A Sneak Attack on Sherwood Forest

Lt. Gov. David Dewhurst is working on an overhaul of the state's school finance system, lowering local property taxes by billions of dollars and raising new sales taxes on service businesses in Texas.

Dewhurst, his aides and a few senators have been working for several weeks and expect to have something ready for public consumption within the month. Internally, they're split on whether the state could get something done within the current legislative session or whether it would take a special legislative session to pass a plan. They want to lead the debate, however, and proposing a fix to the unpopular system could put them in that position.

The plan under consideration would replace around $7 billion in local property taxes with new state taxes–including an expansion of the state's sales tax to services not currently taxed. Dewhurst & Co. are also looking at ending some of the exemptions in the current sales tax, although the details of that weren't available to us.

The Senate can't start tax bills–the state constitution grants that pleasure solely to the House. The Senate can, however, initiate constitutional amendments, and one variation on the proposal would be to put the question to voters: Would they be willing to give up a big chunk of their local school property taxes in exchange for a sales tax on services they buy?

Punting a Tax Bill to Voters

A new state tax, if it were palatable first to lawmakers and then to voters, would increase the state's share of the costs of public education. That part would be popular. It would cut local property taxes, which is also popular. But it would force lawmakers to vote for a tax bill. That's unlikely. But the same dynamics were in place in 1991, when a budget crunch pushed lawmakers to vote–reluctantly–for a state lottery. They finally pushed it through by giving lawmakers some cover. They were able to say "I didn't vote for a lottery–I just voted to give voters the choice of voting for a lottery or not."

Couching a huge tax bill as a constitutional amendment would give politicians the same escape. And if voters turned it down, it might punch a hole in the Robin Hood rhetoric around the state. If nothing else, it would prove to politicians and voters alike whether the school finance system has people mad enough to vote for something a little less unpopular.

The sales tax idea is attractive to conservative senators because it's partly within the control of consumers. It depends on what gets taxed. Sales taxes on necessity items are regressive–harder on the poor. Sales taxes on discretionary items–some services could be in that category–are less regressive. And taxes paid by businesses get buried out of sight of most voters and most consumers.

Politically, a school finance fix would give Dewhurst a signature issue. And it would give incumbent lawmakers something positive to run on. If all they get this year is a tight budget and no new taxes, voters will say that's what was expected. If they get a fatter budget and pass a tax bill, voters will get after them for raising taxes–they'd be planting a flag that says, "Kick Me." Getting school finance fixed, on the other hand, could be popular with voters. If, that is, Dewhurst can sell the tax bill big enough to do real harm to Robin Hood.

The idea hasn't been fully vetted in the rest of the building, where the conventional scheme is to get out of the regular session without getting killed or passing a tax bill and then coming back in a year or so for a special session on school finance. Even if that eventually happens, Dewhurst will be the first one out of the chute with a plan. If it's credible, he'll frame the issue for everyone else.

Why Borrow When You Can Gamble?

Video lottery terminals at racetracks would provide the biggest chunk of change in the second round of recommendations from Comptroller Carole Keeton Strayhorn. The proposals, if adopted, would generate $2.1 billion, including $1.8 billion in general state revenue (that's the part the budgeteers are most interested in). Add the new e-Texas report to an earlier iteration produced by the comptroller, and the Legislature could squeeze $5.7 billion out of the budget, including $3.5 billion in general revenue. Some of the money would come from savings, some from new revenue, but every dollar picked up there is a dollar that's not in the state's shortfall, estimated at $10 billion or more.

Strayhorn, saying the state shouldn't use one-time measures, delayed payments and other accounting tricks to pay its way, endorsed a new gambling program that would eventually generate almost $1 billion a year for the state. She recommended using some of the money from video gambling to replace rising school property taxes around the state and to fund community and technical college scholarships, but lawmakers aren't bound to the spending parts of the recommendation if they approve the gambling and the money it would bring in.

Earlier in the week, Gov. Rick Perry set up a mechanism for the lottery. He's been against new gambling, but told a group of reporters he would have a hard time vetoing legislation that keeps the state lottery going. He didn't say this at the time, but a video lottery measure would fit handily within that sunset bill, and would bring in a bunch of money in a politically painless way. The games would only be available at racetracks, but could be run by the state's current lottery operator, Gtech, if that company wins the contract. Gtech's lobby team includes Reggie Bashur, who's close to the governor and is also one of Strayhorn's closest outside political advisors.

Not everyone is on board. Lt. Gov. David Dewhurst pooh-poohed the idea, saying he "does not believe in expanding gambling." He also took a jab at Strayhorn, saying he appreciates her "compiling ideas, both old and new, to marshal state resources more effectively."

Strayhorn proposed closing two of the underused state schools for the mentally retarded, a move that would save $18 million in state funds and cut the equivalent of 476 people from the state payroll. She would cut $76 million in state spending by making participants in the Children's Health Insurance Program reapply for benefits every six months instead of every year. Strayhorn recommended $432 million in cuts in public school spending–money she said is spent in schools with higher-than-average spending on non-classroom personnel. Since those aren't state jobs, she didn't spell out how many people would lose their jobs if the proposal is carried out. She also said the state should stop paying for benefits for people appointed to run state agencies part-time (She said she didn't consider cutting benefits for state legislators, who meet the same definition she laid out.)

The whole list of recommendations–including the new ones and the old ones–are available at the comptroller's website: www.window.state.tx.us.

Hold that Fight for One More Week

The budget timing in the House has changed. The current plan is to get the budget to the full House for debate and a vote in the week before the Easter break. If the rumors of a long debate come true, they'll either shorten the holiday or take a mid-haggle breather and renew the debate after Easter. Management wants to move the bill out so that the conference committee can work out the details without a knock-down, drag-out fight.

The House usually has a rule in place that you can't add to spending in one part of the budget unless you cut the same amount from other spots in the budget. This time, there has been talk of going one more step, and prohibiting amendments that would move money from one article of the budget to another. That would stop amendments that moved public education money to health and human services, or prison money to economic development. The Calendars Committee, which puts those kinds of rules in place, doesn't have the budget in hand yet and hasn't set any rules, but the conversation is underway.

A Renegade with a Corner Office?

Lt. Gov. David Dewhurst, whose political leanings during last year's elections seemed to fit just fine with those of the Texas GOP, is now getting the kind of attention Democrats used to get from that party. It's not the school finance plan–not yet, anyway–Dewhurst has been the Republican leadership's maverick on budget matters.

While the House was writing the tightest budget the budgeteers could stomach, and the governor was asking reporters which part of No New Taxes they couldn't comprehend, Dewhurst popped up and said the Senate would do its best to fully fund the Children's' Health Insurance Program and other social services without raising taxes. He and his budgeteers polled senators about which non-tax revenues they could support. And he talked with other Republican state leaders about his desire to get a budget that spends at least $59.5 billion in general state revenues.

The state GOP sent notice of all this to the members of the State Republican Executive Committee. They asked those Republicans to each talk to their own senators to see who among them said they'd support non-tax revenues. And they planned to then get together in a conference call to talk about it. The clear implication was that they were supposed to sit on the senators and the Lite Guv to get them back on the program. For their part, the party animals say they have such notices and calls with the SREC all the time and say the media blew it out of proportion.

The Texas GOP pulled up short when word of their protest got out, but a couple of other conservative groups took up the suggestion and have been emailing Texans on their lists and urging them to call Dewhurst and senators to ask them to hold the line.

It might have made no difference: As we've written, the budget pulled together in the House was already giving some legislators serious indigestion. The House Appropriations Committee has added back a bunch of programs (without detailing where they might be getting the money to fund $2.75 billion in additions), and though the cuts from current services are deep, they're not as deep as they were a week earlier. And in conversations among the leadership, it appears that the House's working budget and the Senate's working budget are well within $2 billion of each other. In the history of budget negotiations, that's no record-breaker.

Don't forget that the state doesn't have enough money coming in to cover the current budget, which runs through the end of August. Rep. Talmadge Heflin, R-Houston, says the supplemental appropriations bill that will take care of that will come up for consideration after his Appropriations panel has finished massaging the big budget bill.

Details to Follow. Soon. It'll Be Big...

And then there is the legislation that is designed to rework the state's health and human services programs in a way that leaves them functional and shakes out a whole bunch of money at the same time. In its current form, the legislation would save the state about $327 million, according to the Legislative Budget Board.

But Heflin says there is a committee substitute that will soon be in place, and predicts it will save around $1 billion in general state revenue (and cost the state two or three times that much in federal funds, which are drawn in by state spending). The numbers are important–this is one of the big items in the bag of tricks that allowed Heflin's budget committee to undo some of the proposed spending cuts they'd been considering. That bill, owned by Rep. Arlene Wohlgemuth, R-Burleson, would roll those agencies into one, knocking off the appointed advisory boards and putting everything under the control of the Health and Human Services Commission, whose head would be appointed by the governor.

The agencies are full of skeptics about those savings–it would be hard to come up with any of that money without program cuts, they say. But if the budgeteers believe it, they'll put the savings in the state budget, and the agencies can't spend more than the budget says. That would leave them to find the savings or to make cuts on their own to keep their numbers black and not red.

Maybe Cable TV Needs an Elections Channel

House Bill 872 would reduce the number of uniform election dates, pushing political entities in Texas to hold their elections in May and November in an effort to cut down on "turnout burnout" that results when people are asked to go to the polls too often. The legislation by Rep. Mary Denny, R-Aubrey, would all but kill city and school and county elections now held in January and September. Voters don't show up for those elections like they do for the bigger contests in May and November. Denny's bill would take effect in October, after the September elections. She opposed an amendment (as did the House, by an 82-60 vote) to move the effective date to September, which is when most laws take effect. Denny said that was to preserve planning by schools and others that's already been done for September elections. It also preserves the planning that's been done for something else. The constitutional amendment that would cap the amounts that can be awarded in certain lawsuits isn't set for November, like most such measures. It's set for September.

• The special election to replace Rep. Irma Rangel, D-Kingsville features nine contestants, including seven Ds and two Rs. The Republicans are Ron Lozano and James Matz, both from Harlingen. Matz is a former county commissioner. The Democrats are Eliud Garcia, Joey Treviño, Richard Valdez and Debra Winger of Harlingen; Juan Escobar of Kingsville; school superintendent Dolores Muñoz of South Padre Island; and Victor Rubalcaba of Raymondville. Ed Cyganiewicz, a Republican who lost the election last November to the late Rangel, decided not to stay out. The election is set for April 15.

• Meanwhile, the list of wannabes in Larry Combest's congressional district has 17 people on it. Lubbock produced the most entries, with nine: state Rep. Carl Isett, David Langston, Donald May, Randy Neugebauer, Julia Penelope, Richard "Chip" Peterson, Jerri Simmons-Asmussen, Vickie Sutton, and Stace Williams. Penelope is from the Green Party. Peterson is a Libertarian. Simmons-Asmussen is a Democrat. All the others from Lubbock listed themselves as Republicans.

Midland has four candidates in the running to replace Combest in Congress: Richard Bartlett, William "Bill" Christian, Thomas Flournoy, and Mike Conaway. Flournoy represents the Constitution party, and the rest are Republicans.

Republican Jamie Berryhill and Democrat Kaye Gaddy are both from Odessa. John Bell, a Republican from Kermit, and E.L. "Ed" Hicks, an independent from Denver City, round out the field.

The Slow Wheel of Government

Attorney General Greg Abbott didn't offer any surprises in his answer to Sen. Steve Ogden, R-Bryan; in his official opinion, the Legislature can spend more money than the comptroller says the state will have for a budget, so long as they label it an emergency and muster 120 votes in the 150-member House and 25 votes in the 31-member Senate. They would also have to get the governor to sign the budget, unless they were voting to override him, too.

Ogden, feuding with Comptroller Carole Keeton Strayhorn over what he and other senators suspect is a too-stingy budget estimate, asked Abbott if he was reading the law right. He was. Historical note: the Legislature has never bucked the comptroller's budget estimate before. Doing so opens them to political attacks for deficit spending.

• Most of the legislation going to the governor at this stage consists of congratulatory and commemorative resolutions. He signed his second piece of actual law this session, putting his name on the bill that takes money out of the Smart Jobs fund and uses it to help build a road that Toyota wants for the company's promised car plant in San Antonio. But lest you think the first scratching of the pen was to spend money: The governor's first signature went on legislation requiring insurance companies to show regulators some of the data they use to set rates.

Just Like Before, Only Different

The switch from a Democratic majority to a Republican majority in the Texas Legislature didn't really change the philosophy in the Pink Building on most issues. But for a handful of very high profile matters, things could not have changed more. To wit:

• The voucher bill touted by Rep. Kent Grusendorf, R-Arlington, is out of his Public Education committee and on its way to the Calendars panel. The bill–HB 2465–would allow a pilot program where public money could be used to pay private school tuition for certain students. It's one of a handful of bills that Republicans–with backing from some African-American Democrats–have been pushing for years and that Democrats have been blocking. That, at least, is the theory: The House should pass it easily and chances in the Senate are less certain. Gov. Rick Perry has said he's willing to sign a bill allowing a test program in the state.

• Legislation that would require a parent's consent before an underage minor could have an abortion is up for debate next week in the House State Affairs Committee, and it's got a fair chance. As we went to press, the backers of that legislation had an advantage they weren't really expecting: The bill has no fiscal note on it, meaning the state put no price tag on lawsuits and challenges that will crop up if the legislation passes. Texas currently has a parental notification bill–the difference is that permission from a parent is not necessary right now, so long as they're informed–and the state has to pay the lawyers for young women who go to court for judicial permission to bypass their parents.

• The Defense of Marriage Act, which would prevent the state from recognizing same-sex unions granted to couples by other states, won approval from the Senate State Affairs committee and is on its way to the full Senate. Similar legislation–you'll see it referred to as DOMA–is working in the House.

Sam Attlesey, 1946-2003

At one time, a big part of Sam Attlesey's job at the Dallas Morning News was to make sure the Dallas Times Herald–the cross-town rival, and the then-employer of this reporter–looked like it was getting its juiciest political information from... the Dallas Morning News. Unfortunately for those of us at the Herald, he was quite good at it. However, he was a gentleman about it, a good winner. When the Herald sent a new guy to Austin to scribble about politics a few years ago, Attlesey served up the humble pie on a silver plate, with fresh napkins. Between scoops, he paid for beers and introduced politicos and others who might be helpful to the new guy. Sometimes, he'd explain how he had outrun you on a story, just to raise the stakes and beat you differently the next time.

He was an aggressive reporter without an aggressive ego or even a discernable mean streak. People liked him and they talked to him and told him what they were up to. He loved what he was doing and dug into it, to the benefit of everyone who read his stuff. A true professional, he could and did write tough stories, and did it without taking cheap shots.

Attlesey initially wanted to be a sports writer. He was a baseball fan, a common enough thing among political people. He was a Chicago Cubs fan, which isn't common at all, particularly for a native Texan. But having picked a stinker, he then remained loyal: he loaded up a fantasy baseball team with current and former Cubbies, ignoring their lack of ability and dooming his small investment just because they had worked at Wrigley Field. He was goofy in that same way about the Alamo and about the state of Texas. He studied, knew the history and which stories and fables came from which sources, and collected neckties and other gadgets that featured the old mission and the Lone Star.

He died at the hospital in his hometown on the second day of the baseball season at the age of 56. A little over a year ago, when he learned he had cancer, Attlesey told people not to make a big deal out of it. He refused to pull strings to see this famous doctor or go to that exclusive clinic, even when they were earnestly offered, because he didn't want to handle it that way. He double- and triple-checked the diagnosis, and returned home to Sulphur Springs. He continued to write his weekly column on politics, and broke stories from there as politicians stopped in to chat and spilled their secrets at his mother's kitchen table. As usual, he made a hard thing seem easy.

Political People and Their Moves

A second Texan is on the way to the 5th U.S. Court of Appeals. Edward Prado of San Antonio was approved by the U.S. Senate Judiciary Committee and his nomination now goes to the full Senate. That's not expected to be a problem for Prado, who has been a federal judge for almost two decades. But clouds are forming over some appointments. Texas Supreme Court Justice Priscilla Owen, who was voted down by the committee when the Democrats had control and then approved by the Republicans, still needs approval from the full Senate. That's not usually a big deal, but the Democrats managed to stop another controversial appointment, and U.S. Sen. John Cornyn and others are asking them openly to knock it off.

Lt. Gen. Wayne Marty will have another term as adjutant general of Texas and got a promotion from the governor that put the third star on his epaulets. Marty's second term as head of the Texas National Guard will run until 2005.

Dr. Charles Bailey Jr. is the new president of the Texas Medical Association. He's a plastic surgeon in Houston, and his dad, granddad and two uncles were all doctors, too. Lyndon Johnson and his family were among Bailey's dad's patients. The younger Bailey is a lawyer as well as a doctor, and has been involved with TMA for several years.

Erle Nye of Dallas–the head honcho at TXU–won reappointment to the Texas A&M University board of regents from the state's Aggie-in-chief. Nye has been chairman of that board since 2001. Gov. Rick Perry also named Houston attorney John David White to that panel. Both men went to school in College Station.

Quotes of the Week

Gov. Rick Perry, opening the door for new state-sponsored gambling: "I made it abundantly clear I'm not for the expansion of gambling in the state of Texas, but vetoing a bill that would not allow the state lottery commission to continue its work is another thing altogether... I would be very hard pressed to veto a sunset bill because it had one issue that I did not particularly favor."

Judge Ron Chapman, appointed by the Texas Court of Criminal Appeals to review cases resulting from suspicious police and prosecutorial work in Tulia, recommending that convictions of 38 people should be vacated because the investigator's work was no good: "It is stipulated by all parties and approved by the court that Tom Coleman is simply not a credible witness."

Rep. Jack Stick, R-Austin, telling the Houston Chronicle he wasn't part of a Democratic walkout in the budget committee: "I was thirsty. I just went to get a Coke."

Rep. Garnet Coleman, D-Houston, disagreeing with a proposed reorganization of the state's health and human services agencies, quoted by the San Antonio Express-News: "You can say it's efficient, but is it good public policy?" Appropriations Committee Chairman Talmadge Heflin, in reply: "I don' talk to Mr. Coleman."

Walker County District Attorney David Weeks, quoted in a San Antonio Express-News story on legislation that would create a new penalty for capital murderers: "I feel that Life Without Parole takes away hope. It makes somebody basically a guided missile with no control."

W.A. "Tex" Moncrief, telling the Fort Worth Star-Telegram he's backing Cathy Hirt in the race for mayor of Fort Worth over his nephew (and one-time opponent in a lawsuit over family money), former state Sen. Mike Moncrief: "I am supporting her because she is by far the better candidate. Mike is not a businessman and Cathy is much better educated."

University of Texas at Austin President Larry Faulkner, quoted in the Austin American-Statesman on the school's proposal for a cap on the number of "top ten" students it has to take from Texas high schools each year: "If this is going to be a serious university on the national scene, it can't be 100 percent Texans. That's not good for our students, and it's not good for the state."

A terrific line attributed to the late Sam Attlesey: "Politics is the art of keeping as many balls as possible up in the air at one time, while protecting your own."

Texas Weekly, Volume 19, Issue 39, 7 April 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.