Muddy Waters

Every so often, an experienced reporter from somewhere else will get hired into the Capitol press corps and will proceed to surprise and dominate competitors with stories that should have been obvious to the natives.

Except that watching ethics change is an incremental business, like watching a kid grow up. The aunts and uncles from out of town are always surprised by growth that parents don't stop to notice.

It's not always a reporter, or a new politico. Sometimes it's a state agency, like the State Auditor, which last week raised questions about the fact that comptrollers decide tax cases and that they take political contributions and that nothing in state law requires the sort of disclosure that would reveal any links between favorable rulings and generous support. They took care to say they weren't accusing anyone of anything — Comptroller Carole Keeton Strayhorn seized on that as "clean bill of health" — but just for future protection, they suggested several changes in law that would limit or prevent abuses.

SAO was directed to look for links between campaign giving and the comptroller's official actions. The Legislature ordered that audit at a time when lawmakers were particularly miffed at Strayhorn. The orders didn't include any other agencies, but similar potential conflicts are easy to spot.

Tom Phillips, the former chief justice of the Texas Supreme Court, spent years trying to figure out a politically acceptable way to select judges without having them take contributions directly from the lawyers whose cases they decide. Any number of candidates for the Texas Railroad Commission have promised to unlink energy industry money from the oil and gas cases the commissioners decide, but the questions have dogged that agency since its inception. Few political investors outside of the regulated businesses seem to care about the agency, at least in a financially substantial way. Those two areas, with their mix of judicial functions and elected officials, are directly analogous to the comptroller issue. It's familiar ethical ground for Strayhorn, who was at the RRC before her current gig.

Other agencies have built-in potential conflicts. A Texas attorney general has to decide who to sue, and who not to sue, and which local bond issues ought to move forward — all matters of interest to this potential contributor or that one. It's the AG who takes tax cases to court if the administrative remedies at the comptroller's office leave taxpayers in a litigious mood. And almost every AG has been accused by enemies of dangling legal opinions on open records and state laws in front of potential contributors.

Land and agriculture commissioners have doggie biscuits to hand out, too, in the form of contracts and grants. Land Commissioner Jerry Patterson sees it in the agency's expansion into real estate and development: "El Paso is an example because we have a lot of surface land there... and I had a very successful fundraiser there." Water investors have been trying to get Patterson to open public lands for their use, and the agency makes other decisions that could be lucrative for private investors and business people.

And governors and lieutenant governors, while they don't have any judicial duties, have huge powers in their branches of government. Executive agencies that aren't headed by elected officials are run by people who answer, directly or indirectly, to the governor. Rick Perry sees a difference between what the auditor saw at the comptroller's shop and what goes on elsewhere.

Taxpayer representatives don't register as such with the state, so you can't tell from outside who's doing the giving and the getting. One such firm employs Strayhorn's predecessor — Democrat John Sharp — and is among her biggest contributors. The state auditor listed several firms and their contributions as illustrations of the potential for problems.

Word for Word

You can't tell from outside the comptroller's office whether anybody's playing footsie with taxes and political contributions. But they all have feet and their feet are under the tablecloth, and... Gov. Rick Perry wants to encourage voter suspicions.

Here's his riff on the subject, when asked by reporters about the report and about whether the recommendations ought to apply to other agencies. He apparently took that to mean his office and appointments:

"First and foremost, I think any citizen of this state can look at that audit and come away with the conclusion that there is some great concern about whether or not campaign contributions have been received in exchange for tax decisions.

"Those that would say that that audit was a clear, clean bill of health, I disagree with. As did the auditor. The auditor said that they would certainly make substantial legislative changes. You know what the auditor laid out as those changes. If there's a clean bill of health there, there's no recommendations of that drastic of changes, dealing with tax decisions.

"From the standpoint of other state agencies, those of us in statewide elected office, the campaign contributions that I receive, it's very transparent of the appointments that we make, the campaign contributions. I think that's one of the very powerful issues in the comptroller's office, is you don't know. There is no transparency there. And that's, I think, what the auditor very clearly and I think appropriately exposed, was this clear connection between campaign contributions and tax decisions. Very troubling. Very troubling."

For her part, Strayhorn points to the auditor's disclaimer about pointing no fingers and alleging no wrongdoing, and says that's a clean bill of health for her office. She says, through aides, that the current system is clean but that she'll follow whatever rules or laws the Legislature wants to put in place.

The Reform Bandwagon

Susan Combs, the state agriculture commissioner who's running for Strayhorn's job, endorsed Auditor John Keel's recommendations and added a few suggestions of her own, saying policy changes should be more widely available, that oral concessions should be banned during audits and replaced with written rulings, and saying the comptroller should keep a registry of tax decisions would be "fully disclosed," including "refunds granted and assessments reduced." Taxpayer records are generally closed to the public and it's not clear how much of each taxpayer's case would be disclosed. As for her current agency, Combs said — through a political consultant — that Texas Department of Agriculture decisions and her contributions are "totally transparent." Like Strayhorn, she has no objection to changes lawmakers might want to make.

The auditor — and the unstated promise that this will be a prominent issue in Perry's reelection race against Strayhorn — gave ethics reformers some hope. "It's a great opportunity, and it's an issue that transcends the comptroller's office and has been a problem regardless of who the officeholder is and is the heart and soul of whether you get a fair shake," says Tom "Smitty" Smith of Public Citizen. "If you're in a position as an officeholder to make a ruling and you know there is a donor that is affected, it's going to make a difference in your decision. Any of them who says otherwise is not being honest about it."

"The pattern is clear that large donations come in during periods of time when there is not an election going on, from people who have a lot riding on decisions before a wide variety of elected officials... and that should tell people a great deal about why these investors are making these decisions," he says.

Smith supports the auditor's recommendations and would add to them. One proposal would bar donations timed around regulatory rulings. "The clear solution here is to ban contributions except in the period before the election," Smith says. "And that would do a lot to ease questions about whether contributions are tied to decisions."

Several House members echoed Perry's concerns and said they'd sponsor legislation containing the auditor's recommendations for the comptroller's office.

Democratic gubernatorial candidate Chris Bell said he'd go a step further to make high state office a less lucrative launch pad for lobbyists. Bell said top employees of the governor and other top state officials should be barred from lobbying any state agency, board or commission for a year after they leave state employment. Perry has a rule preventing his aides from lobbying his office, but they can lobby anywhere else in state government. Mike Toomey, a former legislator who gave up lobbying to be Perry's chief of staff, quickly rebuilt a successful lobby practice after leaving Perry's shop; Bell calls his idea the "Mike Toomey Revolving Door Ban."

Luck Be a Lobby

Well over 100 lobbyists assembled in an Austin hotel ballroom this week to hear a pitch from Ricky Knox for a new group called "Texans for Tourism." The idea is to bring gaming interests together for a unified push for expanded gambling in Texas. Knox was in the middle of the fight to get pari-mutuel gambling approved in the 1980s and in the battle for a state lottery in 1991.

The opening pitch is to get video lottery terminals approved. VLTs are essentially electronic slot machines, and crossfire from horse tracks, casino interests and others made it relatively easy for gambling opponents to kill the idea during the last session (and the special sessions on school finance, which started more than a year ago).

At this point, they're just talking. Knox didn't return numerous calls, but in his invitation letter to other lobbyists, he said he's pushing "a united, highly organized and coordinated legislative and public relations effort of all those interested in the legalization of video lottery terminals in Texas."

He pitched the idea for several hours, asked everybody to mull it over and told them he'd call another gathering in about a month. The guest list included lobbyists who represent a wide range of companies, organizations, Indian tribes that are interested, variously, in lotteries, casinos, horse and dog tracks in Texas and in competing states.

Speaking of Horse Races

Separately, a poll commissioned by the AtlanGroup LLC says 85 percent of Texans support putting VLTs on the ballot so voters can decide the issue. The pollsters asked people how they'd like a VLT referendum if the machines were installed at existing horse and dog tracks and if the money went to education, and 58 percent said they would vote in favor of that.

We buried the lead, for the sake of transitions from gambling. The same pollsters asked about the governor's race. In the GOP primary, Gov. Rick Perry would beat Comptroller Carole Keeton Strayhorn 62-26 in a head-to-head contest. They have John Sharp at 32 percent, Felix Alvarado at 13 percent and Chris Bell at 11 percent in a Democratic primary. Alvarado and Bell are the only two who've said they'll run. They have Perry and Sharp in a statistical tie in a general election race.

The pollsters — Hamilton Beattie & Staff of Washington, D.C. — interviewed 700 "registered likely general election voters," 430 "likely Republican primary voters," and 430 "likely Democratic primary voters." The general election sample included more Republicans than Democrats. The AtlanGroup shows up in Texas Ethics Commission records giving $50,000 to the Texas Democratic Party earlier this year, $50,000 to Lt. Gov. David Dewhurst, and $200,000 to Strayhorn. David and Martha Alameel, who show up as principals of AtlanGroup in some reports, have contributed amounts ranging from $100 to $50,000 to 21 politicians and organizations since 2000. According to TEC filings, those includes totals of $100,000 to Sharp, $75,000 to Dewhurst, $50,000 to Strayhorn, $40,000 to Attorney General Greg Abbott, $30,000 to Democrat Kirk Watson, who ran against Abbott in 2002. They gave $50,000 to the Texas Democratic Party. The couple's contributions — most of them in his name — totaled $479,800 from 2000 to 2004.

New Charges against Colyandro & Ellis

The grand jury looking at campaign finance in the 2002 legislative elections restated and expanded its indictments against John Colyandro and Jim Ellis — two associates of U.S. House Majority Leader Tom DeLay, R-Sugar Land.

A Travis County grand jury restated money-laundering charges against the two men and adds charges they made illegal contributions of corporate money, that they gave money to the Republican Party illegally close (within 60 days) to an election, and that they criminally conspired to break state election laws.

Click here for a copy of the new indictment (Adobe Acrobat format).

Colyandro's lawyer, Joe Turner, couldn't be reached for comment. Ellis' attorney, J.D. Pauerstein, said there's nothing new for prosecutors to say that they couldn't have said a year ago, when his client was first indicted.

"Frankly, I think it borders on prosecutorial misconduct to keep indicting these people over and over on the same charges," he said.

Pauerstein passed up a request to speculate about the prosecutors' motives, but said he thinks the indictments were timed to beat the three-year statute of limitations on the alleged crimes. A check photocopied into the indictment matches — with the exception of the year — the date of the new and restated indictments.

TAB's Plea to Supporters

The Texas Association of Business, in an email sent to supporters and others, asks for PR and financial support for its fight against four indictments on campaign finance charges. A Travis County grand jury reported 128 third-degree allegations against the group this week, saying it illegally raised and spent corporate money on election-related activities and illegally coordinated its efforts with campaigns and other third-party groups.

The email calls county prosecutors "a well-funded opponent who has an unlimited supply of money" and asks for financial assistance. It also includes a plea for others to "speak out" for free speech, and says if groups like TAB are shut down, people will have to depend on the news media for all of their information about how candidates behave once they leave home for Austin.

Here's a copy of the whole missive (the "to" line was deleted by the lobbyist who sent us a copy of this):

Never Mind

Rep. Elliott Naishtat, D-Austin, will seek reelection instead of running for an open Senate seat. After thinking about the retirement of Sen. Gonzalo Barrientos, D-Austin, for a weekend, he's decided to stay in the Texas House. "At a time when effective leadership in the House regarding health, human services and issues that affect vulnerable populations, including children, the elderly and people with disabilities, is more important than ever, I am not willing to enter into a costly, divisive Democratic primary race against my friend Kirk Watson, and risk not being in the Legislature at all," he said in a statement. Watson is the only Democrat who's said he'll be in the hunt. He hasn't said much more than that — just that he's in and he'll talk more later — but he's started running. He sent a letter to potential supporters (a copy of which can be found by clicking here) and has uncorked a website: www.kirkwatson.com. Watson followed with a press release listing several groups that have endorsed his candidacy.

Pent-Up Demand

They're starting to kick up dust in Austin's HD-47, where Republican Rep. Terry Keel is giving up legislative work for an attempt at a judicial post. Alex Castano, a Republican who hasn't run before, is announcing this weekend. Dick Reynolds, a former rep and state official who wants another crack at legislating, plans a funder/announcement in two weeks at the Austin Club where lobsters and elected officials go to commingle. Castano runs a commercial real estate company, home schools (with his wife, like him a Rice alum) a herd of seven children, and says his campaign will be about schools, transportation, ending Robin Hood funding for schools, and toughening laws aimed at child predators. He's announcing from a middle school cafeteria (on a Saturday). His website is www.alexcastano.com.

Rich Phillips, who also wants Keel's spot in the Lege, is holding a "rally and press conference" at that same Austin Club to highlight a report from the Pacific Research Institute that ranks Texas 17th among the states in "economic freedom." Phillips, a management consultant, even sent along a list of six "third-party analysts" who could talk about his proposals and stand ready to talk to reporters about them. His website: www.voterichphillips.com. PRI identifies itself as a "free market think tank," and you can see their stuff at www.pacificresearch.org. You might have seen their studies, too; the thinkers have joined up with Forbes magazine in years past to get the work in front of a big audience.

Finally, Jimmy Evans, who thought about making that race, endorsed Bill Welch in the Republican primary. Welch on the web: www.billwelch.org.

Rumors, at a Discount

You might hear that Sen. Kyle Janek, R-Houston, is hanging it up after the current term. You might be hearing wrong; he's in. Janek says he's down on the job right now after the failed special sessions, and he says he wanted to check with his bride before running again. "I haven't formally asked her — I was afraid to. But I had a fundraiser last night and she showed up. That's a good sign." He says he wouldn't have held the fundraiser if he didn't intend to run. "I am running for reelection," he says.

• It's true that a table full of Democrats talked about getting Chris Bell to drop out of the governor's race and to run instead for Harris County judge, either against Republican Robert Eckels or for an open seat if he leaves. But Bell wasn't one of the people at the table and has no interest in county government. He's in the Guv's race to stay.

• Another bit of bad gossip: Rep. Glenn Hegar Jr., R-Katy, says he's also heard the rumor that he'll run for Senate, and says it ain't so. He's running for reelection to the House. But he thinks Gary Gates, an opponent in Hegar's last two races, will be in the Senate race to challenge Sen. Ken Armbrister, D-Victoria.

Political Notes

They're still banging on federal heads to get the rest, but Texas politicos in Austin and Washington, D.C., got their first win in the battle for reimbursement for costs of Hurricane Katrina. The U.S. Department of Health and Human Services will pay 100 percent of Medicaid costs of the displaced and dispossessed driven to Texas by that storm. For Texas residents, the state pays in about $1 to draw in $2 in federal money. For the Louisianans (and those from other states who came here because of the storm) the feds will cover the whole tab. Still on the list: housing, public education, transportation, food, unemployment, and as Yul Brunner used to say in the musicals: Etc., etc., etc.

• Shane Sklar, the former executive director of the Texas Independent Cattlemen's Association, is putting together a challenge to U.S. Rep. Ron Paul, R-Surfside. He's a Democrat, and told the local paper he'd be the only member of the delegation with an ag job if he wins.

• Todd Staples picked up an endorsement from the Texas Public Employees Association in his bid to be the state's next agriculture commissioner. The Palestine Republican is, so far, the only announced candidate in that contest to replace Susan Combs, who's giving up the post at the end of this term and seeking the comptroller's job.

Political People and Their Moves

Texas Railroad Commissioner Michael Williams will head the state's efforts to assist Hurricane Katrina evacuees who find themselves in Texas. He's keeping his day job at the RRC, but he'll be the point person on relief efforts from now on.

Ray Coffman, a captain with the Texas Rangers, will become the new chief of that unit of the state police. He's replacing Earl Pearson, who retired at the end of August. The Department of Public Safety also named a number two for that unit (replacing Coffman): Captain Jim Miller.

Luke Marchant is making another move in the family business, giving up his job as an aide to U.S. Sen. John Cornyn to return to Texas for a job on Staples' campaign for ag commission. He'll work in Staples' field operations. His dad is U.S. Rep. (and former state representative) Kenny Marchant, R-Carrollton.

Fired: Elizabeth Reyes, an attorney with the Texas Secretary of State's election division, after talking to the Washington Post about whether presidential advisor Karl Rove's property in Kerrville qualifies him to vote there. She told the San Antonio Express-News that she didn't know she was talking to a reporter at the time.

Quotes of the Week

Texas Supreme Court Chief Justice Wallace Jefferson, telling a dinner audience the court has already decided school finance and that the decision will be public soon, quoted in the Midland Reporter-Telegram: "I can't say it will be definitive. There will be a decision from the court and the Legislature will do what it does."

Harris County Judge Robert Eckels, telling the Associated Press that the Astrodome's current function isn't permanent: "This is a shelter, not a home, and it will not become a refugee center."

Democratic consultant Kelly Fero, in the Fort Worth Star-Telegram: "If these people decide they want to stay in Texas permanently, they deserve to be represented. And once that happens, I don't think they'll be satisfied with the social-service safety net that Texas provides, compared with that of Louisiana. So I think they'll be receptive to the Democratic message."

Gov. Rick Perry, in a letter to U.S. Health and Human Services Secretary Mike Leavitt: "Without the guarantee of total federal funding for Medicaid services for evacuees in Texas, Texas taxpayers will be forced to bear a financial burden that, in effect, punishes them for opening their hearts and homes to fellow Americans in need."

Bill Petty of Kerrville, telling the San Antonio Express-News about his sometimes neighbor, presidential advisor Karl Rove: "We see him out walking around getting a signal on the cell phone more than anything."

Texas Weekly: Volume 22, Issue 14, 19 September 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 info@texasweekly.com. For news, email ramsey@texasweekly.com, or call (512) 288-6598.