Legislators would be prohibited from serving as “bond counsel” for any public entity in Texas under a policy proposal made by Republican gubernatorial candidate Greg Abbott today. At least two Democratic senators currently profit from such arrangements — including Democratic gubernatorial nominee Wendy Davis.
“Elected officials shouldn’t profit off of their positions and line their own pockets at the taxpayers’ expense,” said Abbott in announcing the proposal. “They are supposed to represent the interests of their constituents rather than their own self-interest. It is particularly reprehensible for lawmakers to profit from taxpayers as bond counsel for public entities that add more to the public debt of taxpayers. My ethics reform plan puts an end to this unethical practice.”
Members of the House and Senate, including the speaker and lieutenant governor, are part-time employees, and are allowed to have outside careers. However, Abbott’s proposal would stop the practice of attorneys serving in the highly lucrative field of “bond counsel” for governmental entities in the state.
Information from Abbott’s policy proposal notes that a bond counsel “is a specialized attorney who works with public bonds” and is paid only when bonds are sold, with the payment coming from the actual bond proceeds. When seeking to issue public debt, governmental entities hire a lawyer or firm to draft a legal opinion verifying that the obligations are binding on the issuer and exempt from federal taxes.
Local bonded indebtedness increased 144 percent between 2000 and 2009, according to the office of Comptroller Susan Combs.
Perhaps the most prominent legislator working in the bond counsel field is State Sen. Royce West (D-Dallas). A 2009 article in the Dallas Observer found that he and his firm made nearly $4 million from the Dallas Independent School District between 2002 and 2008 alone.
West was not available for comment when his office was contacted.
Another prominent senator profiting as bond counsel is Abbott’s November opponent. Davis and her law partner Brian Newby, a one-time chief of staff to Gov. Rick Perry, have made a legal practice almost exclusively out of working for governmental entities — including as bond counsel. A 2012 article in the Texas Tribune noted that their firm had served as co-counsel to the DFW Airport as well as the Tarrant County Water District.
Davis’ campaign office requested that questions be sent via e-mail, but no response has been forthcoming.
Follow Michael Quinn Sullivan on Twitter @MQSullivan
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