Brother, Can You Spare $556 Million?

You're really out in the weeds when you find yourself listening to arguments about reform provisions for unemployment insurance, but that's the first of what might be a series of firefights over the federal stimulus money available to the state.

State policy and budget folks are sorting through the stimulus, but know some things broadly: Somewhere in the $15 billion to $16 billion range will be available with big blocks of that directed at health and human services, education, infrastructure and other programs.

About $556 million — about 1/32nd of the stimulus money for Texas — would go to unemployment insurance, or UI, and it's available only to states that meet requirements set by the feds.

And before we get into those, we'll show you the strings: Those federal requirements outlive the federal funding — the changes the state makes in order to get the money have to remain in place when the federal money is gone.

One third of the UI stimulus money becomes available when the state changes the base period used to compute each unemployed worker's benefits. The rest would come in if the state adopted two things from a list of options, including UI benefits for part-timers, benefits for "trailing spouses" put out of work when their spouses moved for new jobs, added money for unemployed workers with dependents, and so on.

The trailing spouse and the part-timer provisions would be the cheapest on the list for Texas, adding about $81 million to the annual cost of the program and about 45,192 people to the number getting benefits, according to the National Employment Law Project.

Gov. Rick Perry, some lawmakers, and the Texas Association of Business have raised concerns about those provisions, arguing that the federal government is using the stimulus funds to start what will become unfunded mandates in the future. Tom Pauken, chairman of the Texas Workforce Commission, says he's got agency lawyers trying to figure out whether and how the feds would enforce that. "They shouldn't be able to lock us into a permanent law," he says.

(The agency immediately implemented one stimulus-funded deal that had no strings attached, increasing benefit payments by $25 per week.)

Bill Hammond, a former Workforce Commissioner and lawmaker who now heads the Texas Association of Business, thinks the state should forego the money, even if it means higher taxes for business right now. "The costs will skyrocket over time," he says. "We believe the estimates are low." And he says he doubts state lawmakers would get rid of the added benefits in the future, even if the federal government allowed it. He doesn't think they'd take benefits away, once they were granted. "They're more focused on giving out checks than on getting people back to work," he says.

Hammond was more colorful in a press release, comparing the federal government to a drug dealer (and drawing blasts from the Texas Democratic Party, unions and some lawmakers): "The dealer gives you your first hit for free to get you hooked, and then you are addicted and are paying the consequences for a long, long time."

The head of the House Democrats — who also heads a special legislative committee charged with sorting through the stimulus funds — demanded an apology. "I do not believe that Texans thrown out of work because of our current economic crisis are likely to get addicted to losing their jobs," said Rep. Jim Dunnam, D-Waco.

Labor's for the program, and has asked for similar changes in previous legislative sessions. The Texas AFL-CIO says Texas ranks 50th among the states for the percentage of unemployed workers who get benefits, and is also arguing that businesses can't afford to pay a high deficit tax during a recession. The Center for Public Policy Priorities is also lobbying for the changes, saying the unemployed workers need the money and that increases in UI benefits will decrease demands for other government benefits.

Several lawmakers — who have pushed for the changes in UI even before the stimulus money was offered up — want the governor to add the issue to the list of emergency legislation that can be considered during the first 60 days of the session. All four of those legislators — Sens. Rodney Ellis, D-Houston, Eddie Lucio Jr., D-Brownsville, Leticia Van de Putte, D-San Antonio, and Rep. Joe Deshotel, D-Beaumont — have filed bills that would put UI in line with the various stimulus requirements.

And Now, a Puzzle

Texas employers pay a tax on wages, which fills an account with the Texas Workforce Commission, against which unemployment insurance is drawn.

The deficit in that financial machine is about $750 million at the moment, which, among other things, triggers an increase in the tax paid by the employers so as to refill the pool. The state also has the option of borrowing money from the feds, but still has to eventually pay it back by taxing those employers.

The economy is sliding, and the level of unemployment is rising and expected to worsen before it gets better. (Comptroller Susan Combs included this bit of gloom in her latest Biennial Revenue Estimate: She expects 111,000 Texans to lose their jobs by mid-summer.) That means the demands on Unemployment Insurance, or UI, will increase.

Not the greatest timing.

And it makes an interesting political problem out of the federal offer to bail out the program, and the strings that are attached to it, and to opposition to some of those strings.

A vote against the stimulus money is, in the short term, a vote for a higher deficit tax paid by businesses and/or more state debt (if the money to cover the fund is borrowed). A vote for it means higher benefits and a lower deficit tax, but adds just over $80 million a year to the annual cost of the program.

Place Your Bets

Casino developers are making a play for legislative favor, saying they offer a better deal than proposals limited to slot machines at horse tracks.

The pitch from the Texas Gaming Association is that a combination of "destination resort casinos," slots at horse and dog tracks, and approval of casinos operated by the state's three recognized Indian tribes would bring $3 billion or more into the state treasury every year.

Another group made up of track owners — Texans for Economic Development — is making a play for expanded gaming operations in places where gambling is already allowed, namely, at horse and dog tracks. They want to add video lottery terminals — slot machines — and say that change would make money for the state while boosting an ailing equine and racing industry in the state.

Each of the groups is proposing a constitutional amendment that would allow voters to decide whether Texas needs more gambling than the racing, bingo, and lottery, which are already legal.

Both groups have polls to bolster their claims. TGA's survey (Wilson Research Strategies, 1,000 likely voters, December 8-10, 2008, +/-3.1 percent) says 68 percent of Texans favor casino gaming in the state. And they say only 39 percent support a proposal that's limited to the addition of VLTs at tracks. And while they say they're not in competition with the other proposal, they've got a glossy four-color flyer comparing the proposals and saying theirs is the better one, providing more state money, more jobs, and more economic development.

TED's proposal for "racinos" and to allow slots at Indian gaming parlors has the support of 63 percent of the voters, according to their polling (Baselice & Associates, 1,006 registered voters, February 7-11, 2009, +/-3.1 percent). That rose to 75 percent when the respondents were told the proposal would keep $1 billion in Texas that is now gambled elsewhere, would create 53,000 jobs, would help race tracks, make the state's Indian tribes more prosperous and would increase state regulation of 8-liners and other illegal gaming.

TGA's proposal would allow slots at tracks, casinos operated by the Kickapoos, Tiguas, and Alabama Coushattas, and would allow the state to license up to a dozen casinos around the state. No more than three casinos would be allowed in one county, and nine of the licenses would be divided thusly: Dallas County, 2; Harris County, 2; barrier islands, 2; Tarrant County, 1; Bexar County, 1; and Travis County, 1.

TGA would earmark some of the new state revenue it produced. The sponsors of the legislation, Sens. Rodney Ellis, D-Houston, and John Carona, R-Dallas, and Rep. Jose Menendez, D-San Antonio, said it would dedicate $1 billion TEXAS Grants to help Texas kids pay for college, and another $1 billion for transportation projects in the state. They'd do that with a 15 percent tax on casinos and a 35 percent tax on racinos. One percent would be cut out of that tax and given to local governments.

"We don't support a monopoly for track owners..." said Chris Shields, a lobbyist for TGA. "We want to work with them — that's why they're in this bill."

The folks from TED say they don't oppose casinos, but want a level playing field. "[TGA's proposal] creates a widely disparate tax rate between casinos and tracks, does not allow the tracks to have the same games as casinos to ensure a competitive playing field and will greatly expanding the footprint of gambling in the state," said Tommy Azopardi, executive director of TED. "Unfortunately, this approach also does nothing to bolster an important industry that has a rich tradition in Texas."

The two groups are trying to persuade lawmakers to submit the question to voters. That takes a two-thirds vote in each chamber of the Legislature, then a favorable vote from the public. And while both say the state needs the money, no gambling proposal has been approved by Texas lawmakers except in the face of a tax bill. There's not one this time, so there's no "either this or a tax" argument to be made. Without that, both sides point to early projections that the state could have budget problems two years from now; they argue that lawmakers should allow gaming now, so the state will be bringing in revenue from it when it needs the money two years from now.

A late add: Rep. Craig Eiland, D-Galveston, says there's no point in arguing over casinos and racinos until the constitution has been changed. In a press release, he points to the governor's opposition to gambling and says enabling legislation, which has to stop at Perry's desk, is probably dead. He says the gaming folks should concentrate on getting the expansion in the constitution; the rest, they can do in two years. "I think that working and debating the minutia and details is a waste of time until and unless you pass a constitutional amendment," he writes. "A constitutional amendment does not cross the Governor’s desk, so he can't veto it."

Call!

The cash-strapped Texas Racing Commission raised fees on some licensees and asked the folks in the Pink Building for $250,000 to cover immediate finance problems.

The agency wants that cash right away, either in the form of a grant from the governor's office (unlikely, they think, because those funds have been used for hurricane expenses), or a supplemental appropriation from the Legislature.

And they raised their fees on inactive licensees — tracks that have licenses to operate but that aren't holding races — by $25,000.

TRC is also making some cuts and looking for new and more stable funding sources — with air cover from the Sunset Advisory Commission. But they've got an immediate cash flow problem that's behind this request.

They're short $677,833 of what the $5.5 million budgeted this year and could start to choke on that in May.

The agency's woes mirror those of the industry it regulates and from which it draws its funding. Track owners and, separately, casino developers, are seeking legislation that would allow more gambling in the state. The tracks want to become "racinos," where slot machines are allowed. The casino folks want those and a dozen casinos sprinkled around the state.

One Year Out

A North Carolina polling firm puts U.S. Sen. Kay Bailey Hutchison well ahead of Gov. Rick Perry at the beginning of the 2010 governor's race.

The challenger starts with a 56-31 advantage over the incumbent in the survey by Public Policy Polling, which used an automated phone poll to collect opinions from 787 Texans who have voted in recent Republican primaries.

Hutchison gets favorable marks from 76 percent of those GOP voters, against 60 percent for Perry. Unfavorable: Perry, 27 percent; Hutchison, 15 percent.

Perry's camp doesn't argue that he's starting ahead, but has said the numbers will change if and when the candidates engage each other. Right now, his stated focus is on the legislative session; hers, on not commenting while the Legislature is working. There's been some sniping and towel-snapping, but those are the stated intentions.

"The governor has a pretty good track record in the only poll that counts, and that's the one on Election Day," said Mark Miner, a spokesman.

Pollster Dean Debnam said the firm did the poll without pay, though the press releases about the results came from the Hutchison campaign. He said the firm is trying to drum up business and did this to promote itself. "I am not working for anyone in Texas," he said. The full results are posted here.

They're planning to release polls this week on potential replacements for Hutchison, if she leaves that spot, and on potential Democratic contenders in the governor's race and how they stack up against Perry and Hutchison. Fort Worth businessman, diplomat, and former state Rep. Tom Schieffer, a Democrat who's close to former President George W. Bush, has been looking at the race, and state Sen. Leticia Van de Putte, D-San Antonio, says she'll decide after the session whether to run.

Known and Unknown

Either Republican candidate for governor would — as of today — beat Democrat Tom Schieffer, according to a new poll. But voters don't know the Democrat, and have already formed opinions about Republicans Kay Bailey Hutchison and Rick Perry.

Schieffer, a former state representative and U.S. Ambassador to Australia and Japan, is expected to announce his candidacy as early as next week. Gov. Perry has said he'll seek reelection next year. And U.S. Sen. Hutchison — who served in the Texas House with Schieffer back in the 1970s — has given every indication she'll run for governor.

Enter North Carolina-based Public Policy Polling, which has released a series (look here and here) of robo-call surveys this week. This new one, a poll of 1,409 likely voters, found Perry would beat Schieffer 45-35 and Hutchison would beat him 54-30.

Hutchison's the most popular of the three. Schieffer is the least well known. Voters punched in their impressions, choosing from favorable, unfavorable, or not sure. For Perry, the numbers were 41%-48%-11%, meaning fewer of the respondents like him than do. For Hutchison, the numbers were 58%-31%-11%; most voters have a favorable impression of her. And Schieffer, who has never been on a statewide ballot, came in with 25%-31%-43%. Most people don't have an impression. And the question might have had something to do with that answer, because it had another pol's name in it: "Do you have a favorable or unfavorable opinion of possible Democratic gubernatorial candidate Tom Schieffer, who has served as a state legislator and ambassador to Australia and Japan under President Bush?"

Schieffer, who's from Fort Worth, was one of Bush's partners in the Texas Rangers Baseball Club and Bush later appointed him to those ambassadorships.

The pollsters didn't include state Sen. Leticia Van de Putte, who says she's thinking about it and won't have anything definitive to say until after the legislative session is over.

The survey was conducted February 18-20 and has a margin of error of +/- 2.6 percent.

Signs of Democratic Life

The top Republicans (who might be) in the hunt for U.S. Senate start ahead of their Democratic rivals, but those races could be competitive, according to a new poll. It depends on who's running.

North Carolina-based Public Policy Polling took at stab at the race to replace U.S. Sen. Kay Bailey Hutchison, should she decide to resign before her term is up in 2012. Hutchison is "exploring" a run for governor but doesn't have to quit the federal job to apply for the state job. She can resign early, either to concentrate on her run or, if she wins, to take office. Otherwise, if she decides against the race for governor, or loses it, she'll still be in the Senate.

PPP's polling matchups:

42% — Lt. Gov. David Dewhurst, Republican 36% — Former Comptroller John Sharp, Democrat 42% — Dewhurst 37% — Houston Mayor Bill White, Democrat 44% — Attorney General Greg Abbott, Republican 36% — Sharp 42% — Abbott 36% — White 34% — State Sen. Florence Shapiro, Republican 37% — Sharp 37% — Shapiro 36% — White

The pollsters didn't run it as a special election, which is what would be used to replace Hutchison. There aren't any head-to-head numbers pitting Republicans against each other, or Democrats, or throwing all of the candidates into the bucket and asking voters/respondents to pick their favorites. And they also didn't include a number of other candidates — all Republicans — who've officially and unofficially expressed interest in the race, including Railroad Commissioners Elizabeth Ames Jones and Michael Williams, and former Texas Secretary of State Roger Williams.

The poll was done with automated telephone calls to 1,409 likely Texas voters from February 18-20. The margin of error is +/- 2.6 percent, and you can look at the full results here. The same pollsters surveyed Republican voters on the governor's race earlier this week, and have a poll on Democratic gubernatorial candidates in the oven.

Flotsam & Jetsam

Texans want insurance to be simpler, cheaper, and would be happy to see rates set by an elected insurance commissioner, according to a survey done by Texas-based Hill Research Consultants (609 voters, February 4-7, MOE +/-4.0 percent) for Texas Watch, which bills itself as a consumer advocacy group. Most voters (75%) favor prior regulator approval before insurers can change rates. About that many (73%) favor an elected commissioner over an appointed one. They'd like to stop (68%) insurers from using credit ratings to set rates and deny customers. And they'd like policies in plain language for easier comparison (71%).

Pollster David Hill said he didn't find significant differences between Republicans and Democrats who took the poll. He said Texans dramatically underestimate what they pay for insurance compared with other Americans, and that they didn't register much change from the Legislature's latest attempts to reform insurance in 2003.

• That's not the only thing Texans don't know about. A two-year study of sex education classes in Texas public schools — done for the Texas Freedom Network — found all sorts of bogus, incomplete, and silly information being presented to Texas kids. The researchers say most sex ed in schools is confined to abstinence promotion, that the teaching materials "regularly contain factual errors and perpetuate lies about condoms and STDs," that shaming, fear, stereotypes based on gender and sexual orientation are common, and that some public schools mix in religious instruction and Bible study.

While that study was being publicized, Sen. Kirk Watson and Rep. Mark Strama — both Austin Democrats — introduced legislation that would require schools to give parents more information about what sort of sex education materials their kids are seeing in class. They're promoting a curriculum called Prevention Works. (Next week, Sen. Rodney Ellis, D-Houston, and Rep. Joaquin Castro, D-San Antonio, will role out their Education Works legislation, which has a similar aim.)

And Gov. Rick Perry, Lt. Gov. David Dewhurst, and Sen. Dan Patrick were promoting legislation that would require doctors to do ultrasounds on women seeking abortions and to let those patients hear their fetus' heartbeats before the abortions.

Media Woes

The Hearst Corp.'s San Antonio Express-News laid off 75 newsroom employees. That chain owns several Texas papers, including the Houston Chronicle, which has told its employees to expect cuts soon. San Antonio's Austin bureau loses Lisa Sandberg, shrinking a combined Chronicle/Express-News bureau that's also losing the Chronicle's Janet Elliott.

In San Antonio, pink slips went to former Austin-based UPI reporter Mark Langford, who was also a spokesman for then-Speaker Pete Laney, and Patrick Driscoll, who wrote about transportation issues. The paper issued a memo before telling employees who'd been cut.

Meanwhile, Matt Stiles, one of the Chronicle's writers, did a story on the shrinking press corps covering state government.

Political People and Their Moves

Debra Medina, a Ron Paul supporter and head of the Wharton County GOP, filed papers to run for governor in 2010 in the Republican primary. Her supporters are trying to gin up support with an email campaign.

Hans Klingler is leaving the state GOP to become spokesman for U.S. Sen. Kay Bailey Hutchison's press secretary in mid-March. He's been a political consultant for years, and is a veteran of Gov. Rick Perry's 1998 campaign for lieutenant governor. Awkward, that, with Hutchison challenging Perry in the 2010 primary.

Leslie Lemon, who did budget and policy analysis for former Speaker Pete Laney, signs on as director of the House Select Committee on Federal Economic Stabilization Funding, which is chaired by Jim Dunnam, D-Waco. Dunnam announced other hires: Zac Evans, formerly his chief of staff, will be deputy director of the committee; Jenny Casey moves from legislative director to chief of staff.

Lisa Mayes is back on the public side of the wall, leaving Lennox, where she'd been a lobbyist, to be legislative director to Rep. Tommy Merritt, R-Longview.

Travis Richmond left the Washington, D.C. office of the Loeffler Group for Austin — he'll be working on the House Elections Committee staff next week.

Move some legislative chairs around at the Department of Public Safety: Michael Kelley becomes chief of government relations; Janie Smith is legislative liaison, and Rachel Miller and Sarah Hendricks move in from criminal law and highway patrol divisions as policy wonks.

U.S. District Judge Samuel Kent — facing sexual harassment charges that could have forced him off the court — decided to plead guilty to an obstruction of justice charge and retire from the bench instead of going to trial. He still faces up to 20 years in prison on that guilty plea.

Chris Britton and Jason Johnson have formed Caddo Associates to consult people on politics, public policy, business and investments. Johnson's J2 Strategies, a political consulting firm, will be a subsidiary of the new outfit. Britton has worked in health and human services from both the public and private sectors.

There's a new publication in town: The Texas Republic News, started by James Bernsen and Travis Fell. They aim to combine original reporting, blogs, opinion and multimedia content.

Gov. Rick Perry reappointed Ted Houghton of El Paso and Fred Underwood of Lubbock to the Texas Transportation Commission for terms expiring in six years. Houghton works in financial services, estate and benefit planning; Underwood is president and CEO of the Trinity Co.

The Guv also reappointed Judge John Ovard of Dallas to preside over the First Administrative Judicial District. Ovard has served as a district and appellate judge.

And he appointed Hays County Justice of the Peace Andrew Cable of Wimberley to the State Pension Review Board.

Quotes of the Week

California Gov. Arnold Schwarzenegger, on ABC's This Week, on a proposal to merge the party primaries in his state: "And remember one thing: It's always great when the Democratic Party and the Republican Party is against something, because that means it's good for the people. That is the bottom line."

Dale Craymer, chief economist for the Texas Taxpayers and Research Association, talking about Texas' share of federal stimulus money, in the Austin American-Statesman: "We no longer have a hole. We have a mound of dirt, and we're trying to figure out how to spread it around."

Houston Mayor Bill White, quoted in the Houston Chronicle on a quickly dropped proposal to help first-time homebuyers with marginal credit ratings by using public funds to pay off up to $3,000 of their personal debts: "I didn't know it involved a grant, and I thought it was a grant to the bank. But, I'm not absolving myself of the responsibility."

Gov. Rick Perry, in The Dallas Morning News: "People living in Texas are a heck of a lot better off than the vast majority of the other ones. My instinct is they'd whole lot rather have a good-paying job than they would unemployment insurance."

Texas Eagle Forum President Cathie Adams, telling the Houston Chronicle what she thinks about the job growth projected if casinos are legalized: "Why in the world would we want our children to grow up to be card dealers and waitresses?"

Democratic political consultant Matt Angle, talking about House Speaker Joe Straus with the Associated Press: "He had a shorter honeymoon than Britney Spears."

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Texas Weekly: Volume 26, Issue 8, 2 March 2009. Ross Ramsey, Editor. Copyright 2009 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.