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Get 'em While They're Hot

You can't keep weeds out of buffalo grass. Beer and soda pop taste better when cold. Somebody prominent always gets arrested when the Legislature is in Austin. And if the state deregulates college tuition, it'll go up.

You can't keep weeds out of buffalo grass. Beer and soda pop taste better when cold. Somebody prominent always gets arrested when the Legislature is in Austin. And if the state deregulates college tuition, it'll go up.

That last one creates a problem for the Texas Guaranteed Tuition Plan (formerly the Texas Tomorrow Fund), the prepaid college tuition plan that's backed by the state's full faith and credit.

The state goes out every year and surveys schools to see what they're charging for tuition and fees. They feed that information to actuarial and financial whiz-bangs, who make educated guesses about how much it will cost to go to college a few years from now, and how much you'd have to save now to have that much when it's time for the kid to go to school.

For instance, the tables currently in effect say you can buy four years at a public college or university in Texas for your newborn for $17,460 (you can pay it out). You can get the four-year private college contract for that same infant for $52,313.

Those numbers are based on current rates for tuition and fees (the private school numbers are based on the most expensive school in a given year, and this year's winner was Duke University, according to the comptroller's office). The contracts cover tuition and required fees. When the program started in the mid-1990s, the idea was to give Texans a way to lock down the cost of college and save for it. It wasn't guaranteed at the time, but voters later added the guarantee. The state has to pay any difference between what a family puts into the program, plus investment earnings, and the price of college when the little termites grow up and move on to higher education.

The deregulated tuition plan touted by the University of Texas and some of the state's top leaders (including the comptroller, whose office is closely affiliated with the prepaid tuition program) would allow universities to set their own tuition rates, much like private colleges do now. One argument for dereg is that tuition at public universities in Texas is unnaturally low, and that students ought to pay more of the costs of their education. And the supporters of the idea say financial aid programs will cover the costs for students who can't afford the higher costs of higher education.

If tuition rises–and that's the point of deregulation, after all–two things will happen to the prepaid contract program. First, people who buy contracts before deregulation will lock in regulated–and thus lower–tuition and fee rates. The price for the current contracts is already set, and people who buy during the current enrollment period, which lasts until May 23, will get that deal no matter what the Legislature does to tuition and fees during this session. If tuition is deregulated and rises, contract prices will rise, too (They've already risen some: When the program started in 1996, the price for a newborn's four-year public college contract was $8,320; private college was $31,677). A tuition increase could put the costs of prepaid contracts out of reach for most Texans.

But that won't let the state off the hook. The program already has 134,000 contracts in effect. If the locked-in prices paid by those families don't cover the costs of tuition and fees when the kids go to school, the state will be obligated–because of its constitutional guarantee–to make up the difference. That adds a fiscal impact to any legislation deregulating tuition, but the comptroller's office hasn't put a number on it. That agency's own e-Texas report, which supports tuition deregulation, doesn't include those costs. Instead, the state's number-crunchers say the numbers will depend on what the colleges do with prices. Without knowing that, they can't put a price tag on the prepaid contracts.

Summer Vacation?

School finance reform was fast out of the gate, but fastest to hit a brick wall, too. Why? The state's top three leaders were operating with three different timelines. They wanted to stop and get in sync. And the issue wasn't as clear-cut on the House floor as some of its supporters had thought.

Rep. Kent Grusendorf, R-Arlington, rushed out a bill that would kill the current school finance plan in 2005. Whether you think that's a grand idea or a stinker, it has lost its momentum.

First was the timing problem. The House was moving fast. The Senate was moving a little more slowly. And the governor never agreed to pull the issue into the current legislative session.

Then the Texas Supreme Court agreed to hear arguments in a case challenging the constitutionality of the current system. That hearing is set for March 27, raising the prospect of a collision between a court decision and legislative action.

Then there was the threat that House Democrats would accelerate the date on Grusendorf's sunset bill. It's one thing to kill the school finance system in 2005–that gives lawmakers some time to separate the state's current budget problems from whatever they decide to do with school finance. It's another thing (and a politically hazardous one for Republicans) to move up the expiration date on school finance. There was plenty of talk, and even a newspaper editorial or two, pushing the idea of an immediate sunset of the Robin Hood plan. Grusendorf and others wanted to give themselves a little bit of room, but it would be hard for some legislators to vote against the immediate death of the unpopular plan, even if it caused them some political heartache not too far down the road.

Finally, we'll add a bit that makes Grusendorf choke, just because we've heard it from others. Some members were worried about putting an end date on school finance before seeing some serious and workable proposals to replace it. Grusendorf's retort: Sunset always works like this, and it's the deadline that makes the work happen. One difference between his proposal and a normal sunset is in the price of inaction. If you can't decide what to do with an agency like the Public Utility Commission, you just vote to keep it going for another two years while you're pondering the options. Nobody in the Legislature–particularly those who've been talking big about killing Robin Hood–wants to vote to keep it going if the alternatives are lousy.

Throw in some other stuff. Grusendorf's Senate counterpart, Florence Shapiro, R-Plano, broached the idea of funding a school finance revision with an expanded sales tax. She is not talking about adding a sales tax to food and medicine, two of the sacred cows when you're talking about this stuff. Money raised from a broadened sales tax could be used to raise the state's share of the costs of public schools, lowering the local burden and allowing school districts to lower unpopular property taxes. Caveats: The idea is still in the larval stage; tax bills start in the House, not in the Senate; and, of course, there isn't a consensus to work on school finance during this regular session.

Also, Shapiro isn't talking about a tax bill to solve the state's budget problems. That would be off message at the moment, since the state's Republican leadership is sticking with the No New Taxes oath. That, by the way, is another reason some in the GOP want to leave school finance for later. Since it's impossible to fix the problems in school finance without new state taxes (to replace or supplant high local property taxes), there's no way to solve school finance and stick to The Oath.

This next bit is still in flux: State leaders are talking about handling school finance in a special legislative session that would probably take place late in the fall or early next spring. If that holds, school finance will be the subject of choice in the 2004 primaries. And the people who've promised a budget fix without new taxes would–if they succeed in that goal–have a little time to tout their limited government prowess for a couple of months before taking on school finance. This has been part of the GOP playbook for a while: Show people you can save money before you start spending it on school finance or anything else. There's another, potentially bigger benefit to a delay: If lawmakers pare down the budget and if the economy (and state revenue with it) starts to recover, a surplus could begin to form, and the size of the tax bill needed to fix school finance could shrink.

Partly Politics

Comptrollers naturally anger legislators, especially when the state is broke and lawmakers are looking for someone to blame. All that's true even if the comptroller is quiet. The current comptroller, Carole Keeton Strayhorn, is not quiet, and she's got several lawmakers hopping mad.

Though she's never speechified about it, other state politicians think Strayhorn is positioning herself to run for higher office. They don't know which one–and the rumors change daily from governor to U.S. senator to lite governor–but they are convinced. More to the point, they are convinced that she's positioning herself by running down the Legislature. That stems mainly from her comments about the budget shortfall, which she has said is the result of a Legislature having a party and going on a spending binge. Rep. Garnet Coleman, D-Houston, jabs back with this: "If the Legislature had a party last session, then Strayhorn was the bartender."

Strayhorn has kept up the barrage, saying the Legislature started last session with a $3.5 billion in the bank, then spent it all and then some. She has a point: The last Legislature funded one year of a teacher health insurance plan in its two-year budget, saddling this Legislature with an expensive two-year obligation. And in spite of the fact that they started with money in the cookie jar, lawmakers last time decided to delay some payments into the next budget period, and to borrow some revenue from that same period. That made more money available two years ago, but it's a problem now.

And Partly Government

Legislators–and this collegiality vacuum appears to be stronger in the Senate–shoot back by accusing Strayhorn of hiding the state's mounting financial problems until after the November elections. Though some lawmakers were trying to raise the flag–Sen. Chris Harris, R-Arlington, has been hollering pretty accurately about the shortfall for well over six months now–Strayhorn didn't put out numbers until January. And what some had hoped would be a shortfall of about $5 billion, based on her earlier comments, turned out to be twice that. Plus, she said the current budget would end $1.8 billion in the red.

While her staff was being stoned by the Senate Finance committee, which accused her of hiding the truth, Strayhorn was quietly introducing something she calls the "Returning the Favor" plan. That's part of what she says is a needed reform to put "some fiscal discipline" into the Legislature. She says any future budget surpluses should be split, with half going to the state's Rainy Day fund and half being rebated to taxpayers. She also supports a spending cap proposed by Rep. Carl Isett, R-Lubbock, which would tighten existing laws that say part of the state budget can't grow faster than personal income in the state. Isett would extend that restriction to all of the state's general funds and says that–had it been in place for the last four years–the state's shortfall would be small or nonexistent.

They'd had a bellyful, and then she defied a request to cut her budget by 7 percent like all of the other agencies, saying that she could cut 6 percent, but that any more would force her to lose some of her ability to collect taxes. More cuts, she said, would lower the money available for the budget. Lt. Gov. David Dewhurst took her to task for that at a private breakfast, tearing a shred of paper off of a bag of sweetener to show her what 7 percent would be like "in terms you can understand."

The sniping probably won't last. Comptrollers hold more cards than legislators during legislative sessions, because they have final say over the numbers that shape the budget, and the budget is the centerpiece of the Legislature's work. And in a year of deficits and shortfalls and Chicken Little Economics–where agencies march through the budget hearings describing the perils that will befall the state if spending is cut in critical programs–those numbers have even more weight.

The comptroller, senators note privately, has the biggest hammer of all: Strayhorn won't issue her final budget certification until lawmakers have gone home and the governor is finished vetoing bills.

A Divorce and a Marriage

Subtract one name from the banner at Olsen, Delisi and Shuvalov, and add a new political partnership to the mix at Hillco: Ted Delisi–son of a House member and spouse of a top aide to the governor–is leaving his own company to start a partnership with lobbyists Neal "Buddy" Jones and Bill Miller. Delisi was one of the political consultants who bought the consulting and direct mail company founded by Karl Rove when George W. Bush asked Rove to give up his other clients to concentrate on what was then a presidential candidacy.

The company did a bunch of work for the Bush campaign and the partnership that replaced Rove survived one political cycle after the presidential race. But the partners wanted to go in different directions. Todd Olsen and Heather Shuvalov will keep the direct mail company, and Delisi is leaving to form the new venture with Hillco Partners.

It's called Hillco Direct and will do "grassroots" advocacy for Hillco's lobby and public affairs clients. Delisi, like Hillco partner David Weeks, will still do political campaign work. His deal–again, like the one with Weeks–is supposed to keep Hillco itself out of the campaign business. But the firm took some shots during the last election cycle for supporting candidates, and the new deal could further blur those lines. Delisi said he expects to keep working for U.S. Sen. John Cornyn and for Gov. Rick Perry, among others (his wife, Deirdre Delisi, is Perry's deputy chief of staff).

You're History

Without just coming out and saying what was eating them, the six members of the State Preservation Board–a panel that includes the top three officials in the Capitol–fired that agency's executive director, Rick Crawford, and took a popular project away from Nelda Laney, wife of former House Speaker Pete Laney.

Nelda Laney teamed up with the state preservation folks several years ago and started making annual Christmas tree ornaments that are sold in the Pink Building's gift shop and elsewhere. They've caught on, making a fair amount of money and generating some favorable press. The board talked about making the program a "spouse's project" that would be run by whomever is married to the occupants of the governor's, lieutenant governor's, and speaker's offices. Then they asked Crawford if the executive director could handle that. He said it could, and this year's ornaments will be a project for Anita Perry and Nadine Craddick, whose husbands are both on the preservation board.

That reflects the power shift in the Capitol. Crawford, who is close to Pete Laney, is probably a victim of the same thing. It wasn't his record: the former state representative brought the Bob Bullock State History Museum in on time and under budget, then oversaw its quick and unlikely climb to profitability, and the subsequent return of $2 million dollars from the agency's accounts to the state.

Whatever was bugging Gov. Rick Perry, who led the move to fire Crawford, went unstated. The governor, after an hour-long, closed-door meeting on the subject, led the group in a 6-0 vote, then would say only that Crawford is an at-will employee and that the board had the right to fire him. Peppered with pesky reporter questions, he refused to give any reason for the action, or to say whether he thought the agency should be run differently. Other members of the board–Lt. Gov. David Dewhurst, House Speaker Tom Craddick, Sen. Chris Harris, R-Arlington, Rep. Peggy Hamric, R-Houston, and Jocelyn Levi Strauss, a citizen-member from San Antonio–scattered after the vote and left Perry to handle the questions.

Perry's unstated problem with Crawford isn't new; one of the 82 bills vetoed by the governor at the end of the last legislative session was a House Resolution honoring Crawford's work on the history museum. More recently, Crawford drew some unhelpful attention for suggesting that the Capitol could be closed on weekends to save money in the current budget mess. He asked the board to discuss his employment situation in an open meeting instead of in executive session. They refused, and that could be the basis for a lawsuit Crawford's lawyer was preparing as we went to press.

Sharpening the Crayons

Some of them said the snow was keeping them out of Washington, D.C., but that ain't right: Several members of the Texas congressional delegation made pilgrimages to the Capitol to check on the state of redistricting. Shorthand for the Washington gang: The Republicans want it and the Democrats don't. Shorthand for the Austin gang: The House could probably pass a new congressional map, but it would require 21 votes in the Senate. Speaker Tom Craddick is sympathetic to those who want a map, but doesn't appear willing to shed blood in the House if the Senate can't get it done. From the horse's mouth: "The last time I looked, you still had to have a two-thirds vote over there to get a bill up. There's no use the House doing a plan–even if they so desire–there's really no use in the House doing a plan if you absolutely know there's no possibility of getting a two-thirds vote."

Meanwhile, congressional Republicans are working on changes to the maps that would squeeze several Anglo Democrats, including U.S. Reps. Chet Edwards, D-Waco; Martin Frost, D-Dallas; Jim Turner, D-Crockett; and Charlie Stenholm, D-Abilene.

And on this end, state Rep. Joe Crabb, R-Humble, sent a letter to Attorney General Greg Abbott asking for his legal opinion on this question: Does the state Legislature have to draw a congressional map to cover the rest of the decade, or can it go with the map now in place as a result of a ruling by the federal courts almost two years ago? Abbott asked the leaders of the political caucuses in the Texas Legislature for legal briefs on the issue by March 7. And he sent copies of his letter to a long list of people, including the members of the congressional delegation, the state's top political leaders, the political parties, and the groups that were involved in the redistricting lawsuits in 2000.

Flotsam & Jetsam

Travis County Attorney Ken Oden is leaving that post to go to work for the Linebarger Goggan Blair & Sampson law firm. Oden has been involved in a number of state cases, including recent investigations of Sen. Jeff Wentworth and former Rep. Rick Green regarding work on behalf of private clients before state agencies. He's leaving the final disposition of those cases to his successor, and will go to work for a law firm that's best known for doing tax collection work for various school districts and city and county governments around the state.

• We ran a recent item on legislative pay that said lawmakers make almost $8 an hour if you take their per diem of $125 during legislation sessions into account. We should have noted that those daily payments are there to cover lawmaker's expenses, and aren't considered regular pay. We included it in the pay numbers to show their total compensation regardless of category.

• The "other" budget bill–the supplemental appropriation needed to get the Legislature out of the current budget alive–will probably be ready to go by the first week of April, according to House Speaker Craddick. One chunk of that is for new spending: Caseloads in the Medicaid and Children's Health Insurance Program are higher than the budgeteers expected when they wrote the current spending plan two years ago, and they'll need to okay about $500 million in new spending there. And then there is the matter of budget cutting, which requires legislative action. The cuts requested by the governor, speaker and lieutenant governor require revisions in the appropriations legislation passed last session. If the numbers don't change between now and then, that bill will cut a total of $2.3 billion out of the budget that ends August 31. That total includes the $1.8 billion deficit already forecast by the comptroller's office and the roughly $500 million needed for high participation in those public health insurance programs.

• The major pieces of tort reform might end up in one big piece of legislation this session. Some is already there, in the form of omnibus legislation being carried by Rep. Joe Nixon, R-Houston, and Sen. Jane Nelson, R-Flower Mound. But that bill doesn't include two big issues that could be added soon: medical malpractice liability limits, and limits on asbestos claims. Pro: Lawmakers could do the whole tort reform thing in one gulp. Con: Attacks on each proposed change in the tort laws would apply to everything, making the entire package more controversial.

Political People and Their Moves

You wouldn't expect Tony Sanchez Jr. to do well in the Rick Perry administration, and you would be correct. Sanchez won't be getting an extension added to his term on the University of Texas Board of Regents. For the two empty spots on that panel, Gov. Perry appointed Scott Caven of Houston, a retired exec at Goldman Sachs, and James Huffines, an Austin investor who's been a gubernatorial appointments secretary (under former Gov. Bill Clements), a member of the Texas Alcoholic Beverage Commission, and an advisor to Perry. Sanchez, a George W. Bush appointee to the UT System, lost a nasty political race to Perry in November.

• Perry tapped Suzi Ray McClellan for another term heading the Office of Public Utility Counsel, which represents residential and small business consumers in utility battles. Mike Hachtman, the former chief of staff at the Texas Railroad Commission and now a Houston businessman, is Perry's choice to fill an empty spot at the Texas Workers' Compensation Commission.

• Imagine a place just like Texas, except with Democrats in the place of Republicans in state government. It's as hard for the elephants to find work there as it is for the donkeys here, and another one has crossed Arizona to come to the (relative) land of milk and honey: Adam Mendelsohn, who's worked on several GOP political campaigns in the Golden State, is the newest spokesman for Texas Comptroller of Public Accounts Carole Keeton Strayhorn. He'll report to Bill Kenyon, a Texan who migrated to California and then came back last year to work for the comptroller.

• Already at the table, but now in the middle chairs: Geraldine "Tincy" Miller of the State Board of Education. She and the other members were elected in November, but had to wait for Gov. Rick Perry to make one of them the chair, and now he has. That requires Senate confirmation and could be noisy. Perry boosted Richard Smith, a Realtor and former state representative, to the big chair at the Texas Workers Compensation Commission. And the governor designated Christina Melton Crain as chair of the Texas Board of Criminal Justice.

Patrick Crimmins, who's spent the last decade explaining state's environmental regulations and regulators to reporters and others, left the Texas Commission on Environmental Quality and is prowling for a new gig. Crimmins was at the Texas Water Commission before that agency was merged into what's now called TCEQ.

Guillermo X. Garcia, who did time at the Austin American-Statesman, the late Dallas Times Herald, and most recently, at USA Today, is joining the Austin bureau of the San Antonio Express News. He'll cover some of the people in the Pink Building.

• Deaths: Walt Rostow, a national security advisor to Presidents John Kennedy and Lyndon Baines Johnson and a professor at the LBJ school at the University of Texas. He was 86.

Quotes of the Week

Comptroller Carole Keeton Strayhorn, talking about the state's budget mess on Austin's KLRU-TV: I think that the major reason we got here is that there are no tools in place for fiscal discipline at the Legislature. And I've got some plans to remedy that for the future."

Rep. Senfronia Thompson, D-Houston, on why she introduced legislation that would put an expiration date on each state tax: "If the budget starts at zero, then logically, let's start the tax code at zero. If every expenditure must be justified, then every tax to fund an expenditure should be justified."

Sen. Jane Nelson, R-Flower Mound, quoted by the Dallas Morning News on Gov. Rick Perry's proposal to save $144 million by doing away with state-required exercise in public schools: "There was no fiscal note on the bill, so I don't understand how you could save any money by repealing it."

House Speaker Tom Craddick, telling reporters that he's leaving details of legislation to the members of the House: "If I'm going to do it all, then everybody else might as well go home."

Homeland Security Secretary Tom Ridge, quoted in The New York Times: "Stash away the duct tape. Don't use it. Stash it away."


Texas Weekly: Volume 19, Issue 33, 24 February 2003. Ross Ramsey, Editor. George Phenix, Publisher. Copyright 2003 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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