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On Your Mark, Get Set, Get Set, Get Set...

The presidential election lasted too long. Then there was a new governor to swear in and a race in the Senate to name a new lieutenant governor and a mini-diaspora to Washington, D.C. Senate committees were named, then House committees, and everyone paused for the inauguration. Gov. Rick Perry will come back and make a State of the State speech this week and then, at last, this contraption will finally be rolling. It's been a weird beginning to what could be a weird year.

The presidential election lasted too long. Then there was a new governor to swear in and a race in the Senate to name a new lieutenant governor and a mini-diaspora to Washington, D.C. Senate committees were named, then House committees, and everyone paused for the inauguration. Gov. Rick Perry will come back and make a State of the State speech this week and then, at last, this contraption will finally be rolling. It's been a weird beginning to what could be a weird year.

Two of the top officeholders fumbled early, but not at critical points. Lt. Gov. Bill Ratliff had to revise his committee assignments after leaving Hispanics out of the mix. Perry tripped on his shoelaces in reporter interviews on hate crimes and had to patch that. Relations between Perry and House Speaker Pete Laney aren't hopeless, but have all the ingredients for a big explosion. A couple of statewide officeholders have begun what looks like a running squabble that will end with a challenge to Ratliff. Budgeteers say money is tighter than usual. Redistricting is on the horizon.

What a hoot.

Don't read too much into the towel snap that attended the release of Perry's budget. The budget presented by a governor has no real purpose, but is required. Lawmakers have no legal reasons and few political incentives to pay any attention to it, and they often use a governor's spending proposals for batting practice. By the end of a legislative session, which is when a Texas governor's powers peak, all is usually forgotten or at least buried under a number of intervening deals.

That said, Perry tossed out a budget that spends $2.3 billion more (including bonds) than what was proposed by the Legislative Budget Board. It includes a mess of proposals, from his plan to double spending on Texas Grants for lower-income college students to rate increases for nursing homes to $1.1 billion in bonds for new highways. Most of that stuff was expected.

But there was a surprise in there with the candy. Perry wants to build more prisons, and proposed that even though a number of prominent legislators are on record saying that Texas should stay out of the prison construction business for a while. It was reminiscent of Gov. Ann Richards' proposal for a teacher pay raise in 1993. Lawmakers then didn't have the money and resented being forced to turn away a proposal that sounded so good to so many of their voters.

In the current case, Perry landed his proposal at about the same time the Texas Criminal Justice Policy Council put out its annual on prison matters report. That state agency, which is required to watch demands for space, says lawmakers don't immediately need to build anything. Perry wants to authorize $95.1 million in bonds for 1,808 new prison beds in case they're needed and $54.5 million more for repairs to existing prisons, and that idea, along with the criticism of senators who don't like it, dominated the next day's headlines.

His ambitious bond programs got lost in the mix. Perry wants the state to borrow $15 million for overdue park projects. He proposed using about 11 percent of the state's federal highway money for debt service instead of roads. The money would be used to pay for highway bonds, in effect borrowing expected future proceeds to finance more construction now. Those are called GARVEE bonds (short for Grant Anticipation Revenue Vehicles). Folks who like them say they make sense because you don't have to wait several years to build roads you need now. Folks who don't like them say they use money that should go to concrete and asphalt to pay interest on bonds instead. Two years ago, the Senate approved a GARVEE bond package; the House let it die.

Money for the Border and a Plea for CHIP

Another Perry bond proposal would build $175 million in highways at various spots on the Texas Border. Expect the Border in general to be one of the points in the State of the State speech, along with the regular issues of higher education, transportation, and technology.

You might also get another dose on criminal justice. The death penalty proposals we flagged last week are officially in the air. Perry, in a speech that could as easily have come from a Democrat as from a Republican, told the Texas Association of Broadcasters that he'll support post-conviction DNA testing of capital murder convicts, creation of "life without parole" sentencing, and state-mandated standards for attorneys appointed to represent indigents in death penalty cases. A bipartisan group of senators led by Republican Robert Duncan of Lubbock filed the DNA bill and that appears to be on a fast track, at least in the upper chamber.

He said the state should wait for the federal courts before considering whether convicts with very low IQs should be exempted from the death penalty. Texas has a court case on that very subject working its way through federal appeals courts; Perry wants to wait for some received knowledge on that one before he jumps in.

The speech to the broadcasters started with a plea to publicize the Children's Health Insurance Program, which was a bone of contention between Democrats and some Republicans, notably then-Gov. George W. Bush, two years ago. With issues like that and his willingness to spend more money on health and human services than legislators have proposed, Perry might be able to stave off challenges from his left, both within and without the Republican Party.

If he's successful, Perry can kill the possibility that another Republican, like U.S. Sen. Kay Bailey Hutchison, would see some political weakness and challenge him in the GOP primary in two years. And he wants to defuse issues that might work against him in a general election later that year. The most oft-mentioned candidate for that race—oilman, banker and investor A.R. "Tony" Sanchez Jr. of Laredo—has a deep interest in higher education and would almost certainly have some ideas about what the state should be doing for and with the Border. If those are his issues, he'll have to move quickly or cede some ground to the incumbent.

Organizing Early

The biggest news in the House committee assignments is that they came out relatively fast. That's mainly because there was so little turnover in the House; only 11 members didn't return from last session, so there weren't a lot of empty seats to fill. Speaker Laney wasn't in a head-busting mood this year, either; after the 1998 elections, he demoted some Republicans. This time, no bodies.

Go through the list of Speaker Laney's committee assignments and find the list under the name of Rep. Paul Sadler, D-Henderson. His assignments got the same reaction from House members that senators gave to the powers assigned to Sen. Rodney Ellis, D-Houston. Ellis, you'll remember, is chairman of finance and is also on the Senate's redistricting panel.

Sadler remains the chairman of Public Education, but will also chair the Select Committee on Teacher Health Insurance, a powerhouse panel that includes six committee chairman among its 15 members and signals Laney's intent to make the issue a centerpiece of the session. But that's not all. Sadler also got on the elections committee which will handle campaign finance reforms, the calendars panel that decides which bills get to the floor (and which bills don't), and the redistricting committee.

Most of the changes were slight this time, but the Texas Republican Party got after Laney, saying he short-sheeted Republicans and women when he was handing out top committee assignments. By their numbers, women should have had two more chairmanships and Republicans should have had five more chairmanships. They also complain that he put too few GOP representatives on big committees: Appropriations, Calendars and Redistricting. Laney brushed off the criticism, but pointed out to reporters that the chairman of redistricting, Rep. Delwin Jones of Lubbock, is a Republican.

Give a Hoot, Don't Pollute, File a Suit

The Jefferson County Appraisal District is considering a lawsuit challenging the state's property tax exemption for pollution control equipment. That exemption, approved by voters in 1993, knocks as much as $800 million off the county's property tax rolls, or almost 6 percent of the total value. Statewide, the pollution control exemptions are expected to total $3.3 billion on the next tax rolls, an increase of $765.8 million, or 30.8 percent, over the 1999 numbers. Of the total, almost $2.5 billion is in 20 school districts in 12 counties. That translates, in the loosey-goosey fashion of property taxes, into higher tax rates from school districts, cities, counties and other tax entities.

Critics argue that it shifts some of the burden of property taxes from industrial plants to other taxpayers, such as owners of other kinds of business property and of homes. That said, the exemption passed with support from environmentalists and industrialists alike, who figured that plants were going to be built and that if there was a way to make them clean, the state should jump at it. And the industry folks say property tax rolls aren't being shorted, because the pollution stuff wouldn't have been added in if the exemptions hadn't been in place.

The Jefferson CAD won't make a final decision on whether to sue for two or three weeks, officials there say. But chances are pretty good that they, and some other counties, cities and school districts will file suit to either knock the exemption off the books or change the way it's administered. They're talking to the Austin law firm of Ray, Wood, Fine and Bonilla.

The local governments and school districts disagree with industrial companies over what constitutes pollution control equipment. If a gizmo does nothing but control pollution, everybody's fine. But a judgement call is needed when something is added to a production process but claimed as an anti-pollution device. In one case, a company built a new plant, closed an old plant, and tried to get more than half of the value of the new plant attributed to pollution control. The owners argued that a plant without pollution controls would have cost that much less. The local government folks haven't been happy with some of the state government's interpretations in situations like that one, or whether a particular widget is for pollution or production, and therein lie the seeds of the fight.

A working group comprised of disputants met over the last several months, but those sessions have ended. The Texas Natural Resource Conservation Commission has proposed a formula for handling exemptions, and the agency has asked Attorney General John Cornyn for a formal opinion on a chunk of the argument. Talk of a lawsuit is geared, in part, to get the attention of the Legislature during the current session.

These folks don't even agree about the overall size of the exemptions. All of the numbers we've seen, from this group and that, show huge growth in the amounts exempted from the property tax rolls. For purposes of illustration, and because it's ultimately the best source of statewide information on property taxes, we got some numbers from the state comptroller's office.

A little more than 200 of the state's school districts have pollution exemptions on their property tax rolls, according to preliminary numbers (which, we'll caution, are subject to amendment later) from the property tax division at the state comptroller's office. A total of seven counties have more than $100 million in property exempted from their rolls. Deer Park ISD, with $394.7 million in exempted property, is at the top of the list. La Porte, at $372.0 million, is second on the list, followed by Brazosport ($264.6 million), Beaumont ($153.0 million), Victoria ($130.4 million), Pasadena ($108.5 million) and West Orange-Cove ($105.8 million). Growth of the exemptions gets attention from the tax collectors. The preliminary numbers for pollution control exemptions in Deer Park ISD are 38.4 percent bigger than the 1999 numbers. The exemption there is increasing by $109.4 million. La Porte ISD's exemptions look to rise by $129.6 million, or 53.4 percent.

Saber-Rattling Republicans

Okay, sit there and tell us this doesn't sound like the makings of a Republican primary fight. Land Commissioner David Dewhurst told the Dallas Morning News that he was happy about the "dramatic increase in fund raising" exhibited in his latest campaign finance reports, an increase he attributed to the job he's doing at the General Land Office. That prompted Mark Sanders, who is sometimes employed as Comptroller Carole Keeton Rylander's political consultant (and who was formerly employed, in his off-government hours, as Dewhurst's political consultant) to note that around five of every six dollars contributed to Dewhurst came from, um, Dewhurst: "We went searching for this so-called dramatic increase in support and found the only dramatic movement was from one of David's accounts to another. He did more raising of the pen than raising of contributions."

Dewhurst's spending, which totaled $249,617, included $73,000 in interest on the campaign's bank loans. At the end of the year, the balance on those loans was $1.79 million (and monthly interest was over $10,000). Contributions totaled $3.0 million, including $2.5 million from Dewhurst himself. Of those personal contributions, $790,000 went to loan repayment; the rest apparently went into his campaign's bank account. Rylander raised $1.47 million, spent $167,217, and ended with no debt.

Both Rylander and Dewhurst have shown an interest in running for lieutenant governor in 2002. So has the current occupant of the job, Republican Bill Ratliff, creating the possibility of a three-way Republican primary two years from now. Ratliff's report wasn't immediately available.

Keep the Dewhurst-Rylander dance in the back of your mind if redistricting gets ugly in the Legislature. They (and Ratliff) are among the five members of the Legislative Redistricting Board that would draw lines for Texas House and Senate districts if the Legislature itself fails to come up with a plan suitable to the governor. A majority of the lieutenant governor, the speaker of the House, the attorney general, the comptroller and the land commissioner would have to agree on a plan.

And Some Quieter Republicans, Too

The financial parade was led by Gov. Rick Perry, who ended the year with $8.3 million in his bank account, according to aides. His report, which ran on for 495 pages, showed contributions of $4.3 million during the last six months of the year. He spent $665,236 over the same period.

Attorney General John Cornyn raised $1.6 million and spent $369,463. Agriculture Commissioner Susan Combs raised $371,369 and spent $64,314 during the six months. Railroad Commissioner Tony Garza raised $68,467 and spent $59,727. The end-of-year reports for Commissioners Charles Matthews and Michael Williams, both of whom were on the ballot last year, weren't immediately available from the Texas Ethics Commission.

Statewide Democrats, who aren't in office at the moment (and thus aren't barred from raising money during the legislative session), had smaller numbers to show. Former Land Commissioner Garry Mauro, who ran for governor in 1998, still had $225,000 in loans outstanding at the end of the year. He didn't report any contributions for the last half of 2000, and his spending was a light $2,082. Former Comptroller John Sharp, who ran unsuccessfully for lieutenant governor two years ago, raised $49,100 and spent $1,280. Sharp has been telling supporters around the state that he wants to run for Lite Guv again, or, if a U.S. Senate seat opens up, for a spot in Congress' upper chamber.

We took a peek at judicial balances while we were at it, and one stuck out. Most of the justices on the Texas Supreme Court keep relatively low amounts in their campaign funds unless they're running. And they don't spend much, either. But Justice Gregg Abbott spent $69,296 during the second half of the year, including roughly $35,000 on Allyn & Co., a political consulting and marketing firm. Abbott also swamped his fellow justices in the cash-on-hand category, ending the year with $525,142 in the bank. Not all of the justice's reports were available, but next closest among the five whose reports were online was Justice Craig Enoch, who closed 2000 with $101,704 on hand. None of the justices who weren't on the 2000 ballot raised money during the second half of the year.

Our Founder Speaks

Those reports are as good an intro as any to this book plug. Too Much Money is Not Enough: Big Money and Political Power in Texas, by Sam Kinch Jr. with Anne Marie Kilday, is now available at Little Leaf Press for $12.95. Kinch, a former Dallas Morning News bureau chief and one of the founders of this newsletter, and Kilday, a former Austin reporter for the Fort Worth Star-Telegram, Houston Chronicle and the Dallas paper, put together a volume on campaign finance reform and included transcriptions of interviews with current and former officeholders who talk about political finance in an unusually forthright manner. The book was a project of Campaigns for People, a non-profit group pushing campaign and ethics reform in Texas government.

What is the group pushing? They'll apparently stick pretty close to a report from an interim House committee on campaign finance. The proposals include these:

• Require candidates (not just judges) to report cash on hand at the end of each reporting period.

• Bar candidates from squirreling money away in more than one committee.

• Require people who give $500 or more to list their occupation and employer.

• Require out-of-state PACs and in-state PACs to follow the same reporting rules.

• Restrict candidates' ability to repay themselves for personal loans to their campaigns.

• Require the same late reports from statewide candidates that legislators now make, reporting last-minute contributions by sending a telegram report to the state.

While a handful of legislators were announcing their support for some of that, Rep. Debra Danburg, a Houston Democrat who chairs the elections committee, said lawmakers have commissioned a "compare and contrast" study of Texas and Florida election law to find out whether any of the things that went wrong with the presidential election there are possible under Texas law. That's supposed to be done fairly early in the session, so they can fix any problems they spot.


Add Permanent School Fund investments to the budget watch list. Officeholders are forming up behind the idea of changing the mix of those investments, allowing money that has been locked up in growth stocks to move to income stocks. That would free up a boodle of money that could be used for teacher health insurance, for instance. The idea has been floating around for a while and to some, makes sense whether the money is needed or not. If this really is a recession, it's a good time to change stock strategies anyway. Another budget tidbit: Budgeteers snagged some extra cash two years ago by making 23 monthly Medicaid payments instead of 24. To make it up, they budgeted 25 payments this time. If they decide to delay again, it'll make an extra $250 million-plus available.

• They haven't done it to the House committees yet, but the Texas Eagle Forum put together a chart comparing the new Senate committee makeup with the old makeup. Each member has a rating from that group, based on past votes. Those ratings are averaged on each committee, then compared with the rating given to the same or comparable committees two years ago. The overall makeup of the Senate didn't change, but seven of the committees are marginally less acceptable to the group than before. Five, including redistricting, improved. That, in spite of the fact that the old redistricting panel had a one-vote Republican majority and the new one is a partisan tie.

• The House raised its employee pay cap to $3,500 a month from $3,300 per month. Senators can pay up to $5,000 per month without permission from their Administration Committee, and can pay more if they get approval from that panel. This is the answer to the trivia question: Why is turnover generally higher among House staff? The House also gave members a little more breathing room by increasing their monthly operating budgets to $10,750 from $9,750.

• If you need to brush up on rules and such, or explain them to somebody, the House Research Organization has published its regular "How a Bill Becomes Law" report. HRO also put out a list of key legislative dates. We refer you to their Internet site at House Research.

Political People and Their Moves

Former House Parliamentarian Bob Kelly, who left government to be a lobbyist and get rich, will be "of counsel" to clients at Public Strategies Inc. He'll keep his own lobby practice and won't be lobbying for PSI, but will advise their clients on legislative procedure and redistricting and such. While we're on the subject, PSI also signed Lizzette Gonzalez, who worked on former Gov. Bush's legislative team, to join the firm's lobby team...

Richard Evans is back at the Texas Association of Business and Chambers of Commerce, where he'll work on tort and workers' compensation issues. He was at TABCC last session, then left for the Texas Association of PPOs... Jack Campbell, who worked for then-Rep. Bill Hammond in the 1980s, did a little lobbying and then moved to Alabama, is back. He's working at TABCC (where Hammond is the jefe) on education and workforce issues. He'll also be TABCC's PAC director... Lobbyist Jay Propes has signed on with the Bickerstaff, Heath law firm; he'll team up with Sabrina Thomas on government relations work...

Billy Phenix, who left the Senate Natural Resources Committee for the Akin Gump law firm, is back in the public sector, this time on the policy staff of Gov. Rick Perry... Robert Scott, who had been at the Texas Education Agency, and who had already accepted a private sector gig, is also sticking around to work on Perry's policy staff... Patsy Clapper left the Legislature for the dot-com world, but she apparently missed the Pink Building. She's back as an aide to freshman Rep. Trey Martinez Fischer, D-San Antonio... Janet Elliott, formerly of Texas Lawyer and most recently a refugee from the closing of the Wall Street Journal's Texas Journal, has joined the Austin bureau of the Houston Chronicle... Rep. Phil King, R-Weatherford, got a distinguished alumnus honors from Dallas Baptist University. He's a 1981 graduate of that school...

Deaths: Recently retired federal Judge Lucius Bunton III, whose rulings shook everything from the FBI (for discrimination) to Texas water law to lawyers who liked to drag things out. Bunton, appointed by President Jimmy Carter in 1979, established what he called the "rocket docket" to move a backlog of cases and hurry slowpoke lawyers. He was 76.

Quotes of the Week

Sen. John Whitmire, D-Houston, on whether the state should build more prisons: "I am concerned that we still have this mentality that we need to build more when we can't run the ones we got."

Prosecutor turned Sen. David Sibley, R-Waco, on why he's in favor of DNA testing in capital cases: "You don't do justice if you don't have the person who committed the crime behind bars."

Lt. Gov. Bill Ratliff on pay raises for state employees: "In my opinion, we're going to have to do something. I think we have to do something across the board, and I know we have to do something in a number of targeted areas."

House Speaker Pete Laney, contending that he offset the Democratic majority on his redistricting committee by making a Republican the chairman: "That makes up for a little bit."

Senate Redistricting Chairman Jeff Wentworth, R-San Antonio, in a ten-year-old written statement being passed around by other Republicans regarding the last redistricting bill: "The most glaring discrepancy of this plan is that, while Republicans draw half of the statewide vote, when subjected to redistricting at the hands of the Democrats, Republicans are projected to hold only one-third of the house seats after the 1992 elections."

Author-to-be Stuart Stevens, who expects to publish a book this summer on his experiences working on the George W. Bush presidential campaign in Austin: "There's a lot of stuff in a campaign that has comic value that you don't realize at the time. It's like worrying about your cholesterol in a knife fight—you know either one will kill you, but one is more pressing."

Boston Red Sox (and former Houston Astro) outfielder Carl Everett, on living in the spotlight: "You're always going to have problems, especially when you have the media. If there were no media, you would never have problems."

Texas Weekly: Volume 17, Issue 28, 22 January 2001. Ross Ramsey, Editor. George Phenix, Publisher. Copyright 2001 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 For news, email, or call (512) 288-6598.

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