Lawmakers knew that letting new companies sell electricity in Texas would bring some financial drama to a staid industry, but they predicted it would take two years to get that far down the road. As you might have heard by now, they were wrong, and the price tag on the mistake is hovering in the $50 million range.
Property tax appraisers around the state are knocking down the values of less competitive sources of electricity and marking up the value of more valuable assets. That means, without getting mired in electro-jargon, that nuclear plants are worth much less than they were the last time the appraisers came around. The Comanche Peak nuke in Somervelle County is losing $4.75 billion of its value. The South Texas Nuclear Project in Matagorda County is losing $958 million of its value (two of the owners are in turn owned by municipalities, so part of the plant's value is exempt from taxation).
The county governments will lose some money as a result, to the extent they were depending on the plants for property value. The school districts that have the plants inside their borders land in a temporary Twilight Zone. Even after the plants are marked down, Glen Rose ISD and Palacios ISD are still considered part of that class of school districts that have more than enough money, so they'll be sending money to the state, which will then send it to poorer districts.
The electric competition legislation made room for this. The state started a special fund that will fill financial gaps for the first few years, to allow school districts to adjust to the changes in the property tax base. The state will assess utilities (both the existing ones and the new competitors) for the money needed in the fund, and the utilities will then add a small charge, probably under 25 cents, to their customers' bills. That is supposed to continue for a few years and then fade away.
Pain for the State and for Utilities without Texas Nukes
The immediate problem in the Glen Rose and Palacios ISDs is a strange one. They'll actually have plenty of money to cover their own budgets. But their checkbooks will be light when it comes time to send money to the state to redistribute to poorer districts. Budgeteers from several agencies are working on that and seem confident that nobody in education will be hurting for long.
But it's not just the poor little ol' school districts that get whacked when the assessed value of nuclear reactors drops. And it's not the owners of the nuclear reactors who feel the most pain when it comes time to figure out which utilities have to make up the difference in tax revenue.
To understand why the industry is spending so much time working this one, it helps to know that some companies that sell power in Texas -- take Entergy, for example -- don't own nuclear assets in Texas. But they, just like the companies that do own Texas nukes, have to pay a share of the assessment for the state fund and pass that along to their customers. They don't get an offsetting benefit, like the owners of the nukes get. After all, when the nuclear assets of companies like Reliant and TXU Electric are marked down, those companies pay lower property tax bills.
The Public Utility Commission, which regulates this stuff, will eventually settle up with those owners and, in the end, all of the financial turbulence will smooth out. But in the short term, companies like Entergy feel a squeeze. That's one reason why it's taking some time to work out a settlement.
Sen. David Sibley, R-Waco, one of the sponsors of the electric bill last session, admits there is a timing problem, but says lawmakers' intent was for this to even out so that the long-term hits from open electric markets don't hit anyone unfairly. It's the short term that's presenting a problem.
You Don't Need a Nuke to Feel the Fallout
The school districts with the nuclear reactors will see the biggest changes in terms of sheer dollars of anyone in the state. But nukes aren't the only electric plants being marked down in anticipation of competition, and dozens of other school districts will lose some property tax revenue. Those range from the big losses at Comanche Peak and South Texas to actual gains in places where power plants are either new or burning the right type of fuel to be competitive. State education officials are waiting for solid numbers before they start figuring out who will need how much money, but a number of districts that are losing property value are relatively poor districts. And a small drop in revenues in sheer dollar terms can still be a large portion of a small district's money.
By the end of August, the comptroller's office will have final, certified numbers on who got hit and how badly. School districts will set their tax rates -- based on the new and lower property values -- a couple of weeks after that. By the end of October, the state expects to know how much should be in that "System Benefit Fund" we told you about higher up. The utilities will get their bills at the end of the year, based on their sales in Texas.
While we're on the subject: Need proof that the sponsors didn't mean for the local effects to be onerous? Comanche Peak is in Sibley's Senate district and he sponsored the bill. One of his co-signers was Sen. Ken Armbrister, D-Victoria, whose district includes the South Texas plant.
A Sick Doctor and a Name Made for Texas Politics
Dr. Charles Moritz, who won a three-candidate Republican primary (without a runoff) to challenge U.S. Rep. Lloyd Doggett, D-Austin, has dropped out, citing unspecified medical problems (and backing them up with letters from a couple of doctors saying he should get out). His website features a three-sentence note saying that "as of 6/23/00 I have withdrawn from the race for U.S. House Representative." Since that district doesn't cross county lines and thus fall into the hands of the state GOP, it's up to the Travis County GOP to fill the empty slot on the ticket. They would have to show proof that Moritz has a catastrophic illness in order to replace him with someone else. But party elders are not inclined to do anything at all, according to Alan Sager, the county GOP chairman.
There are but four months until Election Day, and the next guy down the ballot, Jerry Mikus Jr., got too little of the primary vote (32.7 percent) to attract much support from the Party, either on the county or the state level. Staying out -- an option also advocated by some members of the Austin legislative delegation -- allows the Republicans to concentrate resources elsewhere. Most believe that the seat, as currently mapped, favors Democrats, and they're inclined to save their gunpowder until after redistricting, when there is at least a chance they can add some Republicans from Austin's high-growth areas to the district. There's also a money question. Doggett has more than $1 million on hand for the race, and it would be difficult to compete with that bankroll this late in the campaign.
• Our candidate for best ballot name so far is The Mad Hatter. That's a real name and that's how it would have appeared on the ballot in November. Mr. Hatter is a Libertarian candidate for House District 83. The current occupant of the chair in question is Rep. Delwin Jones, R-Lubbock, and there is no Democrat in the race this year. Hatter, who says he ran for mayor of Lubbock four years ago, works for a game company traveling in Texas and other states, and had his name legally changed six years ago. Why? The 31-year-old's given name was Robert Guimbellot, a Cajun moniker pronounced WHIM-be-low. He got tired of spelling it for people, and says The Mad Hatter just seemed like a good replacement. He filed on time to be in the race, but his name was not among those on the certified candidate list sent to the Secretary of State by the Libertarian Party. SOS officials say there is at least one candidate from that party who might have inadvertently been left off. If the party left off Hatter because of some mistake, election officials say he can probably get back on the ballot.
Not So Fast There, Buckaroo
The reception for HD-18 challenger Ben Bius a couple of weeks ago listed about a dozen-and-a-half Republican House members as sponsors. But it turns out that at least a couple of them say they didn't grant permission to the Huntsville businessman to use their names.
Bius' reception invitation was unusual because of a tradition that sounds bizarre to people outside of Austin and even to some people who spend a lot of time around the Capitol. House (and Senate) members have traditionally avoided giving overt help to people challenging incumbent representatives. The guiding principle, apparently, is that there are plenty of people out there to run partisan campaigns without getting mud and blood and beer on the 181 officeholders who actually have to work together when the Legislature convenes. In this case, Bius is in a rematch with Rep. Dan Ellis, D-Livingston, who narrowly won the last contest in 1998. It was an open seat then, and lots of elected officials got involved. Now it's not, but the GOP only needs four additional seats to gain a majority in the Texas House, and HD-18 is one of their juicier possibilities.
Even so, several House members who were listed as co-hosts say they didn't agree to be listed. Rep. Kyle Janek, R-Houston, said he hasn't talked to either Bius or his campaign about the reception. He had only nice things to say about Bius. The two talked at a golf tournament last month in Livingston, and Janek said Bius "understands my policy of not getting involved in races against incumbents." He said his name on the program was probably a mistake made by the candidate's staff. Bius says Janek agreed to be listed, and has posted on his campaign web site a picture of the two men standing side by side at the golf tournament (which was a benefit in the name of Janek's brother-in-law, who was killed in an automobile accident).
Rep. Ken Marchant, R-Coppell, said the Bius campaign called about the reception, but said he was out of town and did not respond to their request, either to lend his name or deny the use of it. Marchant said he generally stays out of contested races involving incumbents from the other party, but in this case, "I can't tell you whether I would have done it or not." Rep. Carl Isett, R-Lubbock, initially said he didn't even know about the reception, much less that his name was on the list of hosts for it. He said he generally doesn't put his name on contested races involving incumbents. Todd Smith, a political consultant who's working for Bius and who has worked in the past for Isett, said he later talked with Isett and that Isett then remembered giving his permission.
The reception, held in Houston during the GOP's state convention, attracted a good crowd and raised about $15,000, Smith said. Both he and Bius said the campaign was careful not to use the names of anyone who didn't approve; had they been more cavalier, they would have used the names of all or most of the Republicans in the House. A few members who were asked said they'd rather not be listed, and a few who couldn't be contacted were left off the list, even though they later said Bius could have used their names. Bius said Reps. Tom Craddick, R-Midland, and Ruben Hope, R-Conroe, were among those on the list who either said they would have signed up or came to the event.
Finally, none of the people whose names were used called the Bius campaign to complain about being on the invitations, according to both Bius and Smith.
Meanwhile, in a House District Nearby...
Rep. Wayne Christian, R-Center, is trying to raise money with a letter that starts off with "I am a wanted man." He is, in fact, a target of the Democrats. If you go strictly by the numbers (which is often a dumb thing to do in politics), Christian is the Republican House member with the highest percentage of known Democratic voters in his district. He faces Nacogdoches Sheriff Joe Evans in November, and says in his letter to finance folks that Evans endorsed him before deciding to run. Christian's missive says his race is a top priority for Lt. Gov. Rick Perry (Perry is planning to host a fundraiser for him). And he says -- you'll see a lot more of this line over the next four months -- that his race is important because it shares territory with Senate District 3. Christian's pitch is that the Democrats want to beat him on the way to trying to win that Senate district and with it, a majority in the upper chamber.
Big Needs, Big Numbers
If you were in an industry that got most of its money from the government and if one in every five companies in your business was in bankruptcy, you'd probably want help. Lots of it. Fast. That's a quick way into what's bugging the nursing home business in Texas. That industry, after a bumpy ride with budgeteers during the last session of the Legislature and during the 12 months since lawmakers went home, is getting ready for the next round, and the numbers are very, very large.
They want help with soaring liability insurance premiums, annual turnover of well over 100 percent in their nursing ranks and general inflation. If lawmakers did everything on the list, it would cost $778.4 million: $210 million to cover cost of living and inflation, $322.4 million to cover staff pay hikes and benefits, and the rest to cover liability insurance payments.
Their pitch might be in a new form this year, taking a page from a recent success and trying to do for nursing home nurses and staff what was done for teachers last session. Texas has 65,000 patients. Medicaid covers 70 percent of them, and the state's reimbursement rate of $81.22 per day is $22 under the national average. Texas ranks 45th among the states on that rate. (Three of the states ranked below the Lone Star state are on its borders: Arkansas, Oklahoma and Louisiana.) Texas nursing homes also have fewer nurses on staff than the national average. They would and will contend that the nurse shortage and the money shortage are two sides of a coin.
Reviews Aren't Voluntary for Everyone
Attorney General John Cornyn heard his share of whining after he reached a lawsuit settlement with Aetna earlier this year. But at least part of that settlement now looks pretty good.
The 5th U.S. Circuit Court upheld the state law that lets people sue their HMO's, but in the process, it knocked down a part of the law that forced insurance companies to go through independent review organizations, or IROs, when patients complained. The companies didn't like that idea at first, but have come to find that the reviews stave off some lawsuits, so they're starting to come around.
Under the 5th Court's ruling, IROs are voluntary for insurers operating in Texas. Except for Aetna. As part of that settlement reached in its duel with Cornyn, the company agreed to mandatory compliance with the IROs, and is stuck with that deal even though it later won the argument in court. Cornyn's office is now trying to get similar language into agreements with other health plans.
If irritating the other guys is part of the job requirement, give the Democrats a gold star: They posted the Texas Republican Party's platform on their own web site, offering voters, they said, a chance to compare. As a result, the Democrats have their own platform and the GOP's on display.
The GOP doesn't have either document online at the moment, but they're working on a web site redesign that will eventually include the new platform. And their return snap of the towel, delivered by spokesman Robert Black: "Since Democrats try and co-opt so many Republican principles and ideas, I was actually surprised they didn't post it sooner."
• Want to find out if you've got a millionaire on your payroll? This probably won't surprise you, but there are quite a few millionaires working for taxpayers. The personal financial statements of federal officeholders and all four of the remaining major presidential candidates (George W. Bush, Al Gore, Ralph Nader, Pat Buchanan are now online. You can have a look, courtesy of the Center for Responsive Politics, at this Internet address: Opensecrets.org.
• It's not unusual to see lawmakers getting involved in some local races, but this is a head-scratcher: Republican Woody Edmiston, who's running for sheriff in Travis County (that's Austin), held a fundraiser that included as hosts 11 of the state's 16 Republican senators. Why do they care? It's a favor for former Sen. Jerry Patterson, who's sponsoring the event.
Oddments and Miscellaneous News
• Say you've got a dorky tattoo that's preventing you from getting a job, or that your kid has one. Well, there's a program funded by the governor's office to get tattoos removed for free, but you're probably not eligible unless the tattoo is some kind of gang sign. As it turns out, Gov. George W. Bush awarded a $90,000 juvenile justice grant used to buy tattoo removal equipment for 14 locations around the state. That was last year; four of the locations are up and running and doctors who volunteer to perform the procedures are being trained to use the other ten machines. The Guv's folks say local officials are supposed to screen candidates, allowing only gang members to get the freebies. The idea is that the tattoos forever mark gangsters, even after they go straight and try to run with a new set of friends and colleagues.
• Remember that proposal to shut down the Texas Department of Economic Development and fold it into the Secretary of State's office? The idea would be to move TDED into the governor's office without actually adding to the number of employees in the governor's office. That's important to the current resident, whose campaign against his predecessor in 1994 included a blast about growth in the staff. Anyway, the proposal prompted a reader to ask whether people were already being stowed on the payroll of the secretary of state. The envelope, please? The answer is.... No. The number of full-time equivalent employees is 229.5. That's down from 236 in 1994, the last year Ann Richards was in office, and that was down, in turn, from the count of 264 in 1990, the last year Bill Clements was in office. And by the way, if George W. Bush gets a promotion in November and Lt. Gov. Rick Perry moves into the middle offices of the Pink Building, he would have no promise to uphold: Legislators could move economic development straight into the governor's office without putting Perry in a bind, and add the rare trophy of an abolished agency to their resumes.
• Courts aren't boring. Why, lookee here at the Texas Supreme Court's decisions from June 29: "Paul Bishop sued Texas A&M University at Galveston... for injuries he sustained while playing Vlad the Impaler in a Drama Club performance of 'Dracula'. During the final scene, a fellow student missed the stab pad attached to Bishop's chest and stabbed him with a Bowie knife." A&M professors were there as advisors, the court said, so the school is liable for the accident.
• The Children's Health Insurance Program is finally rolling in Texas, but the state was eligible to start it a couple of years ago. And the federal money Texas didn't spend then goes back into the federal kitty in September. Understand that the state would have had to spend some money to attract this money, and that's one of several reasons CHIP didn't get off the ground earlier. It also took Texas and several other states longer than the federal government had estimated to get a CHIP program up and running. That said, the amount foregone is large. The federal Health Care Financing Administration says $443 million will revert to the federal fund. Texas isn't alone: California left $592.7 million on the table, according to Stateline.org, an online news organization that put the numbers together. States that started earlier could each get a share of the $1.9 billion CHIP surplus, if Congress sticks to the original deal. The biggest state in that group is New York.
• It's happening after our deadline and the timing is odd because of what's happening at gasoline pumps all over the country, but lawmakers are looking at abolishing the state's oil severance tax. Interim committees are considering it, the oil industry is pushing it, and some state officials are joining the call for an end to the tax. It was stopped for several months last year, when oil prices were in the ditch. That convinced some lawmakers that the thing ought to be killed outright.
• And now, our quick weekly visit to East Texas. Rep. Todd Staples, R-Palestine, picked up an endorsement from Texans for Lawsuit Reform. That's not unexpected: His opponent, David Fisher, is a trial lawyer. Fisher, meanwhile, is renewing his call for debates in each of the 17 counties in the district. He came up with a list of dates and places, never got an answer from Staples, and is trying again. According to Fisher, the only debate on the schedule right now is on September 11, in Palestine.
Political People and Their Moves
Regina Montoya Coggins has hired Deborah Reed, a Democratic campaign op recommended by the honchos in Washington, D.C., to run her campaign. She worked on a losing New Jersey race that nevertheless impressed politicos by staying close in spite of a huge financial disadvantage. It doesn't look like money will be a problem this time. Coggins is challenging U.S. Rep. Pete Sessions, R-Dallas, in CD-5, one of the Democratic Party's targeted races in Texas and one of the best-funded, with contributions over $1.1 million so far. Chris Turner, who was Coggins' campaign manager through the primaries and until last month, has moved south to run the reelection campaign of U.S. Rep. Chet Edwards, D-Waco. Edwards has a challenge from Republican Ramsey Farley of Temple... Andy Erben left the Texas Association of Builders and says he'll make his plans known later in the summer... Marc Rodriguez is leaving the Lloyd Gosslink law firm to start his own lobby office. He'll continue lobbying for the City of San Antonio and City Public Service... Appointments: Gov. George W. Bush named John Ovard to be the presiding judge of the First Administrative Judicial Region. Ovard is a justice on the 5th District Court of Appeals in Dallas. Bush reappointed three presiding judges in the second, fourth and sixth regions: Olen Underwood of Conroe, David Peeples of San Antonio, and Stephen Ables of Kerrville... We must confess that we learned of the Judicial Districts Board because Bush named Joseph Wolfe of Sherman to the panel. It draws judicial districts for the Legislature, which isn't bound to follow the lead; the last time the court lines were redrawn was in 1887, we're told... Splitsville: Texas Land Commissioner David Dewhurst and his wife, Tammy Jo Dewhurst, filed for divorce. Her filing cites "extreme cruelty," a term her lawyer says is standard in a divorce filing... Deaths: Clayton Jones, who wasn't a state senator but who was arrested by Texas Rangers who mistook him for his brother, Sen. Gene Jones of Houston, during the Killer Bee episode in 1979. The Rangers were ordered to rustle up some or all of the 12 senators who walked out and left the upper chamber short of a quorum; they arrested Clayton in his brother's driveway while Gene hid inside. Jones was 69.
Quotes of the Week
Insurance executive Robert Reinarz, when asked by the Dallas Morning News why he wrote in an email memo that there would be "a price" of $25,000 for Lt. Gov. Rick Perry's decision against a legislative study of insurance deregulation: "I'm trying to think what I was thinking about." Perry aide Eric Bearse, on that subject: "What is alleged in the memo is total fiction."
Former New York Gov. Mario Cuomo, on Republican Rick Lazio's poll numbers in the U.S. Senate race against Hillary Clinton, a race Lazio joined late: "You could probably have Dracula with a swastika on his T-shirt and get 44 percent."
U.S. House Majority Leader Dick Armey, R-Irving, on why he doesn't have the big portfolio some of his congressional colleagues reported in their personal financial disclosures: "I've raised five children and sent them to college... once you start having babies, there's no money for the stock market."
Dallas political consultant Dwaine Caraway, an ally of DISD Superintendent Bill Rojas, on Rojas' offer to resign: "How much can Dallas take? It's like an Elizabeth Taylor love affair. One divorce after another. Sooner or later, nobody will want to marry us."
Republican political consultant Todd Smith, on the longstanding practice of Texas legislators ignoring races involving incumbent colleagues from the other party: "When [Rep.] Tom Craddick gets up at a Republican convention and says we need to get control of the House, the only way to do that is to beat incumbent Democrats... I'm a pretty partisan guy and I don't see anything wrong with this."
Dr. Edward Weiler, NASA's chief scientist, on preliminary findings that there might be water on another planet: "They have not found lakes or rivers flowing on Mars. They have not found hot springs. They certainly have not found hot tubs with Martians in them."
National Transportation Safety Board investigator Jim Struhsaker, explaining what went wrong with the flight of a small airplane that crashed in Ruidoso, New Mexico: "He got catty-whompus off the runway and disoriented in the soup."
Texas Weekly: Volume 17, Issue 3, 3 July 2000. Ross Ramsey, Editor. George Phenix, Publisher. Copyright 2000 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 (800) 611-4980 or email firstname.lastname@example.org. For news, email email@example.com, or call (512) 288-6598.
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