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Perhaps a $5 Billion Problem, Perhaps Not

State candidates from the bottom of the ballot to the top are talking about the budget mess they expect to confront a year from now. But the budget people who actually work on this stuff are still sorting through the numbers, attempting to get a picture of the train wreck the candidates fear.

State candidates from the bottom of the ballot to the top are talking about the budget mess they expect to confront a year from now. But the budget people who actually work on this stuff are still sorting through the numbers, attempting to get a picture of the train wreck the candidates fear.

The magic number of the moment seems to be $5 billion, an amount first uttered by Comptroller Carole Keeton Rylander in the middle of last year. That's not a deficit. It's the difference between how much the budgeteers expect to have available for spending in the next budget and the amount of spending they would need to keep things going as they are. For campaign purposes, that'll get dumbed down to something about cutting spending and cleaning up the budget and avoiding taxes.

The policy wonks, on the other hand, go through a formula, starting with the amount of money they think will be left at the end of the current budget year and subtracting the amounts the state is already committed to spend. Then they add in growth in tax collections and other revenue. Finally, they subtract spending demands they foresee a few years ahead.

One number is easy to get to: The current budget includes about $3.7 billion in costs that are covered by one-time money. That is, the spending will go on, but the revenue to cover it was only there once. Lawmakers will have to find that much replacement money. That amount includes the health care plan passed for teachers and a mess of stuff that's best left to the accountants, like pushing a Medicaid payment out of one budget year and into the next, for instance.

And a number of other costs are hovering out there, without solid numbers attached to them. For example, health and human services folks have been warning the budgeteers of a worst-case scenario that would increase Medicaid costs by $2 billion. That's if current trends in enrollment and price increases for medical care continue. At this early stage, Medicaid costs in the current budget appear to be outrunning estimates by about $140 million. Public schools always cost more because Texans continue to produce children and demand they are properly educated. And property taxes in the school funding formulas depend on property values, which are dropping. That could affect the state's share of education costs, but the numbers aren't firm.

The Tooth Fairy of Public Accounts

The "good numbers" are under the control of Rylander (or her successor, if Marty Akins pulls an upset in November). The comptroller gets to say how much is in the bank at the end of the two-year budget, and also gets to say how much the state's economy and thus, its tax revenues, are growing.

She also controls timing issues; if more money becomes available early, and if the comptroller officially "recognizes" that money, it has to be spent on contingent appropriations. Those are items the Legislature said it would like to pay for if the money is available, and it's up to the comptroller to say whether anything is available. If the money doesn't come in, or if the comptroller ignores it for a bit when it does come in, those contingent appropriations will lapse and the money will be available for the budgeteers later. She gets to control revenue numbers, in other words, and she's not talking about what they might be. Rylander has said she thinks the economy will improve next summer, but that's an educated guess at best.

We tortured the numbers with a few of the wizards. Their best guesses ranged from spending disorders ranging from about $4.5 billion to about $6 billion. That, in turn, gets back to politics: The crunchers seem to agree that the next group to sit in the leather chairs will have to cut spending or raise taxes by some amount in the 2003 legislative session.

Enron's Latest Victim

Public Utility Commissioner Max Yzaguirre is resigning after weeks of defending his appointment records and his service at Enron, where he worked before Gov. Rick Perry tapped him for the PUC. Sources who should know what they're talking about told us at our Thursday night deadline that Yzaguirre would probably resign on Friday.

Perry appointed the former chief of Enron Mexico last year. There was a minor hum about it, since Enron had some companies that were in related businesses, but Yzaguirre and others said he wasn't involved in anything in the private sector that he would be regulating in the public sector.

Late last year, Yzaguirre was caught in the crossfire between Perry and Tony Sanchez Jr., the Laredo businessman who's trying to win the Democratic nomination to confront Perry next year. After Republicans raised questions about the disclosure statements Sanchez made during his appointment to the University of Texas Board of Regents, Sanchez turned the tables, asking about Yzaguirre's filing.

The PUC official made some amendments to his appointment files after he was in office; Democrats charge that he was less than forthcoming on those forms and that he should have fully disclosed his ties with various Enron companies at the time of his appointment.

As that came to light, the governor's office fumbled an open records request, trying to redact parts of a public document and then finally letting go of the files that reporters had requested. In spite of the confusion, gubernatorial aides say the original filing was "complete." A small group of senators has asked Perry to demand Yzaguirre's resignation. Perry and his aides said they'd stick with him, but with the Enron collapse and the added bad press attached to that, Yzaguirre became a political liability.

The Texas Senate had not confirmed him, which is how we had it last week. He was an interim appointment and the upper chamber would have been able to confirm or deny his appointment next time they meet, probably in the regular session that starts in a year.

Rich Guys on TV

Sanchez won the race to the television studios. Two weeks after Dan Morales surprised him by getting into the Democratic primary for governor, Sanchez put up a border-to-border television campaign, starting with biographical ads introducing himself to voters. He's got just under two months to overcome Morales, whose name is known to voters through a couple of statewide campaigns and the coverage Morales got as attorney general. (Here's the asterisk: If you run a computer search of news clippings on statewide officials in Texas, you'll find that attorneys general are second only to governors in the amount of ink they generate while in office. Senators, lieutenant governors, persons of Congress and others don't even come close over long periods.)

The campaign won't talk about the details of the advertising buy, other than to say it's statewide. They won't say what they spent on it, how long the ads will run, what times of day, anything. There are two spots–one in English, one in Spanish–and the visuals are different. In the Spanish-language ad, a slightly different set of pictures is used, and the camera work appears to be aimed at a younger audience. Both spots talk about Sanchez's family and business and make general plugs about what he'd do as governor without getting specific. None of the particular things he has mentioned in speeches–like full funding for the Children's Health Insurance Program, or merging the Public Utility Commission, which regulates electric and telephone utilities, with the Railroad Commission, which regulates oil and gas–made it into the commercials. Sanchez does all of the talking in the English-language ad; he does a short tag in the Spanish-language one.

Sanchez followed a couple of days later with his first radio buy. That's a series of Spanish language spots, but the campaign wouldn't provide any more detail than that.

Land Commissioner David Dewhurst, who drew a primary opponent named Tom Kelly, went back on television at the end of the week with the same biographical ads he was running last summer. His campaign said the ads were running in selected markets in the state and wouldn't give details.

Labor Pains

The head honchos in the Texas AFL-CIO haven't been subtle about their support for the "structured" Democratic Party ticket. And with only one exception, that's the ticket that got labor's endorsement. At the end of labor's COPE convention in Austin, the endorsements went to Tony Sanchez, John Sharp, Kirk Watson, Marty Akins, David Bernsen, Sherry Boyles and Tom Ramsay.

The one variation from the ticket assembled by Democratic bosses was in the U.S. Senate race: Instead of endorsing former Dallas Mayor Ron Kirk–the only Black on the statewide Democratic ticket–the AFL-CIO gave a dual endorsement, saying Kirk or U.S. Rep. Ken Bentsen, D-Houston, would be alright. That's a little different from no endorsement. As it was explained to us, the dual endorsement means both candidates can be touted in union literature and can get open union support. Had neither been endorsed, they both would have been denied that kind of support. Kirk had the support of labor's higher-ups, but it takes a two-thirds vote at the convention to win the endorsement, and neither he nor Bentsen could muster that many votes. Call it a win for Bentsen, who wasn't supposed to be in the game but who managed to come out with labor's blessing.

Morales tried to block the Sanchez endorsement, but fell short after a series of closed sessions at the beginning of the convention. The public speeches were pointed, but the private ones were described to us as brutal: In his appearance before the Communications Workers, for instance, several attendees reported that Sanchez referred to Morales as a "thief" who, as state attorney general, tried to steal some of the tobacco settlement money for himself and his cronies. Asked about it later, the Sanchez campaign didn't offer any comment or clarification about what their man said to the unions.

The dual endorsement in the Bentsen race was a sop to Houston unions who like the local guy and who were, in some cases, bucking their officers on the gubernatorial endorsements. A couple of unions held out on Sanchez–with a third supposedly leaning toward Morales–until the deal on the U.S. Senate race came through. The Sanchez folks say they had the endorsement tied up with a bow on it early in the convention; the Morales folks say they were in the hunt until late. Morales needed only 34 percent support to block an endorsement and that's what he was aiming for.

Joe Gunn, the president of the Texas AFL-CIO, has said nearly a million times that the Democrats will be better off with minorities at the top of the ticket. He's with Sanchez and Kirk, partly for that reason. That's a general election strategy more than a primary election strategy, but there are a few races at the top of the ballot that will offer a clue to racial trends in voting.

Political hacks are watching two Democratic primary races–for land and agriculture commissioners–to measure the strength of Hispanic-name voting in March. Those races don't get much attention from voters, at least historically, and are more subject to what you might call free-association voting than to informed voting. Sen. David Bernsen of Beaumont faces Ray Madrigal of Corpus Christi in the land office race, and Rep. Tom Ramsay of Mount Vernon faces Ernesto De Leon of Brownsville in the agriculture commission race. De Leon pulled 40.3 percent of the vote against then-Rep. Pete Patterson in the Democratic primary in 1998, after spending virtually nothing to run.

You've Got Voice Mail

Political people love to gripe about John WorldPeace, but the Houston lawyer and gubernatorial candidate apparently is on to something. John Cornyn has taken to using an automated calling system to advance his events. Cornyn's messages aren't nearly as colorful or obnoxious as the calls from WorldPeace. Where the Houston lawyer has been heating phone lines with negative messages about his opponents, Cornyn's message simply says he's running for office, that he'd like some support and that he's coming to town. Another voice then comes in with the local details, saying where and when the U.S. Senate hopeful will appear in the called voter's town.

Filthy Lucre

Giving money back to tainted or semi-tainted donors in the face of public controversy is a routine deal in politics, but it is fraught with peril. Especially with a high-profile donor in the mix.

If you give money back, your opponent can still say you took it. Your protest that you gave it back only substantiates the opponent's claim that you were a dope to take the money in the first place.

If you keep the money, your keep the smell of bad associations, but hey, you still have the money.

If you give the money back, you're implying that it had an effect on you when it was in your possession. Otherwise, why give it back? If you don't think donors gain any sway with their swag, there's no reason to give the money back. After all, if donors don't get anything for their investments, voters and opponents really have no reason to question your motives in taking the money.

And if you give it back, you're inviting your opponents to look at every other donor on your list. Once they've got you running, why stop? Why not make you explain everyone else who might have done business with that donor? And a last one: If you give the money back, you can always argue that you didn't know it was dirty and that you dumped it as soon as you found out.

To the present case: Texas politicians have looked through their treasuries to find any Enron-associated money. Then they're deciding what to do with it. The responses cover the spectrum. Gov. Rick Perry isn't giving it back. Former Texas Supreme Court Justice Greg Abbott is giving back the $12,600 he got from Enron when he was on the court. The footnote: He's running for attorney general, and money raised for a judicial race can't be used for an executive branch race. He couldn't have used the Enron money for his current race even if he had wanted to.

Attorney General John Cornyn, one of the favorites of the Enron folk, isn't giving the money back, either. Cornyn is running for U.S. Senate in a field of five Republicans, four of whom are relatively unknown to voters. But he followed U.S. Attorney General John Ashcroft by agreeing to recuse himself from state investigations and such in the wake of the company's collapse.

Republicans aren't in this alone. Gubernatorial candidate Dan Morales said he'll give back the money he got from Enron while he was attorney general. John Sharp, the former comptroller now running for lieutenant governor, got Enron contributions while in his old post. The company gave to Perry in their race in 1998 and Sharp isn't giving the money back. (His campaign dismisses a Republican rumor that he was trying to get Enron CEO Ken Lay to act as his campaign chairman before the company's problems were known.) And the biggest recipient of Enron funds in the U.S. House of Representatives–Ken Bentsen of Houston–is now running for U.S. Senate. He's giving back only the recent donations.


David Dewhurst's aides say that campaign had nothing to do with conservative group efforts to get their boss out of the running for Texas Monthly magazine's Bum Steer award. The publication's latest promotional gimmick was to put out four candidates for that award and to let readers vote by punching it up on a website. Dewhurst was one of the four; the others were Enron chief Ken Lay, the Dallas Cowboys football team, and Anna Nicole Smith, the former Playboy Playmate who lost a court fight over the estate of her late husband J. Howard Marshall.

The "Hounds"–the same gang of people who used an email network to generate calls about redistricting to Republican House members during the last legislative session–are now trying to turn the votes from Dewhurst to one of the other candidates. In their email, they blame Democrat John Sharp, Dewhurst's opponent, for trying to gin up votes to make their guy the Bum Steer. They don't tell members which of the other three to vote for, and didn't give them a website to hit.

One of the messages deserves the award itself. That version directed Dewhurst supporters to the wrong Internet page; by hitting the link suggested in the email, those Team Ropers actually are voting to make their guy the Bum Steer winner.

Disposable Endorsements

Land commissioner candidate Jerry Patterson is touting an endorsement from leaders of the Texas Federation of Republican Women. Fair enough–those women endorsed him. But the group did not, and has a bylaw that prevents members from attaching the organization's name to anything the members might be doing as private citizens.

That's turned into a flap within the respected GOP group. Patterson's letter touting the endorsement says he won the support of "a group of current and immediate past officers of the Texas Federation of Republican Women." It has a logo at the top: "TFRW Leaders for Jerry Patterson," and the list of seven past and current officers runs down the side of the letterhead, complete with titles.

On the press release announcing the support, the headline reads "TFRW Women Endorse Jerry Patterson for Land Commission" and the version on his website includes a link to the TFRW website. The letters from Patterson crowing about the support went to all of TFRW's 12,000 members and to 185 other Republican clubs.

Six paragraphs into his announcement, Patterson notes that some officers of the organization are barred from making endorsements, and that the organization itself isn't doing the endorsing.

That wasn't enough for the Dallas Federation of Republican Women, which at our deadline was getting final approval from its board for a resolution that demands the "immediate retraction and apology to the damaged candidate," presumably Rep. Kenn George, who's running against Patterson in the primary. They also want the announcement removed from Patterson's website and they want a retraction letter mailed to everyone who got the original letter.

Finally, they're demanding reprimands and resignations from TFRW folks who took part.

Retractable Endorsements

Secretary of State Gwyn Shea was, until a few weeks ago, a constable in Dallas County. She was politically connected and told a bunch of candidates for judicial posts, county posts and even some state posts that they could use her name on their list of supporters.

Fast forward. After she was knee-deep in her normal election prep–recruiting candidates and helping them get started–she got a call from the governor's office offering a return to Austin, where she used to be a state representative.

Now she's the state's chief elections officer and making endorsements is a no-no. But all of those buddies are still running around, mostly in Dallas County, touting their endorsements, and Shea is apparently still on some of their lists. For instance, she helped recruit Rose Cannaday, who is running for an open House seat in Irving against Linda Harper-Brown, another Republican.

Shea put together a letter that she is mailing to Cannaday and to everyone else she endorsed, asking them to pull her name off of their campaign materials now that she is the state's election officer and can't be affiliated with any campaigns. To keep opponents off the candidates, it'll say in the letter that she did give her endorsement but has to remove it because of the new post. And one more thing: She says she allowed people to use her name, but has never allowed them to use it since she got the new job. They would be out of line to use her new title on any endorsement materials, she said.

Flotsam & Jetsam

Land Commissioner David Dewhurst, who's running for lieutenant governor, got the blessing of the Texas Society of Professional Engineers. The group cited his business experience. That same group endorsed the Republican in the last Lite Guv race, favoring Rick Perry over Democrat John Sharp... Sharp got the nod from the Texas Municipal Police Association. That group says it represents about 8,000 people in law enforcement... U.S. Senate candidate Ron Kirk's website originally had a notice saying it would be active on Jan. 15, 2002. That changed to Jan. 18, 2001. They then corrected the date, kinda: Jan. 22, 2001. That's the day he starts a seven-city tour of the state announcing his candidacy. And it's this year, not last year.

Political People and Their Moves

Jim Moore, who was for seven weeks the campaign manager of the Tony Sanchez Jr. campaign for governor, is now the communications director for the Dan Morales campaign for governor. The split with Sanchez was, um, hostile. It's rare for a political aide to switch sides in a race, but Moore, a former television reporter, had been looking for a regular gig when Morales called to talk about a campaign job. He'll be the mouthpiece as well as the advertising guru... Jorge Haynes, who has had the job of vice president of politics at International Bank of Commerce in Laredo for several years, is on his way out of state. He'll stop for a bit to work on the Sanchez campaign before moving to Long Beach as vice president for external affairs (that's a real title, unlike the first one) for the California State University System. Haynes left IBC shortly after taking the blame for reporting mistakes made by the bank's political action committee. That bank's biggest shareholders are named Sanchez... Dallas consultant Rob Allyn sold his company–that would be Allyn & Company–to Fleishman-Hillard, which bills itself as the largest PR firm on this particular planet. The buyer doesn't do political work. Allyn does, however, and will continue working on the races they've signed up for... Kirk Watson signed Carol Butler to run his campaign for attorney general. She ran Debbie Stabenow's upset of U.S. Sen. Spencer Abraham, R-Michigan, in 2000. And she worked on Watson's last mayoral race. Also signed for that campaign: The Washington, D.C.-based Dixon/Davis Media Group, which will handle ads and such. Margaret Justus is handling press there, as well as for other clients, like IBC Laredo, Tony Sanchez' bank... Former reporter Steve Ray signed on to run the state Senate campaign for Barbara Canales-Black of Corpus Christi. Montgomery and Emory Young & Associates are also on that campaign. She's running against Rep. Juan "Chuy" Hinojosa, D-McAllen... Mike Lavigne, who worked most recently for Rep. Harryette Ehrhardt, D-Dallas, went East. He's now an aide to Sen. Rodney Ellis, D-Houston.... Mance Bowden, who worked for Rep. Kim Brimer, R-Arlington, left the Pink Building altogether. He's now a lobbyist for OmniAmerican Credit Union in Fort Worth... Deaths: U.S. District Judge Hipolito "Hippo" Garcia, one day after he gave up full-time status on the federal bench. Garcia, the first Hispanic federal judge in West Texas, had avoided taking senior status for years, telling friends he thought it would kill him to retire. He was 76.

Quotes of the Week

U.S. Treasury Secretary Paul O'Neill, in a New York Times report on the collapse of Houston-based Enron: "Companies come and go. It's part of the genius of capitalism."

Texas AFL-CIO President Joe Gunn, who personally supports Ron Kirk, on labor's dual endorsement of Kirk and Ken Bentsen in the U.S. Senate race: "It's kind of like kissing your sister, but I'd rather have a sister to kiss than nobody at all."

Democrat Dan Morales, after Tony Sanchez Jr. suggested Morales was trying to generate free press instead of paying for his campaign, in the Beaumont Enterprise: "I guess it's not surprising that a millionaire would hold that view, but I believe, strongly, that the governor's office is not for sale. I think it is a very inappropriate attitude to suggest that you can go out and buy this office."

Tony Sanchez Jr., banging on Democratic primary opponent Dan Morales in a speech before the Texas AFL-CIO, which later endorsed Sanchez: "I don't like a fella who gets to the top through affirmative action and picks up the ladder up behind him."

Former Sanchez campaign manager Jim Moore, who now is working on the Morales campaign, after the (UT) Daily Texan did a story on Sanchez missing three of four board meetings as a University of Texas System regent: "When a man has four private jets and can't get to meetings... he probably doesn't have time to serve."

Democrat gubernatorial candidate John WorldPeace, at the top of an email threatening a lawsuit if he's not included in candidate forums with Sanchez and Morales: "Well boys and girls, debate this."

Texas Weekly: Volume 18, Issue 28, 21 January 2002. 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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