AUSTIN (KXAN) — Texas Attorney General Ken Paxton announced Friday that he will be investigating “multiple organizations regarding a potentially illegal fundraising scheme designed to pass Proposition Q (“Prop Q”).”
Paxton said in a release that an Austin nonprofit, Foundation Communities, has “reportedly pledged to donate $25,000 to the Love Austin Political Action Committee.” Campaign finance reports back that up.
He said that same group could benefit financially from the passage of Prop Q.
Should Prop Q pass, the city has said it intends to use roughly $35 million to “expand programs intended to increase housing affordability and reduce homelessness.”
That includes roughly $2.3 million for case management and support services for permanent supportive housing units. Though the city does not specify which groups it will use to provide those services, Foundation Communities does operate in that space.
According to the Internal Revenue Service (IRS): “all section 501(c)(3) organizations are absolutely prohibited from directly or indirectly participating in, or intervening in, any political campaign on behalf of (or in opposition to) any candidate for elective public office.”
But Proposition Q is not a candidate. The Alliance for Justice said in a ballot measure rules guide that: “Even though 501(c)(3) public charities cannot support or oppose candidates for public office, they can urge voters to support or oppose ballot measures … The IRS considers ballot measure work to be a lobbying activity.”
“We will respond to the Attorney General’s inquiry in a timely manner,” Love Austin campaign manager Joe Cascino said in response.
Foundation Communities Executive Director Walter Moreau said the following:
“For the past 35 years, Foundation Communities has served the people of Austin by creating and maintaining affordable housing and support services for residents who were struggling with the cost of housing, and those experiencing homelessness. One of the main goals of Proposition Q is to raise funds for this very work, and that’s why we support the initiative.
As an organization, we are very confident that we have followed all campaign finance laws, and always have. We are responding to all requests we have received from the Attorney General’s Office.“
Campaign finance reports show other nonprofits that do similar or parallel work, like Family Eldercare and The Other Ones Foundation, have also donated to the Love Austin PAC. They were not named in Paxton’s news release. KXAN has reached out to Paxton to better understand why.
“Every non-profit, including Foundation Communities, that is unlawfully contributing to an effort to squeeze more taxes out of Texans must immediately stop,” said Attorney General Paxton. “It’s a sham, and it could be illegal. We will determine if there is an illegal scheme where organizations that are funded by the government pour money into raising the tax rate in return for potential future benefits.”
What is Prop Q?
If voters approve that proposition, the average homeowner’s property tax bill will go up by $302.14 annually. That does not include the increase Austinites will see in city rates.
The more than $100 million that increase would generate for the city annually would go toward services like homelessness services, parks, public safety programs and public health. Here are some of the line items:
- The largest chunk of that funding would go toward the city’s homeless strategy office, including:
- $12 million for rapid rehousing services
- $8 million for emergency shelter operations and services like housing navigation
- $2 million for street outreach
- Money would also go toward dozens of sworn EMS positions
- More than $8 million to restore the Austin Fire Department’s overtime budget
- And $1.6 million “in one-time funding to provide stability to core public health grants at risk of reduced grant funding”
You can find the full breakdown of where that funding could go here.
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