A Break from Taxes They Don't Levy

No, Virginia, there is no national sales tax, but politicians are politicians and tax holidays are popular gimmicks. Some of the politicos in Washington, DC, are talking about a national sales tax holiday that would hit right in the middle of the Christmas buying season. The idea is that the federal government would reimburse the states that have a pre-Christmas sales tax holiday. It's been the subject of conversation both in the national and state capitals, but the proposal is fraught with the sorts of pesky details that could easily sink it.

For instance: Five states don't have sales taxes and there's the problem of not giving a federal tax break to residents of Alaska, Delaware, Montana, New Hampshire and Oregon. That would be compounded if some of the 45 states that do collect the taxes opted out of the federal tax holiday.

For instance: Local option sales taxes ride on top of sales taxes here and in other states. Would the federal government reimburse the state, which would then figure out how to split money among everything from cities to transportation authorities to economic development districts?

For instance: How would the federal government figure out how much money was lost, from the standpoint of state and local governments, during the holiday? One proposal would have the feds using sales figures from past years to compute the amount of taxes "missed" by the locals. But would sales jump if taxes were waived for a couple of weeks and then dip after the holiday was over? Another way to put it: If January sales dropped because people took advantage of a December tax holiday and moved their spending up a month, how much would the drop in January sales cost the state and would the federal government be willing to pay that money back?

For instance, and this is a big one: How long would the state and local governments have to wait for their money. These are relatively tough times, but even if they weren't, governments have cash flows down to hair-trigger tolerances. Delay income for a week, and they're in something of a pinch. Delay it a month and they're in trouble. How would the local governments fare while the federal government floats their income, and who would hold money that inevitably ends up in disputes?

Aides to the governor and the comptroller are looking over the possibilities but won't really dig into the issue until they've got a better idea of what Washington is doing. Both Rick Perry and Carole Keeton Rylander have been supportive of the state's own sales tax holiday, a pre-school affair in August. Rylander has even proposed extending the August sales tax holiday, at a cost of $46 million, but that proposal preceded the economic downturn. But this is different because it would be "free" to the state and because it's not clear whether it would affect all or just some goods and services (the back-to-school break is targeted at clothes, school supplies, and other items).

Maybe an Earthquake, Maybe a Blip

Texas dropped $113 million in sales taxes on and immediately after September 11, but recovered by the end of the month so that the overall loss was only $42 million. That's not much in the overall scheme of things, but there were some weird numbers. Tax revenues from car sales were up for the month, but the effects—if any—of the attacks in Washington and New York might not show up in the numbers for another month. In any case, Rylander says it is way too early to start trying to figure out what all this will mean for the two-year budget. And she's still whistling past the economists, saying she still doesn't think Texas is in a recession or on its way to one. Local sales taxes dropped slightly as well—they would have to—but city-by-city numbers won't be ready for another week.

Burning Up the Phone Lines

Gubernatorial candidate John WorldPeace has himself in a bit of a bind because of the way he presented his unique advertising campaign to two different state agencies.

WorldPeace, in case you're not on the phone list or haven't read about it, has an auto-dialing machine at work day and night, calling people all over the state to leave messages about his campaign. Most of the messages we've heard are off-the-wall and spend a little time talking about WorldPeace and a lot of time knocking his opponent, Tony Sanchez Jr. The most recent message drags in others, including lobbyist and former state officeholder Ben Barnes and Sanchez attorney Tony Canales, a former federal prosecutor. It says unkind things about them, particularly about Sanchez, and it says those unkind things at the rate of 4,000 to 5,000 calls per hour, 12 hours per day.

WorldPeace claims to have made 12 million such calls so far, and says he intends to continue the drumbeat through the primaries in March and then through the general election in November 2002.

The Sanchez campaign hasn't done anything about it, other than to call WorldPeace "a crackpot dangerously armed by technology." A Sanchez aide contends the Laredo businessman's campaign gets another vote every time the Houston attorney completes a call. But they are paying attention.

There is no way to know the costs, who's paying, or who is getting called. WorldPeace said early last month that he's not reporting the automatic phone dialers to the Texas Ethics Commission as an in-kind contribution to his campaign. He's not paying campaign money for the service, he said, and was simply piggy-backing the political calls on the business calls being made on behalf of his law practice. We can't find anyone who heard a legal pitch in any of the political calls, but that was his contention.

That caught the interest of the Public Utility Commission, which regulates commercial calls. But that agency has decided it doesn't have the power to regulate a phone bank where the message is purely political. It's an endless loop. If it's purely political, then it's an in-kind contribution to the campaign, either from WorldPeace himself or from his law firm. If it's promoting the law business, it's arguably open to regulation by the PUC. But the fact that both arguments have been made—that it's a political message, that it's a business message—flushed out the candidate.

WorldPeace says he'll report whatever the Texas Ethics Commission says he should report. The folks at that agency heard about that, and wrote him a letter saying they weren't aware of any request from him about what should be reported. Tom Harrison, the executive director of the agency, recalled some conversations with WorldPeace's campaign treasurer, however.

Harrison says in the letter that WorldPeace doesn't have to report use of the dialers if they are personal assets, but does have to report any increased costs that resulted from the campaign. That's based on the notion that WorldPeace is making business calls along with the campaign calls. The candidate says he's not doing that, so all of the calls are for the campaign.

According to Harrison's letter, that means WorldPeace has to report the costs of lists used, long-distance charges, and any other costs that resulted from the campaigning. WorldPeace says he'll report all of that on the campaign finance report due in January, and says that report will have numbers "with two commas in them," by which he means he'll be reporting finances in the millions of dollars.

The calls began before the mid-year filing deadline for candidates. But WorldPeace says those calls were made in tandem with business calls (the machine would play business or politics, depending on whether the phone was answered by a human or by an answering machine). That didn't generate campaign costs, he says, and that's why no report was filed in July.

On his website, the candidate says he's in favor of the campaign finance reforms suggested by Austin-based Campaigns for People. He says he "believes in moving toward a system of campaign finance whereby any and all contributions toward the election of a candidate become part of the public record. If the amounts of contributions are public records, the public will be able to easily spot the potential influence on any politician. Election reform will not be easy because of the creative nature of human beings to find loop holes in the law."

Craddick Starts the Speaker Money Chase

About two dozen people got together at the Dallas Petroleum Club a week ago to hear about GOP prospects after the redistricting of the Texas House and a fundraising pitch on behalf of Rep. Tom Craddick, R-Midland. That was followed by a letter to some of the non-attendees from Louis Beecherl Jr., the Dallas businessman and Republican financier who has thrown his support to Craddick.

Beecherl's letter to the absentees says he's sorry they couldn't have lunch with him, Craddick, and political consultant Ted Delisi for lunch. (Delisi says he's not on Craddick's payroll, has no dog in the hunt for a speaker, and was only there to present the redistricting plan. When asked whether he's working to get Craddick elected—sans pay—he answers a different question, saying he's trying to ensure that a Republican majority takes the House next year.) Beecherl says the presentation was good and that the GOP should grab 85 to 90 seats in the 150-member House after the next elections.

He says he thinks Craddick "would make an excellent speaker of the House and deserves our support... he is well on the way to getting commitments from current and prospective members of the House." He has a classic Dallas oilman's line at the beginning of his pitch for Craddick's experience with state issues: "Although he is from Midland..."

Beecherl enclosed a return envelope and asked the letter's recipients to contribute up to $5,000 for Craddick's campaign for speaker. That, he says, is a limit set by Craddick for the campaign. This month marks the first reporting period for Craddick and other candidates who recently got into the race. Those include Reps. Kim Brimer of Arlington, Ed Kuempel of Seguin and Brian McCall of Plano. House Speaker Pete Laney was the only official candidate until a few weeks ago.

Lies, Damned Lies, & Statistics

He didn't mention any names when he was shooting, but Lt. Gov. Bill Ratliff has had a bellyful of a line that originated in Comptroller Carole Keeton Rylander's shop and is out to rebut it.

The line: Only 52 percent of the money spent on public education in the state gets to the classroom. Rylander has used that line for more than a year in education policy materials and speeches.

Ratliff didn't talk about her or her office in knocking the numbers, but says he looked things up, and says those numbers aren't anywhere close to correct. His version, taken from the Texas Education Agency's "Snapshots" publication: Teachers account for 51.4 percent of all school employees and 63.1 percent of the payroll. Principals and other campus administrators—he argues that they are "directly involved in hands-on education"—account for 2.5 percent of employees and 4.8 percent of payroll. Counselors—another group he puts in the hands-on category—account for 7.2 percent of employees and 9.4 percent of payroll. Want to include teacher aides? That's 10.3 percent of the workforce and 4.7 percent of the payroll. If you buy his line that those people are hands-on educators, you've accounted for 71.4 percent of the school workforce in Texas and 82 percent of the payroll.

Rylander's version also comes from TEA, and from that same publication. There is a column of numbers in that 400-page book that gives "the percentage of total expenditures budgeted for instruction" in each school district in Texas. It goes beyond payroll, but doesn't include things like buildings and food services and transportation. You'll find people who think a classroom itself is a direct instructional expense, but most of the tallies we've seen put buildings in their own category.

In the 2000-2001 school year, 51.3 percent of school budgets were classified as instruction. Another 2.6 percent were in the category of "instructional related services," and another 1.2 percent were in the "instructional leadership" box. Throw in "school leadership" to grab the principals and other campus administrators and you've added another 5.6 percent. Counselors and others are included in "support services-student," and account for 4 percent of the average school district budget. The total for those categories: 64.7 percent. The point Ratliff is trying to make is that most of the money in the school budgets is there to teach students. Or at least more of it than some would lead you to believe. And Rylander's point is that every dollar squeezed out of other areas can be used in the classroom.

Another Shot at the Middle Seat

Tom Phillips stuck his foot in the revolving door at the Texas Supreme Court to slow it down. Phillips, who talked about leaving the court he joined in 1988, says he will run for reelection to his post because "I cannot yet say that I have accomplished what I came to Austin to do." Phillips said in a statement that he still wants to work on judicial election reform. He said judicial races cost too much and said "even Arkansas and Mississippi have abandoned party labels for judges." He wants to be around for judicial redistricting, which will take place in 2003. He wants to work on access to the courts, making it easier for poor people to get issues settled without going broke on the way.

He also said he doesn't want to leave the court at a time when so many other justices are going. Priscilla Owen has been appointed to the 5th U.S. Circuit Court of Appeals. Deborah Hankinson and James Baker will serve out their terms but don't plan to run for reelection. And two justices—Greg Abbott and Al Gonzales—already left the court. Abbott is running for attorney general and Gonzales went to Washington, D.C., to be the White House attorney under George W. Bush. Their replacements, Wallace Jefferson and Xavier Rodriguez, will be up for election for the first time next year. Phillips wants to stick around until his goals are achieved and the turnover has slowed.

One of the contestants for an open seat on the court will be John Cayce, now the chief justice of the 2nd Court of Appeals in Fort Worth. Cayce, a Republican, says he'll run for the seat being vacated by Hankinson. He's a Fort Worth native who served in the Navy and went to law school at St. Mary's.

Examining the Gift—and the Gift Box

The same group that prodded George W. Bush into revealing the names of the Pioneers who each raised $100,000 for his campaign is after John Cornyn on the same subject.

Cornyn is planning a Pioneers knock-off to raise money for his campaign for U.S. Senate. The name is different—he's calling them Patriots—and the amount, at $50,000, is lower. All of the contributions and contributors will be reported, but federal law doesn't require Cornyn or anyone else to report the names of the folks who are out hustling the money.

Texans for Public Justice is asking Cornyn not to use what they call a bundling operation. If he persists, however, they want him to do what Bush did, to put out a list of names of people raising the funds. Here's the nuance to watch: The group wants a list of people who have raised the money or who have promised to raise the money. Bush didn't give up the names of anyone until they'd made their goal, and didn't point out anyone who raised more than the goal, either.

For now, Cornyn's folks say he'll follow federal law. That means he'll list contributors without providing a list of people who brought them to the table. They didn't give a flat NO as the answer, however. Cornyn has room to change that policy later if he wants to disclose more.

One More Poll, and the Cavalry Rides Again

A last poll in that open Senate seat in Wichita Falls shows Craig Estes way in front of his five opponents, but not far enough ahead, probably, to avoid a runoff against Greg Underwood. The poll by Fort Worth-based Eppstein Group gives Estes 45 percent and Underwood 21 percent on Tuesday. In a head-to-head with just the two candidates, the pollsters have Estes winning 69-31. Estes' name identification is 32 percent positive and 14 percent negative; Underwood's is 16 positive 12 negative. Harry Reynolds was at 12/11, and Kirk Wilson was at 9 positive and 12 negative. Eppstein polled 401 people on October 25-27, and the margin of error is ± 5 percent. The voters were split: 40 percent voted in one or more of the last three GOP primaries, 45 percent voted in one or more of the last three Democratic primaries, and 15 percent flipped from one primary to the other. Sidebars: That same poll shows school vouchers with 34 percent support while 58 percent of the voters oppose them.

Halved and Unhappy

Jefferson County will officially weigh in on the legislative redistricting case now pending in federal court, but not as a party. The county commissioners court—four Democrats and one Republican—voted unanimously to jump in and complain about the Senate plan that splits the county for the first time in umpteen years (that's more than 100). County Judge Carl Griffith Jr. says the plan approved by the Legislative Redistricting Board was the first proposal that split the county that way.

He says the Senate plan (which has also won a nod from the Department of Justice) would cripple Jefferson County's position in the water rights fights that have been going on in the Legislature for the last several years. He and others there, including incumbent Sen. David Bernsen of Beaumont, want the area to retain rights that allow it to hang onto enough water for locals even when outsiders might have other claims to it. That's a big deal in East Texas communities that feel the gravitational pull of Houston and its suburbs.

As it stands, one part of Jefferson County would be in a Senate district that stretches into Houston's northern suburbs. The other would go to a district that starts in the southern part of the county, follows the coastline to Matagorda County and then veers north into Harris County. On the other side of the argument: The current map more or less ensures a senator from Jefferson County, and that means it would probably be a Democratic seat. The new map would probably put two Republicans from Houston and its suburbs in the Senate, each representing a part of the county.

Maybe They'll Have a Moment of Silence During the Debate

The escape route on the school prayer debate appeared almost as quickly as the debate itself. Gov. Rick Perry's "Amen" at the end of a prayer at a mandatory school assembly in Palestine kicked off a mini-typhoon. It was just the kind of thing the U.S. Supreme Court ruled against in a case that began with a prayer at a high school football game in Santa Fe, Texas. But to get a political fight, you have to have an opponent, and Democrat Tony Sanchez Jr. said he agrees with Perry.

A week later, the same U.S. Supreme Court gave everyone an easy exit by refusing to reconsider a lower court ruling in favor of a Virginia law. That law requires a moment of silence in schools in that state, which students can use to pray, to figure out how they're doing in the stock market, or to contemplate the missing cards in their Pokemon collections. It allows prayer but doesn't force it.

The other Democrat running for governor, John WorldPeace, says prayer in school should be a local option issue and in any case shouldn't be mandated. He says the Virginia law would, in effect, force students into a prayer setting and he doesn't support it. Sen. Jeff Wentworth, R-San Antonio, says he'll file a bill to add a similar provision to Texas law next session. Sanchez, separately, said he would support such a law in Texas.

Flying Before the Landing Pad is Completed

He doesn't know what the district will look like, but Rep. John Shields, R-San Antonio, says he'll run for the Texas Senate next year. Unless the lines are dramatically different from what's on the table, that will put him in a primary with Sen. Jeff Wentworth, also R-San Antonio.

Shields told the San Antonio Express-News that he's not getting into the bout because of any gripe with Wentworth. He says he wants to be a senator and that's it. He is the second member of San Antonio's House delegation to drop out; Mike Villareal, D-San Antonio, is running for a county commissioner's job next year. Had he stayed, Villareal would probably have been paired with another lawmaker in new redistricting maps that reduce the number of seats in Bexar County. Rather than wait and see how new maps might treat a freshman lawmaker, he decided to run for county office. Shields' move prompted a handful of hopefuls to say they're looking at the House seat he's leaving behind. Two told the Express-News they're definitely in the race: James Allen, a developer, and Winfred "Chuck" Carroll, a retired Air Force officer. The outline of that district, like that of the Senate district, will be settled by the courts sometime in the next few months.

Political People and Their Moves

The denizens of the Pink Building are maneuvering to send Elton Bomer over to the Texas Parks & Wildlife to sort out the mess found by the state auditor there. Bomer, a former Democratic state representative, was appointed by then-Gov. George W. Bush to be the state's insurance commissioner, then to be Secretary of State. He was recently dispatched to the Texas Department of Health, where he reported back to Gov. Rick Perry and other state officials on ways to improve that agency. They're apparently looking for the same kind of help at Parks & Wildlife. The governor wants Bomer; some agency officials have said they want to open bids for consultants who could do the job... The folks promoting Sen. Florence Shapiro, R-Plano, for Secretary of State forgot about one of the basic rules of appointments: Lawmakers can't take a job if their term overlaps the job and if they voted, as a lawmaker during that term, on the salary. Shapiro voted on the budget, along with everyone else in the Legislature, and won't be eligible to serve as Secretary of State until her own term is up at the end of 2002. Henry Cuellar was appointed SOS at the beginning of the year and became eligible by not taking the oath of office for a new term in the Texas House. Gov. Perry is still shopping for Cuellar's replacement... Perry appointed Vickers Cunningham Sr. as judge of the 283 Judicial District Court in Dallas. He's a Dallas County Criminal Court judge, and will replace Molly Francis, appointed earlier to the 5th Court of Appeals... Katherine Lancaster has left the Texas Land Title Association and has been replaced by Leslie Midgley as executive vice president... Move Johnny Sutton a notch forward. He was recommended by the state's U.S. senators for a U.S. Attorney job last summer and President Bush has now appointed him as U.S. Attorney for the Western District of Texas. Sutton works in the U.S. Department of Justice; he was the criminal justice policy director under then Gov. Bush, and was a Harris County prosecutor before that... Lisa Mays is leaving the Public Utility Commission for the private sector. She'll be a lobbyist in the Austin office of the relatively new law firm of Loeffler, Jonas and Tuggey... Deaths: Rep. Paul Hilbert, R-Spring, who was diagnosed with cancer three years ago. Hilbert, first elected to the House in 1982, was 52.

Quotes of the Week

Democratic Senate candidate Greg Underwood telling the Fort Worth Star-Telegram how voters feel about the Nov. 6 special election to replace the late Sen. Tom Haywood, R-Wichita Falls: "You could cut the apathy with a butter knife."

Suzy Grindrod, a Madison, Wisconsin, first grade teacher who refuses to lead the pledge of allegiance in her class, as quoted in the Los Angeles Times: "Mandating patriotism is a really scary thing. It leads to nationalism and ultimately, to fascism."

Gov. Rick Perry, in a speech to the Texas Taxpayers and Research Association: "The number of people who fled to states with no income tax during the 1990s exceeded the number of individuals who fled East Germany to West Germany during the Cold War."

International Bank of Commerce Chairman Dennis Nixon, telling the Houston Chronicle why the Laredo-based bank, owned in part by gubernatorial candidate Tony Sanchez Jr. and the Sanchez family, fought new federal money-laundering rules last year: "You don't want somebody going through your bank account every day just become somebody thinks you're a terrorist."

Democratic gubernatorial hopeful Sanchez, in the Fort Worth Star-Telegram: "I don't think prayer in school is the issue. I think we need to start praying for our schools."

Gov. Perry, on the same subject, quoted by the Associated Press: "I bet we get it worked out. All of us who are running for governor are for it."

A spokesman for the Nashville Metro Water Department, explaining in the Nashville Scene why the department didn't complain after an overzealous TV reporter broadcast from the wrong facility in an attempt to prove the city's water supply was inadequately guarded: "After all, if a terrorist tried to put something in our water supply, we'd rather he end up at the sewage plant."

Texas Weekly: Volume 18, Issue 19, 5 November 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 biz@texasweekly.com. For news, email ramsey@texasweekly.com, or call (512) 288-6598.