Setting Sail

Gov. Rick Perry starts the session with higher education, health care, border security, appraisals and the state budget on his list of things to do. The governor, who'll be sworn in for his second full four-year term next week, lived through a day of serial interviews with reporters, taking small bunches for a half-hour at a time. You'll see varied reports depending on what he said to which group and what they thought was important. Some high points from our interview:

• The Guv foreshadowed initiatives in higher education, health care, border security and appraisals. He's teasing now, saving the surprises for later. But he gave some hints, saying he'd have "a very intriguing and thoughtful way to address that big group of, the working uninsured in particular." Asked whether it would be like programs passed in Massachusetts or proposed in California, he offered, "Not like California."

He said the border security program will be partly what he's already outlined; during his reelection campaign, he said the state should spend $100 million fighting border crime. "It's a shame we have to spent $100 million when it's the federal government's job — it's kind of like us having to deliver our own mail," he said. He said it would be "idiotic" to build a fence from El Paso to Brownsville — though he thinks they make sense in some urban areas — and said much of the legislation that's been filed on immigration is divisive and in some cases, unconstitutional. He said border security was one issue he thought was clearly addressed by Texas voters in November.

He didn't say what he wants to do with higher education. But asked what he thinks is wrong with it, he said it should be more accountable, more affordable, more accessible, more competitive and more open. He said the value of college isn't clear enough to enough people. It's not clear to them how it's priced, or what — exactly — they get for their money. He said the state should figure out how to keep more of its smart kids in Texas schools instead of exporting them, and said that community colleges have an important role to play. "I'm not saying on the face that there are any huge problems, but I'm not saying there aren't, either," he said.

• A state water plan — and water issues generally — could be important sleeper issues this session (former Sen. Ken Armbrister, Perry's new legislative director and a veteran of several water law fights, sat nearby, nodding). He said East Texans might decide some time to sell water "rather than let it run out into the Gulf," but he said he's against inter-basin transfers unless "the basin wants to." He called water the only real limiting factor on the state's growth. He said he's looking at everything: conservation, reservoirs, desalination, and water transfers. The real push, he said, will be on reservoirs. And he went out of his way to slap "the antics of those in the environmental going out and trying to create reserves in the middle of a reservoir site."

• He'll ask the Legislature to fast-track legislation that passes along the school property tax cuts to homeowners with over-65 exemptions. When lawmakers replaced local school taxes with a new state tax last year, they left elderly homeowners out of the deal.

Those taxpayers already had their rates frozen — that's the benefit of the over-65 exemption. But there was no provision to cut their rates along with everyone else's.

Perry will declare that an emergency item, allowing the Legislature to act right away (without that tag, legislation can't be passed by either chamber until the session has run for 60 days. The break for seniors requires a constitutional amendment; that could be on the ballot as early as May.

• He said the press ought to lay off lawmakers on the spending cap and whether busting it is a big deal. Perry said it's goofy to call a tax cut a spending plan, and said that's a sort of "lawyering the numbers" that only makes sense in Austin and Washington. The budget folk would say — anonymously, if they have any sense — that the state is spending more money so that the local school districts can spend less. Perry said it won't be a messy political mire unless the media and other troublemakers make it one.

• Perry said only half of the $14.3 billion in new money reported by Comptroller Susan Combs can actually be called a surplus. Even that's a big number, in his estimation, but some of it is encumbered. He was clearly trying to send the message the state's not loaded.

• He'll back what he called "a real spending limit" as opposed to the one the state has now, and hinted — without details — that he'll have a proposal along those lines. His appraisal task force is expected to issue a report soon that will include recommendations for leashes on spending by cities and counties. Perry apparently wants the state government similarly shackled.

• He reiterated his support for operational funding for a Texas Tech Medical School facility in El Paso and said it was a shame the state didn't fund it last time around (it got stuck in the House).

• He had high praise for Combs' decision to put spending records from her agency online and said his office would soon follow. They need help from the comptroller to do that and wanted to wait until Combs was in office. Her predecessor, Carole Keeton Strayhorn, ran against Perry last year, and they don't get along so well.

Craddick Survives a Challenge

Rep. Jim Pitts withdrew from the race for speaker after his side lost a procedural vote that would have made members' votes secret until after the new speaker had made committee assignments. That left House Speaker Tom Craddick as the sole nominee in the race, securing a third term for the Midland Republican.

Pitts didn't cite the 80-68 vote total on that procedural issue. But after speaking briefly, shaking hands, and hugging Craddick, he told the full House that he didn't want to endanger House members who had told him they'd vote for him if they could do so in a secret ballot.

"In my campaign for Speaker I promised my colleagues I would not expose them to a selection process that would leave them vulnerable to retribution. I felt the adopted ballot resolution that required the publication of their names did just that," he said.

Had the disclosure passed the way his side had hoped, the winner of the race for speaker would have had to make committee assignments without knowing who had supported and who had opposed him. The argument was that the assignments would be based on merit rather than loyalty. The House voted to let members vote secretly, but to reveal how they voted after a new speaker was named. That speaker would have the voting records in hand as he organized the House. About half the appointments are done on the basis of seniority; the rest are made at the pleasure of the presiding officer.

By forcing a vote on whether the ballots should be opened to the public immediately or after committees are assigned, Craddick's side effectively forced a test vote on the contest between the speaker and Pitts, the Waxahachie Republican who has been his appropriations chairman. And the Pitts supporters who wanted to stay under cover either switched or were outed. In hindsight, that looks like a boner. It begs this question: How might people have voted on the speaker's race if the Geren amendment had been pulled down? Their names would have been know eventually, but not until after the Craddick & Pitts contest had ended.

But once that vote was cast, the thing was done. The few folks actually counting votes might have had a notion before the rest of the people in the room were clued in — Pitts told reporters he knew he was cooked well before he conceded. But the procedural vote, and the record vote sheets that spread quickly through the room, showed all of the representatives who stood where, more or less, on the Craddick-Pitts contest. Craddick's challengers were seven votes short of the 75 needed to knock off the incumbent. Once they were flushed out and it was obvious that Craddick had the votes to win, Pitts didn't see any reason to go on.

After Pitts quit, the actual vote to keep Craddick in office was 121-27, with all of the Nays coming from Democrats.

How They Votedon the procedural vote, which most took as a proxy vote on Craddick and Pitts (Rep. Fred Brown, R-Bryan, was absent due to the death of his mother, and HD-29 is empty until after a special election later this month):

Ayes- 80 (65 Republicans, 15 Democrats)

Democrats: Bailey, Chavez, Deshotel, Dukes, Dutton, Flores, Giddings, Guillen, T. King, Lucio, McClendon, Pena, Puente, Rose, Turner.

Republicans: Anderson, Aycock, Berman, Bohac, Bonnen, Branch, B. Brown, Callegari, Chisum, Christian, B. Cook, Corte, Crabb, Craddick, Creighton, Crownover, Darby, J. Davis, Delisi, Driver, Eissler, England, Flynn, Gattis, Goolsby, Hamilton, Hancock, Hardcastle, Harless, Harper-Brown, Hartnett, Hilderbran, Hill, C. Howard, Isett, Jackson, Keffer, P. King, S. King, Kolkhorst, Krusee, Laubenberg, Macias, Madden, Miller, Morrison, Mowery, Murphy, Orr, Otto, Parker, Patrick, Paxton, Phillips, Riddle, W. Smith, Smithee, Solomons, Swinford, Taylor, Truitt, Van Arsdale, Woolley, Zedler, Zerwas.

Nays - 68 (54 Democrats, 14 Republicans)

Democrats: A. Allen, Alonzo, Anchia, Bolton, Burnam, Caraway, Castro, Cohen, Coleman, R. Cook, Y. Davis, Dunnam, Eiland, Escobar, Farabee, Farias, Farrar, Frost, Gallego, Garcia, Gonzales, Gonzalez Toureilles, Heflin, Hernandez, Herrero, Hightower-Pierson, Hochberg, Hodge, Homer, Hopson, D. Howard, Leibowitz, Martinez, Martinez Fischer, McReynolds, Menendez, Miles, Moreno, Naishtat, Noriega, Oliveira, Olivo, Ortiz, Pickett, Quintanilla, Raymond, Ritter, Rodriguez, Strama, Thompson, Vaught, Veasey, Villarreal, Vo.

Republicans: Elkins, Geren, Haggerty, Hughes, D. Jones, Kuempel, Latham, McCall, Merritt, Pitts, T. Smith, Straus, Talton, West.

Now What?

Surrogates for House Speaker Tom Craddick said while this was all in the air that he had heard the complaints of the House and was prepared, if reelected, to make adjustments. But Craddick himself made no public promise of reform or change in style, and what he does next is the subject of much speculation.

Is this going to be more like the aftermath of a failed coup attempt where the guy in charge jails all of the generals who tried to knock him off?

Or will Craddick be more like the guy who gets a serious lecture from his cardiologist about changing his lifestyle before the next heart attack kills him?

The first real evidence might not come until the committee assignments are handed out in a few weeks. Craddick is collecting preference cards from members — that's where they say what they want to do, with senior members getting in line for spots reserved for those with tenure. A couple of weeks after that, he'll announce who gets the good assignments and who gets the stinkers. On one hand, it doesn't make sense for a winner to reward his detractors, and if Craddick doesn't punish at least some of them, members will see that there's no risk in crossing him.

You just knew there was a "however," right? Craddick came within seven votes of getting his political neck snapped. If he's too harsh, the opposition could get fired up enough for another run and try to win that handful of votes against him.

After the elections, Craddick had nine open committee chairmanships and 10 vice chairmanships. Those resulted from defeats and resignations since the previous session. When the votes were counted on a rule that established the battle lines between the Craddick and Pitts armies, five of Craddick's remaining chairmen were on the other side, and 10 of his vice chairs.

Pitts did worse, proportionally, on this own committee than he did in the full House. Five members of the panel didn't return to the Lege. Of the 24 remaining, Pitts got seven votes, including his own. That's 29 percent. In the House, the Geren Amendment got 68 of 148 votes. That's 46 percent.

Fat Accounts, with an Asterisk

Texas has $14.3 billion in "new money" available for the next budget, according to Comptroller Susan Combs. The news is no surprise to lawmakers who've been paying attention to the budget, but it confirms their suspicions that they'll have more money to spend than some of them think they really need.

That presents a problem for appropriators. It's easier to say 'No' when you're short of cash. But spending all of the money available this time could set a pattern they don't think they can afford later. On the other side of the coin, there are proponents for various programs who think the state ought to do what it can when it can. That camp wants to spend what's available. Another wants to stow the money in the state's Rainy Day accounts as a buffer against future shortages. And a third group thinks any money that's left in state coffers should be refunded to taxpayers.

In her first biennial revenue estimate, the new comptroller said legislators will have $82.5 billion in general revenue available for the next two-year budget, and that current spending in that part of the state's finances totals $68.2 billion in the current budget. The difference is $14.3 billion — theoretically the amount that could be added to current general revenue spending without breaking the bank.

Don't go calling it a surplus, though. Some of the money is already spent. Increased school enrollments, prison populations, caseload and costs in health and human service programs, and other growth in current programs will eat into the total.

Part of the state's new business tax will be dedicated to local school property tax relief. But lawmakers promised voters even bigger increases, and general revenue money will have to supplement the dedicated funds.

Combs warned of some potential bad weather ahead, with charts showing a slowdown in the growth of the state economy, a drop in the amount of money people are extracting from their home equity to spend on other things, falling housing permits in the state during the past year, and a slight cooling of energy prices and drilling activity. None of that is dire at this point, but it could give some ammunition to budget-writers who want to shoot at various new spending plans.

Some of what's available now is left over from the last budget, which ended with $7 billion in the state treasury. And the $14.3 billion does not include about $2 billion that went straight into the state's Rainy Day Fund.

The bottom line: The state's loaded at the moment, but it might be a temporary condition.

A Rule Made to be Broken

The Legislative Budget Board says, officially now, that the state budget can't grow more than 13.1 percent over the next two years. The only problem is that lawmakers already know it'll grow more than 30 percent because of their agreement to lower local school property taxes and make up the difference with state funds.

That promise alone would force them past the spending cap. And the regular stuff in the budget — increased school and prison populations, health and human service caseloads and costs, and so on — will be added on top of that.

Lawmakers will have to vote to break the spending limit sometime this session. Some are nervous that their voters won't understand the issue or that their opponents will exploit it. So they're looking for escape routes.

One possibility is to pass a constitutional amendment — quickly, so voters can see it in May — that says the school money doesn't count against the cap. That would give them cover, if voters approved it. If voters didn't, though, it would just increase the risk of spending the money. An amendment requires two-thirds approval from both halves of the Legislature to get on the ballot, then a thumbs-up from voters.

Some legislators don't think this is any big deal, and that's a group that includes some conservative Republicans. They think they can explain the spending surge easily, just telling voters that was a one-time consequence of lowering property taxes. If the property tax breaks are real (to voters and not just economists), that shouldn't be a hard sell.

Numbers (But Not from the Speaker's Race)

Two down, two to go: A revenue estimate, a cap on growth in state spending, a report on appraisal reform, and a proposed budget. And because they delayed their vote to set a cap on growth in state spending until the first week of the session, Texas budgeteers got to see how much money they'll have before they decided how much of it they should or shouldn't spend.

Normally, the Legislative Budget Board meets before a legislative session to cap the spending growth rate. The idea is that the state can't increase its spending faster than total personal income in the state is growing. Then, as the session begins, the state comptroller issues a revenue estimate telling them how much money the finance folks think will be available. And the budget-writers submit a "base" budget as a starting point for the 20-week debate over state spending.

Still to come are the base budget, which ought to be out in a few days, and recommendations from the appraisal reform task force set up by Gov. Rick Perry and headed by Dallas lawyer Tom Pauken. Among the discussion topics in that brief: Limits on increases in spending by local governments. State lawmakers might find it awkward to put limits on cities and counties while they're exceeding limits on their own spending at the same time. Perry's got some ideas there, including how to put a limit on state growth that doesn't snare legislators when the spending they're doing cuts taxes elsewhere.

A side note: The governor's office delayed the release of his task force's report on appraisal reform. Though no one is saying so out loud, they didn't want the speaker's race to overshadow a major announcement.

While You Weren't Looking

Comptroller Susan Combs immediately made good on a big campaign promise, moving the tax courts from her office to the State Office of Administrative Hearings. The move only involves five judges and, at $431,000, only a relatively small amount of money relative to her agency budget. But the political move is a big one.

To this point, Texas comptrollers have assessed and collected taxes and overseen the initial judicial review when taxpayers think they've gotten a raw deal. From the taxpayer standpoint, it's as if the cop, the prosecutor and the judge all worked for the same boss. And that boss is a politician who gets to stand at the gate and decide who passes. A creative person might see that as a good position for trading favor.

The cops and the prosecutors are still with Combs, but taxpayers who disagree with the deal they're getting from the comptroller will now take their cases to a separate agency for hearings. There are some limited cases, apparently, that can still come back to the tax folks at the LBJ building, but for the most part, Combs won't have final say when taxpayers disagree.

If SOAH doesn't make them happy, taxpayers will be able to do what they've always been able to do — take the state to court. The five people moved to SOAH with the judicial section are Joe Greco, Eleanor Kim, Anne Perez, Roy Scudday, and Al Stoll.

While You were Looking at Something Else

Most of the attention at the start of the session was on the House. And while Craddick and his foes were doing battle there, the Texas Senate schooled one of its new members.

Sen.-elect Dan Patrick, R-Houston, promised his voters and the listeners to his radio show that he'd try to knock down the rule that requires two-thirds of the Senate to approve something before it can be considered. He has said that empowers the Democrats who are in the minority and limits the Republicans who have the majority. The Senate met in private, decided not to consider some proposed variations to that idea, then came out in public and voted 30-1 to leave the two-thirds rule in place.

Political People and Their Moves

Deputy Secretary of State H.S. "Buddy" Garcia is apparently on track to become the newest commissioner at the Texas Commission on Environmental Quality. That spot opened when Martin Hubert left the agency to become deputy to Comptroller Susan Combs. Garcia worked for Gov. Rick Perry and for Sen. Eddie Lucio Jr., D-Brownsville, before getting his current job. He's concentrated on border affairs in both his current job and in his time in the governor's office. Perry's making the appointment, but wanted to wait until Garcia's new senator — Kirk Watson, D-Austin — was sworn in and could approve the appointment. Watson was a commissioner at the old Air Control Board, one of TCEQ's predecessor agencies. Garcia joins TCEQ at a time when electric companies wanting to build coal plants are seeking permits for those projects. They're getting opposition from several cities and environmental groups, but argue they need to build plants quickly to meet the state's growing need for electric power.

The Senate named its newest president pro tempore. It's Mario Gallegos, D-Houston.

Rep. Jim Pitts, R-Waxahachie, has a new legislative aide. Jason Nelson was previously with Rep. Mike Krusee, R-Austin.

Joe DaSilva moved into the executive offices at the Texas Hospital Association — he's now a senior vice president — and out of the lobby racket. John Hawkins, who joined THA two years ago after a run at the Texas Sunset Advisory Commission, will head the lobby ops.

Cathy DeWitt moves from public affairs to lobbying for the Texas Association of Business for the session. She's done media relations there for several years.

Former Dallas County Judge Margaret Keliher signed on with the Locke Liddell & Sapp law firm's Dallas office. She'll work in the public law section there and will spend some time in the Austin office during the legislative session.

Appointments: Gov. Rick Perry tapped District Judge J. Manuel Banales of Corpus Christi to be presiding judge of the 5th Judicial District. That's a four-year gig, if the Senate goes along.

Mark Silverstone of Georgetown is Perry's choice for the 425th District Court judgeship. He's an attorney in private practice there. Just to the north, Fancy Jezek of Temple will be the new judge of the 426th District Court in Bell County. She's also a private practice attorney.

Perry named Jim Cox the chairman of the Texas Lottery Commission. He's been at the commission since 2002 and served on the General Services Commission before that.

The state's newest transportation commissioners are Ned Holmes of Houston and Fred Underwood of Lubbock. Holmes is a real estate developer and a former commissioner at the Port of Houston Authority and at Texas Parks & Wildlife. Underwood is head honcho at Trinity Co., a cotton bale storage facility.

The governor named Dr. Michael Arambula of San Antonio to the Texas Medical Board, which regulates doctors. He's in private practice and also teaches psychiatry at the UT Health Science Center in San Antonio.

Deaths: Former House Speaker Bill Clayton of Springlake, the first speaker of the modern era to serve more than two terms in the post — he did four — and the political survivor of a political sting investigation run by the FBI. He beat a bribery rap and was reelected to the House and to the speakership when it was over. Clayton covered his shrewd political skills with a country veneer, and became a successful lobbyist after leaving the House. He was 78.

Quotes of the Week

House Speaker Tom Craddick, after winning reelection to a third term in that post: "I want to assure each and every one of you today that I believe my primary responsibility as your elected leader is to fulfill your elected purpose . . . If in some way I fall short of your expectations or needs, please tell me, and I will do my best to correct that shortcoming."

Rep. Jim Pitts, R-Waxahachie, quoted in the San Antonio Express-News on losing the race for Speaker of the House: "This is like a little pimple on your face."

Rep. Phil King, R-Weatherford, telling the Fort Worth Star-Telegram how Speaker Tom Craddick won reelection: The Democrats were the key. If all the Democrats had voted in lockstep against Tom, we were done."

Rep. Robert Talton, R-Pasadena, who dropped his own speaker bid to support another challenger, quoted in the Austin American-Statesman after the race: "It surprised me how many people, their word is not good."

Rep. Valinda Bolton, D-Austin, and a freshman lawmaker, on the machinations of the speaker's race, in the Austin American-Statesman: "I was a little surprised, but that's because I'm new here."

Journalist Michael Kinsley, quoted in The New York Times about the startup of The Politico, a national political Internet news site: "I'm thinking, 'God, I can't keep up with it all.' But, then again, I would have thought there was no more room for another Starbucks in Dupont Circle, and there always is."

Texas Weekly: Volume 23, Issue 28, 15 January 2007. Ross Ramsey, Editor. Copyright 2006 by Printing Production Systems, Inc. All Rights Reserved. Reproduction in whole or in part without written permission from the publisher is prohibited. One-year online subscription: $250. For information about your subscription, call (512) 302-5703 or email biz@texasweekly.com. For news, email ramsey@texasweekly.com, or call (512) 288-6598.