AUSTIN – The $11.2 million that Texas gentlemen’s clubs have paid the state in the last year is supposed to be funding sexual assault services for dozens of Texas counties that don’t have any, along with some health insurance programs.

Instead, the money is sitting in state coffers, hamstrung by a First Amendment lawsuit that pits the state against its most prominent sexually oriented businesses.

Though the Texas Comptroller’s Office continues to collect the $5-per-patron fee, which the Legislature approved in 2007, only some of the topless clubs are paying it – leading to allegations of unfair play within the industry. The $11.2 million taken in so far is well short of the $40 million that legislative analysts projected in the law’s first year.

“We have always paid the tax in full because we are good citizens who follow the law,” said Dawn Rizos. She said the fee has cost her Dallas club, The Lodge, $600,000 so far. “The added burden puts us at a competitive disadvantage in a difficult economy.”

Revised bill

Meanwhile, Rep. Ellen Cohen, [pictured] who authored the 2007 bill, is pushing a new version this year. She says the revised measure – which drops the cover charge to $3 and sends all proceeds to sexual assault programs – resolves potential constitutional issues in the first bill. Lawyers for the topless clubs say they’ll take it to court, too.

“We will continue to fight until they stop filing unconstitutional legislation,” said Stewart Whitehead, an attorney for the Texas Entertainment Association, which represents more than half of the topless clubs in Texas. “These changes don’t get them around the fact that they are taxing constitutionally protected speech.”

The original strip club bill charges clubs a $5-per-patron fee, with the proceeds going to fund sexual assault prevention programs and health insurance for poor Texans. Last year, a state district judge struck it down, saying topless dancing was protected as free speech, and that the state couldn’t show a link between strip clubs and inadequate health insurance. The state has appealed, and the appeals court has not yet ruled.

“As the dust settles, I believe reasoned heads will prevail,” said Cohen, D-Bellaire, who said 54 Texas counties currently have no sexual assault services. “It’s hard to guess how long this [court battle] will go on.”

Meanwhile, the comptroller continues to collect the money – or some of it.

The comptroller’s office has no records of high-grossing Dallas clubs, such as Baby Dolls, Cabaret Royale, Million Dollar Saloon and PT’s Gold Club, paying any fees. Representatives for the clubs’ management companies did not return e-mail and phone messages, and employees at the clubs either took messages or said they were sure their bosses had paid.

May be returned

R.J. DeSilva, a spokesman for Comptroller Susan Combs, said if the strip club fee is upheld in the courts, these businesses will face financial penalties. If the fee is overturned, he said, all collected money will be returned to the clubs – part of the reason none of the money is being spent.

Whitehead, the entertainment association’s attorney, said clubs aren’t being advised not to pay.

But some clubs argue that even collecting the money while the bill is in legal limbo is unfair; it affects their cash flow as the economy is reeling. Others say the fact that only some clubs are paying means those who aren’t are at a competitive advantage – they don’t have to require cover charges.

Cohen said she’s grateful to the clubs that are “paying their obligations,” and she hopes that someday soon, the money will be passed along to sexual assault prevention and education programs. The reality, lobbyists on both sides say, is that it could be years.

Rizos, with the Lodge, said that in the meantime, state officials should work with the clubs “to ensure a fair outcome.”

“Even though we didn’t think the tax was fair, we were glad the money was for a good cause,” she said.
By the numbers

What Dallas strip clubs have paid to the state for a $5-per-patron fee that is held up in a court battle:

The Lodge: $604,855

The Clubhouse and Chicas Bonitas: $573,510

Silver City: $338,830

Spearmint Rhino Gentlemen’s Club: $318,585

The Men’s Club of Dallas: $205,780

Palace Cabaret: $154,823

Rick’s Cabaret: $108,545

Jaguar’s Gold Club: $107,870

La Zona Rosa Cabaret: $78,910

The King Lounge Inc: $77,600

Platinum Club II: $37,710

Club Onyx: $17,210

Bombshells Cabaret: $615