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A Man on the Hot Seat

Within about 24 hours, Rodney Watkins, an insurance agent from Mineola, pulled his name off the ballot and then agreed to let it stay on, and then called it off again. Watkins, who owns a growing insurance business with offices in Austin and Waco as well as in his home, decided at one point that business matters should dominate his time and energy, and that's apparently what he finally decided.

Within about 24 hours, Rodney Watkins, an insurance agent from Mineola, pulled his name off the ballot and then agreed to let it stay on, and then called it off again. Watkins, who owns a growing insurance business with offices in Austin and Waco as well as in his home, decided at one point that business matters should dominate his time and energy, and that's apparently what he finally decided.

He originally got into the HD-2 House race at the last minute -- state GOP leaders called him on the day of the filing deadline and pleaded with him to put his name on the ballot for the seat now held by Rep. Tom Ramsay, D-Mount Vernon. He says he was told he had until the 12th of January to reconsider, that someone in Austin would cover the filing fee for him, at least temporarily, and he went ahead and did it. Over the days that followed, he decided that his business was too pressing at the moment for him to run. He also says he considered the redistricting fight ahead, and decided that, as a freshman, he would get beat up in that process. His concern there was that he would have to beat an incumbent this time, in Ramsay, and might have to repeat the feat in two years if, as a freshman, he was paired in redistricting with a veteran incumbent. He didn't name any names, but Watkins says he even got calls from Republicans telling him that this might not be the right year for a challenge.

Hours after he related all of that, he told GOP officials in Austin that they could leave his name on the ballot after all, then, within a short while, he pulled it back off. This is an odd one, since he decided some of this the day after the deadline for withdrawing from the race. He says he officially pulled out on Wednesday, the deadline for doing so, and then agreed on Thursday to leave his name on the ballot, then pulled it back off. GOP officials took that to mean they had until the close of business on Friday to fill the hold on the ballot. Leave that one for the lawyers.

That caps a tough recruiting drive in that district for the GOP. Some Republicans had hoped that Debe Maguire, who lost to Ramsay in 1998, would be interested in a rematch. She wasn't. Watkins, as noted above, didn't even get a call until the last day.

Ramsay also has a primary opponent, in Sarah Bailey King of Quitman.

Other Last Minute Ballot Moves

Take Alex Jones off the Republican ballot. He was one of the gazillion candidates (actually there were only nine, but it feels like more) running for HD-48, the House chair left open by Sherri Greenberg's decision to leave after this term. Jones is a counterculture celeb in Austin, where he's been on public access television, commercial radio and the speaking circuit arguing against big government and such. Now there are two Democrats and six Republicans in the hunt. GOP consultant Royal Masset has been signed to run the show for Joe Anderson, a Republican lawyer seeking the seat.

There is now no Republican in the San Antonio Senate race. Mark Weber, who had hoped to run in the general election against either Sen. Leticia Van de Putte or David McQuade Leibowitz, filed in Austin instead of San Antonio, and got bounced off the ballot. He's the candidate who ran in the special election for that Senate seat in spite of the party higher-ups, who tried to talk him off the ballot.

Pat Gillot, a Dallas attorney who wanted to be on the Fifth Court of Appeals, forgot to mention which place on the court he was seeking on the petitions he filed. He's off the ballot.

Rep. Glen Maxey, D-Austin, gets a free ride. His Republican opponent, James Ritter, filed at the state party headquarters on filing date. He was supposed to file several blocks away at the Travis County GOP, and the Democrats caught it before the Republicans did.

You Just Thought it was Tax-Free

If you go with headlines alone, it looks like Texas Land Commissioner David Dewhurst might be way behind on taxes he owes the state, and that Comptroller Carole Keeton Rylander might be gigging him on a tax most people have never encountered.

On the political scoreboard, that would put the comptroller up by a point, but the game isn't over: The episode exposes a provision in the state's tax laws that leads indirectly to a levy on Internet and catalog sales that hasn't been enforced by either the current comptroller or by her predecessor, and that most politicians in Texas -- and elsewhere, for that matter -- don't even want to discuss. Half the politicos in America are trying to figure out how to give Internet sales a free ride without undermining the finances of cities and counties and states that are dependent on sales tax revenues.

Many Texans don't know it, but when they buy taxable doodads from retailers who don't charge them the tax, they still owe it. For instance, if you buy $1,000 worth of clothing from an out-of-state retailer who doesn't charge tax -- maybe over the Internet, maybe over an 800 number from out of a catalog -- you owe the state and local sales taxes on that purchase even if the retailer didn't add it to the bill. It's called the use tax, and it's what got all the little hairs to stand up on the back of Dewhurst's neck in the last few days. The tax isn't limited to goods bought outside the country -- it can also apply to goods bought in the U.S., but things purchased in person are generally taxed by the states where they are purchased, which usually means the taxpayer is off the hook back home in Texas. When the retailers don't collect a levy, Texas taxpayers technically owe one anyway.

The use tax is not always enforced, but the comptroller's folks say they certainly collect use taxes when they see that they are owed. Generally, that doesn't include someone's $50 purchase from, say, Tax auditors follow the money, concentrating their efforts on larger taxpayers who will be more likely to owe more money. It's the Willie Sutton rule (Why do you rob banks, sir? Because that's where the money is.). Most payers of the use tax are big companies that buy things elsewhere for use in Texas. They report taxable purchases on the same form used to report sales. Individuals can fall into the net in a number of ways: Customs sees them coming in with a mountain of swag and lets the comptroller know about it, or aviation regulators see a plane's title get transferred, or someone buys a big boat. Dewhurst's name came in on a list of about 300 individuals spotted by U.S. Customs, and that's why the comptroller's cross hairs fell on his wallet.

Rylander's auditors sent him a form letter asking him about goods purchased overseas and reported to Customs. They let him know about the use tax and asked him whether he would please report any purchases that might be subject to that tax. They didn't tell him he owed any taxes. They simply asked him if he'd get in touch with them to talk about it, and told him about the tax.

Dewhurst and his lawyers and accountants piled up an estimate of what he bought outside of the state for the last seven years and shipped if off to the auditors (who are in the same building he's in, just north of the Capitol). And then he jumped into the papers and onto the talk shows to say that:

• He didn't know there was such a tax, and thinks most Texans are also unaware of it.

• Singling out people like him -- those fingered by Customs for coming back with a significant haul in the shopping bags -- amounts to selective enforcement, and could mean horrible things about the tax collectors. He would hate to think, he says, that this has a foundation in the Austin gossip that he and Rylander might someday vie for the same post in a future Republican primary.

• Not singling out people like him -- going after anybody who makes taxable purchases without paying taxes -- amounts to an onerous load on average Texans, and could mean horrible things about the tax collectors. He can pay, he says, but says that he's really worried about everyone else.

Ask him whether he thinks the comptroller should be allowed to decide whether to collect it or not, he comes up with this: "Folks don't want statewide elected officials playing God and deciding when they're going to enforce the laws and when they're not." He goes on to say it would be wrong to selectively enforce the tax law, but says it would also be wrong to enforce it all the time. Go figure.

Tangents to the Tax Tussle

Dewhurst said he learned about the taxes in a notice mailed to him December 8 of last year. But Rylander's aides say another notice had been mailed the year earlier -- a month before Rylander took office. That one apparently had a bum address and came back in the return mail, where it languished in a bureaucratic morass for almost a year. The comptroller's folks are a little sensitive about the fact that they didn't get word to someone officed so close, but stuff happens.

Stories in the Dallas Morning News and the Austin American-Statesman made reference to "thousands of dollars" in taxes that Dewhurst might owe. He wouldn't show us the numbers he reported to the comptroller, but said he has not yet been told whether he owes use taxes, and if so, how big the bill will be. He did say that, when they present a bill, he will pay it.

Most business people know about the use tax, because it's one of the things the auditors poke around on when the comptroller gets interested in a business' books.

Here's another gizmo in the state's tax law that most people either don't know about or have never had any reason to consider: The comptroller and the people who work for her are mostly prohibited from talking publicly about the taxes paid or owed by any particular taxpayer. There's an exception for overdue taxes, because the state has to file a public lien for the tax amount before they can sue the taxpayer. They can't legally tell you whether Joe or Josephine Sixpak pay taxes or owe them or divulge anything from their tax files, but they can talk about it once there is a public filing that says the Sixpaks are overdue to the tune of whatever amount.

That's a notable provision in the law. It means that the original leaks that led reporters to the Dewhurst/Rylander dustup either came illegally from the comptroller's shop -- Oops! That would be wrong! -- or from the land commissioner's shop -- Wow! It would sure be strange to rat yourself out by telling a reporter you might have missed paying your taxes!

Dewhurst says an anonymous email was sent to some reporters and they called him. The comptroller's troops say they found out from reporters who had talked to Dewhurst.

Later, Dewhurst poured gasoline on the fire, keeping the story alive by putting out a press release that called on the Texas Legislature to "review obscure provisions in the law governing the state sales and use tax." He said he talked to several lawmakers who, like him, had never heard of the tax.

Just Like the Democrats Used to Do It

Republicans have a rule about not speaking ill of other Republicans, and they didn't violate it, but the GOP's statewide officials have made two endorsements, as a group, in two contested primaries. Scratch around a little bit and you can find some Democrats who remember when they were doing the same thing inside their own statewide primaries.

Railroad Commissioner Michael Williams has the support of the Republican elected class, even though he's in a contested primary. Williams, appointed by Gov. George W. Bush last year, is running for his first term on the commission, and held a photo op/press conference to announce endorsements from all of the other Republican statewide elected officials. Only Bush and Land Commissioner David Dewhurst missed being in that picture, but they're both on board. Williams' opponent, political newcomer Andy Draughn of Austin, says he'll serve the entire term if he's elected and will run for a full six-year term after that one. The two are vying for a term that ends in two years.

It was on paper, but Al Gonzales, the Texas Supreme Court justice who previously was Bush's Secretary of State, put out a similar list of endorsements. It also includes the names of all of the state's non-judicial statewide elected officials, all of whom are Republicans.

Political Notes, Congress

Credit the Houston Press for running down the money trail that showed $250,000 of Mark Brewer's money went to former U.S. Rep. Steve Stockman, who is now a consultant to Brewer. Brewer is one of several Republicans who want to succeed U.S. Rep. Bill Archer, R-Houston, in CD-7. He loaned his campaign well over $500,000, according to the mid-year finance reports and, according to the Press, paid Stockman $50,000 directly and made two separate $100,000 payments to something called General Media Consultants, which shares Stockman's address in Virginia.

If you're running for Congress in one of the wealthiest districts in the United States, why not leave town to raise money? Houston businessman Peter Wareing hops over to San Antonio to drag the sack and the host list includes a bunch of folks any San Antonio Republican would die for: Car dealer Red McCombs, banker Tom Frost, radio magnate Lowry Mays, and so on and on. Put this down as an odd connection that probably doesn't mean anything: Wareing's list of friends includes San Antonio oilman Gene Ames, whose daughter is running for the Texas House. Her fundraising efforts have received a big assist from the same Rep. Archer that Wareing is trying to succeed.

Elsewhere in that race, John Culberson picked up the endorsement of former Texas Secretary of State and GOP state chairman George Strake. Culberson says he's also got former party chairs Fred Meyer and Ray Barnhart in his corner.

Tom Reiser, one of two Republicans trying to knock off U.S. Rep. Ken Bentsen, D-Houston, in CD-25, picked up a pat on the head from House Majority Leader Dick Armey, R-Irving. Armey's political action committee cut Reiser a check for $2,500.

Ramsey Farley, one of three Republicans who wants a crack at U.S. Rep. Chet Edwards, D-Waco, in CD-11, picks up an endorsement from former state Rep. Hugh Shine, R-Temple, who lost to Edwards in 1990 (after beating David Sibley of Waco, who's now a state senator, in the GOP primary). Farley, who quit the Temple school board to make the race, faces Waco businessman Rob Curnock and Temple highway contractor Rodney Geer in the March primary.

Political Notes, General

Bill Callegari, a late entrant into the race to replace Rep. Culberson, R-Houston, gets a nod from his own. The Texas Society of Professional Engineers hasn't formally endorsed him, but they're on the verge. He's the third Republican in that HD-130 race: Corbin Van Arsdale, an attorney, and Aubrey Thoede, owner of a carpet-cleaning company, were already sprinting.

• It ain't exactly Regis Philbin: Democrat Molly Beth Malcolm wants to hold some public forum/debates with Republican Susan Weddington this spring, and the chairman from the left has challenged the chairman from the right to sit down with a calendar and set dates. Weddington isn't biting; her official line is that the two should get out of the way and let the various candidates talk. They do have one debate set, on January 26 in Dallas, and it would appear that that's it for this year.

•Jon Lamkin of Lufkin (say that fast) has signed on to manage Democrat David Fisher's campaign in SD-3. He's not from the regular crop of hacks, having spent the last seven years working for Memorial Health Care Systems of East Texas. Campaign finance deadlines are still a few days off, but Fisher says he will report raising $116,140 during the second half of the year, bringing his total to about $230,000. He gets to sit out during the primary season and watch the Republican side of the fight, where there are three candidates.

•Liz Mobley, a Republican attorney who wanted to take a crack at a district judgeship in Montgomery County, fumbled twice. She didn't make it to Austin to file for the job as she was supposed to, and when she sued to correct it, she went to a court that didn't have jurisdiction.

Signings: Robert Deuell, the Greenville doctor running for state Senate in SD-2, has signed up Jim Arnold, Hans Klinger and Jennifer Terrell to handle general consulting and fundraising for his campaign. That's a three-way primary against Tyler businessman Richard Harvey and Rockwall lawyer Keith Wheeler. The winner gets a crack at Sen. David Cain, D-Dallas, in the primary.

High Finance, Low Finance

That 10 percent cut in the tobacco settlement payments we told you about (the state's share is about $32 million; the county and hospital district share is about $61 million) won't immediately affect the state budget because legislators put the money into endowments instead of into operations. Less money than expected will flow to the various health science centers, for instance. But the Children's Health Insurance Program, or CHIP, is exempted from the cuts and will remain fully funded, according to Senate Finance Chairman Bill Ratliff, R-Mount Pleasant. There will be an adjustment in the tobacco payments later in the year, when the tobacco industry's profits are tallied up (that's part of the formula), and some budgeteers think that will mean a further reduction in payments to the state.

The state is on the verge of working out a $60 million difference between lawmakers and nursing homes. Lawmakers gave the nursing homes the 3.7 percent increase in payments they requested, and then left enough money in the pot for an increase of 4.5 percent. The industry now wants a 6.6 percent increase. The state will come part of the way. In return, lawmakers are imposing a rule that will require new money to go for care, and not for owners' profits, and are telling the industry to honor an agreement to not take the matter to court.

The January Ballot

If you ran a track meet this way, people would wonder about you. The San Antonio House race that falls after our deadline will have almost no effect on anything but parking spaces and office space in the Texas House next year, and that itself is only a 50-50 proposition. Mike Villareal and Robbie Vazquez, both Democrats, are running for the HD-115 position left open when Leticia Van de Putte won a special election to the Senate last year. They are alone in the race. The winner will get to be a state representative for the rest of 2000, a year without a legislative session in it. And the two will be back for a rematch in March, when they run for the full term that begins a year from now. All that's at stake is House seniority, and with only five open seats in the lower chamber this election cycle, that's small beer. Most of the establishment, including Van de Putte, has lined up behind Vazquez, who has been involved in politics for years; Villareal, a political newcomer, has the support of former mayors Henry Cisneros and Nelson Wolfe.

Also on the ballot this month is a recall of LaMarque City Councilman and former Democratic Rep. Lloyd Criss. He contends the recall effort is illegal, but it was on the Saturday ballot at our presstime.

Another Texan Goes National and Other Legal News

Texans for Lawsuit Reform made its name on the tort reforms of the 1995 legislative session and the group is now trying to go national. The president of the outfit, Houston builder and developer Dick Weekly, sent a letter to supporters asking them to come to a strategy session this month to talk about "the second five years." In his letter, he says "a small group of plaintiff lawyers" are attacking the reputation of the Texas Supreme Court in an effort to run back the reforms.

He points to growing class action lawsuits, to the settlement in the state's tobacco lawsuit and its "outrageous and dangerous precedent for unreasonable legal fees." And he says the efforts of opponents to tort reformers are going national and deserve a national response. "TLR is contemplating a role in a new, aggressive, national effort to fight lawsuit abuse to assure that federal action does not circumvent the reforms passed at the state level."

• Watch for a group that includes state Reps. Rick Green, R-Dripping Springs, and Suzanna Gratia Hupp, R-Lampasas, to file a lawsuit against the 28 cities that have sued the gun manufacturers. The Texas Legislature passed a law last year that prevents cities here from filing such suits. But cities elsewhere in the U.S. have filed such suits, and the Texas lawmakers and others say that has affected interstate commerce, raising prices and lowering Texans' ability to buy guns. Green says they're still doing legal research and won't take action for a couple of weeks. And he expects the list of plaintiffs to include several other lawmakers by then.

Political People and Their Moves

Remember NETPAC? It's the political action committee started up by Rep. Rick Green, R-Dripping Springs, and funded, he says, with over $500,000 in contributions. That group has hired Wil Galloway as its executive director. He was general counsel at the Texas Department of Agriculture under Rick Perry and has been working as a lobbyist since Perry's election to Lite Guv... Attorney General John Cornyn is hiring Sally Hanners, longtime lobbyist for the Texas Dental Association, to work in his legislative office. No word at this point on who will replace her at TDA... Cha Guzman of Austin is off to Washington, D.C., for a year to work in the executive offices at the U.S. Department of education. She's a top administrator at Austin Community College. The move will put her closer to her husband, Gilbert Ocañas, who is the deputy director of the Democratic National Committee... Appointments: Gov. George W. Bush named Patsy Waller Nichols of Austin to the Texas Growth Fund board. She's a partner at Fulbright & Jaworski... Jim Francis will keep his job at the head of the Texas Department of Public Safety; Bush reappointed the Dallas businessman and Republican activist to another six-year term... The governor named Alfred "Mac" Stringfellow, a San Antonio businessman, to take Allan Polunsky's spot at the head of the state's prison board, keeping the chairman's job in San Antonio. Stringfellow was already a board member, and Bush still has a position to fill on that panel... Finally, Bush appointed two new members to the Juvenile Probation Commission and reappointed Betsy Lake of Houston, who has been on that panel for four years. The new faces belong to Bexar County Commissioner Lyle Larson of San Antonio and Carlos Villa, an El Paso lawyer... Deaths: Fort Worth Police Chief Thomas Windham, who brought community policing and a steady hand to that department for 15 years, of cancer. He was 61.

Quotes of the Week

Gov. George W. Bush, promising tax cuts if he is elected president regardless of what happens to the economy: "This is not only no new taxes -- this is tax cuts so help me God."

U.S. Sen. John McCain, in response: "It's fiscally irresponsible to promise a huge tax cut that is based on a surplus that we may not have."

Heritage Foundation policy analyst David John, on the public's desire for cuts in the price of government: "At this point, we seem to have moved from irrational exuberance to rational responsibility, where tax cuts don't resonate as strongly a they once did."

Fordham Foundation director Chester Finn Jr., co-editor of a study that says Texas leads the U.S. in holding public schools accountable: "It's almost embarrassing that we keep giving Texas high marks when we don't mean to." Civil Rights Project co-director Gary Orfield, on studies sponsored by his group that conclude the accountability tests used in Texas are harmful to minorities: "What we're finding out from Texas is truly frightening. When high-stakes tests drive education reform, they can reduce the curriculum in high poverty schools to little more than test preparation."

U.S. District Judge Edward Prado, the next day, in a written order upholding the use of the Texas Assessment of Academic Skills, or TAAS, test: "The disparities in test scores do not result from flaws in the test or in the way it is administered. Instead, as the plaintiffs themselves have argued, some minority students have, for a myriad of reasons, failed to keep up with their majority counterparts." (You can take the test yourself online at the Texas Education Agency.)

U.S. Senate candidate H. Gerald Bintliff, a Democrat, on his proposal to pave Mercury to solve overcrowding problems on Earth: "We might be able to make the planet habitable. I call it the Morning Star Project. Eventually we know we're going to have to move out of the solar system anyway."

The latest from U.S. Sen. Kay Bailey Hutchison, R-Dallas, on whether she's interested in running for governor in 2002: "If it's a free run -- an open seat -- I will look at it."

Former Democratic consultant Chuck McDonald, on Bush advisor Karl Rove: "Karl plays as fair as anybody else in politics, but he plays for keeps. I always knew where I stood with Karl. I knew he was trying to kill me."

Texas Weekly: Volume 16, Issue 27, 17 January 2000. Copyright 1999 by Printing Production Systems, Inc. All Rights Reserved. Reproduction in whole or in part without written permission from the publisher is prohibited.

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