Clubs protest strip fee

The Texas Supreme Court ruled strip clubs that serve alcohol are required to pay a $5-per-customer fee created in 2007 earlier this month. But that doesn’t mean club owners are paying up.

Strip club owners had sued the state over the fee, arguing that the fee violated their freedom of expression under the First Amendment. The Texas Supreme Court justices disagreed and overturned a lower court decision that declared the fee unconstitutional.

State lawmakers passed the Sexually Oriented Business Fee Act in 2007 as a way to raise money for sexual assault prevention programs and health insurance coverage for low-income people. The fee applies to any establishment that features nude performances and the consumption of alcohol. The program was expected to raise $40 million in the first year, but the state has collected only $15 million during the past four years.

Some club owners across the state have not been paying the fee, while others paid but then stopped as they waited to see how the legal issues would be resolved. According to data collected from the Texas Comptroller’s Office by the Texas Tribune, only 111 of the state’s 176 strip clubs have paid the fee during the past four years.

According to the Tribune’s information, A&D Interests, owners of Heartbreakers in Dickinson, paid $204,850.

DSW Restaurant, which owns Lipsticks in Bacliff, paid $183,510 to the state.

Calls were made to both businesses, but The Daily News did not receive a response.

Nikolaos Manetas, owner of Ocean Cabaret in La Marque, said he has not paid the fee. He said he would not pay the fee “until they come up to my door and say, ‘Hey, you have to pay.’”

“We’re just a regular business,” Manetas said. He said his strip club was just a “mom and pop” club that provided jobs and a form of entertainment. The fee was unfairly singling out his type of business, Manetas said.

He wondered why a fee wasn’t imposed on other forms of entertainment, such as amusement parks or concerts. The adult entertainment industry does not support or encourage sexual assault anymore than other forms of entertainment, Manetas said.

Manetas said the state should use the tax dollars it already collects to fund programs that combat sexual assault.

R.J. Perdue, manager of Whispers in Galveston, also said it was unfair that strip clubs had to pay for a sexual assault program, but other establishments that sell alcohol do not. Perdue said his club was more like a neighborhood bar, and the fee was just another tax.

“It’s tough, and the last thing they need to do is start taxing people down here,” Perdue said.

Nonetheless, Perdue said that he had tried to pay the fee when it was first enacted but was not able to. Instead, he has saved some money and was waiting to hear from the state.

Lawyers representing the strip clubs argued that the fee is a “pole tax” on a form of expression. To tax nude dancing would violate freedom of speech protections, they said.

“We’re obviously disappointed and disagree with the decision of the Texas Supreme Court,” said Stewart Whitehead, a lawyer for the Texas Entertainment Association. Whitehead said his clients would either take the case to the U.S. Supreme Court or go back to state district court to argue issues not addressed by the current ruling.

The state attorney general’s office called the ruling a victory for victims of sexual assault.

James Ho, the former state solicitor general, defended the fee before the Texas Supreme Court. He said it has been repeatedly recognized by the U.S. Supreme Court that state and local policy makers have the constitutional power to forbid the consumption of alcohol in adult entertainment establishments to combat sexual assault and other social ills.

“Businesses wishing to avoid the Texas fee have a simple remedy,” Ho said. “Remove the alcohol, avoid the fee.”