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Three Big Bills and a Bucket of Lint

You got your budget. You got your school finance/reform bill. You got your tax bill. And then you have everything else. If there's a notable feature to this legislative session, it's that those three pieces of legislation have sucked the oxygen out of the room. There are other bills of note — appraisal caps, workers compensation insurance, the water bill, some sunset bills, and so on — but the report card on this Legislature will focus on the three big deals.

You got your budget. You got your school finance/reform bill. You got your tax bill. And then you have everything else. If there's a notable feature to this legislative session, it's that those three pieces of legislation have sucked the oxygen out of the room. There are other bills of note — appraisal caps, workers compensation insurance, the water bill, some sunset bills, and so on — but the report card on this Legislature will focus on the three big deals.

The budget is underway, with conference committees named from both Houses and the crunchers of numbers banging away on side-by-side comparisons of the bills. The school finance and tax bills are both out of the House — that happened weeks ago — and meandering through the Senate. The school bill is public, at least. The tax bill went to Sen. Steve Ogden's Finance Committee, then to four subcommittees, and was last seen in one of the negotiating theaters attached to the lieutenant governor's office. We're told they'll show something to the public soon, maybe even while this edition of the newsletter is still warm.

As you know, they're attempting to revise the current corporate franchise tax to add more business taxpayers and lower rates. The current tax only applies to about 17 percent of the corporations in the state once everyone's accountants have gone to work. The Legislature wants a broader tax with a lower rate.

One version knocked around on the Senate side would work like the current tax but would apply to all kinds of businesses — specifically including all the flavors of business partnerships now excluded from the tax. They'd pay their choice of .25 percent (that's 1/4 of one percent) of "net taxable capital" or 1.95 percent of "net taxable earned surplus." The earlier term is used in the current franchise tax; the latter is a modified business activity tax that pulls in a company's Texas income, its payroll (with deductions for the lesser of 50 percent of income per worker, or $30,000, and for part-timers). The income side excludes foreign income, but includes income stuffed away in affiliates and so on.

So far, the House has been wary of taxing partnerships, while the Senate has always worked to include them. And the politics are gnarly. The House already voted on a tax bill and there's some conversation on that end of the building about the dangers of voting on another one that contradicts or compounds the earlier vote. They'd relax a little if the Senate would just go along with the House plan. Senators are in the same boat, though, having voted on a tax plan two years ago. They're also at risk — if there is one — for voting for different tax bills to solve school finance.

Another level of discussions is about the size of the local school property tax cut. Legislators from both chambers are trying to produce a 50-cent cut for most taxpayers, but before the current legislative session, the conversations were about smaller bites, in the range of 25 to 30 cents. Lawmakers are trying to find the point where a Big Enough Property Tax Cut intersects with a Small As Possible Tax Bill. They're trying to get as much juice as possible with as little squeeze as possible. Some argue that it doesn't matter — that a vote for a little tax bill is no safer than a vote for a big one, and that the only appeasement that will keep voters heeled is a large property tax cut.

What About the Rest?

With six weeks left in the legislative session, lawmakers and lobsters are starting to fidget and look at their watches. If a bill isn't out of committee within a week or so, and hasn't already passed either the House or the Senate, it'll need help to get to the finish line.

For major bills with management imprimaturs (visible or invisible), there's plenty of time. But the average piece of legislation, if it's to get all the way through the process, needs to roll. Nothing's dead yet, but in a week's time, lots of legislation will be running a low fever. Expect the pace to quicken.

Some scatter-shooting:

• Rep. Joe Nixon, R-Houston, says he's waiting to see what the Senate will do with limits on asbestos litigation before he'll try to get a House vote. The Senate has been the higher hurdle, and Lt. Gov. David Dewhurst has been personally involved in negotiations to get that issue unstuck (and two others: the tax bill and the telecommunications bill).

• Workers compensation insurance remains jammed. The Senate passed a bill and the House passed a bill and neither side has been willing to hear the other side's bill. An attempt to split the thing so everybody would have something to brag about fell short.

• Sen. Ken Armbrister, D-Victoria, followed his announcement of a big water bill with a substitute and seems to have made some progress bringing together some groups that historically fight. But it's got a small tax in it — 13 cents for every 1,000 gallons, with no tax on the first 5,000 gallons — and that's produced some opposition. Rep. Robert Puente, R-San Antonio, is the House leader on water, and has taken a piecemeal approach instead of writing one big bill.

• Gambling proposals are still alive, even though most handicappers don't see the votes for either slot machines or full-blown casinos. That could change if there's something like a deal on school finance. One bill to watch, since it has to pass and it's a potential vehicle for everything else: The lottery commission's sunset bill. And the opposition to gambling is still percolating, too. Rep. Corbin Van Arsdale, R-Tomball, snagged a letter from Florida Gov. Jeb Bush to the Christian Coalition of South Florida that blasts gaming interests there. In the letter, Bush tells the group that Florida proponents of gambling expansion are "seducing the voters with the hollow promise of more education funding." A copy of the letter is available on our website by clicking here.

In Texas, the lobbyists promoting a constitutional amendment to allow casinos claim gaming, once it's up and running, would bring $5.5 billion into the state treasury every two years. That amount would cover half the cost of lowering local school property taxes by 50 cents, and would halve the size of the state tax bill needed to fund that property tax cut. Their pitch is online at

• Have any siblings? Kids? Know any men? You already have a basic understanding of negotiating a telecommunications bill. Every player has one eye on what it's getting and another eye on what the other guys are getting. In the phone/cable/Internet/gizmo business, each outfit wants its data/voice pipeline to be the biggest and to go where everyone else's pipeline goes. And the players who are forced to serve markets they don't want in order to get lucrative markets want to make sure their competitors also have to serve the ugly customers. There are details, but that's the essence of the thing. An interesting breakout issue is usually referred to a municipal wireless. In some places, city governments are opening broadband access — which they buy from phone and cable companies — to citizens. Austin, for instance, has a couple of parks where wireless Internet access for laptops is free. In other parts of the country, cities have sponsored "wireless clouds" that cover areas much bigger than a park in Austin. The companies don't like that. People with laptops do like it. Lawmakers are trying to figure out how to write rules about it. The House's bill passed; telecom is currently a Senate problem.

Tipped Caps

Appraisal caps don't have the support in the Texas House they apparently have in some pockets of the state. In two days time, the residents of the Legislature's lower chamber knocked down two separate measures that would have made it more difficult for local governments to increase their incomes from property taxes.

The first would have capped property values for tax purposes; the values would do whatever the market dictated, but increases of more than five percent each year would have fallen outside of property tax range. A bipartisan group in favor of that idea was outnumbered by a bipartisan group that opposed it. (Of 81 votes against the bill, 36 were cast by Republicans and 45 by Democrats; on the other side, there were 49 Republicans and 16 Democrats. House Speaker Tom Craddick didn't vote.) In a deft bit of legislative maneuvering, the bill was killed in a way that prevents its sponsor, Rep. Dwayne Bohac, R-Houston, from bringing it back to life.

The next day was Rep. Carl Isett's turn to try legislation that would have forced local governments to win approval from voters for any increase in property tax revenues of more than three percent, whether that came from higher values, higher rates, or growth in the tax base. Some outside groups that oppose appraisal caps — the Texas Association of Realtors, for instance — support revenue caps. Capping appraisals creates inequities between property owners; taxes would be artificially low on a home owned by someone for a long time, while the home next door might be on the rolls at its full value because of a recent sale. Isett's bill hits revenues at the city level and stays out of appraisals.

Even so, it started with opposition and ended with opposition. Isett, a Lubbock Republican, made the revenue caps idea more palatable with an amendment that basically put the locals on longer leashes, but like Bohac's measure the day before, it was first attacked with hostile amendments and finally killed with a point of order because of some incurable problem with the way the legislation came up for consideration. That could still be resuscitated, in theory. Still in the works is a Senate version of Bohac's bill; whether the upper chamber wants to take a crack after the rough week in the House is unclear.

Conventional wisdom: The House actions smacked down a pet program of Gov. Rick Perry, who has mentioned appraisal caps and limits on property tax growth in two out of two State of the State speeches over the last three years.

Before you buy that line, there's something to be said for its counterpoint: Perry can (and apparently plans to) make the push for limits on local government spending a plank in his reelection platform. What looks to Austin hacks like a humiliating slap — Perry made one of his infrequent forays onto the House floor a week before the votes to bolster support — can be marketed as a setback on the way to getting government to hold back taxing and spending. That's not a bad product in a GOP primary.

A weak spot, pointed out by The Dallas Morning News in a story on state spending, is that Perry and other current and former state leaders haven't done as state officials what they're asking local officials to do. With the exception of the current budget, written by lawmakers facing a $10 billion shortfall, each state budget since 1996 has increased between four percent and 10.5 percent, according to the paper. Had the proposed three percent limit applied to state legislative actions, voters would have been called in each time to say okay to what the Legislature was doing.

All Politics is Local

State Rep. Martha Wong, R-Houston, voted for a constitutional amendment banning marriages of same-sex couples, and that measure, part of the Texas Republican Party's platform, left the House State Affairs Committee on the way to the full House. But her district includes a large and active gay and lesbian population (she's got Houston's Montrose area in her House district) and she issued a rationale for her vote as she cast it, saying she only voted for the legislation after it was amended, as she put it, so as to allow civil unions.

"I believe the institution of marriage should be maintained only between one man and one woman. But I cannot allow us to write blatant misunderstanding and discrimination into the Texas Constitution by banning civil unions as well," she said. She also quoted President George W. Bush, who was talking about federal legislation at the time: "I don’t think we should deny people rights to a civil union, a legal arrangement, if that’s what a state chooses to do."

Looking for Jobs

Once upon a time, Texas politicians could get in trouble for having their names appear too prominently on the reports printed by the government to fill dusty shelves in legislative offices. Now you can put your name and face more prominently on your state-supported Internet site than the name of the agency where you're serving; the average officeholder is as bashful about promotion as the average car dealer. And in this environment, a television commercial featuring the governor for all but a few of its 30 seconds goes unremarked.

That last one — a commercial targeted at business people in the other 49 states — prominently features Gov. Rick Perry. The spot touts the "governor's cup" award from Site Selection magazine that was awarded to Texas a few months back. Perry does almost all of the talking, over pictures of him, of the award ceremony and of various Texas landmarks and locales. Click here to watch it on the governor's state website.

State taxpayers aren't paying for the commercials, and the spots are running outside of Texas, in Washington, D.C., Detroit, and Sacramento and San Jose, California, through the end of next week. The total cost, born by a 501-c-3 outfit affiliated with the governor's economic development office, is $123,808.

The governor's office is open about who contributes to the Texas One Foundation, though disclosure isn't required. That outfit got $100,000 each from Introgen Therapeutics, Novartis Pharmaceuticals Corp., and Verizon Communications. Five donors gave $50,000: CenterPoint Energy, TXU (Oncor), SBC, Greater Austin Economic Development, and AGC of Texas Infrastructure Education Fund.

• Texas Secretary of State Roger Williams, who really is a car dealer, started his job with an extensive road schedule. He's traveling to county courthouses around Texas to push the Help America Vote Act, a federal deal that's run through his office. He's hitting five to ten counties a week, which lets him tell the county officials and local voters about HAVA and how much money is available to each of them, and to hold press conferences and all that. He's not a candidate or anything, but this is the sort of groundwork that a future candidate might do.

One Vote Short

Campaigns for People, a campaign finance reform advocacy group, is running radio ads to try to unplug legislation that would outlaw so-called informational ads in the 60 days before an election. Rep. Bryan Hughes, R-Mineola, chairs a subcommittee where that bill was stuck, and the radio ads are running in his district.

In the ad, a man and woman are complaining about corporate commercials in campaigns, and the man says there's legislation to change that. The woman asks about the local rep — Hughes — and the man says, "Oh, he's on the fence and is the deciding committee vote." An announcer then instructs listeners to call him and gives his phone number. How's this for a twist? It's an issue ad, and under current law (and with no election in sight), the advocates don't have to disclose who contributes to them and thus, who pays for the ad. You can hear it online with a click here.

That legislation is more popular in the Texas House than most of the bills that have already come to a vote, including education reform, taxes, appraisal caps, and big chunks of the appropriations bill. It had, at last check, 93 sponsors, including all 63 Democrats in the House and 30 Republicans. They're pushing for a vote, using an old line from House Speaker Tom Craddick as a prod. Craddick, when he was elected speaker (or when it was apparent that he would be) told reporters that Rep. John Longoria, D-San Antonio, had been unable to get a bill out of committee even though a majority of House members had signed on as co-authors, and said that sort of thing wouldn't happen on his watch.

Flotsam & Jetsam

There's something circular about the first piece of legislation signed this session by Gov. Rick Perry. It allows local governments to use tax money to attract government spending. They'll be able to use some of the money they collect from sales taxes for improvements to military bases, helping those communities show some commitment to federal officials thinking about which bases to close and which ones to keep open.

• After spiking the current version of life in prison, the Texas Senate approved a life without parole bill that had stalled. A handful of prosecutors opposed the no parole option for fear jurors would prefer it to the death penalty. Sen. Eddie Lucio, D-Brownsville, wanted three sentencing options in capital murder cases: death, life without parole, and the current life penalty with its possibility of parole after 40 years. The Senate agreed to open Door Number Two but only if Door Number Three is closed. That bill is on its way to the House. His staff put an ominous headline on their press release about the bill's passage: "Senate Approves Life Without Parole and Removes Life".

• The freshest argument for easier access to information about school spending comes from Texas Businesses for Educational Excellence, which peeled back the curtains to find the number of central administrators has increased 37 percent since 1997 while student populations grew 13 percent. Operating expenses, according to that group, increased 57 percent over that period. That group's membership overlaps significantly with the Governor's Business Council, a group of CEOs from Texas companies. They, and Gov. Perry, want information on school spending to be easier to get to, so voters can see where the money's going.

• Lt. Gov. David Dewhurst, through his trusty aides, says he didn't tell an audience in The Woodlands that he wants to run for U.S. Senate in 2010. For one thing, neither of the Texas seats in the U.S. Senate is on the ballot that year. What he said was that he'd like to run for governor in 2010, and he also reiterated his endorsement of Gov. Perry's reelection next year. Dewhurst, at this point, wants to succeed Perry.

• Texas ranks 43rd among the states in state-local tax burden, according to the Tax Foundation. That's the outfit that calculates "Tax Day" each year to tell us when we've stopped working for our various governments and started working for our mortgages and car loans and grocery stores. Tax day nationally is April 17. In Texas, it was on April 14. The state ranks 22nd in overall tax burden when local and state taxes are combined with federal taxes. That could drop next year, when deductible sales taxes are reflected in the numbers. On average, Texans pay 9.3 percent of their incomes to state and local governments as tax, and a total of 28.4 percent of income when state, local, and federal taxes are combined. The U.S. averages for those numbers are 10.1 percent and 29.1 percent, respectively.

• If you go by percentages, the list of the ten fastest-growing counties in the U.S. includes, in the sixth position, Lampasas County, Texas. The Census Bureau's newest population estimates are out; Lampasas grew 7.3 percent from 2003 to 2004. Three counties in the U.S. made it into the top 10 in overall population and in number of people added during those two years: Los Angeles County, California, Maricopa County (Phoenix), Arizona, and Harris County, Texas. Texas had 12 counties among the nation's 100 fastest-growing, and had three (Harris, Tarrant, and Collin) in the top ten. The state added 386,648 to its population from July 2003 to July 2004 according to the estimate. If you plunked that many people in an unpopulated area and called it a county, it would be the 12th largest in the state, bigger, for instance, than Montgomery or Williamson or Nueces. As of July, they said, Texas had a population of 22,490,022.

Political People and Their Moves

Lt. Gov. David Dewhurst named his five conferees who'll sit down with House negotiators to work out the budget. Senate Finance Chairman Steve Ogden, R-Bryan, will lead a group that includes Republican Sens. Kip Averitt of Waco and Robert Duncan of Lubbock, and Democrats John Whitmire of Houston and Judith Zaffirini of Laredo.

 A couple of days later, Speaker Tom Craddick named the House's five conferees who'll sit down with Senators to negotiate a budget. Appropriations Chairman Jim Pitts, R-Waxahachie, will head the House delegation. He'll go in with Republicans Dan Gattis of Georgetown and Lois Kolkhorst of Brenham, and with Democrats Vilma Luna of Corpus Christi and Sylvester Turner of Houston.

Before the conferees were named, the House voted down an attempt by Rep. Jose Menendez, D-San Antonio, to "instruct" the negotiators to hold their ground on a teacher pay raise in the budget. That wasn't even close, dropping on a 94-to-51 vote.

Appointments: Gov. Perry named four people to the Texas Credit Union Commission: Gary Janacek of  Temple, president and CEO of Scott & White Employees Credit Union, who will chair the commission; Thomas Butler of Deer Park, president of Centrifuge Services and Diesel Fuel Maintenance Services; Pete Snow, a private invester in Texarkana who lost a House race to Rep. Stephen Frost, D-Atlanta, last year; and Barbara Sheffield of  Sugar Land, president and CEO of Members Choice Credit Union and the only re-appointee in the bunch.

For director spots Lower Neches Valley Authority, Perry named Steven McReynolds of Port Neches, president of Groves Equipment Rental Co.; Sue Cleveland of Kountze, president of Cleveco Construction Co.; Kathleen Thea Jackson of  Beaumont, public affairs manager for Exxon Mobil Corp.; and Woodville Mayor Jimmie Ruth Cooley.

Jeff Austin III, vice chairman of Austin Bank in Tyler, is Perry's pick for a slot on the Northeast Texas Regional Mobility Authority.

The governor reappointed four members of the State Board of Nurse Examiners: Deborah Bell, a financial advisor from Abilene; Dr. Blanca Rosa Garcia, an RN and a professor at the Department of Registered Nurse Education at Del Mar College in Corpus Christi; Beverly Nutall of Bryan, an LVN who works at University Pediatrics Association; and Dr. Linda Rounds, an associate professor at the UTMB School of Nursing at  Galveston.

Nothing against the practitioners, but we had no idea there was a Texas Board of Professional Geoscientists. There is, and Gov. Perry named three folks to it: Y. Lynn Clark of  Dallas, principal geoscientist with LCA Environmental, Inc. and president of Pertect Detectors, Inc.; Glenn Lowenstein of  Houston, president and senior project manager of Terrain Solutions, Inc.; and Kimberley Robinson Phillips, a Houston lawyer and the only reappointee of the three.

Quotes of the Week

Rep. Fred Hill, R-Richardson, urging his colleagues to finish off a property tax bill: "The time to kill a snake is when you've got the hoe in your hand."

Frank Sturzl with the Texas Municipal League, on legislative efforts to limit property tax growth: "Clearly, the goal of this Legislature is to cut taxes, but somebody else's taxes. There's never a rollback of state budgetary actions."

Dallas lawyer Mike Boone, quoted in the Houston Chronicle: "We're headed down the road in Texas where if the anti-tax forces prevail, it will be to the detriment of the long-term future of Texas. I'm afraid the leadership we have right now is taking us down that road."

U.S. Majority Leader Tom DeLay, R-Sugar Land, quoted in The New York Times (he later apologized): "I believe the judiciary branch of our government has overstepped its authority on countless occasions, overturning and in some cases just ignoring the legitimate will of the people. Legislatures for too long have in effect washed our hands on controversial issues from abortion to religious expression to racial prejudice, leaving them to judges who we then excoriate for legislating from the bench. This era of constitutional cowardice must end."

Republican political consultant Arthur Finkelstein, quoted in The New York Times on the occasion of his marriage to another man: "I believe that visitation rights, health care benefits and other human relationship contracts that are taken for granted by all married people should be available to partners."

Jerry Polinard, a political science professor at the University of Texas-Pan American, telling the Associated Press where to find Democrats running for governor: "You have to go look under 'sacrificial lambs' in the Yellow Pages."

Houston financier Charles Miller, quoted in the Houston Chronicle on complaints that a contested GOP gubernatorial primary will cost a lot: "Grow up. It's a big state. It's going to be expensive. If you're going to be a player, you can't ask for comfort."

Texas Weekly: Volume 21, Issue 42, 18 April 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 For news, email, or call (512) 288-6598.

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