Tax bills are difficult to pass, and it never goes smoothly. Gov. Bill Clements signed a tax bill in 1987 that still holds the state record, and he did it over the objections of some of his fellow Republicans. In 1991, the political ambitions of then Ways & Means Chairman James Hury ended on the floor of the House when his fellow Democrats disassembled a multi-billion tax bill and left it to Lt. Gov. Bob Bullock to put Humpty Dumpty back together again. That one finally got passed, and is the second-place finisher on the state's all-time list.
That was also the Legislature that approved the state lottery, and it's probably worth knowing that the bill was voted down when it first came up in the House. That killed it, everyone thought, but they revived the legislation later in the session — after the budget and tax outlooks were clearer (and gloomier) — and the lottery was approved. Another historical footnote: 1991 saw the birth of what became the Texas Performance Review, which scoured the budget for savings and tricks and all sorts of non-tax revenue magic to balance a budget that was too big to swallow even with a tax bill and a lottery. And a final bit of lore: The financial tangle wasn't finally combed out in the regular session. It took a special session on the budget to get it done.
A tax bill big enough to make a dent in local school property taxes would dwarf either of those bills, and the lawmakers being asked to back it were elected, in large measure, on the basis of their opposition to taxes and growth in the state government's budget. You were expecting, maybe, a nice family movie instead?
A compounding factor: 122 members of the current House weren't in the House in 1991. About half of them were in office in 1997, when then-Gov. George W. Bush took his stab at a tax bill to fix school finance. It was severely whittled before finally passing and giving him claim to pushing the largest tax cut in state history. Like Clements, he found his strongest opposition to the tax bill in his own party. And as with the earlier bills, his chance for a win didn't come until late in the legislative session. Gov. Rick Perry was around for all three — as a House member, then watching from the Department of Agriculture. House Speaker Tom Craddick's name was in the author box on Bush's tax bill, and he was head of Ways & Means when it passed. He's been here for all of them. Lt. Gov. David Dewhurst, who was still a Houston businessman when the Bush plan was in play, will be doing this for the first time.
Two tactical points on the tax bill.
First, opponents of the House's public education bill — most of them Democrats — didn't get to put any significant ornaments on that plan. Having decided they don't want the vehicle, they have little incentive to sign off on the financing. In fact, since the fortunes of the education bill are directly tied to those of the tax bill, the vote on the tax bill offers opponents a second chance to kill the education package they don't like. And they could conceivably get some help from Republicans who like the public education bill but who just can't bring themselves to vote for this particular tax bill; 71 voted no on HB 2, and they only need five tax-haters to prevail on HB 3. Though we're still in the early stage, that linkage could be a continuing problem as the two bills progress through the session. That's especially true so long as the education bill has so many enemies inside and outside the Pink Building.
Second, the House added a debate rule to prevent amendments that change the overall size of the tax bill. Management had its reasons: You can't pay for a local property tax increase without increasing state taxes, and lowering the size of the state tax bill would shrink that local property tax cut. If a component of the tax bill is removed, the amendment that strips it has to replace it with something that would raise the same amount of money. That preserves the overall scheme, but potentially endangers the tax bill itself by forcing members into an all or nothing vote. It's like the table rule we heard growing up: "You're going to have a serving of everything we've put on the table." A legislator who is adamantly opposed to a particular tax could end up choosing between an "aye" vote that "moves the process forward" and a "no" vote that's truer to that legislator's philosophy. To overextend the metaphor, they have to eat their asparagus if they want to eat anything at all.
This happens with every tax bill, to some extent: Lawmakers have to choose between (or, if you prefer, "balance") the demands of their political patrons and the demands of their voters.
Down But Not Out
Lawmaking sometimes follows the principles of courting. The only way to make legislators fall in love with an unattractive idea is to present them with an ugly alternative.
The unattractive idea we're talking about here is gambling, whether in the form of slot machines or full casinos. (And the historical example is the Texas Lottery mentioned earlier.) Conversations about gaming peaked early in the session, then ebbed; getting the needed 100 votes out of the 150-member House and 21 out of the 31-member Senate is a tall order. Most officeholders seem to think gambling won't advance this session, but there's an effort afoot to join the racetracks, the slot machine people and the casino promoters together to push for new gambling in the state. And with a record-setting tax bill in front of the Legislature, they are hoping they've found the ugly thing that makes their proposals less unattractive.
Gov. Rick Perry has said he doesn't think new gaming would fly. And U.S. Sen. Kay Bailey Hutchison has said she's against it, a way of setting out a marker for a potential race between her, Perry and Comptroller Carole Keeton Strayhorn. To review, both Perry and Strayhorn have voiced support for video lottery terminals, aka VLTs, aka slot machines; Hutchison is against.
Either type of gaming would require a constitutional amendment and thus, electoral approval from voters. And with the deadline for filing legislation at hand, a couple of new bills would open the door to that vote. Rep. Charlie Geren, R-Fort Worth, proposed a constitutional amendment that would allow "casino-based development projects," VLTs at horse and dog tracks and on Indian lands. He'd create a Texas Gaming Commission to oversee that stuff, the state lottery and the venues now regulated by the Texas Racing Commission.
Geren's bill would allow a dozen casinos in the state, including seven in urban areas "allocated by population," three in coastal counties, and two more in locations determined by the new gaming board, and they'd have to meet development requirements ranging from $150 million for the optional casinos to $400 million in development costs for the urban casinos. In other words, they'd have to spend at least that much on their projects. Cities would be barred from offering tax incentives to attract the casinos, and voters in each county would have to approve before a casino could be located there. It doesn't lay out requirements for bidding on licenses; some lobbyists for the gambling folks say a license to operate a casino in a major Texas city could be worth $500 million or more, and say the state should auction the rights to raise money.
The state would get $15,000 for each VLT installed, and then would get 70 percent of the money wagered there. The racetrack or tribe would get the rest.
Notes on Education
Gov. Rick Perry likes to chide reporters who ask about process instead of focusing on policy issues and results. But now he's talking process himself, pushing education and tax bills forward "as vehicles" without endorsing their contents. "Content" earned him a losing showdown last spring; now he wants school finance and property tax legislation, and "process" is the buzzword.
His standard answer to specific questions about the education and tax bills is along the lines of "this isn't the final product and a lot can happen between now and the end of the session."
The education package's support floated amendment to amendment from two-vote margins to 30-vote margins, with most of the record votes on amendments showing splits in the mid-20s. House Speaker Tom Craddick and Rep. Kent Grusendorf, R-Arlington, designed a game plan and stuck with it and didn't lose on any vote that was on their high priorities list. That was all the difference between this round and what happened last spring, when efforts to lower local school taxes came to pieces.
• The school bill didn't win over any education groups, but conservative groups, for the most part, rallied behind it. They didn't rally around the tax bill, though. The Texas Association of Business couldn't get all of its executive board to run in the same direction and ended up not taking a position on the bill. The National Federation for Independent Business didn't like the payroll tax. A conservative group calling itself "Texans for Texas" that includes a gang of regular allies to Gov. Perry put out an email on the pros and cons of the tax bill; it included one column in favor and three against, including one from anti-tax activist Grover Norquist and another from an editorial writer for The Wall Street Journal.
Perry himself responded to passage of the education bill with a vote for process on the tax bill, saying, "To ensure that the effort to reform our education system and to reduce property taxes stays on course, it is vital that the members of the House follow the leadership of Speaker Craddick and Chairman [Jim] Keffer and pass HB 3. I urge the House of Representatives to pass HB 3 and send the entire education reform proposal to the Senate so that work can continue and the process can proceed."
• The final vote on the school bill (on second reading) was 76-71. Every Aye was a Republican. The Nays included 62 Democrats and 9 Republicans. The strays — those who didn't vote and/or were absent, included a Democrat and two Republicans. Craddick voted from the chair, giving the bill the last vote it needed to have more than half the membership of the House behind it.
• Grusendorf would let school districts add two cents to their tax rate each year — up to ten cents — to raise "local enrichment" funds that wouldn't have to be shared with other Texas school districts. It would be equalized — a fancy way of saying the state promises that penny of tax raises a minimum state-set amount per student. And districts that wanted to raise more would be allowed to do so, but with two strings attached.
String 1: Only the first two cents allowed each year would be equalized with state money.
String 2: And a district wanting to go beyond the two cents would have to have approval from two-thirds of its voters. That's not unheard of in other states, but it's a new thing here. According to the election wizards with the Texas Secretary of State, no other type of election requires more than 50 percent of the voters for a win. Under Grusendorf's bill, a super-majority is required before a district could raise extra local money from property taxes.
• If the Lege ends the regular session with a school finance package and a tax bill in place, they won't be able to show all of their work to voters in time for the elections in 2006. New state taxes would be in place by then, but it takes a while for property tax changes to trickle down to the level of family budgets. Any changes that result from caps on property tax appraisals will take another year to sink in, if those caps make it into the final package.
Lawmakers have time to cut school property taxes, and that would show up on bills sent to property owners in October. But most Texans don't itemize their deductions on their federal income taxes, and most don't directly pay their property taxes. The rest would likely see a school property tax cut in the form of an adjustment to their mortgage escrow payments. But those escrow accounts cover a mess of other stuff: Other property taxes make up about half of the average property tax bill, and escrow accounts cover homeowners insurance and homeowners association dues and such. Even a significant school property tax cut could be dulled by the surrounding costs. What looks like a 33 percent cut when you're just talking about school taxes quickly becomes a discount of ten to 15 percent off of the escrow part of a mortgage payment. It's still real money, but the political question is whether it's enough to overcome whatever pains result from new state taxes.
• House Democrats distributed a list of 44 Republican lawmakers whose home-owning constituents would have fared better under the Democratic alternative than under Grusendorf's bill. Attached to that were more detailed sheets on each of those districts, with the name of the member, the additional savings for the owner of the average-priced home in that district, and the amount of extra money that would have gone to each of the school districts represented by the lawmaker. The list included every Republican member whose average homeowners would have saved at least $100 more each year and whose school districts would have seen more money coming in. In the end, the House voted 81-67 against that plan (the sponsor was Rep. Scott Hochberg, D-Houston). No Democrats voted against it, and only four Republicans voted for it. Each of those reps was among the 44: Fred Brown of College Station, Toby Goodman of Arlington, Bob Hunter of Abilene, and Tommy Merritt of Longview.
Hunter voted with the Republicans when the full bill came up for a vote, but six other Republicans joined the Democrats: Charlie Geren of Fort Worth, Bob Griggs of North Richland Hills, Pat Haggerty of El Paso, Delwin Jones of Lubbock, Edmund Kuempel of Seguin, and Todd Smith of Euless.
News of the Future
Now that we have an authentic crystal ball in our offices (honest), we can write stuff like this: State District Judge Olen Underwood has told friends and the governor's office that he'll step down from one of his two posts, and the man in waiting for that open job is state Rep. Ruben Hope, R-Conroe, who is also the head of the House Republican Caucus. Underwood, a one-time star center at UT Austin who went on to become a professional football player (NY Giants, Houston Oilers, Denver Broncos) before taking up the law, is the presiding judge of the state's second judicial administrative district. He's apparently keeping that job, which would allow him to serve as a visiting judge while also handling administrative duties for the region. He's also the judge in the 284th district court. That's the gig he's apparently giving up and that Hope is hoping to get, through a gubernatorial appointment.
Nothing is official — Underwood is still hearing cases and Hope is still voting on legislation. But if everything falls into place, former state Rep. Bob Rabuck, the Conroe Republican who was replaced by Hope, told his local paper he'll run for the seat, as did Brandon Creighton, a lawyer and former Senate staffer who ran against Hope in the GOP primary 2002 and got a respectable 44.4 percent of the vote. Rabuck, an orthodontist, served in the House for eight years before deciding not to seek reelection in 1998. And so far, the triggering resignation, appointment, resignation, and election proclamation haven't happened.
Sidebar: Hope beat Rep. Joe Nixon, R-Houston, in the contest for head of the GOP caucus, and two years ago beat Rep. Sid Miller, R-Stephenville, for the post. Miller is currently the vice chairman.
The Richest Texas Candidates
Political consultant John Doner has been fiddling with databases again, cranking out the sort of information that's readily available on federal candidates and PACs but only indirectly available in Texas.
To wit: Two new lists rank candidate/officeholder committees by the amount of cash they had in the bank at the end of 2004, and then the top 500 general purpose committees also by cash-on-hand at year-end.
Ten state officeholders had more than $1 million on hand at year-end, and a total of 21 had more than $500,000 on hand then. Drumroll, please: Texans for [Gov.] Rick Perry, $7.9 million; Friends of [Comptroller] Carole Keeton Strayhorn, $5.7 million; Texans for [Attorney General] Greg Abbott, $3.2 million; [House Speaker] Tom Craddick, $2.9 million; [Sen.] John Whitmire, $2.3 million; Friends of [Agriculture Commissioner] Susan Combs Committee, $1.7 million; [Sen.] Rodney Ellis, $1.4 million; [Sen.] Ken Armbrister, $1.3 million; [former Rep.] Steven Wolens, $1.2 million; and [Lt. Gov.] David Dewhurst Committee, $1.0 million.
The top general-purpose PACs don't have as much money on hand as the top candidates. Only five had more than $500,000 on hand, and only three — two of them attached to the same group — had more than $1 million in the bank at year-end. That list: Texas Association of Realtors PAC, $1.6 million; Union Pacific Fund for Effective Government, $1.4 million; Texas Association of Realtors Issues Mobilization PAC, $1 million; Compass Bancshares Inc. PAC, $791,492; and Friends of Phil Gramm PAC, $750,314.
Doner put the lists together from candidate reports filed with the Texas Ethics Commission, which then added them to its online database.
Four Out of Five Dentists...
We don't have a transom, but studies float in anyway. The latest:
• The U.S. Chamber of Commerce commissioned pollsters to talk to corporate general counsels (generals counsel?) to get some ranking of state liability systems. Guess what? In spite of years of lawsuit-limiting legislation, Texas still sinks to the bottom of their lists. They're not fond of the judicial system in general; 56 percent of the lawyers give "fair" and "poor" rankings to the system.
Texas no longer ranks in the bottom five states — that honor goes to Mississippi, West Virginia, Alabama, Louisiana and California. But it ranks in the bottom six states; Texas is 45th overall. See for yourself; their report is online.
• Medical malpractice claims were relatively stable from 1988 to 2002, according to a study done by the Center on Lawyers, Civil Justice, and the Media at the University of Texas Law School. They looked at claims information from the Texas Department of Insurance and concluded that the rhetoric bolstering legislative limits on med mal claims was empty. The number of large claims paid was constant. The mean and median amounts paid out were "roughly constant" and million-dollar awards accounted for about 5 percent of the cases each year. The number of claims paid per 100 practicing doctors dropped to 4.6 in 2000-2002 from 6.4 ten years earlier. Costs of payouts and defense rose about 1% annually, and that was driven, the study says, by the costs of defending cases. The gist of this one is in the title: "Stability, not Crisis." The entire study will be published in a legal journal later this year, but it's also online now.
• Economist Ray Perryman did a report for the Texas Association of Counties spelling out the downside of caps on properties appraised for taxation, on state-imposed spending limits on local governments and on limits in revenue growth. You can see a full copy for yourself here. The gist: "By restricting the capacity of local governments to provide services, appraisal caps, revenue limits, and expenditure limits lead to a reduction in the quality of life and economic performance of the state." The report says the current 10% cap on appraisal growth already causes problems and creates inequities between taxpayers. Lower caps, it says, can depress real estate activity (capped property values are reset to 100% when properties are sold).
"In summary, appraisal caps and other limits have created substantial problems in providing adequate revenues in states where they have been implemented, resulting in major disparities among taxpayers, increases in other taxes, and significant increases in State transfers to local governments. They have also distorted economic behavior and limited growth potential."
• Another economic study says the state gets $24 in return from every $1 it puts into higher education. The Institute for Economic Development at the University of Texas at San Antonio did the work — with advice from Perryman and from state demographer Steve Murdock — and concluded the UT System adds $4 billion in personal income and a total economic impact of $12.8 billion to the Texas economy. That one's also online, here.
On the Radio
Air America — the liberal radio network started by comic Al Franken and others — is signing up its second station in Texas and giving a forum to Democratic gubernatorial explorer Chris Bell at the same time. Corpus Christi has the only Texas radio station that's airing Air America's programming (though it's also on satellite radio), and an Austin station is signing up. Franken will do his show from the State Theater in Austin, and Bell, a former congressman from Houston who's formally considering a race for Guv in 2006, will be a guest there for 30 minutes.
More Blogs on Texas Politics
Add these blogs to the list we wrote about a couple of weeks ago.
• The United Way of Texas has one, zeroed in on legislation and such.
• Campaigns for People — a group advocating tighter campaign finance law in Texas — has a blog focused on campaign finance scandals.
• A Houston man, Kevin Whited, who describes himself as a political conservative, blogs about lots of stuff including Texas politics.
• Democratic U.S. Senate candidate Barbara Ann Radnofsky is blogging her way through that campaign. She's running for the seat currently occupied by Kay Bailey Hutchison, and oddly enough, is the only candidate who's said for sure she's running. Hutchison is still considering a gubernatorial bid and several Republicans are circling in case she jumps. But until then, Radnofsky, a Houston lawyer, is the only declared Senate candidate.
Political People and Their Moves
Former Lt. Gov. Bill Ratliff will receive the John F. Kennedy Profile In Courage Award "for a distinguished career as a courageous bipartisan leader." The announcement from the Kennedy Library cited him for fighting a "principled action" against redistricting plans backed by his fellow Republicans, for his work on school finance and education and for "maintaining an inclusive style of governing in an era of sharp partisan politics." He'll receive the award in May.
Terri Seales, who'd been at the Texas Commission on Environmental Quality, signs on as legal council to Texas Railroad Commissioner Michael Williams.
There's a new name at Gov. Rick Perry's campaign office: Alfredo Rodriguez has been hired as political director. He recently worked for the National Republican Congressional Committee, but he's a Texan and worked on congressional campaigns for U.S. Rep. Henry Bonilla, R-San Antonio, state Rep. Carl Isett, R-Lubbock, and Ramsey Farley, who ran against U.S. Rep. Chet Edwards, D-Waco, in 2002.
Appointments: Gov. Perry named Keith Morrow of Southlake, the CIO at 7-Eleven, to the Texas Department of Information Resources... He named Maceo Dailey Jr. of El Paso and Cynthia Comparin of Dallas to Humanities Texas. He's the director of African American Studies at the University of Texas at El Paso and teaches history. She is the founder, president and CEO of Animato Technologies... The Guv reappointed Robert Rowling of Dallas as a regent of the University of Texas System. He's the chairman of Omni Hotels...
Deaths: Jerry Hall, who became a political and media consultant but never really overcame an almost genetic tendency to think and act and tell stories like a journalist, at age 78. Hall, an aide to former Gov. Preston Smith and over the years, to a wide array of politicians and officeholders from Ben Barnes to John Montford, spent his last years holding court from his front porch in Austin for friends and visitors from the press corps, the lobby and the political world.
Quotes of the Week
Rep. Kent Grusendorf, R-Arlington, arguing for a provision that requires the Legislature to reexamine education funding every two years: "As a state, we have been pouring dollars down a rat hole. It is important we are in the driver's seat. When we are on auto pilot, that doesn't happen."
Rep. Bob Griggs, R-North Richland Hills, and a former school superintendent, on the House education bill: "This bill is just plain old junk food. It's junk food for school finance. It provides that sugar rush immediately, but the funding falls apart after a very short period of time."
Sen. Florence Shapiro, R-Plano, in the Austin American-Statesman, on the House education package: "I think it's very difficult to just say we'll pass all this education reform, but we don't know where the money's coming from. What if they only find $2 billion in scrubbing the budget instead of $3 billion?"
Sen. Shapiro, a few days later, asked what the Senate will do with the House effort: "I think we'll obviously review what they sent us first, and then once we've reviewed it, we'll probably set it aside."
Arkansas Gov. Mike Huckabee talking to the Washington Times about tax-basher Grover Norquist: "Grover's never been in a situation where he couldn't borrow money so he didn't have to raise taxes or tell old people he's just going to take them out of the nursing home and drop them on the curb."
Jason Stanford, a consultant to Democrat Chris Bell, who might run against Rick Perry next year: "We have a Governor that wants to tax lap dances and a Republican legislature that wants to tax love handles, and now they want to reform school finance by taxing bottled water. Satire is dead in Texas..."
Independent gubernatorial candidate Kinky Friedman, in his farewell column in Texas Monthly: "My candidacy is not a joke, as some assume. I'm running in the spirit of Seabiscuit: I do not plan to place or show; I plan to win."
U.S. Sen. Kay Bailey Hutchison, talking with The Dallas Morning News about reports that one of her campaign aides called into a radio talk show under a fake name to promote her as a gubernatorial candidate: "It's just not on my mind. I've had a really tough week. I found out about it when I opened up the paper. I don't think it's worth talking about anymore."
President George W. Bush, quoted by Harper's Weekly as saying faith-based programs funded by government aren't allowed to discriminate: "All drunks are welcome."
Texas Weekly: Volume 21, Issue 37, 14 March 2005. Ross Ramsey, Editor. George Phenix, Publisher. Copyright 2005 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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