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Chicken Little Economics

The details are always tougher than the general idea of budget-cutting when you're talking about government programs that have a direct effect on people's lives. That's why discussions about health care in any form–Medicaid, CHIP, whatever–eventually come to fit the headline above.

The details are always tougher than the general idea of budget-cutting when you're talking about government programs that have a direct effect on people's lives. That's why discussions about health care in any form–Medicaid, CHIP, whatever–eventually come to fit the headline above.

State budgeteers have been saying for a long time that the costs of medical care and drugs are running up the price of services. The rising prices, combined with lower-than-expected revenues, are the reasons behind the budget shortfall. And if you want to close the shortfall without significant tax increases, you have to cut services. And the agencies that provide those services are now laying out, in detail, just what it would mean to cut spending. They start by saying the current programs, left alone, are growing in both the number of clients and the cost of each client. To wit:

• The state's Medicaid caseload was 1.84 million in the 2001 fiscal year; by FY 2005, it'll be 2.9 million, according to the Health and Human Services Commission. The average cost, per month, for each recipient in Medicaid will jump from $185.59 to $210.53 in that same time frame.

• The number of prescriptions handled by the vendor drug program was 27.7 million in FY 2001; the projection for FY 2005 is 39.8 million. The cost per prescription will be $68.98, up from $47.68.

HHSC, the umbrella over the Departments of Health, Human Services, Protective and Regulatory Services and several other agencies, is telling lawmakers what they can do at various funding levels, and leaving it to lawmakers to decide what to cut and what to spare.

The first-level numbers are grim. It would cost the state about $611.4 million to fund an "amended" Children's' Health Insurance Program and base-level Medicaid program that covers less than what's covered now. An even more stripped-down proposal would cost $396 million in state funds (federal funds would add just over $1 billion to the bigger proposal, and about $700 million to the smaller one). The smaller program would cut the CHIP program from about 500,000 clients to about 280,000. The second proposal would cover 388,000, still leaving more than 100,000 kids now covered without CHIP. Each would make it harder to get in the program and to stay there, and more expensive for clients than the current version of CHIP.

The numbers are similarly spooky in the Medicaid program. The HHSC package has five choices in the bigger portion of Medicaid that's not related to CHIP. The costs are huge: On the low end, the state would spend $5.2 billion and would cover only federally mandated services. On the high end of the proposal, which would be closer to what Texas is doing now, the state's cost would be $8.4 billion. The federal shares range from $8.2 billion to $13.0 billion. The program would serve about 500,000 fewer people at the deepest level of cuts. The cuts are difficult to compare to current programs in simple terms; some cuts would serve the same number of people, but with a lower level of care.

The scenarios painted by the commission's director, Albert Hawkins, prompted some hand-wringing from some of the people who actually get the money from the programs–doctors and hospitals. They sent a letter to Sen. Teel Bivins, chairman of the Finance Committee, saying, "the health care needs of Texans do no wax and wane with the state budget," and saying that the costs of that care would fall elsewhere. In emergency rooms, for instance.

Most lawmakers dismiss that, for now, saying they're just looking at the problems and don't think the final numbers will be as bad as the worst numbers that came out this week. But if they don't find some new money, or a new idea for health care, they'll have to make dramatic cuts.

Repairs in Progress

Robert Howden, an advisor to Gov. Rick Perry and a former lobster for the National Federation of Independent Business, is leaving the governor's office to join the Texas Automobile Dealers Association, but Perry isn't getting the coup d'etat he sought. Gene Fondren, whose name is more or less synonymous with the car dealers group, will stay on. Perry wanted Fondren's head after the car dealers–spurred by Perry's surprise vetoes of a couple of their major bills last session–kept him at arm's length during the governor's race. Fondren's contributions went to Democrat Tony Sanchez Jr. Howden said he came on board after Fondren approached him, and says he'll join the team already in place. He's not sure what kind of car he'll be driving, but he starts in a week.

TADA was one of three trade groups on Perry's enemies list: the Texas Medical Association, under pressure from the governor's camp to make changes, accepted the resignation of longtime lobbyist Kim Ross and made some other changes. TMA went with Sanchez after Perry stiffed them on their favorite piece of legislation last session. After he won, the TMA chieftains and Ross mutually decided to make some changes rather than walk around with targets on their backs all session. They've hired a lobby team that includes a number of Republicans.

Some Perry loyalists say the next target is the Texas Association of Realtors, but the folks at TAR say they haven't seen any pressure to back those rumors. That group supported Perry in the governor's race, but also backed John Sharp in the lite Guv's race. Backing Sharp, who lost a bitter race to Perry in 1998, hit the Perry camp almost as hard as backing Sanchez would have done.

Howden's job goes to Luis Saenz, who worked for the governor's state office before leaving to work on Perry's election campaign. Now Saenz is back on the state payroll.

Legislature 101: Pass/Fail

The Texas Association of Business doesn't like some of the prompt pay legislation filed this session and is telling lawmakers, via memo, that it'll be watching their votes and including them in the group's post-session scorecard. Refresher course: Prompt pay was the pet bill of the Texas Medical Association two years ago. It passed the Legislature, but Gov. Perry vetoed it on the grounds that it created a whole new reason for court fights between docs and the people who won't pay them on time (see the item above this one). The Guv didn't raise any other objections, so Rep. Craig Eiland, D-Galveston, filed a copy of the bill that passed last time, only without the section that brought on the veto. Sen. Jane Nelson, R-Flower Mound, filed a prompt pay bill as well. But in his note to lawmakers, TAB's Bill Hammond claims both of those bills would increase the cost of health care insurance paid by business. His version: The Texas Department of Insurance says doctors in Texas are being paid promptly now. He says he'll support a prompt pay law, but not one of those two. And he shows his knife, such as it is, saying the trade group will oppose those bills and anything else that raises private health insurance premiums and "it is extremely likely that we will include any votes to that affect in our pro-business voting record." That puts the governor in an interesting place. He told TMA he wouldn't oppose their legislation without the clause he didn't like, and now TAB, a close ally, is against the bill TMA wants.

• The Heritage Alliance and its affiliated political action committee, run by Dallas activist Richard Ford, is planning to include the state's top three officials in its ranking of legislative votes at the end of this session. The group will give passing grades to lawmakers who go their way at least 80 percent of the time, and they say in a memo to legislators that they'll include Gov. Perry, Lt. Gov. David Dewhurst and House Speaker Tom Craddick in the rankings. Perry would be ranked on the basis of what he signs or doesn't sign. Dewhurst doesn't vote, except in the very rare instance of a tie, and Craddick's predecessors at the tall desk in the House voted only occasionally, either on symbolic measures or on tight votes where members wanted to see the boss put some skin in the game. The Dallas-based group is better known by its former names: The Free Enterprise PAC and the Free Market Committee. It's the group that got blasted before the Republican primaries for sending out mailers attacking moderates in a handful of races.

Closing a Tax Loophole, Slowly

The national tide on taxing retail sales made on the Internet is turning, partly because states are strapped for cash and partly because brick-and-mortar retailers are making noise about getting zinged by competitors whose prices are lower than theirs, just because they're not collecting the taxes. The state tax people around the country have more or less figured out how to collect taxes for each other without going bug-eyed-crazy, and they've got an agreement in circulation that will go into effect as soon as enough states with enough citizens sign it.

Under current state law, buyers owe sales taxes to the state even when they buy over the Internet. Retailers collect the tax for the state and then turn over those collections. All a new law would do is set up the collection mechanism for a tax that's currently owed and very rarely paid. It's one of the clearest examples of what Gov. Rick Perry is talking about when he says new taxes don't include taxes that people should have been paying all along.

But even if that happens quickly, it won't help Texas out of the current crunch. Taxing Internet sales would bring in a lot of money, but not in the time period covered by the next budget, according to officials at the state comptroller's office. They're guessing (as opposed to forecasting or predicting, which are official acts in their building), but they say there is little chance that the deal could get signed by the states and approved by Congress in time to do much good in the next budget cycle.

How Do You Want Your Steak?

The members of the House Agriculture Committee went to dinner the other night at the Austin Land & Cattle Company. And because of the outside chance they might discuss legislation, they were advised by House Parliamentarian Steve Collins to announce from the House floor that they would be holding a "working session" at the restaurant. Rep. Rick Hardcastle, R-Vernon, said it was just a committee dinner and that he hadn't planned to do anything official or even to talk about legislation.

But Collins, according to Hardcastle, is worried that assembling a quorum of the committee for a meal could create a point of order on legislation that's assigned to that committee. If members talked about a bill at dinner–in effect considering it out of public earshot–they would be having an illegal closed meeting. That interpretation creates an interesting dilemma for legislative diners. If they go out and don't announce a meeting, opponents might call points of order on bills they consider; after all, the House parliamentarian thinks it's a problem, and he helps referee those points of order when they're called. On the other hand, if they go out for dinner and announce the working sessions as Collins recommended, they in effect create public meetings–some in nice restaurants–that all of Texas is invited to attend.

Out of Work, Still on the Payroll

He doesn't get his desk back or anything like that, but the state has to continue to pay Rick Crawford his full salary while he's suing over his firing as executive director of the State Preservation Board. The six-member board–which includes the governor, the lieutenant governor and the speaker of the House as members–voted to fire Crawford after meeting behind closed doors for an hour to talk about it. The court fight just started, but a state district judge gave Crawford an initial win, ordering the state to keep paying him and barring the state from hiring a permanent replacement. They have to go back to court within a couple of weeks for the next step.

Crawford's suit says the board goofed by bringing an attorney into the closed meeting on his job status, and that the meeting was illegally called. Attorneys aren't allowed in closed meetings except to talk about "pending or contemplated litigation" or settlement offers. Crawford's suit says neither exception applied, and that since Gov. Rick Perry called the executive session "for the purpose of consultation with legal counsel," it was an illegal meeting. The consulting should have been in open meeting on that basis, and also because Crawford–as the employee in question–formally asked the board to discuss his employment in an open session and not in a closed one.

Honoring Their Own Ilk

Don't be shocked, but they give awards to people who infest your television and mailbox and email and phone lines and radio and newspapers with political advertising every two years. Actually, the people who do that stuff have a trade group–the American Association of Political Consultants–that awards its members for their ability to successfully prod people to the polls or to successfully lull opponents' voters back into their warm, comfy spots on their sofas. The group's MVP in a Campaign was none other than Karl Rove, a Texan who got a Texan elected to the White House. The down-ballot awards are called Pollies, and you can get one even if your candidate tanks. Texas ties:

• Printed stuff: The Fort Worth-based Eppstein group won third place for a Michael Burgess mailer called "My Dad is not Dick Armey." Burgess beat Armey's son for Armey's seat. Austin-based Message, Audience & Presentation won first place for a slate card for the Democrats' coordinated campaign in Texas, and won third place for a different piece for the same client. That third-place piece also got a third-place award in the "bilingual or foreign language mail" category. And the firm also got an honorable mention for an issue ad for the Texas Abortion Rights Action League. Austin-based Olsen Delisi & Shuvalov won a second place ribbon for an absentee ballot mailer for the Iowa Republican Party. Winning Directions, a national outfit with an Austin branch, got a second-place ribbon in the original/innovative category for a fake movie poster called "The Sum of All Vetoes," a Tony Sanchez piece making fun of Gov. Rick Perry's vetoes last session.

• Message, Audience and Presentation was the only Texas firm that showed up in the radio category, winning third place for a GOTV ad for the Sanchez campaign, and first place for a bilingual/foreign language spot. Another Texas campaign made the list, though: National Media Inc.'s full radio campaign for U.S. Rep. Jeb Hensarling, R-Dallas, got first place in that group.

• Austin's Weeks & Co. won a blue ribbon for a video done for Agriculture Commissioner Susan Combs that never went on TV–it was an introduction used at the GOP state convention. The company won an honorable mention for its "broken glass" commercial for Lt. Gov. David Dewhurst. Two Texas connections showed up in awards for TV in state legislative races. The Strategy Group for Media got first place for a Ben Bentzin spot that used police video of a DWI arrest of Sen. Gonzalo Barrientos, D-Austin. Barrientos won anyhow. And Jeff Montgomery & Associates got honorable mention for an education spot for Barbara Canales Black, who lost to Sen. Juan "Chuy" Hinojosa, D-McAllen. Message, Audience & Presentation showed up again, this time getting an honorable mention for a TV spot for Webb County Judge Mercurio Martinez (he lost) and a first place for bilingual ads for Omar Garza, a county court-at-law candidate. Second place in that bilingual/foreign language group went to Montgomery & Associates for a spot promoting Cameron County Judge Gilberto Hinojosa. He won. The same firm got an honorable mention for another spot for Canales-Black.

• Austin-based Campaign Momentum won second place for the best overall Internet campaign for the company's work for the Sanchez campaign. They also got first place for best use of a website for persuasion for a Sanchez project:

They Still Like Him in Austin

You can't park at the Pink Building if you're not a legislator–you can't even drive through without a dispensation. Unless you're Emmitt Smith. While he was making a visit to Austin, he got the red carpet treatment. Just three days before the Dallas Cowboys announced they would not re-sign Smith–the most productive running back in NFL history–the Texas Legislature honored him. He got to park a limousine in the Speaker's parking spot next to the steps on the West end of the Capitol, and he got a built-in retinue when he walked through the House and Senate, including legislators, TV cameras and the lobsters for the Cowboys.

Spring Reading

Now available in a bookstore near you: Bush's Brain: How Karl Rove Made George W. Bush Presidential. That's the effort by former TV reporter Jim Moore and current Dallas Morning News Austin Bureau Chief Wayne Slater. Both covered Bush's rise to the governor's office and then to the White House, and both covered Rove's rise from his early days as a Texas political consultant to Gov. Bill Clements and others to national Republican superstar. The book is the second Rove/Bush effort; the first, a paperback by Austin writers Jan Reid and Lou Dubose with an assist from Washington, D.C., writer Carl Cannon, is called Boy Genius: Karl Rove, the Brains Behind the Remarkable Political Triumph of George W. Bush. Rove granted interviews to Moore and Slater (and didn't to the other set of authors), and they wrote in detail about his involvement in a string of famous political intrigues of the last 20 years, including a possibly faked bugging of Rove's office and an investigation of the Texas Department of Agriculture that benefited another Rove client, now-Gov. Rick Perry. It's readable, interesting, and if you're involved in Texas politics, some of your friends and enemies are featured.

• Rove's profile was high even without the books. He's on the cover of the current Texas Monthly, and he'll be the featured guest at a Harris County Republican Party fundraiser on April 17.

• The latest book by one of the founders of this very newsletter, Sam Kinch Jr., is called Crapshoot Justice: Money and the Texas Judiciary, and it'll be officially available within the week. It's about raising money for judicial races and whether and how that creates conflicts in judging cases involving people who might have contributed. Kinch and co-author Susan Borreson Brewer write that the current system creates a crapshoot where success in judicial elections is disconnected from whether somebody's a good jurist or not. It's coming out of Austin's Eakin Press within days, we're told.

Ethical Oddments

• Insurance companies gave at least $1.3 million to legislative candidates during the last election cycle, including at least $211,088 to members of the committees that are overseeing insurance reform during this legislative session. The numbers come from Campaigns for People, a campaign finance reform group that's pushing for deeper disclosure of who pays for political campaigns. Among other things, the group wants campaigns to list the occupations and employers of contributors of more than $500, and they want the state to require candidates to file electronic reports that can be viewed by anyone in the state with a connection to the Internet. Under current law, the group says, 38 percent of candidates and 66 "substantial" political action committees file paper reports that aren't immediately available to voters.

• The biggest ethics story in town is the court fight over whether the Texas Association of Business' support of Republican legislative candidates last year was legal, and that could open on a new front. Rep. Pete Gallego, D-Alpine, sent a letter to Rep. Kevin Bailey, D-Houston, Gallego's successor as chairman of the House General Investigating Committee, asking him to open an inquiry into TAB's political activities. Citing a couple of stories in the Austin American-Statesman, he writes that ongoing civil and criminal investigations won't conclude during the legislative session, and says the committee should address the question because it involves the integrity of the Legislature. He writes that an investigation could "remove any taint... especially the suggestion that the insurance industry, or any special interest has exercised undue influence."

• The Dallas Chamber of Commerce dropped its membership in the Texas Association of Business, deciding not to pay its annual dues last month. The Dallas folks ducked our calls, but TAB officials say they were told the reasons were financial and not because the Dallas Chamber disagreed with anything the statewide group was doing.

• A San Antonio debt collection concern filed a lawsuit against the Linebarger Goggan law firm, saying that firm bribed public officials, rigged bids and laundered money–charges that mirror a criminal charge that one of the company's lawyers bribed a San Antonio council member. The company–Municipal Services Bureau–says it lost contracts because of the law firm's actions.

Political People and Their Moves

Pop the cork on the cheap champagne–there's a majority on the Texas Railroad Commission once again. You can't have a tie vote with three people on board, and Victor Carrillo of Abilene has been appointed, confirmed, and sworn in. The current commissioners–Charles Matthews and Michael Williams–have been locking horns since Tony Garza left the RRC to become the U.S. Ambassador to Mexico, meaning Carrillo–a county judge from Abilene tapped by Gov. Rick Perry–will be in the majority at first, no matter how he votes. And as for the ongoing battle over the middle seat (Williams has it, and Matthews wants it), Carrillo will get to troop though a couple of meetings without breaking the tie. Matthews posted the chairman's job for a vote a couple of weeks ago, apparently anticipating that a third commissioner would be in place in time, didn't post the matter for Carrillo's first meeting.

• Gov. Perry appointed Richard Roman of El Paso to an open spot on the 346th District Court. He's a private attorney who has been appointed to the bench before, and by the same governor. Perry put Roman on the 327th district court last summer. After the elections, he went back to being a lawyer. Now he's on his way back to the bench... Perry reappointed Jerry Kane of Corpus Christi–first appointed in 2001–to a full term on the board of the Texas Department of Human Services... Dallas political maven and Texas Department of Public Safety Commissioner Jim Francis won an appointment from his former neighbor: George W. Bush is making Francis a member of the American Battle Monuments Commission. The commission oversees overseas war cemeteries and memorials.

• Moves at the House Public Education Committee: After the abrupt departures of general counsel Clayton Trotter and assistant clerk Susanna Gallun, Rep. Kent Grusendorf, R-Arlington, has announced some hires. Sam Miller and Brett Price come in as assistant clerk and committee liaison, respectively. Julie Linn, a former Grusendorf aide who's been off at college, is back as committee clerk... Jeanie Coffey, who used to lobby for the Texas Retired Teachers Association, moved into the insurance business: She's now with Association Member Benefits Advisors, an Austin outfit that puts together insurance for associations like the one she used to work for... That open job we told you about at the Texas Association of PPOs went to Jennifer Stevens, formerly with Pacificare.

• Deaths: Mike McCool, an attorney, former state senator and Dallas County Democratic Party chief and activist. He was 84... Jose Villaseñor, a former aide to Rep. Norma Chavez, D-El Paso, who moved to Dallas to start a business and raise a family, of a heart attack. He was 31.

Quotes of the Week

Gov. Rick Perry, responding to a reporter's question about raising money to cover the state's budget shortfall: "What part of 'no new taxes' do you not understand? I mean 'no new taxes.'"

Lt. Gov. David Dewhurst talking about insurance reform: "We're optimistic that we're going to find that the insurance rates are from 12 to 18 percent high... You take a state like Florida, which has similar weather patterns, and their homeowners insurance rates are substantially lower."

Eric Wellman, assistant program director at WAXQ-FM, in a New York Times story on why there aren't any country music stations in the largest city in the U.S.: "The attitude is that you may get 20 million listeners, but they're all on welfare and driving rusted pickup trucks."

Denise Rice, mother of an elementary school student, asked by the Houston Chronicle about the pressures of the new TAKS test: "It's like every student is in a suspense movie. Everybody knows something is going to happen, but nobody knows what."

President George W. Bush as quoted by the Washington Post on homeland security: "We're going to make sure we spend enough to win this war. And by spending enough to win a war, we may not have a war at all."

Rep. Suzanna Gratia Hupp, R-Lampasas, quoted by The Dallas Morning News on critics of her proposal to conceal the names of people who hold concealed handgun permits in Texas: "The media would love to know the type and color of underwear I have in my drawer. If they could get that information, they would love to have it."

Texas Weekly: Volume 19, Issue 34, 3 March 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@ For news, email ramsey@, or call (512) 288-6598.

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