Strip Club Fee Battle Will Be Tough

I can’t say that I ever realized that strip club owners had business associations (although I’m sure Bill Hammond at TAB would welcome their, uh, money), but evidently they do, because the adult entertainment industry (a nice way of putting it) is suing the state over the $5 cover charge law passed during the 80th Legislature.

If you’ll recall, Capitol Annex told you we expected serious constitutional challenges to this law during the session.

From the DMN:

Lawyers for Texas’ adult entertainment industry are asking a judge to block a state-mandated $5 cover charge at strip clubs – money that, starting Jan. 1, will be collected to fund sexual assault prevention and health care for the uninsured.

The suit, filed Wednesday in Travis County, alleges that lawmakers violated club operators’ constitutional right to free speech when they approved the surcharge last spring. Owners of topless bars have argued that the fee, designed to help victims of sexual assault, imposes a discriminatory tax on their businesses and unfairly links their patrons to rape.

And though officials from the Texas attorney general’s office vowed to do whatever it takes to uphold the adult entertainment fee, government insiders acknowledged quietly that they may face an uphill battle.

There is no doubt that this fee would serve a noble purpose. And, I think it’s a good thing for the state to try to do. But, I do see the constitutional argument here and simply don’t think this will hold up in court, and I expect it to go all the way to the U.S. Supreme Court.

On another note, I’m not familiar with the “adult entertainment industry” in Texas (though I assume they have, uh…let’s call them “lap dance lobbyists”), but I’d suspect it brings a good deal of money into the economy (which in and of itself is a frightening thought). I suspect, also, that part of the real reason the strip club owners are opposing this fee is because it means more licensing and more regulation for an industry which, I suspect, makes most of its profits “off book.” Unless there is a reader of Capitol Annex who happens to be an exotic dancer and can confirm that these employers send out W-2s, I suspect we’re right. Obviously, if strip clubs start reporting the $5 cover, but hide some of their other income, it will cause the folks who calculate franchise tax and all that good stuff to take a closer look at clubs that, for example, report $100,000 in $5 covers by a loss for the year.

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