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The Texas Legislature won’t meet again until January, but lobbyists have been haunting the halls of the state Capitol since the last session ended in May 2001. The breaks between the Legislature’s biennial sessions aren’t what they used to be, and lobbying in Texas has turned into a year-round job. “We’re working like crazy in the interim,” says 32-year lobby veteran Gaylord Armstrong, who leads the lobby practice at Austin’s McGinnis, Lochridge & Kilgore. “There aren’t many days that I don’t spend up to 12 hours on the job.” Jack Erskine, a lobbyist at Hughes & Luce, says legislative committees used to start their interim meetings the fall before the Legislature swung back into action, around the time that the University of Texas Longhorns had their first home football game. But lawmakers now meet in committee almost every month during the off-year, tracking issues likely to come into play or fleshing out bills to be filed even before the session starts. “In the old days, people could come in at 10, have lunch and be on the golf course by 2″ during the off-season, says Erskine, a veteran of 27 years lobbying in Austin. “Those days don’t exist anymore.” The shift is part of a growing role for the 1,600 or so lobbyists in the state during a legislative session. Figures compiled by Texans for Public Justice, a government watchdog group, say companies and trade groups paid lobbyists as much as $230 million in 2001, a 33 percent increase over the $172 million paid in 1995, and $20 million more than the previous high watermark, set in 1997. The top 10 lobby firms or solo lobbyists in Texas reported combined revenue of between $12.8 million and $27.2 million in 2001, according to Texas Ethics Commission records. Texas law requires only that lobbyists report general ranges of income from each client, making it difficult to get precise figures. Further, the law requires lobbyists to report only fees earned for direct efforts to influence a state legislator, agency leader or staffer, meaning that some lobby-related fees need not be disclosed. According to Texans for Public Justice, energy and natural resources interests accounted for 17 percent of the total spending on lobbying in 2001, while communications firms, local and municipal agencies, and health-care companies also were major players. Though Texas firms with large lobbying practices are a strong force in the lobby sector, with five ranking among the top 10 in revenues, two relatively new and sizeable government affairs operations — HillCo Partners and Public Strategies Inc. — also are among the most lucrative shops. Small, more traditional lobby boutiques run by former state officials round out the top 10. In 2000, Russell “Rusty” Kelley, one of Austin’s most seasoned lobbyists and a lone wolf on the lobby scene for more than 20 years, shifted gears and threw in with Public Strategies, a shop with more than 50 professionals operating in three Texas cities as well as New York, Mexico City, Washington, D.C., and California. It’s proven to be a happy marriage. In 2001, PSI took in between $1.7 million and $3.5 million in Texas lobbying revenue. Kelley says he had been recommending that his clients hire the company even before he signed on with the firm. After meeting with PSI founder Jack Martin, formerly a top campaign aide to former U.S. Sen. Lloyd Bentsen, D-Texas, Kelley decided joining was a logical step. “It just started clicking in my mind that the old traditional lobbying deal of just going by and seeing members to try to get them to vote with you was pretty much a thing of the past,” Kelley says. “You needed a more strategic approach to these lobbying issues.” Kelley, who learned the ropes as director of pages in the state Senate in the 1960s and later as executive assistant to former House Speaker Bill Clayton in the late 1970s, brought a long list of clients with him, including the Outdoor Advertising Association of Texas, and Hillwood Development Corp., the real estate arm of Ross Perot’s empire. Several clients new to Kelley and PSI have signed on since. One of them, Lubrizol Corp. of Wickliffe, Ohio, turned to PSI in 2001 to seek a modification of a Texas Natural Resource Conservation Commission statute so that the water portion of its “clean fuel” mixture would not be taxed. Lawmakers approved the classification change, which Kelley says made it economically feasible for the company to produce the fuel. Lubrizol paid PSI between $50,000 and $99,999 for the effort, according to state records. The keys to success, Kelley says, are having “an incredible amount of patience” and an understanding that the most important players in a lobby campaign are inside the state Capitol. “Lobbyists don’t pass bills, and they don’t kill bills; legislators do,” Kelley says. “If you don’t learn that early on, you’ll never do well.” PSI has 19 registered lobbyists in Texas, including former state Sen. Kent Caperton, who left Winstead Sechrest & Minick to join the firm. Caperton chiefly represents Southwestern Bell, one of the most free-spending and active companies at the state Capitol. EYEING THE STATE BUDGET Public Strategies and HillCo Partners are the two most prominent examples of a blending of the lobbying arts, merging crisis management, public relations and other services with straight lobbying. Neal “Buddy” Jones, a former Texas House member who became former House Speaker Gib Lewis’ chief of staff in the early 1980s, joined Austin political consultant Bill Miller to form HillCo in July 1998. The firm, now with seven lobbyists, has quickly risen to the top of the heap. Ethics Commission reports show that HillCo earned between $1.8 million and nearly $3.9 million in 2001, putting it in league with the largest of the lobbying firms. Jones says that increasingly members want to know how the public is sizing up an issue before they act on a lobbyist’s pitch. HillCo does some polling, seeking ways to tie their clients’ concerns to the interests of lawmakers’ constituents. “I try to position my issues in a way that I would like them positioned to me if I was still a voting member of the Texas Legislature,” says Jones, a lobbyist since 1985. For the 2003 session, the state budget is clearly the dominant issue for many lobbyists. State Comptroller Carole Keeton Rylander has predicted that lawmakers could face as much as a $5 billion shortfall when they convene in January. “We’re all concerned about what might be required in the form of additional taxes,” says Armstrong of McGinnis Lochridge. One of his clients is the Texas Society of Architects, which is concerned that the state’s 8.25 percent sales tax might be applied to professional services. “If you want to design a building in this state, it’s just as easy to call New York or Chicago to hire an architectural firm and avoid an 8.25 percent hit,” says Armstrong, warming up for his pitch to lawmakers. Hughes & Luce’s Erskine, whose client list includes the Department of Public Safety Officers Association, says one of his challenges is to convince the Legislature to boost compensation for state troopers, whose salaries have fallen behind the rates at big-city police departments. Erskine and his colleagues are preparing comparisons to show “how out of whack” DPS salaries are with those paid by other law enforcement agencies, he says. Hughes & Luce and McGinnis Lochridge are among the many firms that own a big chunk of the lobby market. But firms have a different model for their practices than the pure lobby shops. Baker Botts, which reported revenues between $1.9 million and $3.8 million, earns a great deal of its lobbying revenue by representing clients before the state’s regulatory agencies — something of an ancillary practice to corporate legal work. “It’s not so much traditional lobbying as the practice of law,” says Baker Botts partner Pamela Giblin. Texans for Public Justice cited Giblin as the top-grossing lobbyist in the state last year, based on Ethics Commission reports showing that she brought in from $1.2 million to $2 million. Giblin’s top client in 2001 was the Brownsville Public Utilities Board, which paid her more than $200,000 to assist in obtaining permits for a water project. Giblin, who previously worked as an attorney at the Texas Air Control Board, says she has practiced environmental law for 32 years, “figuring out what the rules are” for clients seeking air, water or waste permits. The state’s most lucrative lobby practice, Akin, Gump, Strauss, Hauer & Feld, includes Thomas Bond, a former state insurance commissioner who represents more than 60 insurance companies and trade groups. But earlier this year, four Akin Gump lobbyists who work on insurance issues jumped to Gardere Wynne Sewell, which opened an Austin office. Akin Gump also represents the Port of Houston Authority and AOL Time Warner Inc., among others. Gary Compton, an attorney and lobbyist at Locke Liddell and Sapp, also is heavily involved in the regulatory area, but with a legislative twist. Compton, who has been lobbying since the mid-1970s, says his niche is “running shuttle diplomacy” between lawmakers and the agencies. One of Compton’s most intense struggles came early in the 1999 session, when then-Gov. George W. Bush was pushing for an emergency tax cut for oil and gas producers with marginal wells. At the time, oil prices had dropped so low that small producers were in danger of being wiped out. Compton represented Pioneer Natural Resources, a large independent producer. He says he and other lobbyists representing oil and gas interests found themselves ricocheting between the Texas Railroad Commission Office, the State Comptroller and the Legislature in the effort to draft a bill that would provide relief but would quell concerns about potential fraud. Because the measure, Senate Bill 290, had to be passed and put into effect quickly to do any good, lobbyists were working on it almost around the clock. The bill passed into law a mere month and a half after it was introduced. “That was the no sleep, here we go, live at the Capitol [deal],” Compton recalls. However, Texas lobbyists have been known to go too far in pursuing their clients’ interests. A hubbub erupted in the Texas House of Representatives in 1991 after someone spotted a couple of still-unnamed lobbyists in the gallery, filming lawmakers to make a record of votes on a products liability bill. Under the Texas Constitution, the presiding officer is required to have votes recorded in the House Journal only if three members request a record of the vote. In many instances, there is no record of the votes taken on bills or amendments. That year, says Democratic state Rep. Barry Telford of Dekalb, “Whoever these folks were working for wanted a record. So they decided to make a record of their own. They were actually upstairs with a movie camera.” Telford says the filming violated House rules and sergeants were dispatched to stop it. Angry legislators also went in search of the culprits, he says. “A number of legislators went out and proceeded to grab lobbyists they knew, whether they were guilty or not,” Telford says. Those kind of shenanigans seem less likely today, in what has become a more professional atmosphere. Reforms passed by the Legislature that same year cap the amount that a lobbyist can spend on a gift to a state official at $500 per year and require lobbyists to disclose the names of all officials they’ve entertained if those expenditures exceed $50 a day. Jack Roberts, a former deputy state comptroller who turned hired-gun in 1990, says lobbyist behavior has steadily improved as the industry has bent to the times and the demand that lobbyists be valuable and credible information brokers. “The 1991 reforms simply are a big punctuation mark in that continuum,” Roberts says. “It heightened awareness that you better do your business exactly right.” Related Chart: Top 10 Texas Lobby Shops in 2001

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