in total revenue could run the city’s water department for $10 million. As long as most of its income comes from other ventures, the corporation wouldn’t be subject to public information requests about the utility.
“That’s pretty hard to swallow,” said Larsen, who believes the all-conservative court is giving undue deference to private enterprise in this case.
Lynne Liberato, who argued for GHP, said governments outsource to the private sector all the time — like the foreign companies that build and operate toll roads. She said even in those situations, much information is still available through the government, such as contracts, reports and expenditures.
The court’s three dissenting justices wrote that the ruling upends 40 years of precedent. But Liberato said the high court had never interpreted the ambiguous language of the act that addresses what is or isn’t a governmental body.
The act defines it as an organization “supported in whole or in part by public funds.”
The attorney general rulings that construed this to reach private entities were “bad law, and it doesn’t make it any better that it’s existed for 40 years,” Liberato said.
The majority said the full context of the Public Information Act makes it clear that the Legislature never intended it to reach groups like GHP.
“Like the lobbying shops and law firms that also populate the State payroll, GHP shares many common objectives with the city, but without more, such shared interests can hardly transform a service provider into a government appendage,” Justice Eva Guzman wrote for the majority. “A private entity engaged in economically delicate work should not be subjected to invasive disclosure requirements merely because it counts the government as one client among many.”
Justice Jeffrey Boyd, in his dissent, said the majority was ignoring the plain language of the law and the Legislature’s directives that it be interpreted to favor openness. He noted the law already has dozens of exceptions that would protect GHP’s sensitive records, but GHP elected not to seek that protection. It was clear to Boyd that “the City paid the Partnership public funds to subsidize, underwrite, and support the Partnership’s activities.”
The decision was anxiously awaited both by open government advocates and by other groups that straddle the line between public and private. Chambers of commerce from around the state and the Harris County Democratic and Republican parties had supported GHP’s case, hoping to avoid public records requests.
Joining Guzman in the majority were Paul Green, Debra Lehrmann, John Devine, Jeff Brown and Chief Justice Nathan Hecht. Joining Boyd in the dissent were Phil Johnson and Don Willett.