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June 14, 2004
State Senator Asks Auditor for Examination
of Las Vegas Firm's Slot Machine Contract
By
Mike Hailey
Capitol
Inside Editor
Saying that an "unbiased mind" is needed, State
Senator Jane Nelson has asked the State
Auditor's Office to conduct an extensive examination into
the state's hiring of a Las Vegas law firm to draft legislation
to legalize video slot machines in Texas.
"Serious questions relating to the legal consulting
contract entered into between the Attorney General of Texas
and the outside legal firm of Lionel, Sawyer and Collins
of Las Vegas, Nevada through an interagency contract with
the Texas Lottery Commission" were raised at recent
hearings of the Texas Sunset Commission and a state House
committee, the Flower Mound Republican said in a June 7
letter to Auditor Lawrence Alwin.
"While the use of state funds to draft controversial
legislation raises serious questions regarding propriety
and necessity, other issues involving conflict of interest,
legal authority to expend funds, and anticipated deliverables
have also been raised," Nelson said.
Nelson, who serves as vice-chair of the Texas Sunset Commission,
indicated that she needs the information by July 13 when
the commission will make a determination on policy changes
for the Lottery Commission. The senator requested a review
into all of the details and circumstances surrounding the
contract with the out-of-state law firm including the parties
and procedures used in the selection and contracting process.
She also wants an inquiry into the legal authority the Lottery
Commission and the Attorney General's office had to use
state funds to pay for the firm's services.
Revelations about the $250,000 contract with the Nevada
law firm first came to light when Nelson brought up the
subject at a Sunset Advisory Commission meeting last month.
The contract was reportedly drafted at the request of Governor
Rick Perry's office and given to LSC in
December. The law firm so far has billed the state for more
$176,000 at a rate between $200 and $250 per hour for work
done on the legislation over a three-month period. Top officials
from the Lottery Commission and Attorney General Greg
Abbott's office were grilled earlier this month
at a hearing of the House Licensing and Administrative Procedures
Committee. The panel's chairman, State Rep. Kino
Flores, a Mission Democrat, accused the agency
officials of giving false answers to the committee while
under oath and violating state law by spending public money
without proper authorization on an activity that is barred
by the Texas Constitution.
Perry announced his support for video gambling in early
April - five months after the Las Vegas law firm was signed
to draw up the VLT legislation. The governor had threatened
to veto a video lottery terminal bill that the Legislature
was considering last year. But he switched his position
before the start of the spring special session in order
to avoid a major tax increase to pay for changes in the
state's school finance system. The plan prepared by the
Las Vegas law firm with the help of a pair of subcontractors
would have generated an estimated $1.7 billion for public
schools in two years by allowing video slots at seven existing
horse and dog tracks and three Indian reservations in the
state.
The move to legalize VLT's fizzled in the House amid stiff
opposition from conservatives and Democrats. But the proposal
is back on the drawing board for a possible second special
session on school funding that could be held before the
end of the summer. While Perry and the Republican leaders
of the Legislature favor video lottery as a revenue source
for public education, the proposal has hit a nerve with
the GOP activists including those who have stated their
opposition twice to slot machines and other types of gambling
in the state Republican Party Platform.
"Evaluation by an unbiased mind is critical to determining
all facts relating to this issue," Nelson wrote to
Alwin.
Alwin, who has announced his resignation, remains on the
job until a successor is chosen.
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