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School Finance Grows a Beard

Gov. Rick Perry wants to call a special session on school finance this spring to try to cut property taxes and end the Robin Hood formulas that have rich-district voters in uproar. But he's leading with "education excellence" instead of finance, adding $500 million to the price and diverting attention from the funding emergency that's driving the issue. And the lack of consensus over that plan, and over schemes to re-jigger the school finance system, threatens plans to call lawmakers to Austin.

Gov. Rick Perry wants to call a special session on school finance this spring to try to cut property taxes and end the Robin Hood formulas that have rich-district voters in uproar. But he's leading with "education excellence" instead of finance, adding $500 million to the price and diverting attention from the funding emergency that's driving the issue. And the lack of consensus over that plan, and over schemes to re-jigger the school finance system, threatens plans to call lawmakers to Austin.

To do anything with school finance, Perry has to sell a tax bill to a bunch of Republicans, within and without the Pink Building. The state spends less than 40 cents for every dollar of public education in the state, and to balance spending from one district to the next, that low state contribution means richer local districts have to ship money to poorer ones, if the state wants to remain in compliance with its own constitution. Many local districts are charging the maximum property taxes allowed by the state and still need more money to do the things they think they should be doing to educate children. They're suing. The trial is set for this summer, and Perry wants to short-circuit the lawsuits by patching up the school finance system. That requires taxes. Educational excellence covers the ugly face of a tax bill, so he's pitching improved schools as part of the package: Pay This, Get That.

The rollout in San Antonio and Austin was the first run for Perry's incentives for improvement program, and he'll be pitching that across the state for the next couple of weeks. Meanwhile, his aides are working behind the scenes to find a tax package acceptable to the lobby, so that Perry can walk into a special session with an attractive education package and a less flammable tax package and, in the best case, walk away without many cuts and bruises.

It's not going well. Groups that make up the education establishment — school boards, school administrators, teachers — are pooh-poohing most of his public proposals. Most business lobbyists who've looked at the Perry plans are pooh-poohing that, saying they can't support it.

And they're not the people under pressure. Lawmakers can get some of the revenues they need by passing a relatively non-controversial tax on smokes, giving voters a chance to approve video lottery terminals and trying some nipping and tucking on the state's leaky franchise tax system. Those and some smaller items would only provide a Band-Aid for school finance problems, but nobody would suffer much damage. Businesses like that.

The school gang won't be happy until the state picks up significantly more of the tab for what is, after all, a state system of public schools. They're pushing for more spending on teacher salaries and to hire enough people to shrink classroom sizes. To politicians and businesses, that sounds like a call for a big tax bill. That sales pitch gets much more difficult as soon as they name the tax to pay for it.

Perry may be the only politician who's on the griddle. The new incentive systems he's proposing could easily wait until the next regular legislative session that begins in a year. The reason for a special session is to short-circuit the lawsuit so that the solutions are driven by legislators instead of by judges. Perry alone has the power to call a special session. If he doesn't, senators and representatives have him as their excuse — "He didn't call us back." And potential opponents, like U.S. Sen. Kay Bailey Hutchison, would have an issue to run on — "He didn't fix it, but I will." Perry's only out at the moment is to call a session. If he calls it and the Lege passes something he can sign, it's a win for the Guv. If he calls it and the Lege fumbles it, he won't have to shoulder the blame alone, or perhaps at all. But at the starting point, he's the only one with a political incentive to solve the puzzle.

The Front Room

Perry wants to reward schools for particular sorts of improvements, but isn't proposing to punish those who don't improve. That would be left to parents and taxpayers angered, presumably, over the lack of bang their bucks produced. Among the proposals:

• A $100 million fund that could be tapped by school districts that show the most improvement — a measure designed to give more money to districts that aren't already at high achievement levels.

• Schools would get $100 for each student passing a standardized high school algebra test, with another $100 for every at-risk student who passes.

• Schools would get $100 for every student who starts without English fluency and ends up with a passing grade on the TAKS test.

• The state would match up to $2,500 for incentives for excellent teachers. An audience of school administrators, whose districts are strapped for cash, greeted this proposal with scattered laughter when the governor first announced it.

• High schools would get a bonus every time a student advanced to the next year of school, a funding incentive designed to cut into high dropout rates. It would start at $100 for the first year, adding another $100 to the bonus each year. A district would get a total of $600 over time for every student making it to the senior year of high school.

• Schools would get bonuses when students reach "commended performance" grade levels.

School groups complained that the incentives are focused on high schools, and that school districts already at the top in achievement would hog the incentives, creating a less equal funding system for schools. Perry dismissed that, saying "they clearly don't understand what I'm proposing."

The Back Room

The governor's aides are trying to sell business on a plan that would lower property taxes for businesses to $1.40 per $100 valuation, and lower property taxes for homeowners to $1.25. The business taxes would go to the state for public schools, and at least some of the local money would remain in the localities where it's raised. That's called a split roll, and businesses that pay a lot of property taxes really, really, really hate it. They think they'd be the whipping horse for property taxes as a result. Grover Norquist, probably the best-known tax-basher in the country, told a Texas Public Policy Foundation audience that the best reason to split the rolls is because it would "allow the state to take taxpayers out for a mugging one group at a time."

The size of the tax bill depends on the solution sought. According to the Center for Public Policy Priorities, which has been cranking numbers on this, it would cost $1.1 billion a year to end the Robin Hood system. It costs $1 billion to cut local property taxes by a dime. Enrollment growth in the schools costs $500 million a year. And if you want to increase spending, add $1 billion to the pot for every $250 per year added to the spending per student.

Mike Toomey, the governor's top aide, isn't talking publicly about the tax package. In private meetings with lobbyists and business people that have been relayed to us, he's telling them that the governor's plan is the least poisonous of the plans under discussion. Comptroller Carole Keeton Strayhorn, as we noted a while back, has fiddled with raising homestead exemptions to $70,000 or $80,000, thus giving residential taxpayers a huge cut in property taxes and shifting the load to business. It's a split roll, sort of, but it has the advantage of charging all taxpayers the same tax rate. The Senate voted unanimously for a package of expanded sales taxes during the last regular session. Senators did it in a hurry; after they'd had a closer look, several began praying they wouldn't have to defend their votes. One idea being considered on that end of the building is a business activity tax, which has traditionally drawn loud opposition from the service industry and, in particular, from low-profit-margin, high-volume retailers, like grocers and discount chains.

The bottom line: They haven't found the consensus they seek, and without it, the governor's camp is reluctant to go into a special session to fight publicly over taxes.

Taking Sides

The new chairman of the Texas Democratic Party, Charles Soecthing, has stirred up a hornet's nest in South Texas by endorsing one Democrat over another in a House primary race. He's also named his favorites in two other races, where challengers are taking on incumbent Democrats who haven't toed the Party line on issues like congressional redistricting and the last Speaker's race.

State Board of Education members are generally ignored by other state politicians — except in times of great controversy or loud squabbling — but Alma Allen of Houston is getting some face time with other Houston Democrats. And she's been endorsed by Soecthing in her challenge to longtime Rep. Ron Wilson, D-Houston. Some Democrats are peeved at Wilson for his support of Republican Tom Craddick in last year's race for House Speaker — Craddick won, Wilson advanced, the rest of the Democrats didn't — and for siding with the Republicans on redistricting. Wilson didn't go to Ardmore with the other holdouts last May, and he voted for the new congressional plan when it finally came to a vote in the third special session last year. Wilson contends the congressional map is better for minorities and for his constituents, and defended his vote for Craddick by saying he didn't see any percentage in backing Democrat Pete Laney for reelection in a strongly GOP House. Wilson jumped to Craddick before the elections that made the House so Republican, but the legislative redistricting maps in play made the shift a certainty. Short form: He's a renegade, and the loyalists don't like him.

Sen. Rodney Ellis, D-Houston, isn't taking a highly visible role in the Wilson reelection fight, but he did invite Allen to be on stage for a presentation on school finance in Houston. Wilson's most vociferous foe — Rep. Garnet Coleman — will be there, too. Allen will be there under her current title, as a member of the State Board of Education, and not as a candidate. Still, it's face time.

Wilson isn't the only Democrat who's got his Party chairman's goat. Soecthing endorsed Marc Veasey, a former aide to U.S. Rep. Martin Frost who is now challenging state Rep. Glenn Lewis, D-Fort Worth. Soecthing says only that Lewis, like Wilson, "hasn't acted like a Democrat for some time."

Influencing People Without Really Trying

The first two endorsements made some Democrats uncomfortable, but there have been enough arguments about speaker politics and redistricting to give Soecthing a little cover within the Party.

That's not true in the case of a Democratic primary contest that has split local politicos in South Texas who favor state Rep. Aaron Peña, D-Edinburg, from those who like Eddie Saenz, a former city engineer who is mounting a serious challenge. Unlike his help for challengers to Wilson and Lewis — endorsements based on disaffection — Soecthing says his support for Peña is based on affection. He has nothing against Saenz, but says he has known Peña — and, in particular, Peña's father — for three decades. The elder Peña, he says, was instrumental in helping him recruit Hispanic troopers when Soecthing worked at the Texas Department of Public Safety (he's now a lawyer).

Hidalgo County chairman Bobby Guerra calls the endorsement a "huge political mistake" that divides local Democrats and puts him in the position of saying the Party doesn't have a favorite even though the state chairman has loaned his name to one of the campaigns. Guerra says he'd feel the same way if Soecthing had gone with Saenz: "He has no business getting involved like this in local primary elections, whether it's in Hidalgo County, Harris County or Tarrant County. This is not how you unify the Party." Sen. Juan "Chuy" Hinojosa, D-McAllen, was one of several local officials who called Soecthing on the carpet. "It's a big no-no. He's supposed to be neutral and unite the party — not divide it — and represent all the candidates. This is not their function," he said. Hinojosa gave Soecthing a little breathing room: "He's trying to learn on the job and somebody gave him some bad advice."

Enforcement endorsements, like those against Wilson and Lewis, are relatively rare. You might be seeing more of it, on the Democratic side. "The old way has gotten us where we are," Soecthing says. But endorsements like the Peña blessing are extremely rare from a party chief. Soecthing acknowledged as much, now that he's sent the letter and listened to some of the hot reactions on the phone. He's not retracting it, but he admits, "In retrospect, maybe I shouldn't have done it."

The Upper Chamber, East & West

Former Tyler Mayor Kevin Eltife got an unqualified endorsement from state Rep. Tommy Merritt, R-Longview and a conditional blessing from former state Sen. Bill Ratliff, R-Mount Pleasant, in his runoff bid for Ratliff's job in SD-1. The runoff will be on Tuesday, February 17.

Merritt, who finished third in the special election, is running for reelection to his House seat and will be in a Republican primary in March. There had been some speculation in places like Austin that he might endorse Democrat Paul Sadler in the runoff, but that's a weird thing to do if you're going to face Republican voters in a month. He's with Eltife.

Ratliff is, too. But he said in his endorsement that Sadler is a good guy and that he'll go to the Democrat's defense against "any personal or unfounded attacks." He also said Eltife has agreed to respond to any such attacks by denouncing the attacks and those responsible. "The people of the first Senate District have a choice to make. That choice is between two good and honorable men... my vote will go to Kevin Eltife," Ratliff wrote.

That raised some eyebrows, but it's a no-brainer for Eltife. Ratliff is the second most popular Republican in that part of the state, behind the guy in the White House. And the conditions allow Eltife to denounce nasty ads, keeping himself clean, even if third parties run the ads and he's the beneficiary (third party ads contained virtually all of the negative stuff in the first round). Ratliff worked with Sadler on school finance when Sadler was a House member, but Ratliff is a Republican, and he's going into the lobby business, working a Republican Legislature on issues. He said he likes them both, but said his philosophy is closer to Eltife's than to Sadler's.

• In SD-31 on the other side of the state, Republican Don Sparks decided not to endorse either of the remaining candidates in the runoff. Sparks was the only Midland contestant, but he grew up in Amarillo on the other end of the district. He won't publicly name a favorite in the runoff between Kirk Edwards of Odessa and Kel Seliger of Amarillo.

Those two will face off on February 17, but that might not be the last of it. The special election will fill the Senate seat through the end of this year, but a regular election will decide who will be the senator for the four years after that. The primaries are in March, and it's too late for anyone to take their name off the ballot. Sparks said he won't campaign, won't buy ads, and won't do anything active, but he'll still be on the ballot. So will everyone else who was in the first round of the special election. The winner of the runoff will probably get his first test in April — assuming the governor calls a special session — and will have to face voters in November after voting in a special session that includes a tax bill of some sort.

GOP Primaries... in 2006

The Texas congressional delegation is forming up in favor of some changes to the criteria used to close unnecessary military bases. U.S. Sen. Kay Bailey Hutchison and Gov. Rick Perry squabbled publicly over BRAC (Base Realignment and Closure) rules after Perry said he liked the draft and Hutchison said the Defense Department should make some changes. Now, House Majority Leader Tom DeLay, R-Sugar Land, and 14 other members of the Texas congressional delegation have sent a letter to Defense Secretary Donald Rumsfeld mirroring Hutchison's position. They want overseas bases to be considered for closure before domestic bases, and they want more weight given to Homeland Security issues that — we'll simplify and save time — would better the chances for Texas bases. One example they cite: Moving operations from Ellington Field in Houston would lengthen response times should someone attack the Houston Ship Channel or NASA. Perry aides say the governor's position wasn't all that different from Hutchison's, that the two just gave different spins on the same thing. Hutchison and Perry are possible opponents in the next gubernatorial race.

All Dressed Up and No Place to Go

The Texas AFL-CIO made only a handful of endorsements in political races, but they didn't have many from which to choose. They'll be with David Van Os, a Democrat, who's running for the Texas Supreme Court against Republican Scott Brister. Brister is the incumbent, but he was appointed last year by Gov. Rick Perry and hasn't stood for election to that seat.

They also endorsed J.R. Molina, who's running for a spot on the Texas Court of Criminal Appeals. That seat is now held by Republican Mike Keasler, who also has a primary opponent, Steven Porter of Boerne. Three seats are up for election on both courts, but those are the only two Democrats who filed in those six contests. Labor will go with both of them.

The unions didn't get a visit from Texas Railroad Commission candidates, and the conventioneers kicked that decision to the executive board, which can issue an endorsement later. The incumbent is Republican Victor Carrillo, who, like Brister, has been appointed but not yet elected.

Flotsam & Jetsam

The Texas Senate Research Center isn't out of business, as was rumored, but it might be consolidated with Lt. Gov. David Dewhurst's research office. Then again, it might not. The Senate is looking for budget-cutting opportunities and those two offices will have to prove they're both needed if they're going to survive. Senate committees are going through a variation — their budgets will be up for consideration by the Administration Committee February 13 [triskaidekaphobiacs will be horrified to learn that's also a Friday]. The Lite Guv's office has about a dozen people in it; Senate research has a handful more. No pink slips have gone out to anyone; management says that, for now, everything is under review. The legislative agencies were cut just like other state agencies, and they offered the same retirement incentives to long-time employees, too. Those quit bonuses amount to 25 percent of eligible employees' salaries, and the bonuses come out of the budgets of the agencies from which the employees are retiring. There's a second hit: The agencies can only pay replacement workers 65 percent of the salaries that were being earned by the people who quit.

• The Texas Association of Business doesn't have to hand over election records to the Travis County District Attorney's office, at least not right away. The Texas Supreme Court put that on hold until after it holds hearings of its own on the matter. The grand jury looking at TAB's efforts in the 2002 elections meets through the end of March.

• Rep. Jack Stick, R-Austin, won't have Don Zimmerman to kick around anymore. Zimmerman, one of three Republicans challenging Stick in the primary, had previously filed to run in the same elections for a precinct chairmanship, and didn't remove his name. Bzzzzzzt! He's disqualified, and the Travis County GOP is trying to change its procedures so people won't get caught that way. He told the Austin American-Statesman he'll run for the House later: "I'm a fixture here in Travis County."

• For the propeller-heads in the audience, Gov. Rick Perry's official website has an RSS feed on it, allowing people with computers and the right kind of (often free) software to keep tabs on what he's doing. If you have the software, called a news aggregator, you can tell it to periodically check the governor's website (and thousands of others, which you pick and choose). When the Guv's staff makes a change on the site — new press releases, announcements of appointments, and the like — the change shows up on the news aggregator. Click on the headline and you go to the site. Perry is apparently the first official in state government to add the software.

• Run for the Border: U.S. Rep. Max Sandlin, D-Marshall, is running for reelection here in George W. Bush's state, but he jumped over to Oklahoma to stand in for U.S. Sen. John Edwards at a campaign event for the Oklahoma Democratic Party.

• DEPARTMENT OF CORRECTIONS: We quoted lobbyist Bill Miller last week and said in the lead-in that he and another lobster arranged for House Speaker Tom Craddick to meet with the Pope. The guy who arranged the meeting was not a lobster... While we're here, we misspelled former Speaker Rayford Price's name in some editions last week. Sorry, sorry, sorry.

Political People and Their Moves

Gov. Rick Perry named Paul Hudson to chair the Public Utility Commission, replacing Becky Armendariz Klein. Hudson, who worked on Perry's policy staff, was named to the commission in August, but now he'll get the middle seat. Klein is running for Congress after filing for office right at the deadline. She joined the race with lots of official Republican encouragement but without much research. She showed up for work the next Tuesday only to find that, by filing, she had instantly resigned from the PUC. She had planned to stay on the job until March, putting finishing touches on a couple of pending cases, including one involving Reliant Energy. The governor hasn't named a new commissioner yet; one name in the mix is Jimmy Glotfelty, who worked for then-Gov. George W. Bush, then took a lobby job, and who now works for the Department of Energy in Washington...

George Kuempel, who's been reporting for the Dallas Morning News Austin Bureau since 1978, says he'll retire after the March primaries. Kuempel worked for the Houston Chronicle and for then-Comptroller Bob Bullock before going to the News, where he developed a reputation as a terrific and tough investigative reporter. He plans to putter around for a while...

Mike Lavigne, who's been doing press for Sen. Rodney Ellis, D-Houston, will be the Texas Democratic Party's new spokesman, starting about the time you read this. Lavigne says his Honda is paid off and it's time to move. He'll replace Sean Byrne, who's leaving for law school in Washington, D.C...

Eddie Aldrete, who's moved from political campaigns to business-related work over the last few years, is going to work for the San Antonio office of Austin-based Public Strategies. Aldrete's firm worked with PSI on arena elections there and in Tampa Bay...

Two guys who worked for the Texas Lottery Commission — Keith Elkins, the lottery's former spokesman, and Rob Kohler, the lottery's contracts manager — are forming a trade group to represent retailers, lottery players and winners....

Texas Tech University is getting three new regents. Gov. Perry named F. Scott Dueser of Abilene, Windy Sitton of Lubbock and Dr. Bob Stafford of Amarillo to the board. Stafford is a retired surgeon and a partner in a cattle operation in Matador. Sitton was mayor of Lubbock for three terms and owns a design business. Dueser is a banker, and both he and Stafford are Tech grads. Sitton went to school in Denton, but she's on a number of boards at Tech and is also on the Texas Higher Education Coordinating Board...

Perry opened a state economic development office in Abilene and put Kevin Christian in charge of it. Christian had been chief of staff to state Rep. Bob Hunter, R-Abilene...

Deaths: Former state Sen. Dee Travis, R-Dallas, after a heart attack. He left after two years for a successful development career, and had moved to Nashville. Travis, elected in 1980, was then the youngest senator ever. He was 53.

Quotes of the Week

Gov. Rick Perry, rolling out his "education excellence" package: "I believe that it is good public policy to reward proven teachers that embody excellence in the classroom with financial incentives. We should not be afraid to single out our top educational professionals for additional pay out of fear of bucking the status quo." Later, on the same subject: "If we can provide incentives for victories on the football field, why can't we reward victories in the classroom?"

Comptroller Carole Keeton Strayhorn, quoted in the Houston Chronicle on Perry's education proposals: "I am afraid that this governor's plan leaves too many children and too many teachers behind. I obviously have not met with the governor about his plan, but it appears — and I'll certainly want to look at it in detail — but it appears that it widens the gap, the equity gap."

Houston businessman Rob Mosbacher, on school systems' need for financial help, in the Austin American-Statesman: "Our sense is there's not enough money in the system to do what we've asked them to do. We are asking the schools to do more with less. That is not working."

Dallas lawyer Mike Boone, a former member of the Highland Park school board, in the same story: "If Highland Park is suffering, what do you think is happening in other school districts?"

Airplane designer and businessman Dee Howard, quoted in the Fort Worth Star-Telegram about his rags-to-riches career: "If you got luck, anything will do for brains."


Texas Weekly, Volume 20, Issue 31, 2 February 2004. Ross Ramsey, Editor. George Phenix, Publisher. Copyright 2004 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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