Hays County Tax Assessor-Collector Luanne Caraway discusses matters with the Hays County commissioners. Photo by Sean Batura.
By SEAN BATURA
After a “possible conflict of interest” led San Marcos city officials to turn over delinquent tax collections to Hays County this week, an identical conflict came into play for the city once the county accepted the job.
As a result, delinquent tax collections both for the city and the county will be handled by a law firm that contracts with the father of Hays County Tax Assessor-Collector Luanne Caraway (R-Kyle).
Caraway’s father, Jim Brewington, has a contract to do work for the law firm McCreary, Veselka, Bragg, and Allen (MVBA). Caraway filed an affidavit with the Hays County Clerk Monday to disclose the relationship. Brewington receives more than 10 percent of his income from MVBA, for which he has performed contract work since 2006, after the county hired the firm for delinquent tax collections.
Caraway filed an affidavit with the city last week disclosing that Brewington is also an independent contractor for Perdue, Brandon, Fielder, Collins and Mott (PBFCM).
After a contentious discussion at the city council meeting Monday, the council voted, 4-3, to turn over the city’s delinquent tax collections to the county. Councilmembers Gaylord Bose, Chris Jones and John Thomaides cast the only dissenting votes against a motion to have the county do the city’s delinquent tax collections. The next day, the Hays County Commissioners voted unanimously to take up the job for San Marcos, without ever mentioning the issues that tied up the San Marcos council the night earlier.
Just before it recommended using the same firm as the county, the city’s finance and audit committee came close to selecting PBFCM as San Marcos’ delinquent tax collector firm. The finance and audit committee had been evaluating proposals submitted by three delinquent tax collection firms that were hoping to get work from the city. Councilmember Kim Porterfield, who sits on the finance and audit committee, said the discovery of Caraway’s connection to PBFCM prompted the committee to examine the question of whether the city should continue to choose its own delinquent tax collection firm.
Just before the council’s vote, Thomaides asked why the city would walk away from PBFCM over a conflict of interest, only to walk into the same conflict by using the county’s firm, MVBA. Mayor Susan Narvaiz and Councilmembers Pam Couch and Porterfield, all of whom sit on the finance and audit committee, said they had considered the matter thoroughly.
“I want to make sure that we’re dispelling rumors that this city council awards contracts based on party lines or politics,” Porterfield said. “I mean, an RFQ (request for proposal) went out, it was all above board, the references were checked, and so I think that the decision that the finance and audit committee came up with — disagree with it if you want, but certainly, there was due diligence involved in that, and I believe that we made the correct decision.”
Earlier in the discussion, Porterfield said the finance committee was the first to raise the issue of Caraway’s connection to the two firms.
The city has chosen its own firm since 2002. The city’s contract with its current delinquent tax collection firm, Linebarger, Goggin, Blair and Sampson LLP, expired two years ago, but was extended. City Manager Rick Menchaca said that was a reason why the city began looking for other firms. Assistant City Manager Collette Jamison said it was customary for the city to want “fresh eyes” and periodically check the marketplace for better value and higher quality service.
The finance and audit committee eventually recommended the city turn over delinquent tax collections to the county, in effect hiring the county’s firm.
City of San Marcos Finance Director Steve Parker told city councilmembers in the pre-vote discussion Monday that switching to the county’s delinquent tax collection firm would create a higher level of service for residents. Parker, who sits on the finance and audit committee, said residents with delinquent taxes would no longer receive three different demand letters if the city and county used the same firm.
“Are we trying to make the tax assessor/collector have an easier job, who’s already getting paid, or are we trying to provide more efficiency?” Jones asked before the final vote. “I’m confused, because it makes more sense to use the firm that currently has the largest jurisdiction of San Marcos (Linebarger, Goggin, Blair and Sampson collects delinquent taxes for San Marcos CISD), right?”
Jones made a motion to table the item, but it failed on a 4-3 vote, with Bose, Thomaides and Jones on the losing end.
“(The finance and audit committee) looked into it, and we discussed it, staff researched it and brought it back to us, and we made the recommendation that we have today,” Narvaiz said.
The city council’s action Monday constituted the first of two steps in the process, which county commissioners finalized the next day with a unanimous vote. The actions by the two governing bodies formalized an amendment to a 19-year-old contract that gives the county the responsibility to collect taxes on behalf of the city. The contract amendment removes the city’s authority to choose its own delinquent tax collection firm.
In contrast to the heated discussion among city councilmembers, county commissioners voted unanimously Tuesday to authorize the contract amendment without any discussion or mention of what Parker the previous day had called “a possible conflict of interest” for Caraway.
“I noticed that it was not brought up in public,” said Hays County Precinct 2 Commissioner Jeff Barton (D-Kyle) during a lunch break after the court’s vote on Tuesday. “I think probably it should have been mentioned in open court today.”
Chapter 171 of the Texas Local Government Code requires a local public official who “has a substantial interest in a business entity” to file an affidavit stating the nature of the interest before “a vote or decision on any matter involving the business entity,” in the language of the code. The law stipulates that an official only has to file an affidavit if the vote or decision has a “special economic effect” on the business entity in a manner distinguishable from the effect on the public.
“We just filed a notice of the relationship of my father with the law firm, and just stating that he was a contract employee — not employee, I keep using that word — he’s not an employee, he’s a contractor for a couple of the law firms,” Caraway said Tuesday. “It was just to clear the air. There was a definition in the law that they don’t think I fall under, but just to be out in the open and not hide anything, we just decided to go ahead and file the affidavit.”
Hays County Civil Division Chief Mark Kennedy, who advises all county department heads and elected officials on matters of law, said he helped Caraway draft the affidavits she sent to the city and county. Kennedy said he advised Caraway not to file an affidavit with the county regarding PBFCM, because the commissioners court vote would not affect that firm. Caraway said she did not file with the county regarding MVBA until a day before the commissioners court vote because she did not find out until Monday that the pertinent item was on the court’s agenda.
“She was the first one who called me about this,” Kennedy said Tuesday. “She wanted to know whether I thought it was an issue at all or not, whether she actually had an obligation to file. And I told her that I thought, out of an abundance of caution, she should. Again, some of these definitions are very broad in Chapter 171. So it leads you to question, ‘How far reaching is this statute?’ But when you question that, and you see the penalty associated with it, again, you get pretty careful … So there’s a real incentive to file when you have to. If there’s a question of whether you should or not, then you probably should.”
An official who fails to file an affidavit as required by Chapter 171 may face as much as a year in jail or a fine not to exceed $4,000, or both.
Barton said Tuesday that he learned about Caraway’s connection to MVBA and PBFCM last Friday. On the same day, Barton said he was told Caraway’s affidavit would be emailed or faxed to him but said, “I may have just missed that.” Barton said “all sorts of people in the community” called him about Caraway’s connection to the law firms.
“Ms. Caraway, then, was kind enough to call me last night and explain what her dad did for the company and what compensation he got, and it doesn’t sound like it’s compensation that’s out of line for the work,” Barton said Tuesday. “It’s substantial, but it’s not big dollars. He’s semi-retired and works part-time contract for them, and for another tax firm. It would be simpler if there were no conflicts. I think that’s one that does fall into a grey area that gives me some cause for concern. But I’m mindful that in a small town, small county, we all have relations and friends and family, and it’s sometimes unavoidable. So I don’t think this is worth making a federal case over … I certainly don’t think Ms. Caraway’s out to try and do anything wrong.”
Hays County Precinct 3 Commissioner Will Conley (R-San Marcos) said he has known for “a long time” about Brewington’s work with MVBA.
“I never have seen any real conflicts there,” Conley said. “It wasn’t an issue, to me, personally. I think it’s a very competitive world out there. I think some people brought up some issues through the spirit of competition … people associated with different things. And so that’s why I think Mrs. Caraway felt that she had just to address it just to be prudent, (and) make sure that everything’s on the table, and nobody can accuse anybody of doing anything that is wrong.”