A naked gamble that the pole tax gets stripped

Two Tyler clubs paid a combined tax of more than $200,000 before its last payment in March 2009.

Tom Pennington

Dawn Rizos, owner and CEO of The Lodge, paid more than $600,000 in a $5 per-patron tax in 2008, but she has stopped paying since, calling the tax unfair.

TYLER — When Texas lawmakers passed a $5-per-patron strip club fee in 2007, they pledged it would raise $40 million in the first year to finance low-income health insurance and programs combating sexual assault.

Four years and one seemingly endless lawsuit later, the state has only raised a fraction of that figure — $14.5 million. None of the money has been spent on sexual assault prevention or on health insurance as the state awaits a ruling on the law’s constitutionality from the Texas Supreme Court. And just 111 of the state’s 176 strip clubs have paid any money, according to an analysis of the state comptroller’s records. (View our interactive feature here.)

Confident that the law will be overturned, many club owners, like Dawn Rizos, who runs The Lodge strip club in Dallas, have stopped paying.

At The Lodge — with its leather bucket chairs, dark secluded corners, and six stages where women swing masterfully around poles — Rizos said she paid more than $600,000 to the state in the law’s first year. It was such a detriment to her bottom line, she said, that she stopped. With a court case pending, “I felt stupid trying to do the right thing,” she said.

The fee has hardly left the headlines since lawmakers first passed it and the strip club owners promptly filed suit. Lawmakers revisited it this legislative session, trying unsuccessfully to change it in a way some felt might protect it from the continuing legal challenge. For now, the money that has been collected is sitting in the bank.

James Ho, the former state solicitor general who defended the fee before the Texas Supreme Court, said that there was nothing unconstitutional about the $5-per-patron tax and that he thought the law would be upheld.

“In case after case over the past half century, the U.S. Supreme Court has upheld laws even stricter than the Texas law,” Ho said. “If those laws are constitutional, then so too is the Texas law.”

Lawyers representing the strip club owners declined to comment on the case, though they have argued in court that nude dancing is a form of expression and that the so-called "pole tax" violates free speech protections.

State officials said they are hoping for a verdict in October, but in the meantime, many strip clubs are not paying. Rizos said that even though she has not paid since 2008, she deserves something in return for abiding during the law’s first year — “at least a thank-you note.”

If the court upholds the fee, Rizos will receive another kind of note — a bill from the comptroller’s office asking for the money she owes, plus interest.

If the strip club owners win the suit, the money collected so far will be returned to the clubs that paid — without interest, said Allen Spelce, a spokesman in the comptroller’s office.

Rape crisis centers, hit hard by budget reductions, need that money, said Torie Camp, deputy director of the Texas Association Against Sexual Assault.

“The first thing it will do is restore funding and provide a long-term steady source of revenue,” Camp said, “so rape crisis centers can provide more services and keep their doors open.”