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Risks, Hazards, and Insurance

The great thing about incumbency is that you control the government agencies you're seeking to lead. For example, lookit: Gov. Rick Perry started a commercial that touts the fact that the Texas Department of Insurance issued a cease-and-desist order against Farmers Insurance. The ad began running the same day the order from TDI was announced, letting the governor–through the regulators–control what was in the papers at the same time he was starting a political ad reinforcing the message. The trick is getting voters to believe in reforms put in place so close to Election Day.

The great thing about incumbency is that you control the government agencies you're seeking to lead. For example, lookit: Gov. Rick Perry started a commercial that touts the fact that the Texas Department of Insurance issued a cease-and-desist order against Farmers Insurance. The ad began running the same day the order from TDI was announced, letting the governor–through the regulators–control what was in the papers at the same time he was starting a political ad reinforcing the message. The trick is getting voters to believe in reforms put in place so close to Election Day.

What Perry hopes to do is muddle the issue so that Tony Sanchez can't close the sale with voters on insurance alone. His message: Rates are up, and I'm doing something about it. Sanchez hopes voters will remain angry about insurance rates and coverage and will blame Perry for doing too little before the election season was underway. His message: Insurance bills are too high and the other guy was at the steering wheel when they rose. Twenty years ago, when Bill Clements and Mark White were having a similar argument, voters blamed the incumbent and tossed Clements out. (Four years later, they changed their minds and brought him back.)

Sanchez started running insurance ads a couple of days before the Perry campaign did so. Voters get to see both candidates talking about insurance in residential settings.

The best positioning on the issue might belong to Democrat Kirk Watson, who decided early on to hammer Republican Greg Abbott for working for a law firm that represents insurance companies. It turns out that the list of Bracewell & Patterson clients includes the three largest property and casualty insurers in Texas, including Farmers, which was the target of the cease-and-desist order. Insurance regulators say they're looking into other companies' practices and that could include some of the other major insurers. That could add to Abbott's exposure. The race for attorney general is a lower-profile race and most Texans probably don't know either candidate well. On one hand, they're not paying close enough attention for Watson's message to sink in. On the other, mid-ticket races are often one-issue affairs and Abbott is exposed on a hot issue.

The race is dependent on what happens to other candidates. If Perry and Lite Guv candidate David Dewhurst do well, it helps Abbott. If Tony Sanchez and John Sharp gain traction, it'll help Watson. But insurance is stickier for Abbott. He gets to call Watson a trial lawyer and argue that lawsuits have driven up the cost of insurance, but Watson gets to say he sued the insurers Abbott's firm represents. Other Republicans might suffer blows, but they aren't on the payroll of the industry's lawyers.

Dewhurst probably skates on insurance unless voters remain angry about the issue and blame Republicans for it. Land commissioners don't have a lot to do with insurance coverage or rates, and Dewhurst came out of the gate with a commercial calling for insurance reform and bemoaning high rates and loss of coverage. The only telltale Republican message in the commercial is that he blames trial lawyers and frivolous lawsuits for the problem.

Sharp has no commercials up yet and probably won't until mid-September. His suggested reforms: ban credit-scoring, license mold-control contractors, and stop punishing homeowners who make legitimate claims. But in the lieutenant governor's race, there is no incumbent and neither contestant can really be blamed for the problem. It's an issue, but it's weaker in the number two state race than in the top one or the third one.

Tightening Up

Every poll we've seen this year had something to make everyone unhappy, and Austin Democrat Jeff Montgomery's results have taken their share of flesh wounds. But he's got another one out, and the results are interesting political fodder, and that's why we're writing about them.

First, the background: Montgomery is a Democrat. He's not working for anyone on the statewide executive ticket, although you could argue that he's got a couple of judicial candidates who could benefit from a strong showing by up-ballot Democrats. He polled 1,152 Texans from July 31 to August 8, screening for people who had voted in at least one of the last two general elections. The margin of error for the poll is ± 3 percent. And now, the stuff worth reading:

• The candidates for U.S. Senate are in a dead heat. Republican John Cornyn and Democrat Ron Kirk each have the support of 46 percent of the respondents. That contest is split on racial lines (so are the parties–more on that in a second). Kirk is winning 59.8 percent of Hispanics and 86.3 percent of Blacks. Cornyn is winning 59.7 percent of Anglos. Cornyn has 82.1 percent of the Republicans surveyed; Kirk has 84.2 percent of the Democrats surveyed.

• Gov. Rick Perry is still beating Democrat Tony Sanchez, but the gap has narrowed and they've both got reasons for both hope and dismay. The horse race number is 52.5 percent Perry and 40 percent Sanchez. Perry was leading 59.4–34.2 in Montgomery's May poll. Sanchez increased his lead over Perry among minority voters, while Perry slipped about five points among Anglos.

• The ratios of voters with favorable impressions of the candidates to those with negative impressions are sliding. The poll shows 52.4 percent have a favorable impression of Perry and 26.2 percent have a negative impression. In May, 65.5 percent viewed the governor favorably. Perry's trends aren't great, but his numbers are better than the Democrat's: Only 38.1 percent of voters have a favorable impression of Sanchez, and 32.4 percent have an unfavorable impression. If you're watching movement and trends, Perry is sliding faster than Sanchez, but he has more room to slide.

Issues and Race

• Montgomery also asked voters how they feel about the gubernatorial candidates on particular issues, which can give you some idea of how external things like insurance or the state budget play in the race. If the conversation leading up to November is about the budget shortfall, or leadership and vision, then Perry is the way to bet. Voters favor him by 13 to 15 percentage points on those issues.

• Perry's advantage drops some when the talk turns to job creation and education, but he still leads Sanchez by about 9 points on both issues.

• Perry's smallest leads–put another way, his vulnerabilities–show up when the issues are insurance and health care. There, Perry carries only a four-point advantage. That would explain the current insurance war. How do voters rank those issues? Education is first, followed by health care, better insurance company regulation, job creation, and the budget shortfall.

• Texas still has a gender gap, and the racial gap between the two parties is wide, according to Montgomery's polling. 62.5 percent of Anglos say they're strongly, not so strongly, or at least leaning to the Republicans. That's only true of 4.9 percent of Blacks, and of 27.2 percent of Hispanics.

• On the other side of the ledger, 25.1 percent of Anglos call themselves Democrats of various strength, while 86.4 percent of Blacks and 62.6 percent of Hispanics call themselves strong, not strong or leaning Democratic.

• Among all men, 51 percent identify as some variety of Republican against 36.1 percent who say they're Democrats and 10.1 percent who call themselves independent. Among women, it's 46.7 Republican, 42 percent Democrat and 8.8 percent independent.

• The numbers in the gubernatorial race reflect that. Perry is beating Sanchez by about 54-37 among men and by about 51-41 among women. It's about 67-25 in Perry's favor among Anglos. Sanchez is leading by 68-19 among Blacks, and by 63-30 among Hispanics.

Playing the Terror Card

Land Commissioner David Dewhurst, the Republican running for lieutenant governor, is the first general election candidate to hit the airwaves with a commercial playing off last year's terrorist attacks on New York and Washington, D.C. Dewhurst's ad doesn't directly mention the tragedy, instead talking generally about terrorism and about his role as head of the state's advisory board on homeland defense. The candidate himself does the talking: "We're not invincible, but by working together, by staying vigilant, we can protect our way of life and the future of our children." During the middle of the spot, an American flag is dissolved into the picture, playing up the patriotic theme. Dewhurst said earlier this year that he wouldn't exploit his homeland security post during the campaign; a spokesman said, "an appropriate amount of time has passed" since he said that.

• Gov. Rick Perry named a seven-member "September 11 Memorial Design Committee" to look at proposals for 9/11 designs for the Texas State Cemetery. That group includes three public safety officials, three state officials from the cemetery, the commission on the arts and the historical commission, and the sister of Barbara Olson, a conservative political commentator who died on the plane that was flown into the Pentagon.

• Admiral Bobby Ray Inman is the headliner for a Texas House candidate's fundraiser and terrorism is the subject; Carter Casteel is pitching the former CIA deputy director's "War on Terror" briefing in Boerne and telling supporters they can listen in for $35.

We Now Pause for This Message...

Nobody's been paying much attention to Democrat Marty Akins, but the former UT quarterback, who's running for comptroller, is about to ease into the TV wars.

Akins has four commercials in the can, and we'll start by saying he doesn't wear a football uniform in a single one of them. He starts each ad on a field where kids are playing, then moves to an office to sit in front of a picture of Sam Houston. In three of the ads, he takes a pass from former UT receiver Kwame Cavill, who now plays for the Cleveland Browns. Akins says his opponent, Comptroller Carole Keeton Rylander, has a "record of conflict," doing favors for businesses. He says she hired advisors, some of whom made campaign contributions, to manage funds and says they lost money instead. He says he wants to end property taxes and "find a better way to fund public education." And he says he wants to raise teacher salaries to the national average. Akins, who does all the talking in the spots, ends each by saying, "I'm Marty Akins and I'm back in the game."

Aides say they'll start the ads in Houston next week, first on cable, and later on the networks, and they'll run more as money allows and the elections get closer. Rylander has said she'll run a full-bore campaign on television and has been stowing money for that, but she hasn't rolled out her ads yet.

Play Nice on TV, Mean on Radio

Dewhurst and Sanchez announced their television spots and showed off scripts and supporting documentation and all of that to reporters and others, but were a little quieter about their radio ads. Dewhurst is running negative radio accusing Sharp of "supporting big government, increased fees and higher taxes." Specifically, the ad mentions some proposals from the former comptroller's "Texas Performance Reviews," such as higher hunting license fees, franchise tax increases and tuition hikes at Texas colleges. And it suggests it's only one in a series of such commercials, referring to those proposals as "bad idea number four, five and six."

Sanchez is running an ad "in selected markets" around the state that puts Perry in a boat with Enron and revisits Perry's appointment of a former Enron exec to the state's Public Utility Commission. It starts with a bunch of clucking chickens, goes into a riff about foxes guarding hen houses. It talks about Enron-related contributions to Perry and then says "he took their money and did their dirty work." And it goes on to say Perry honored Sanchez's bank earlier this year and mentions George W. Bush's appointment of the Democrat to the University of Texas Board of Regents.

The Most Powerful Job in State Government?

Sen. Chris Harris, R-Arlington, says through an aide that he won't vote to change the Senate rules to take power away from the lieutenant governor, whether the next Lite Guv is Republican David Dewhurst or Democrat John Sharp. Democrats were spinning the tale that Harris would help pull the rug out from under Dewhurst if the land commissioner is successful in November. That's not so, according to the Harris gang; the senator even called Dewhurst to tell him he would leave the powers of the presiding officer alone. Harris' aide also says his boss won't jump at the rules if Sharp is elected. He didn't mention any calls of assurance to the Democrat, however.

• A new thingamajig called "Women for Dewhurst" is holding a fundraiser in Austin in early September, and the list indicates some repaired relationships. Sen. Jane Nelson, R-Flower Mound, was hopping mad a year ago after the five-member Legislative Redistricting Board approved a map that forced her to choose between a mostly new district that included her home, or moving to a new home in another district that included most of her old supporters. She opted for the new home and vowed revenge. Dewhurst was one of the three Republicans who voted for the new maps, but Nelson's name is on the list of women who support his campaign. It also includes U.S. Sen. Kay Bailey Hutchison, First Lady Anita Perry, and several female legislators.

• Sharp's campaign is busily comparing his long list of endorsements to Dewhurst's short list. By the Democrat's count, the current score is Sharp 145, Dewhurst 2. Sharp is clearly winning, but not by quite that much: He's counting one endorsement–from CLEAT–as 101 endorsements, listing each of the police departments that belong to the statewide group. And there's one endorsement on the list that could be more interesting this fall than anyone expected: Sharp is the favorite of the Farmers Group of Insurance Companies, the insurer under attack from state regulators for charging too much.

• While we're spiking rumors, spike the yarn about how Tony Sanchez wants to sue former Sen. David Sibley for helping present the Rick Perry campaign's case against the Democrat. Sibley, a former prosecutor, led a press conference that was designed to present the facts behind a Perry commercial on Sanchez, the defunct Tesoro Savings and Loan, and drug money that passed through the bank and led the federal government to sue the thrift. Sibley's now a lobbyist. Sanchez spokesman Mark Sanders says the rumor is bunk: Sanchez won't sue.

Mailbag Mischief

Sherry Boyles, a Democrat running for a spot on the Texas Railroad Commission, wrote a letter to Gov. Rick Perry urging him to appoint a new commissioner–if he gets the chance–who will ease up on bonding requirements for marginal wells.

Boyles has been banging on her opponent, RRC Chairman Michael Williams, for supporting tougher bonding requirements. Her version: The current requirements force small firms out of business and don't give them sufficient time to get in line with regulations. His version: The rules protect the state from well operators who abandon their wells, leaving dangerous wells that are also environmental hazards behind them. President George W. Bush has nominated another commissioner, Tony Garza, to be U.S. Ambassador to Mexico. Boyles' letter to Perry doesn't ask him to name her to Garza's spot–just that he pick someone who takes her position on the bonding issue.

But Perry didn't answer the letter. Williams did, under his campaign letterhead, calling her an extremist and tying her to Ralph Nader and polluters, to both left-wingers and right-wingers, and to out-of-state unions. He even made a vague reference to terrorism, saying Boyles' "ideas would cost mom and pops dearly and threaten our ability to bring new energy resources online at a time when our war effort and our economy demand new, safe production." He said he was urging Perry to ignore her advice. Boyles fired off another letter to the governor, but says he hasn't sent her a reply.

Money Managers vs. School Children

The members of the State Board of Education disagree over how much they should pay their outside money managers, and they've kicked the issue over to Attorney General John Cornyn for a decision. At issue are two different readings of the state budget.

One group–which includes the chairmen of the House Appropriations Committee and the Senate Finance Committee–says the managers can't be paid everything they're due until they've met a goal of adding $150 million to the interest earned from the state's permanent school fund.

But several members of the SBOE–who formed an ad hoc committee on the subject, headed by David Bradley–say the managers should be fully paid even if the investments fell far short of the goal, as it now appears they will. They say the earnings were higher than what the comptroller's office had predicted and say that's enough legal justification to pay those outside managers. To do otherwise, they say, would violate the state's contract with the money managers.

The lawyers at the Texas Education Agency say the managers can't be paid unless the goal is met and the earnings beat the comptroller's estimate by $150 million. The agency has about $20 million available to pay the managers, and estimates full pay for them at about $30 million. But the TEA lawyers think the managers can't get the last chunk of money unless they first make the $150 million goal and then exceed it. The difference between the $20 million already set aside and the $30 million owed the managers would be covered by earnings over $150 million. Letters from Rep. Rob Junell, D-San Angelo, and Sen. Rodney Ellis, D-Houston, take the same position and say that was their intent when they were writing the budget. The comptroller agrees. But Bradley's group says the actual wording in the budget requires them only to attempt the goal, not to meet it.

Unless Cornyn tells them to stop, TEA will send out letters next month telling the money managers that the $20 million will run out sometime in February. The agency is also talking about ways to cut back on services the managers perform to try to stretch the available money.

A Hole in Their Pocket

Taxes are a little counter-intuitive for politicians. But Gov. Rick Perry is shifting a bit on his position on something called business personal property taxes. Without disavowing earlier remarks, his aides say the governor is for tax fairness and will work with lawmakers to ensure it.

That's the second round. It must have seemed a little like a trick question when the Austin American-Statesman asked some of the statewide candidates about business taxes. Short version: appraisers say they can't enforce the tax on business inventory because state law doesn't penalize businesses that won't report how much stuff they've got. The appraisers say they're missing a bunch of property as a result and that other property taxpayers have to pull up the slack.

The state Legislature will convene in Austin in January and its primary business will be to compose a state budget for the two years starting in September 2003. The difference between current obligations and expected revenue will be in the $5 billion range (or more, depending on what's in the numbers now pouring in from various state agencies).

Lawmakers will be looking for money and one of the easiest ways to get it is through what's generally called "tax fairness." They'll be looking at companies that pay less than their fair share of taxes so as to take some of the burden off of everyone else. Put that a different way: Before they'll ask existing taxpayers to pay more, they'll look for taxpayers who are seen to be paying less than they should. For instance: Some of the state's biggest companies, including some of the biggest newspapers, are organized as partnerships. They get out of franchise taxes by doing that.

Several statewide candidates left the gate open when asked about the property tax loophole; Democrats Tony Sanchez and John Sharp and Republican David Dewhurst all said the law ought to include penalties so appraisers could get good numbers on business property. Perry said the law ought to remain as it is now, with no penalties for businesses that won't tell appraisers how much they have in inventory. Now, as we say, he's ready to talk to legislators about it.

Political People and Their Moves

GOP political consultant Bryan Eppstein is recovering from heart bypass surgery. He didn't have a heart attack, but felt the wrong kind of tingle up his arm while taking a walk and went to the doctors to ask about it. He should be home by the time you read this... Budget wizard John Opperman is leaving Gov. Rick Perry's staff to return to Texas Tech University, this time as the school's vice chancellor for policy and planning. Opperman will remain in Austin through the next session before moving back to Lubbock... Former Insurance Commissioner Richard Reynolds, now the executive director at the Texas Workers Compensation Commission, is in hot water for telling an insurance group that the best thing they could do to protect their businesses is to elect Republican Greg Abbott attorney general. The governor's office told the commission to investigate and that resulted in a letter back to the governor saying Reynolds messed up but the agency's general counsel didn't think he had broken the law. Labor, which has never supported him, still wants his head, and Rep. Dawnna Dukes, D-Austin, says Reynolds was politicking on state time. Reynolds is not a gubernatorial appointment, and the governor can't fire him, either... Appointments: Gov. Rick Perry named Major General Wayne Marty to be adjutant general of Texas. Marty replaces Lt. Gen. Daniel James III, who got a presidential appointment to head the National Guard. The term ends in February–at that point, whomever is governor has the option of reappointing Marty to a full term. The adjutant general commands the Army and Air Force National Guards in Texas... Perry named Houston investment banker Jim Fonteno Jr. to the board of the Teacher Retirement System of Texas. He's a commissioner on the Port of Houston Authority, and the son of the outgoing Harris County Commissioner. He also named Jarvis Hollingsworth of Missouri City–an attorney with Bracewell & Patterson–to the board. And Perry elevated Terence Ellis, who's been on the TRS board since 1999, to presiding officer there... He moves, he shakes: Austin political consultant and lobbyist Jim Arnold isn't working on any of the headliner races in Texas this year, but made one of his own: His mug is on the cover of Campaigns & Elections and they call him a "Mover & Shaker"... Look closely at the photo gallery on Democrat Kirk Watson's website. There's a snapshot there of the attorney general candidate in what is supposedly his law library. Enlarge the picture. Look at the second shelf on the left. Read the titles of the books in the law library: Kitchens. Home. Bathrooms.

Quotes of the Week

GOP consultant Royal Masset, quoted in the Dallas Morning News: "It's a universal wonder if a Republican candidate doesn't have a picture of themselves with George W. Bush. If they don't have one, you almost stop to wonder why."

Gov. Rick Perry, in The New York Times: "He's my friend, and I respect him. But I don't wake up every morning and go, 'How can I make myself more like George W. Bush?'" Later in that same story: "I'm like an artist, I guess, working on, hopefully, his masterpiece. When it's all over with, I'm going to look back and say, 'It's a good piece. It's a good piece of work.'"

Foy Mitchell, chief property appraiser for Dallas County, in an Austin American-Statesman story on businesses that don't report "personal business property" to taxing authorities: "The system is putting the shaft to people who report fairly because others don't."

Rob Schneider, an attorney with Consumers Union, in a San Antonio Express-News story on insurance: "Politicians care about what voters think. People are mad. Politicians are listening."

Former appellate judge Ross Sears–the third judge assigned to decide whether five prominent lawyers should be forced into state depositions regarding the tobacco settlement–quoted in the Houston Chronicle about the pressure: "Thank God I'm out of politics. I don't have to worry or think about it. I don't have to raise any money."

From the Texas A&M University football media guide, which recounts a melee that followed A&M's loss to Texas Tech last year: "Lubbock is ugly enough without any problems. But on Nov. 3, the Texas Tech fans were even uglier than the barren stretch (of) dirt some West Texans call a city."


Texas Weekly: Volume 19, Issue 8, 19 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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