Jay Propes will be introduced by J. Bart Fowler, a Partner with McCall, Parkhurst & Horton L.L.P.
Transcript :
J. Bart Fowler (
00:09):
Good afternoon and welcome to the luncheon today. My name is Bart Fowler with McCall Parkhurst and Horton. I am a partner here in the Austin office and it is my pleasure to introduce Jay Propes, a Lobbyist here in Texas at the state capital that I present some information on the ongoing incident at the Texas Capitol this session. I have known Jay for probably 20 years, give or take a few years, but for a long time and always worked with him and appreciated working with him because he has a unique perspective on the Texas Capitol. He has been a resource for me and my firm pretty much the entire time. And one thing that is really nice about Jay is He is got access to a lot of representatives and senators at the Capitol to get good information. There can be a lot of drama at the capitol and a lot of things you can get worked up about, which I think we are all familiar with. But whenever we needed some answers and some idea of what may have traction, what may not get traction, Jade's been able to give us that so we know what to focus on and provide that information to you and our clients as a resource so we know what we should be able to focus on and what we can consider noise in the background and not waste our resources on that.
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01:16)Before I turn it over to Jay, I just wanted to at least share some of his background information. As I mentioned, He is a lobbyist here in Texas over three decades of public affairs and governmental relations experience. He is currently with the Mercury Public Affairs Group. He began his career at Capitol Hill working for Congressman Ralph Hall and moved to Austin in mid 1992. He served eight years as director of governmental affairs and executive director of the Texas Ophthalm Ophthalmological Asso Association, representing nearly 900 Texas Eye physicians and surgeons before the Texas legislature agencies and the US Congress. Since 2000 Jay has represented a myriad of clients simultaneously in governmental relations, public affairs strategies, and crisis management across all businesses and professional sections. For over 20 years, he has held professional associations, affiliated interest groups, and corporations, assemblee legislative and public affairs teams across the United States and coordinate their work across the geographies to develop consistent messaging and strategy to assist in their successes. Probably most, in importantly to Jay. He is been in Austin for a number of years as a lovely wife and two children. So with that brief introduction, I will turn it over to Mr. Jay Propes.
Jay Propes (
02:38):
Thank you Bart, for that very nice introduction. Thank you to McCall Parkhurst for hosting this lunch and hosting me. Thank you to the Bond Buyer for inviting me to be with you today. There is a lot of incredible knowledge of a very, very deep subject in this room, and I do not know what people appreciate, how much of what you do and what everyone in the process of public finance does. I live in the Austin Independent school district, as does bart. For those of you that live around Austin, you see these Proposition A, B, and C. They are on the ballot in May, different bonds that are for the ES school district. And you think about all the work that has gone in to get it just to the point where it can be understandably explained, correctly, explained to the people that what is on the ballot, that the ballot language is correct, that it is sensible funding, that the revenue stream is reliable, that it does not violate any other covenants or laws, and that is just to be able to put it on the ballot and then all the work that comes after that about going to market with the bonds and getting the investors to buy them and making sure that the proceeds are deployed as the people voted them to be.
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04:05)That is a lot and people do not think about that and you unfortunately, we need people to think more about the nuts and bolts of public finance than they do if They are going to be in the Texas legislature or any legislature and have a direct effect on the operation of that market. The legislatures are very much reactive organisms and had a one time, a guy told me, he said this, their idea of long-term planning is what is for lunch, and There is a little bit of truth to that. I mean that otherwise it is what They are reacting to, something that was posed to them as a problem, something that was explained to them maybe anecdotally, maybe apocryphally, sometimes not accurately, but a problem they believe needs to be addressed and they bring forth solutions and that some things, we have bills right now in front of the legislature where people are trying to make sure that another FTX crypto meltdown does not occur. I do not know how you do that in the state legislature. it is something that is loosely regulated if at all, regulated. But that is, again, it is a response to something that people, we get made people uncomfortable with the banking system. There are also things about not letting state funds be deposited in any bank that has depositors with more than 80% over insured levels. I do not know why we do that, but that is still, it is reactive to what people see in the news and what gives their constituents discomfort and they think they need to do something.
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05:53)We had a whole spate of these for years after the Orange County California bankruptcy, different people trying to micromanage the tax pool and other financial instruments of the state to make sure that did not happen here and it still has not. And if you really need to contemplate the lack of financial literacy among your elected officials, some of them take a gander at some of the pithy suggestions that come from our congressional members about the national debt when they discuss that, the analogies they use, I just clinging to because I can not wait to hear it. And my favorite is giving a kid a credit card and running and letting run it up and then saying, you will pay it off and let it do it again. No, that is not what this is like. This is giving your kid a credit card, then running it up and you saying, and you are not going to pay it off to show them some discipline when it is your credit that is enduring the cart and you are just shooting yourself in the foot.
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06:56)What you do is you try to reduce the levels of dead teaching people that is sometimes hard to get their head around. And politically it is a lot more easy to be reactive and overreactive and show that you are trying to do something, but that is not what we are doing here. And I will tell you, in 2011, I remember listening to Jim Kramer on Squa Box talk about ESG and how his kids were really wanting him to look at ESG scores for investing. And I was like, I do not something about investing and I am not really sure what ESG means, and we have to look it up and wish I would never seen those three initials together ever since then. And it means something to different to everyone. But it seems to cause almost a hives reaction in some people in the legislature because they think it is woke financial management. Now, I do not even think I can explain what woke means versus a asleep at the wheel or whatever the opposite of that is, but it is been the attack on investing on the investing public and financial markets pretty steadily now for the last three years.
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08:16)And I will give you an example of what people do not understand. They say there are a couple of funds on the list of that the controller's office published that are municipal bond funds. And it is not that they do not want to, they can not invest in oil and gas, they can not invest in munitions companies, they can only invest in municipal bonds. And they got put on a list of these violating, violating instruments because they do not do that. One of the most important things in the ESG construct is sustainability, not sustainability from an environmental standpoint, but sustainability that you can do it again, you can repeat it and governance and in public finance, sustainability and governance are very important. It means you are going to pay the debt back that you got the people to vote for and you are going to do it legally and you are going to use the proceeds of the bonds that were voted for in a way that you legally described to the people that voted for it and They are paying for it.
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09:27)That is sustainability and governance. And I think those are not bad things. I do not know why those have become triggers for a lot of people. But the problem is There is not a lot of people in the legislature that know this. I worked one time with a state agency that had a 21 member board, 21, they would meet in the mornings, but the night before they would get these huge briefing books at a dinner and then go back to their hotel rooms probably doze off and come to the meeting the next day with the belief that the person to their right read the briefing book and probably knows what the issues are, who in turn is thinking the person to their right read it and so on, until you get to the point where no one has really read it or even enough to ask intelligent questions. And the person who is the most verbose or the loudest at the table becomes the appointed expert and leads the discussion wherever it goes because they are the only person asserting themselves.
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10:36)The legislature's a lot like that. And people are proud for someone else to take the lead on a lot of things, even if it takes them down a bad path. And it is just if you can be the loudest, you can be the expert. So what this legislature needs, and this part of the pride of working with McCall Parkridge over these years is they are happy to come be the experts and talk to people about, tell us what you are trying to do and we can help you get there without creating disruptions and distortions in the market that this does.
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11:19)I like to say that financial markets and public finance and capital markets are generally intimidating. They are not fragile, but They are very precise and There is hundreds of years of construction into what they are today. And though it is intimidating, it is not so intimidating that it keeps people from pursuing really bad ideas to mess with it. And they are pretty confident in some of the bills they filed. And I think it is important to have that ability to come in and say, we are not just going to be against your bill. Are we going to try to kill your bill somewhere in the process to come in and say, what are you trying to accomplish? Okay, let us find a way to accomplish that or at least give a nod to it or at least send a signal to it without making someone else think they have done a bad, they have made a bad decision by underwriting debt in this state or that They are not going to do it anymore or that They are going to charge us a hell of a lot more to do it.
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12:18)And that is the guys that work with at McCall Parkers have been great at coming in and be those experts, but there needs to be more of them because you can not outnumber the bad ideas with even the number of people in this room. it is just not a fair fight. They produce them quickly, they get out before you have a chance to say anything. And again, we disruptions and distortions of markets are the accidents results from governmental actions that are uninformed. And if you have them frequently enough, it becomes the reputation of the governing body. And that is when real problems come. that is when capacities to help the people who are electing you, the citizenry that are supposed to be served, you wind up paying more in debt service and less in capacity to make their lives better. And you have to explain that a lot to people and frequently and consistently.
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13:23)And sometimes when they come back from a break from last session, There is not a lot of retention of this information from the previous experience. And you have to reeducate. that is what we do, but we have another problem in this state and that things have been going too well for our state for too long. People have not been really forced to deal with hard issues financially in Texas, when you are growing a thousand people a day, you can hide a lot of things in growth when that growth plateaus, you really can kind of see where the thread bear nature of it is. You can see why we are not investing enough in infrastructure. we are not, we sure should have done it when interest rates were functionally zero for so long, but it is going to be someone else's problem. And a lot of people have ideas that and some proof to this, but there was just a real anti-political subdivision fever that has hit the legislature for the last decade.
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14:31)And just to be blunt, it happened when most of the larger cities in this state became governed by democratic majorities and that is anathema to the leadership of the legislature and they do not understand it and they think they have got to do something to step in. So coming in and specifically saying, here's your revenue caps, you can not grow by more than this, or certain types of bonds have to count against revenue bonds. And there was an idea to count cos into revenue. And it is like all you are doing is driving up the cost of borrowing and forcing these political subdivisions to borrow more than they need when they go out for bonds so that they do not do it again. That is not what you are trying to do, is it? Well, no, it is not. But you have to get people in a comfortable place where they can learn and it sends a cornucopia of bizarre signals to the markets when some of these bills are discussed or filed or pursued.
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15:42)If we do not have the ability to push back on them in a really legitimate and quick way, I mean, I do not know even what it does to the commercial capital markets, but you have to think when somebody files a bill that is not legal or sensible like seceding from the union and they want to talk about it, I think that is all been pretty well litigated. There was a war about it. It was in all the papers. And to see somebody wants to have a hearing about that, discuss it publicly again, that sends a signal that says, maybe we do not need to be investing more down there until they figure out really, again, get a history book or figure out what the truth is. And just again, after you let that happen long enough, it becomes reputational. And I hope we are trying to stop that.
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16:38)There is some people in this room and that I have rep that I have worked with over the years and that I have not actually represented and representing groups that I have worked with and not represented because I may have wound up being one of the last people in the room to try to talk to someone before a bad idea got hatched or memorialized and cut loose. But I have learned a lot from people that I have never worked for and they have educated me and they have educated me about the uniqueness of what they do in public finance and why what they do is important and why it is important that I be able to explain it to somebody else. And your lobbyists are important. Those of you that have represented lobbyists, They are important. I would advise you to get one who is perennially curious because it is a deep subject that you all work in and you need to be curious and learn and be contemporary in your education about it if you are going to be an effective Lobbyist.
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17:42)But there are people who in my business who say to treat the practice of lobbying like car insurance, pay me every month and call me when you have a wreck. That is not who you want. You want somebody who tries to do as much as they can to learn what you do. So it gives you more time to do what you do and let them be an effective voice for your interest. And I know a lot of you all know that, but it is an important consideration. It is not always the banner names and the people you think of as big time professionals that are the best fit for your company, but nobody can be as good a resource and effective communicator for what you do as are you. And I would encourage you to avail yourself to be a resource for your legislators, for your city council people, for anybody in a regulatory or governing environment that has to do with public finance because as I said though, it can be intimidating, confusing, it is not so much so that it keeps people from pursuing bad ideas.
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18:53)And if they say, Hey, I know someone we can call, where you can put together a group of expertise to support the decision making and maybe tamp down some of the bad ideas and bring them to the understanding, maybe even the education of why something is a bad idea and make them be a better voice for good sense going forward. It would help everyone. It is, I know it can be amusing just to shake your head and go, gosh, I can not believe these people are pursuing these things. But sometimes There is not enough voices, informed voices, patient voices and rational voices should turn back those ideas before they get into law and signed into law. And then you are just playing cleanup aisle nine for the rest of the time until something else comes along to out wave the size of that problem. So that is generally speaking, your legislators welcome your input, and particularly if it is not during the legislative session, which is a ridiculous way to try to get in to see people and inject sensibility into it, it is when They are not in the legislature that not in the legislative session, they have time to listen and remember that you are a resource.
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20:11)Maybe they put your business card in a desk drawer. Maybe they cross section in some way where they remember to call you when these things come up. But it really makes a difference. And the time to, you are credible, you are very credible in this industry, in these practices. You need to be accessible and make yourself available to people because that is about the only way to make this environment survivable. Because otherwise, the people who are the loudest and most verbose are going to be telling your story and your purpose for you. You probably should have an elevator speech. I think everybody should have an elevator speech. In less than a minute, they can articulate to someone what they do, why it is important, and how it may be analogous to something They are concerned with. They will stick with that. Practice your elevator speech and practice. If anytime you see someone either somewhere, an elected official is speaking, introduce yourself, offer to be a resource, one of these people is going to take you up on it and you could be in the middle of a discussion that stops some really bad ideas from coming.
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21:24)I think everybody is willing to do that. You will be amazed at how receptive people will be to the offer of your expertise and how badly it is needed, and also be involved in everything and encourage everybody in your places of work to be involved. Civically, There is a lot of people that are not involved. Texas has one of the lowest voter turnout rates in the United States, the 10th largest economy in the world. And you are letting people, you are letting less than 10% of the population determine its path in most places because the elections are all decided in the Republican and democratic primaries for most cases. And we haven't had 10% turnout in one of those elections ever. So the general election is generally ratification at that time. So I would encourage you to vote every time they open the schoolhouse door to let you, but also drag somebody with you because we need to get all the people that have an investment and a concern about the future and concern about this being a place that can sustain. do not let that trigger anybody that you need to have the smart people invested because the people who are not invested in the future show up every time. And thank you all so much for the opportunity to visit with you today. I have really enjoyed it and hope you got something out of it too. Thanks.
