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Ka-Blooey!

Gov. Rick Perry pulled the trigger early on the negative ad everyone in Texas politics has been expecting for more than a year, hitting Democrat Tony Sanchez for a drug money scandal that hit a savings and loan that was controlled by the Laredo businessman and his family in the early 1980s.

Gov. Rick Perry pulled the trigger early on the negative ad everyone in Texas politics has been expecting for more than a year, hitting Democrat Tony Sanchez for a drug money scandal that hit a savings and loan that was controlled by the Laredo businessman and his family in the early 1980s.

Tesoro Savings & Loan went the way of most S&Ls in the 80s–into the tank–but its story had a twist because some notorious Mexican drug traffickers laundered money through the thrift. The short version: The IRS went after the druggies and told the thrift to freeze their assets. A bunch of the money was held in the names of other people who were not named in the IRS notices, and the thrift followed the orders of the depositors to wire that money to Panama, apparently after the real owners of the accounts signed papers saying they weren't the real owners of the accounts. The feds later went after Tesoro for the amount of the lost deposits and a penalty, but a federal judge sided with the thrift. The traffickers won that round, and the thrift escaped punishment.

Sanchez contends Tesoro had no choice but to wire the money and he's got a federal judgment to back it up. He says Tesoro didn't know the money in the other accounts was tainted, but adds that it still would have had to wire the money to Panama if the bankers had known it was all drug money. Perry's gang says the S&L should have put the money in a court account and let the legal system handle it from there. Sanchez says that wasn't a legal option at the time, but is now.

This isn't a law journal, so let's say Sanchez is right about all of that stuff, just for the sake of conversation. The whole business might have been legal, but in the context of politics, it has some of the attributes of a silver bullet. Every candidate in the country would love to be running against a banker whose institution had a run-in with federal officials over drug money that was laundered through a bank and ended up back in the hands of the druggies. And in the world of politics, it doesn't help Sanchez to say he didn't know it was drug money, because it was a huge percentage of the thrift's total deposits at the time. He's the guy who wants to scrub the state budget to find money for new programs, and he couldn't find the drug money in his savings and loan?

But the Perry ad gave Sanchez some breathing room, and some room to work.

It tossed in a ruling in a different case from a different federal judge (involving the same traffickers) who said a different bank that did what Tesoro did shouldn't have done so. That bank had to pay the government. The retired federal judge who made that ruling told the San Antonio Express-News and others that Perry was taking his orders out of context.

Then the Perry folks brought former Panamanian leader Manuel Noriega into the ad, though he hadn't been mentioned in either legal case or anywhere else. Their explanation was that he was the leader of Panama at the time and that the country had become a hub for the illegal drug industry.

Political hacks on both sides of the ledger are talking about whether the Perry ad has a racial undertow. Sanchez is Hispanic. He's from the Texas-Mexico Border. He's a banker there. Drug money went through his S&L. The thrift sent it to Panama. Panama's leader was Noriega. If it's there, it's below the surface, but we mention it because it continued to come up in our conversations during the week with Republicans and Democrats who had seen the commercials.

Perry's folks say race wasn't a consideration and that they don't think race is a factor in the ad, or even a subtext. They didn't intend for it to be there and say it's not. Sanchez, when asked about it, said, "I hope not, but I'm not going to be talking about that."

Law vs. Politics

The ad also quotes federal lawyers who said Sanchez had a choice of cooperating with the feds or with the drug dealers and chose the bad guys (that contention is from the lawsuit the government lost in federal court). But even the former prosecutors who appeared at a press conference to document the allegations admitted that Sanchez and his bank had done nothing illegal. What they did, those three lawyers said, was unethical and immoral, even if it didn't break the law.

The Perry campaign handed reporters two-inch-thick binders with documentation for the commercial, and held a news conference with former prosecutor and former state Sen. David Sibley, who's now a lobbyist, former U.S. Attorney Dan Hedges and former government lawyer Michael Greene. They laid out the case supporting Perry's commercial while admitting the thrift had broken no laws. The actions of Sanchez and the S&L, they said, raised ethical and moral questions even if the government's legal case fell short. (Related: One of Sibley's lobby clients is the University of Texas System. Sanchez is still on the UT Board of Regents.) They continue to contend that Tesoro had the legal option of not sending the money to Panama, but did it anyhow.

The advantage to jumping out early with a devastating commercial is that it can end a contest early, removing an opponent's credibility at the time when the public is just starting to pay attention. The risk in using the heavy artillery early is that it gives the opponent time to recover voters' confidence before the elections, and then you have to find some other closing argument.

Damage Control

Perry's commercial, by including Noriega and references to another case that had only tenuous ties to the Tesoro case, gave Sanchez some material to work with. The challenger got right to work blunting the effect of the ad. He had an answering commercial up immediately, saying "Rick Perry was misleading you" and saying the bank was exonerated. (He also threw in something unrelated, telling viewers that Perry gave his bank an award for its service to the state. That's true, but the award was to the Sanchez-controlled International Bank of Commerce and not to the long-dead Tesoro.) Perry aides also say Sanchez is stretching to say the thrift was cleared by all of the federal agencies he claims.

Sanchez also scheduled sessions with newspaper editorial boards all over the state to deplore Perry's negative ads (Sanchez started negative advertising months earlier) and to say the governor shouldn't stoop to this. That started a slew of editorial moaning about rough Texas politics.

The Perry camp won't say how much money is behind its ad campaign. Sanchez aides say Perry, who already had a moderate amount of television time purchased, didn't step up the frequency with the bombshell ads. That and the early timing of the attacks baffled both Democrats and Republicans, who are trying to figure out why Perry pulled out his big guns at the beginning instead of waiting until closer to the time when voters will make their decisions.

By the end of the week, Sanchez was still calling for Perry to pull down the ads and apologize, and Perry was still saying the ad is completely factual and will continue to run. He's also reinforcing the message on the road. For instance, in a speech to the Sheriffs' Association of Texas the day the commercials first went on the air, Perry used this line: "You deserve a governor who has a history of siding with you and not with the criminals that you fight."

The Perry campaign has other Tesoro-related commercials in the can and will probably use them. And the measure of whether the first ad does the trick will be two-fold: Do voters retain the word association of "Sanchez" and "drug money"? Do voters remember to put "Perry" and "liar" in the same thought? That'll be apparent within a month or so, when Labor Day polls come out.

OOPS: We wrote in an earlier issue that Court of Criminal Appeals Judge Tom Price had gone on to win election after he was sanctioned by the State Commission on Judicial Conduct. That's not right: He was running for presiding judge of that court and lost the election. But he remained on the court because his term as one of the eight non-presiding judges was still running. Sorry, sorry, sorry.

Searching for Openings

Suppose you were a candidate for statewide office in Texas and that you were not running for governor or for the U.S. Senate. Here's your problem: The top two races are blocking the sunlight. Downballot campaigns always complain, and with reason, that they can't afford to do the kind of expensive television advertising typical of the top race or two. And with the early start to the battle for governor, they're having a hard time getting attention from political reporters. If you're a downballot candidate without a huge wallet or a giant statewide reputation, your future can get tied strongly to the coattails of the folks running for governor and for U.S. Senate.

Time on television is hard to get. The races for statewide offices are more competitive than four years ago–mainly because the Democrats are putting up a credible fight for governor this time. That means there's more competition within the two parties for money and other kinds of support. There are some possible synergies if the partisans can hold their coordinated campaigns together so that downballot candidates benefit from the resources of the ticket-toppers, but there is also more noise and it's tough for a candidate to get the attention of voters long enough to win their support.

Give an advantage as the ad wars begin to the candidates whose messages are memorable. Most political ads are little more than eye candy for television viewers. The tricks from the best political commercials have been incorporated into ads for other products: It's tough to tell ads for some health plans from political campaigns on health issues, for instance. That increases the problems of breaking out. And what's left is so generic that a reasonably intelligent six-year-old can pull it off: She's for education, jobs and protection from all kinds of bogeys.

The gubernatorial campaign will get all the airplay and most of the ink. That's a given. The U.S. Senate candidates won't spend nearly as much on television, but they also have less risk of losing their shot at TV time, since federal laws force the stations to elbow other advertising aside in deference to candidates for federal offices. Candidates for state office have to buy TV time as far in advance as possible to lock in reasonable amounts of time. Candidates for federal office can wait a bit, and can sometimes elbow the state candidates out of the way. That's one reason early money is important.

No Choice But the Traditional Schedule

We might be wrong, but the betting here is that you won't see any of the lower-level statewide campaigns on the air until the traditional time, which more or less corresponds to the beginning of the school year. The goobies are up, and Republican Senate candidate John Cornyn has started his first ads. Lite Guv candidate David Dewhurst ran ads earlier in the summer but has gone dark for now. Nobody else has been on television. With the exception of Dewhurst, who can personally finance an air war, there don't appear to be any candidates below the governor's race who can get on TV and stay there until Election Day, which is 13 weeks from now.

The Cornyn ad is biographical and isn't likely to require a response from his opponent. It shows him in a variety of settings–with his wife, with his president, with some kids, with some elders, with a cop, in his judicial robes, and leaning on a ranch gate. It never mentions his opponent, Democrat Ron Kirk. Cornyn never speaks in the ad, and in fact, it never says he's a Republican. It does include a quick bit on how he's cracked down on bad corporate actors, while showing black and white footage of some executive types smoking cigars. Cornyn aides said they're running the ad now because Kirk's time as mayor of Dallas raised the Democrat's name identification to 8 or 10 points higher than Cornyn's, even though Cornyn has been a statewide official for 12 years. They're trying to catch up, they said. All indications from the Kirk campaign are that he'll keep his own schedule unless Cornyn does something that cuts into their candidate.

Election Day for Them is in 117 Weeks

The U.S. Senate vote on whether to put Priscilla Owen on the 5th U.S. Circuit Court of Appeals has been put off until September. Among other things, that means her seat on the Texas Supreme Court won't be on the Texas ballot in November.

The same goes for the Texas Railroad Commission seat currently occupied by Tony Garza. A long-standing rumor came true during our break when President George W. Bush said he wants Garza to be the country's ambassador to Mexico.

If either of those officeholders resigns before September 3, their position would be filled for the rest of the year by appointment, and would be included on the November ballot. The November winners would then serve out the rest of their terms.

After September 3, the appointees would serve out the terms without a pesky election to deal with. Since neither is likely to be confirmed before then–most of August will be wiped out by Congress' recess–their spots aren't likely to be on the ballot this year. Owen's term runs through the end of 2006, so there could be an election for that spot in two years if she does resign. Garza's term ends in 2004, so an appointee would serve out the entire remainder of his term if he resigns. The Senate vote on Owen will probably come next month; the timing of the vote on Garza isn't set.

There will, however, be an opening on the Texas Supreme Court now that Justice James Baker has announced his decision to resign at the end of the month. He's leaving office three days before the ballot deadline, and Gov. Rick Perry says he'll appoint Michael Schneider to the post. Baker was already leaving and Schneider was already running for his job, but now he'll get the post for at least a little while even if he loses the November election. Baker had said this would be his last term, but his decision to retire early gives Schneider a small advantage. Schneider will serve to the end of the year and the winner in November will take the seat in January. Democrat Linda Yañez, an appellate judge from Corpus Christi, and Schneider, an appellate judge from Houston, are running to replace Baker, and the Republican can now say he's running for reelection. Most voters will never know that he'll have been in office for only two months when they cast their ballots. Baker is going to work for the Dallas-based Hughes & Luce law firm.

Report Cards

More than 4,300 of the state's public schools won "exemplary" or "recognized" ratings from the Texas Education Agency. But the same announcement had a couple of dark clouds in it. The school ratings are based on how the students in each school perform on standardized tests.

This the last year kids will take the current test–next year they switch to the more difficult "Texas Assessment of Knowledge and Skills," or TAKS for short. The exemplary ratings went to 1,908 schools; recognized ratings were given to 2,400 schools; 2,070 schools got a rating of acceptable; and 167 were rated low-performing.

Schools with alternative education can opt for another rating system, and they came out this way: Two were commended; 268 were acceptable, and 66 were told they need peer review.

Dropout rates were the cloud. During the 2000-2001 school year, 17,563 students in 7th through 12th grades dropped out. That's down from 23,457 the previous year, but it's still a big number: Fewer than 80 of the state's school districts have more than 17,000 students in all of their schools. The overall dropout rate was down, but Black and Hispanic students dropped out at twice the rate of Anglos.

When TEA toted up the result for the Class of 2001, they concluded that 6.2 percent of those kids dropped out between their freshman and senior years of high school. The rate for the Class of 2000 was higher, at 7.2 percent.

Lists of the ratings for all schools in the state are available online at TEA's website. You can poke around or go directly to this mouthful: www.tea.state.tx.us/perfreport/account/2002/index.html.

Small Percentages, Big Numbers

The people who watch the state budget are going to be all fidgets and tics by this time next year. The comptroller has said over and over that the Lege will start with a $5 billion difference between what's available and what's needed for current programs. Lt. Gov. Bill Ratliff, who's both an engineer and a budgeteer (which might be redundant), says the part of the budget that's not discretionary can't be cut and the part that is discretionary is so small the cuts wouldn't do much good.

Add this: Comptroller Carole Keeton Rylander says the state's overall revenue estimate is right on track, but notes that the state sales tax revenues are below what her staff projected and might actually come in below last year's numbers. (The revenue estimate is the official guess of how much money the state can spend over two years and effectively caps the amount the state can spend.)

The final figures won't be available until mid-September. But the numbers for the first 11 months of the fiscal year are sobering. Sales taxes have brought in $13.13 billion so far this year, compared to $13.25 billion at the same point last year. In percentage terms, that's a squeak, but in fiscal terms, it's a roar. The budgeteers were betting sales taxes would increase at a 3.9 percent pace through the two-year budget cycle. What looks at first blush like a $100 million problem is bigger, since the target number is somewhere in the $13.8 billion range.

Other taxes have picked up the slack left by the low sales tax numbers, and it's always possible that things will improve over the next 13 months and bring all of the actual income figures in line with the projections. Motor vehicle sales are up nearly $100 million over last year and gasoline taxes have brought in $50 million more. Franchise taxes are down from last year, but higher than the comptroller's fortune-tellers had predicted. Natural gas taxes are lower than last year, but insurance premium taxes–boosted by high premiums–are $200 million ahead of last year's mark.

A Different Kind of Dropout

Scratch one contestant and one rationale from the Texas Senate race in Austin. That seat currently belongs to Sen. Gonzalo Barrientos, D-Austin, and he's running for reelection. He's getting a well-organized, well-financed challenge from Republican Ben Bentzin, a former Dell Corp. executive. One of Bentzin's talking points was that Barrientos would lose votes to the Green Party candidate and that that marginal loss of votes could help put Bentzin over the top. But the Green candidate–Austin Dullnig–decided not to run. He hasn't endorsed anyone, but won't be there to bleed Barrientos. And Democrats point out that there is a Libertarian in the race–Marianne Robbins. The same semi-reliable conventional wisdom that says Green votes come out of Democrats says that Libertarian votes come from the Republicans. Robbins, by that logic, will erode some of Bentzin's support.

Political People and Their Moves

Appointments: Gov. Rick Perry tapped Kerry Russell of Tyler to be the new jurist in the 7th District Court there. He's a local attorney... He named Glenda Kane and Gray Miller to the board of the Texas Department of Mental Health and Mental Retardation. She's a volunteer in a number of community organizations in Corpus Christi; he's a Houston attorney who served on the Harris County MHMR board... Ruben Monzon, a former DEA special agent, will be the new U.S. Marshal for the southern district of Texas. That nomination zipped through the U.S. Senate and he can shut down his private sector security job and go to work... The Senate also rushed through final approval of David Godbey, a Dallas judge appointed to the federal bench by George W. Bush earlier this year... state Rep. Ron Clark, R-Sherman, got his hearing in front of the Senate Judiciary Committee, but they haven't voted on his appointment to the federal bench... Judicial spankings: The State Commission on Judicial Conduct admonished a Williamson County Justice of the Peace who forced a female juror to stay in court while a bailiff took the juror's noisy four-year-old out of the courtroom. The mother said JP Patricia Ott was rude and yelled at the tot; the state said the judge "lacked the patience, courtesy and dignity required of a judicial official." Ott's not running for reelection.

More Political People & Their Moves

Jeff Saitas, the state's top environmental regulator, said he'll leave the Texas Natural Resource Conservation Commission in October, mainly so he won't miss the childhoods of his three kids. Saitas has headed that agency for four years, steering the state through fights over clean air in Houston, Dallas, and other big cities. He hasn't looked for a new job yet, and the agency's board is shopping for a replacement... David Dunn is leaving the Texas Association of School Boards, where he's the head lobster, to take a job in the White House. He'll be working with Margaret LaMontagne, Bush's domestic policy adviser and another former head lobster for TASB... Political consultant Bill Kenyon, who made his mark on Texas politics 12 years by telling Clayton Williams Jr. not to shake hands with Ann Richards, is back. Kenyon has a government job this time, working as a "senior communications officer" for Comptroller Carole Keeton Rylander... Robert Black, who had been the spokesbot for Republican Greg Abbott's campaign for AG, left that spot to become communications director for the Texas Department of Insurance. Abbott hasn't replaced him... The number two job at the Texas prison system goes to Ed Owens, who had been director of the operations division at the Texas Department of Criminal Justice. He started as a prison guard in 1977 and worked his way up to deputy director of the agency... The new lawyer-in-chief at the San Antonio office of MALDEF (the Mexican American Legal Defense and Education Fund) is Nina Perales. She worked with Al Kauffman for six years and now will take over the position when he leaves. Perales headed MALDEF's efforts on Texas redistricting last year... Former Judge John Carter, now a Republican nominee for the U.S. House, signed on with the Austin-based Potts & Reilly law firm. Carter was a state district judge for the 20 years leading up to his congressional campaign. He's running in CD-31, a new district that stretches from the Austin suburbs to the Houston suburbs... Deaths: Jack DeVore Jr., an El Paso television personality (during our editor's formative years) who outgrew that gig to become the spokesman for U.S. Sen. Lloyd Bentsen of Texas and a true model of how to handle reporters and politicians. DeVore, 63, had been wrestling with various cancers for several years... Former state district Judge Carl Walker Jr. of Houston, one of the first Black federal prosecutors in the South, from a stroke. He was 78... Former federal Judge Sam D. Johnson of Austin, who served on the Texas Supreme Court before being appointed to the 5th U.S. Circuit Court of Appeals in 1979. He was 81... Oliver Teresa Pettis Ellis, a community leader and the mother of state Sen. Rodney Ellis, D-Houston. She was 72.

Quotes of the Week

U.S. Rep. Sam Johnson, R-Plano, in a speech at a GOP rally, as reported by the Dallas Morning News: "We don't need Democrats in office, because they don't think like Americans. They talk a big game, but they always vote against what's right for America."

Rep. Juan "Chuy" Hinojosa, D-Brownsville, after airport security guards made him stop for searches over and over again: "I was in the Marines in Vietnam and if I had needed to search the same person three times I'd have been in real trouble."

Attorney Les Weishrod, in a Dallas Morning News story on lax regulation of doctors by the Texas Board of Medical Examiners: "With the Texas board, you get at least one dead patient. You've got to kill two or three before they do anything to you."

Gov. Rick Perry, asked by Texas Monthly how his religious views were sparked: "I was just a little kid. Somebody in the class had a daddy who was a second-generation Aggie. I remember the teacher asked me if I wanted to be a Christian, and I said, 'Nope, I do not. I want to be an Aggie.'"

Office-worker Christina Bautisto of Manila (Spain), telling the Washington Post how cell phones help professionals like her involved in political activism: "They don't have to spend all day protesting. They just get a message telling them when it's starting, and then they take the elevator down to the street. They can be seen, scream a little and then go back to work."

Don Seaton, publisher of the Hastings (Nebraska) Tribune, on the death of Texan Gary Johansen, a former newsroom executive at the Trib: "Gary was a very popular editor, as editors go."


Texas Weekly: Volume 19, Issue 6, 5 August 2002. Ross Ramsey, Editor. George Phenix, Publisher. Copyright 2002 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.


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