Need to Hide Something Big?

Ask Gov. Rick Perry for advice. He managed to bury headline-grabbing proposals for the sale of the state lottery, a $3 billion war on cancer, $100 million for border security, a $2.5 billion tax rebate, and health care for up to two million of the state's working poor behind a vaccine for pre-teen girls against a sexually transmitted disease.

His executive order for a mandate was still Topic A after a week of exposure, and the unusually large amount of substance in his State of the State speech got lost in the mix. It's not just that he didn't have his ducks in a row — he didn't even invite any ducks. Perry's announcement surprised his friends and his enemies alike and for different reasons, united them.

And what started as a row over policy is turning into a broader conversation about the limits of the governor's authority — Texas is, after all, known for skimping on gubernatorial powers in its constitution — and an assertion of the Legislature's right to make law.

A Drug with Political Side Effects

Start at the top. Only one company makes the HPV vaccine mandated by Gov. Rick Perry, and Merck & Co. is hoping to bring in $50 million from Texas during the first full year the mandate is in place. It's a $360 regimen delivered in three shots over a six-month period.

Texas is the first state to require the vaccine (there's an opt-out provision for parents who don't want their daughters immunized).

The Merck & Co. drug in question is called Gardasil.

Perry's executive order potentially takes the issue out of the Legislature's hands. Lawmakers won't have to vote on it now and can avoid a politically dangerous issue. On the other hand, some lawmakers — particularly those who don't agree with Perry on HPV vaccines — think he should butt out and leave it to lawmakers. Nothing he's done prevents lawmakers from fighting it out, though his action foreshadows a veto if they pass something contrary.

Perry's executive order says that 11- and 12-year-old girls have to have the shots before entering sixth grade, starting in 2008. HPV is the country's most common sexually transmitted disease, and certain types of it can cause cervical cancer — the second-leading type of fatal cancer in women around the world, according to the Centers for Disease Control. That agency also says the vaccine "does not appear to cause any serious side effects."

Some of Perry's normal allies — social conservatives — are against him on this one, and they've been gathering momentum since his announcement. Cathie Adams of the Texas Eagle Forum accused him of corruption and blamed the lobbying campaign led by Merck & Co. for his mandate to use what she called "an experimental vaccine." Rep. Dan Flynn, R-Van, said Perry's move was "an effort to circumvent the legislative process." He wants it left to parents. Sen. Kevin Eltife, R-Tyler, said he's not opposed to funding the vaccine for people who want it, but doesn't think the state should make it a requirement. He wants it left to parents, too. Sen. Jane Nelson, R-Lewisville, called a press conference to say Perry should leave this to the Lege. Rep. John Zerwas, R-Houston, who identifies himself as the only practicing doctor in the House (the Senate has two), says HPV doesn't pose the same sort of contagious threat posed by other diseases on the school immunization lists, like measles and chicken pox. And because it's only transmitted by sexual contact, he's against adding it to that list of required shots. The Harris County GOP sent out emails calling on Republicans to tell Perry to rescind the order. And the chair and vice chair of the state GOP — Tina Benkiser and Dr. Robin Armstrong — asked the governor to pull back his directive and let the Legislature work on the issue.

After a weekend of noise about it, Perry put out a second press release (the first one was the original announcement) saying he's in the pro-life position on this one. "Providing the HPV vaccine doesn’t promote sexual promiscuity anymore than providing the Hepatitis B vaccine promotes drug use.  If the medical community developed a vaccine for lung cancer, would the same critics oppose it claiming it would encourage smoking?" And he repeated his promise that parents would be able to opt out if they don't want their daughters immunized.

Three bills on the subject — all promoting vaccinations — were filed before Perry announced his directive. In the aftermath, Sen. Glenn Hegar Jr., R-Katy, filed a bill that would prohibit making the immunization a condition for enrolling in school.

Nelson started a letter in the Senate, now signed by all but a handful of the state's 31 senators, asking the Guv to back off his executive order. A day or so later, more than two dozen House members, led by Rep. Carl Isett, R-Lubbock, joined in, asking Perry to leave mandates on the HPV vaccine to the Legislature. The reps didn't take a position in their letter, but said it ought to be debated and that "no Texan would willfully abdicate their voice in the legislature to a single office of their government." That one carried the signatures of 31 Republicans and one Democrat.

Merck is backing an organization of female legislators from around the country to promote the vaccinations. In Texas, the four directors listed on that group's website are Reps. Alma Allen and Senfronia Thompson, D-Houston; Dianne White Delisi, R-Temple; and Ruth Jones McClendon, D-San Antonio.

Delisi — whose daughter-in-law, Deirdre Delisi, is Perry's chief of staff — peeled away from the governor's position in a written statement, saying she respects his goal but things the Lege ought to be in front and that parents should have "absolute authority" over health care decisions involving their kids.

WIG's website also lists GlaxoSmithKline as a supporter. That company is reportedly trying to bring a competing vaccine to market.

Merck's Texas lobsters are Mike Toomey, Lara Laneri Keel, and Holly duBois Jacques. Toomey's getting the most attention, because he's Perry's former chief of staff, but if you go by the money, Jacques leads the team. Merck pays her $100,000-$149,999, according to the Texas Ethics Commission; Toomey and Keel (who are colleagues) reported income of $25,000-$49,999 from Merck. GlaxoSmithKline, which isn't in the game yet, has 10 lobbyists registered in Texas.

After a few days of this, lawyerly folks began asking questions about just what authority Perry has here. Former state District Judge F. Scott McCown wrote that Perry is stretching his leash, and Nelson, joined by Rep. Jim Keffer, R-Eastland, has asked Attorney General Greg Abbott for his official opinion on the subject. Perry's HPV diktat is his 65th as governor.

The Guv's Wish List

Rick Perry talked for a long time and made a lot of news (or would have) with his State of the State speech. To wit: He wants to sell the state's lottery to pay for health insurance for the working poor and for a huge cancer initiative as well as pumping money into public schools. And he wants to limit the growth of state government and give taxpayers a $2.5 billion rebate.

Those are just the highlights.

The question now is whether the Legislature will do anything about it. The legislative record is mixed for Texas Governors — who have little say over the content of the budget and other legislation, save the ability to wave a veto pen. And the joint session of senators and representatives was relatively subdued while the governor presented his wish list, and more quietly, his budget proposal. But give him points for trying; most of these talks have been vague and very quickly forgotten. The list:

• A "Healthier Texas" program that'll use up to $800 million in state funds and $1.2 billion in federal funds to help up to two million Texans buy insurance. The state would use that money to pay health insurance premiums of up to $150 monthly for working adults whose incomes are below 200 percent of the federal poverty level (for 2007, that'd be everyone with an annual income of $20,420 or less). Perry would pay for it with money now used for uncompensated care of the uninsured in the state's hospitals and from the lottery sale. Hospitals like the insurance idea, but are anxious about getting into the disproportionate share funds that pay for uncompensated care. They fear losing the money from the latter before the money from the former starts coming in. And you can squint at the numbers and find fault: Medicaid for one adult for one year is $2,640, or $220 a month. Perry's plan, which relies on insurance in the more expensive private market, offers up to $150 per month. Advocates for the poor, while they like the direction Perry is going, wonder whether the beneficiaries will be able to afford the help he's offering.

• He talked about a $3 billion endowment to pay for cancer research, and he offered a public statement about why he's adding an HPV vaccine to the list of shots girls have to have to get into sixth grade. "I understand the concern some of my good friends have about requiring this vaccine, which is why parents can opt out if they so choose. But I refuse to look a young woman in the eye ten years from now who suffers from this form of cancer and tell her we could have stopped it, but we didn't. Others may focus on the cause of this cancer. I will stay focused on the cure. And if I err, I will err on the side of protecting life."

HPV has appeared on the political front in Texas before, though it wasn't this wild. Last year, Democratic gubernatorial candidate Chris Bell said he'd back legislation that does what Perry is trying now to do with an executive order. First Lady Anita Perry gave a keynote address in late 2005 at a Women in Government conference in Atlanta on cervical cancer prevention and elimination. That's a group funded in part by Merck & Co., the company that makes the only government-approved vaccine. Legislation passed two years ago requiring insurance companies to cover the vaccine.

• Perry wants to sell the lottery to pay for the cancer program, the health insurance program and for public schools. He said the state's lottery could bring a price of $14 billion and that the invested proceeds would generate enough annual income to spend $750 million on schools, $130 million on the cancer program, and $250 million for the uninsured insurance plan. That's $1.13 billion a year — more than the lottery produces now. Put an asterisk there; Lt. Gov. David Dewhurst, among others, questions whether funds from a lottery sale would bring in as much as the lottery now produces for the state. House Speaker Tom Craddick seemed nonplussed by the idea. And there's a question of whether to strip some of the proceeds from public education for other purposes, since all of the money goes to schools now and wouldn't under the Perry plan.

Here's another asterisk, from the bidness community. By Perry's numbers, the state would make more money on the investment of lottery sales proceeds than it would from the lottery itself. Suppose you had $14 billion ready to invest. Would you pour it all into a lottery that produces about $1 billion a year, or would you pour your money into the kinds of investments the governor is talking about, and make $1.3 billion. To make this work, the state would have to locate a buyer with one or more of the following qualities: A belief that the lottery is inefficient and that smoothing its operations would raise profits; a belief that a more aggressive marketing campaign of the sort avoided by the state would increase revenues and thus, profits; or stupidity about how much the thing is worth.

• He wants to rebate $2.5 billion to taxpayers. He said he'd push the appraisal reform (presumably what was recommended by his task force on that subject, though he didn't say so). He wants to limit the growth of local governments to five percent unless voters okay more growth. And he wants to limit growth in state spending — not including tax relief — to a six-year floating average of population growth and inflation. He'd repay one-time accounting tricks that were used to balance the state budget in 2003 and 2005. The rebate didn't get as warm a reception as you might think. Other state leaders have other ideas about how to use the money available to budgeteers this year. And Perry didn't describe a mechanism for the rebate; the details are missing. The Senate Finance panel has already given a different answer to spending limits.

• Perry repeated his request to the federal government to give the state more flexibility in its Medicaid program, and he said he's proposing the state spend "more than half a billion dollars" to raise Medicaid reimbursement rates for doctors and hospitals. The Texas Medical Association says that amount is too small, that it would restore cuts made in 2003 and no more.

• The higher education spending unveiled earlier was in there, including increased funding for financial student aid with bonuses for students who finish school in four years. The package includes aid money for technical and nursing students, and full funding for the Texas Tech Medical School in El Paso and Texas A&M's Irma Rangel School of Pharmacy School in Kingsville.

• He won a standing ovation from legislators when he talked about making sure money dedicated for a particular purpose actually gets spent there. He said he's with Craddick on using proceeds of the sales tax on sporting goods for parks.

• The $100 million for border security — a campaign promise — made it into the Guv's speech and into his budget.

• Perry supports legislation establishing 20+ reservoir sites in the state and griped about "environmental extremists entrenched in the federal bureaucracy undermining our regional water planning process." (Try saying that three times, fast.)

• He wants to go ahead with coal plants to add electric capacity and said alternatives using gas are promising but unproven. And he said he'd welcome new nuclear energy work in Texas. Nukes are a few years off, and the coal plant issue has all the makings of a big fight this session.

• The governor wants to put more money into rehabilitation of criminals. He wants tougher penalties for sex offenders who prey on kids. The state should redo its windstorm insurance system in anticipation of big hurricanes and other storms. He said the state should divest of companies that do business in Sudan because of the Darfur genocide.

The Other Sure Thing

Tax audits and disputed tax cases should move faster, according to Comptroller Susan Combs. A month after moving the tax courts out of her agency, she's checking off another campaign promise with a new process she hopes will accelerate tax settlements and decisions. The whole schmear is posted on the comptroller's website, complete with tiny type and flow charts. Some of the big pieces:

• Tax policy, where broad issues are decided, will focus on open cases so audits and hearings won't get stalled.

• Audit deadlines — those on taxpayers and those on auditors — will be shortened. A new set of audit rules is being readied for publication next month.

• Hearings already in the queue are being reviewed and reassessed.

• Combs will hire a "special counsel for contested cases" who'll report to Deputy Comptroller Martin Hubert.

• Dispute resolution will be taken out of the agency's audit division to get a "set of fresh eyes" on contested cases, Combs said.

• A new mediation process will be set up for cases on their way to tax court, offering an alternate forum for settling fights between collectors and payers.

Combs said she wants to speed tax disputes and audits that can drag on, in some cases, for years. And she wants to remove the appearances of conflicts that stem from the agency's roles as auditor, tax collector, judge, prosecutor and jury.

The judging business has been contracted out to the State Office of Administrative Hearings. Disputed audits get reviewed by independent divisions in the agency. What used to be another function of the auditors now goes to mediators. The new process for taxpayers requires quicker responses from both sides, and stiffens penalties on the one hand and auditor discretion on the other to keep things moving.

In an interview, Combs said she "is just trying real hard to say this is very fair and very transparent... If I pay the checks of auditors, prosecutors and the judges, it doesn't look like you're getting a fair shake. It looks gamed from the outset."

She said she doesn't want anyone spinning their wheels while cases are in progress, and wants to end the process of "tolling the statutes" to keep tax cases open for years and years. In a case we reported on last year, several cities got letters from the state saying they'd over-collected their taxes from a large company for years and had to pay Texas back. That started with an audit that — because a taxpayer kept the issue open — reached back almost a decade into the past.

She's now reviewing "audit selection," or how the agency decides which taxpayers have to prove their stuff to the state, and collections practices, which is how the state gets its money out of taxpayers who owe. She said the state has around $475 million in uncollected taxes on the books and she wants to be aggressive about getting it. (That number is smaller than the one used by Combs during her campaign for the office; she acknowledges that $1.2 billion or more that's on the books is uncollectible because of bankruptcies and other calamities.)

On a separate but related issue, Combs wants the Legislature to give her money to hire more experienced and more expensive auditors. She said 60 percent of the auditors hired by the agency in 2004 aren't there any more — that's a 60 percent turnover rate — and said pay at the agency is $10,000 to $25,000 less than what the private sector pays for similarly trained people.

A Beauty and a Beast, and Some Tidbits

A temporary reprieve from the constitutional limit on state spending won approval from the Senate Finance Committee and is on its way to the full Senate. It's tied to tax relief for seniors, which has some of them crying foul.

SJR 13 has got two elements. The first would extend last year's school property tax cuts to homeowners with elderly exemptions. They were left out and lawmakers want them included.

The second bit has to do with the spending cap. To cut local property taxes, the state agreed to spend more on education, in effect, to take on a larger share of the cost. But the Legislature can't do that without voting to ignore — just this once — the constitutional limit on increases in state spending. (Growth in the next two-year budget would be limited to 13 percent or so without a vote, and it'll take an increase of about 34 percent to cover the state spending that makes the local tax cut possible.)

Rather than voting to spend more money, lawmakers are trying to put the decision in the hands of voters. Skittish politicians in the House in particular are afraid voting to increase spending — even for local tax cuts — might get them trouble come next year's elections. They'd rather leave the decision to voters.

Both issues require constitutional amendments. That means they'll have to get two-thirds votes in both chambers and then a majority of the voters at the polls later this year.

Legislators who oppose the elder exemption are scarce. But the spending limit amendment is more controversial. AARP accused lawmakers of using old people for "political human shields." And Jim Dunnam, D-Waco, is trying to slow things down, saying the Legislature shouldn't be messing with a spending cap until the budget is out. That would foul the timing, though, and there's little question that the budget numbers — with that property tax business in there — will be big enough to force the issue.

• Rules spats or not, the House can now get to work on the state budget, supplemental appropriations, property tax swaps, water issues, the sporting goods sales tax and funding for state and local parks, and Jessica's laws. Gov. Rick Perry declared those items emergencies, meaning the Legislature can get to work on them right away. The House — blocked by a group of Democrats — couldn't muster the votes to ignore that constitutional time limit. Perry's action opens the door for the issues on his list. If you're keeping score, the governor is in control of what can be considered by the House during the next month. Ordinarily, that would be up to the House and its presiding officer.

• Department of Corrections: State GOP Chair Tina Benkiser was allied with the folks looking for a secret vote at a recent Republican National Committee winter meeting, but wasn't with them on the issue of secret voting. She was with them on the content: whether to create a "general chairman" position. We muddled the two things and made this bit unclear: She was against the secret ballot. Sorry, sorry, sorry.

The Other Foot Drops

Attorney General Greg Abbott filed suit against Sprint Nextel Corp., saying the company's breaking the law by "implying that an additional fee on customers' bills was a state-imposed tax."

He's aggravated about the company's line item "reimbursement" for the state's new business tax. That tax isn't due next year, but it applies to business activity in 2007. Sprint and Nextel put it on customers' cell phone and wire-line bills starting last month.

Comptroller Susan Combs wrote to the company last week, objecting to their use of the term "reimbursement" for a tax that's not yet been paid. And she wrote that that one percent fee the company is charging its wireless customers is higher than the maximum margins tax rate of 0.7 percent. That, she said, "appears to clearly conflict" with state tax laws. She asked the company to remove the charge from its bills until the Legislature has a chance to act. A spokesman for the company said they haven't done wrong and won't be taking any corrective action.

In his lawsuit, Abbott agreed with all of that as a violation of the state's deceptive trade practice laws, and said the company is also violating an agreement with Texas and 31 other states that won a settlement with the company after suing it for deceptive billing practices. The company didn't agree to any wrongdoing at the time, but signed off on an agreement that has a section that, according to Abbott, applies to the current situation. He wants the courts to issue an injunction.

Political People and Their Moves

Appropriations subcommittees got underway this week, with these representative in the middle chairs: Fred Brown, R-Bryan, Regulatory; John Davis, R-Houston, Health and Human Services; Dawnna Dukes, D-Austin, Special Issues (performance reviews, employee compensation, and capital budget requirements); Carl Isett, R-Lubbock, General Government; Lois Kolkhorst, R-Brenham, Education; and Sylvester Turner, D-Houston, Criminal Justice.

Three new names on the masthead at the Department of Agriculture: Hector Gonzales is the agency's internal auditor; Bryan Black is assistant commissioner for communications, and former Rep. Gary Walker is interim assistant commissioner for governmental affairs (that's Austin talk, meaning he'll sweet-talk his former colleagues). Gonzales was most recently at the Texas Department of State Health Services. Black's been with the Burson-Marsteller PR firm in Dallas.

Gov. Rick Perry reappointed Albert Hawkins III as executive commissioner at Texas Health and Human Services. It's a two-year term — he's been in that job since 2003. 

James Graham and Paula Mendoza were named to the Texas Ethics Commission by Lt. Gov. David Dewhurst. Graham is an investment manager at Hunt Realty Corp. Mendoza owns a small business consulting firm in Houston.

Rep. Frank Corte Jr. of San Antonio, will head the House Republican Caucus, after out-polling Rep. Geanie Morrison of Victoria. Bill Callegari of Katy is vice chairman, Linda Harper Brown of Irving is treasurer, and Sid Miller of Stephenville is secretary.

Tim Mashburn, general counsel for the comptroller's office under Carole Keeton Strayhorn, signed on with DeCharme, McMillan & Associates, a tax-consulting firm.

One we missed over the holidays: Cheri Huddleston joined the Hance Scarborough Wright law firm after 11 years with Sen. Jane Nelson, R-Lewisville. She'll do lobby work for the firm.

The campaign is over, but the store is still open. Kinky Friedman, the writer and musician and professional character who finished fourth in the race for governor, is still hawking t-shirts and books and stuff to people who signed up for news of his campaign.

Deaths: Sam Seale, former Jackson County Judge and longtime executive director of the Texas Association of Counties, after a long struggle with cancer. He was 73. He was a policeman, sheriff's deputy and FBI agent before turning to the family ranch and running for office. He joined TAC in 1986 and was named executive director a year later.

Quotes of the Week

Suzii Paynter, director of the Christian Life Commission, in the Houston Chronicle: "I cannot resist in pointing out that the Lottery has not always lived up to the promises that Texans expected when they approved it. So, in that light, I don't blame the governor for wanting to sell it."

House Speaker Tom Craddick, on the governor's plan to sell the lottery to pay for, among other things, cancer research: "I'm certainly in favor of cancer research. I don't know whether selling the lottery is what we need to do or not."

Cathie Adams of the Texas Eagle Forum, on Gov. Rick Perry's order to make HPV shots a requirement before girls can enter sixth grade in public schools, in The Dallas Morning News: "This replaces the parent with the state. You're not only turning parents' rights upside-down, but you're also subjecting children to an experimental vaccine."

Democrat Chris Bell, a former gubernatorial candidate, quoted on Gov. Rick Perry's State of the State address in the Austin American-Statesman: "He does seem to have liked quite a few of my ideas. Good for the state."

Bill Allaway of the Texas Taxpayers & Research Association, telling the Senate Finance Committee they shouldn't be nervous about voting to exceed the constitutional spending cap, since they're doing it for school tax relief: "This is all about whether you have to take another vote, like you did last spring, and say, 'Yes, I believe in property tax relief'... We think you should be proud of that vote." 

Bob Jackson with the Texas chapter of AARP, on legislation that ties a property tax break for the elderly to limits on growth in the state budget: "The Legislature can already break the spending cap, and seniors should not be used as political human shields."

Rep. Norma Chavez, D-El Paso, talking to the El Paso Times about her dealings with her colleagues in that city's delegation: "They talk to themselves, but they don't talk to me. I think part of it is sexism. I'm a woman, and they're men and they're not going to ask a woman for any help."

Rockwall County District Attorney Ray Sumrow, quoted in The Dallas Morning News after hearing the local sheriff, the Texas Rangers, and the FBI are looking into his conduct: "I don't know what they're investigating me for, so I guess I'll wait and see if they find anything."

Texas Weekly: Volume 23, Issue 32, 12 February 2007. Ross Ramsey, Editor. Copyright 2007 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.