While former Comptroller John Sharp and the rest of Gov. Rick Perry's tax reform commission works on proposed revisions to the state's business taxes, they're starting to hear more noise from lawmakers and lobbyists. That's not unusual with a special session approaching, but it's dangerous for tax bills: An unprotected tax bill lasts about as long as free pot at a rock concert and isn't nearly as much fun.
And a couple of Republican leaders in the House who were in the middle of the school finance battles of the last year say voting on a tax bill isn't the easiest option available to lawmakers who want to solve the problem with a minimum amount of spilled blood.
Rep. Warren Chisum, R-Pampa, sent an email to his colleagues in the House questioning why they'd want to vote on a tax bill while they've got an estimated $4.3 billion sitting idle. His suggestion: Take $2.5 billion or thereabouts and put it into public schools. That's enough, according to Chisum, to lower local school property taxes by 20 cents, which would (temporarily) satisfy the courts and would also give school districts freedom to raise a little money for teacher pay or other needs. He'd allow the districts to raise up to a nickel in local taxes in the first year (and up to 15 cents overall) if they want to do so and if they win approval from local voters.
"You don't go down and pass a tax bill when you've got a damn surplus — how the hell do you explain that?" Chisum said during a repair break at his place in Pampa, which was hit by the range fires in the Panhandle. Chisum said he emailed his idea to everyone in the House — Republicans and Democrats alike. He said he hasn't heard back from most of them but added that he "hasn't heard anybody do flip-flops over this tax bill."
Chisum says the presence of a surplus, the upcoming elections, and the absence of any real leverage to push legislators into an uncomfortable vote all conspire against a tax bill this spring. Sharp and others have said that spending the surplus now would set the table for a tax bill next year, but Chisum contends the state's economy might make that unnecessary right away.
Rep. Jim Keffer, R-Weatherford, says he's still willing to work on a tax bill, but says the time constraints will make it difficult and says Chisum's idea might be attractive to lawmakers. "We're trying to work with the governor's office, but we've got so many dynamics... a lot of lame ducks, people coming off of tough primaries, people with tough elections in November... How do you convince people back home you're doing your job if you pass a tax bill while you've got a surplus? That's not very Republican."
Keffer, chairman of the tax-writing Ways & Means Committee, sidesteps a bit when you ask whether he'll be carrying the governor's tax proposal. He does say it's hard to make the case for a tax bill right now, but he's quick to say he's not trying to pour cold water on Perry or Sharp or the tax panel. "We just have to deal with life as it is and not life as we'd like it to be," he says.
A special session on taxes for schools, unless it's carefully orchestrated, could open members to sniping from within and without the House. And Keffer says the businesses that are in favor of a tax bill won't be nearly as loud as those that are against it. That sort of noise can be unnerving in an election year. Speaking of November, he says there's another obstacle, and it's named Carole Keeton Strayhorn: "Strayhorn is still running for governor and she's still the comptroller and she still controls the numbers..."
Whether the fix is to spend the surplus or pass a tax bill, he says, "we all want to be successful and we all want to make sure the schools open."
It's All in the Timing
Gov. Rick Perry has said he wants new state income from a revised business tax to replace local school property taxes.
The Legislature has to put more state money into public schools if it wants to keep up education standards while easing pressure on local property taxes.
The Texas Supreme Court has given the other branches of state government until June 1 to change school finance formulas in a way that gives local schools meaningful control over their own property taxes.
House Speaker Tom Craddick and Lt. Gov. David Dewhurst agree — probably by accident — that they'd like to do some education reform. And in the past, both the House and the Senate have tied school finance and education reforms together, effectively piggybacking education reform — which isn't required — on school finance reform — which is required by the courts.
The push by some House leaders to put off school finance reform until the regular session next year could thwart Perry, who's looking for a big win on school finance in a competitive election year, while it also helps Craddick and Dewhurst get the other goodies they want.
Perry has said his agenda for the special session will be school finance and nothing else. His worry is that education reform and other issues could lower chances of a school finance fix, or that general horse-trading on side issues would spoil things. Former Comptroller John Sharp, who heads the Perry-appointed committee that's trying to cook up a tax bill, has said bringing other issues into play would kill a rare chance to overhaul the state's primary business tax.
But in the House, where tax bills have to start, there's noise about that tax bill and a sentiment among some of Craddick's lieutenants to use a multi-billion-dollar budget surplus to patch school finance until next year's regular session. That group, led for the moment by Rep. Warren Chisum, R-Pampa, doesn't think voters will sign off on a tax bill when there's money lying around. Plus, putting off the tax bill gets them out of the election season.
It would also be a boon to legislators who want various sorts of education reform. A long-term solution to school finance has to pass, and anything attached to it would pass, too. January might be a better deal for those who want to overhaul school finance and make changes to education, even if it makes it harder to pass the tax bill Perry and Sharp are promoting.
Pre-Squeals: What You'll Hear When the Tax Bill Goes Public
Some businesses like the tax proposal floated, but not yet voted on, by the governor's tax reform commission. But some key groups still think the overall tab is too big and squirm at the idea of replacing personal taxes with business taxes in a state that already puts a relatively heavy load on business taxpayers.
Start calling around on the idea and you'll stumble across a Council on State Taxation report that says Texas businesses carry 60.2 percent of the state and local tax burden (Ernst & Young, the accounting firm, did the numbers for the CST). Only three states— Wyoming, Alaska, and South Dakota — put greater shares of the tax load on businesses, according to that 2005 survey. Nationally, the average business paid 43 percent of the state and local taxes in its locale. Spin the numbers a different way: State and local business taxes in Texas equal 5.8 percent of private sector economic activity; no other big state is in that ballpark, and the national average was 4.3 percent.
Former Comptroller John Sharp has told various groups that the tax reform panel he chairs is trying to raise enough money to replace the current franchise tax and to buy down local school property taxes. That would require a business tax that raises around $6 billion, along with increased taxes on cigarettes and some smaller items. They're not currently considering a higher sales tax, but they've talked about it and some conservatives prefer it.
The new deal works for some businesses. Their property taxes would drop even as average business taxes rose. Some come out okay, some win big and some lose big. But the overall burden of state and local taxes would shift away from homeowners — who get a break and no new tax to pay — and toward businesses — which get a break on one tax and a hike in another one. The full cost of property tax relief for business and residential property owners would be borne by businesses.
Don't Use a Pen
If you're making plans for April, you must be trying to avoid the Texas Legislature.
We're hearing from two schools of rumor on special sessions at the moment, both in April. One would have a session starting on April 4, which would put runoff elections and a long Easter/Passover weekend in the middle of the tax bill. We're also hearing April 18, which would start the race to June 1 with the first round of elections and the holiday out of the way.
While we're monkeying around with this, it would be risky to bet that the Tax Reform Commission will vote out a proposal next week. That could still happen, but there's some sentiment that waiting until closer to the special session would be smarter. That would reduce the amount of time the proposal is exposed to snipers who don't like it.
Take a look at the primary election turnout numbers and you have to conclude that politics is way down on the list of things to worry about for most adults in Texas.
Overall turnout was down 22.5 percent from the gubernatorial primaries four years ago, and the drop is completely attributable to Democrats. They had an expensive and competitive race for governor four years ago; this year, it was competitive and anemically financed. Their numbers fell to 600,529 this year from 1,003,388 four years ago, a 40.1 percent bungee jump. Republican numbers were up 8.7 percent, but their turnout wasn't anything to crow about, at 676,529. The difference between 2002 and 2006: 348,753 voters.
If you want to argue that people who voted four years ago stayed home this time because they want to sign petitions for independent candidates Kinky Friedman and Carole Keeton Strayhorn, you'll have to ponder this question, which either disproves the idea or points to something interesting ahead: Were Democratic voters the only ones looking for alternatives?
Republicans have a beef with reporters and others who say legislators didn't endorse challengers to incumbents in their own parties before this year. The Democrats were doing it two years ago, they (correctly) point out.
It's still unusual, and it doesn't make for great relationships when the Lege convenes. This year's big example: Five Republicans endorsed Chris Hatley, who lost to Rep. Charlie Geren, R-Fort Worth, in spite of having bottomless financing and campaign help from the Texas Republican Legislative Campaign Committee and its only real funder, Dr. James Leininger of San Antonio. That's the first time we're aware of Republican-on-Republican dog piling publicly in a legislative race (holler if you have an earlier example). It's newsy in part because it marks the end of the Reagan Rule — Thou shalt not speak ill of another Republican — in Texas GOP primaries.
The Democrats did something similar this year — with Houston incumbents like Rep. Garnet Coleman backing opponents of Rep. Al Edwards. And a group of Houston Democrats went after Rep. Ron Wilson, also a Democrat from Houston, two years ago, endorsing his opponent, Alma Allen, who's now a state representative. Republicans go after Democrats all the time, and vice versa, but it's unusual for Republicans to go after their own, at least overtly.
Forty candidates for state office aren't done yet. They're in runoffs set for April 11. Here's the list, with the first place finisher listed first, and incumbents noted with an (i) after their names.
U.S. Senate:Barbara Ann Radnofsky, Houston, 43%; Gene Kelly, Universal City, 38.2%.
CD-10:Ted Ankrum, Cypress, 36.8%; Paul Foreman, Austin, 35.8%.
Lieutenant Governor:Maria Luisa Alvarado, Austin, 39.8%; Ben Z. Grant, Marshall, 38.4%.
HD-42:Richard Raymond (i), Laredo, 49.8%; Mercurio Martinez Jr., Laredo, 32.3%.
HD-47:Valinda Bolton, Austin, 43.1%; Jason Earle, Austin, 42%.
HD-146:Al Edwards (i), Houston, 48.2%; Borris Miles, Houston, 32.8%.
CD-30:Wilson Aurbach, Dallas, 44.6%; Amir Omar, Dallas, 36%.
Court of Criminal Appeals:Charles Holcomb (i), Wimberley, 45%; Terry Keel, Austin, 30.7%.
State Board of Education:Ken Mercer, San Antonio, 49.8%; Dan Montgomery (i), Fredericksburg, 35%.
HD-11:Larry Durrett, Jacksonville, 42.2%; Brian Keith Walker, Tatum, 32.5%.
HD-28:John Zerwas, Houston, 25.2%; David Melanson, El Campo, 16.4%.
HD-47:Bill Welch, Austin, 38.5%; Alex Castano, Austin, 28.4%.
HD-50:Jeff Fleece, Austin, 46.9%; Don Zimmerman, Austin, 43.7%.
HD-54:Jimmie Don Aycock, Killeen, 39.1%; Dale Hopkins, Marble Falls, 28.8%.
HD-63:Tan Parker, Flower Mound, 24.6%; Anne Lakusta, Flower Mound, 23.6%.
HD-71:Kevin Christian, Abilene, 37.7%; Susan King, Abilene, 28.7%.
HD-72:Drew Darby, San Angelo, 40.4%; Scott Campbell (i), San Angelo, 33.4%.
HD-118:George Antuna, San Antonio, 49.4%; Steve Salyer, Universal City, 28.2%.
HD-133:Michael Scofield, Houston, 35.1%; Jim Murphy, Houston, 33.7%.
Justice, 3rd Court of Appeals:Will Wilson, Austin, 33.7%; Bill Davidson, Austin, 24.4%.
Dates to note: Runoff candidates have until Friday (3/17) to thrown in the towel and concede the party nomination to their opponents. That's also the deadline for officials in each county to canvass the primary votes; the state parties do their canvassing by Wednesday, March 22. Early voting is set for the first week of April, and the runoff elections are on Tuesday, April 11.
Texas Democratic Party Chairman Charles Soechting will resign before his term ends in June, allowing the State Democratic Executive Committee to elect a temporary replacement in April.
That would give someone a leg up on the full term, and that's enough to start a fight. In an email to members of the SDEC, Soechting said he's got new duties at the law firm where he works and also wants to spend more time with his family. He called a replacement election for April 22.
Among the contestants who've said they want to play when Soechting leaves: Boyd Richie, a former district attorney from Graham, Glen Maxey, a former state legislator from Austin, and San Antonio lawyer Charlie Urbina Jones. Maxey emailed supporters and others crying foul, accusing Soechting of pulling out to give Richie — who's on the SDEC — an advantage. Maxey said in the note that he won't seek the job when it goes before the SDEC, but will campaign at the convention. He called Soechting's early out "a backroom deal."
That, in turn, elicited an email from Dennis Teal, an SDEC member who briefly considered running for the job. Teal's supporting Richie (who distributed the email) and says Maxey's pitch misconstrued some of the party's rules and hid Maxey's intention of letting Richie get the interim job so he won't have as much time to work the floor at the convention. Fun, no?
Separately, Richie sent out a note this week saying he's won endorsements for his bid to head the Democrats. He's got the backing of state Reps. Stephen Frost, Mark Homer, Chuck Hopson, Jim McReynolds, and David Farabee, and former U.S. Rep. Max Sandlin.
• Kinky Friedman's petitioners can get financial prizes for signing up enough people. So-called "Super Volunteers" are people who work at least ten hours a week and get 500 or more signatures to get the entertainer on the gubernatorial ballot. They get a buck a signature for their work, though the campaign says they'll limit the number of people who get the cash.
• Carole Keeton Strayhorn says her petitions will carry the signatures of former Democratic gubernatorial candidate Tony Sanchez Jr. and former House Speaker Rayford Price. Kinky Friedman adds Willie Nelson to his list of signers, and Nelson also cut a radio spot promoting Friedman and biodiesel fuel.
• Former President Bill Clinton will be speak at the Center for Public Policy Priorities benefit on May 19. The group's honoree is B. Rapoport of Waco, a longtime financier of Democratic and liberal causes in Texas.
• Rep. Carter Casteel, R-New Braunfels, hired Austin lawyer Buck Wood to work on a recount. She lost by 45 votes to Nathan Macias on Election Day. There's a recount going in El Paso, where Rep. Pat Haggerty won by just under 100 votes, and talk of a couple more. Lawyers who watch this stuff say electronic voting makes recounts less likely to flip the results, but mail-in and provisional ballots can still swing close races if they're initially miscounted.
• Susan King, who came in second but got into the runoff in HD-71 (Rep. Bob Hunter, R-Abilene, didn't seek reelection) got an endorsement from John Young, who finished last in that four-person GOP primary. She'll face Kevin Christian.
• Alex Castano, the second-place finisher in HD-47, got the endorsement of Rich Phillips, who finished out of the money in that race. Castano wants the spot held by Rep. Terry Keel, R-Austin, who's running for a judgeship. Castano's next rival is Bill Welch.
• In HD-63, Rep. Mary Denny, R-Aubrey, endorsed Tan Parker to take her spot in the House next year. He's in a runoff with Anne Lakusta of Flower Mound.
• Bill Davidson, trying to win a runoff for a nomination to the 3rd Court of Appeals, got an endorsement from Lee Parsley, who didn't make the final round. Will Wilson led in the first round of voting; the other candidates were knocking his use of the word "judge" in his campaign materials, saying it was improper.
• Put this on your list of fiscal seeds that could grow into weeds: The Social Security Administration is auditing several Texas school districts that take part in that program, looking to see if those district hired retiring teachers on a short-term basis to boost their retirement pay. Most districts don't offer Social Security benefits and teachers without Social Security credit can lose spousal benefits. If they get a short-term job that includes the bennies, however, they aren't penalized. The auditors — we found out about them from the Texas Federation of Teachers — want to see what's what.
• State sales tax revenues rose 15.2 percent in February, compared to the same month in 2005. That's feeding a state budget surplus that could prompt the comptroller to raise her estimate of what's in the till. Her latest pronouncement was that the state had $4.3 billion above what it needs to cover the current budget.
• Linebarger Goggan Blair & Simpson is one of three firms chosen by the IRS to help the federal government collect taxes. That's a new deal for the feds. The Austin-based law firm does the same thing for school districts and cities and counties; they and other firms have tried for years to get the state to open up its tax collection business to private firms.
• There now exists a "Texas Poker Political Action Committee" that'll work to expand legal poker in the state. The Poker PAC's founders want the state to legalize tournaments that benefit charity. They've got a website: www.texaspokerpac.com.
Gotta Watch Those Pesky URLs
The state's senior U.S. senator is finding out the hard way that the Internet is unforgiving of typos. In an email to supporters of U.S. Sen. Kay Bailey Hutchison, her staff urges them to vote for her in a Parade Magazine feature on eight women to watch in advance of the 2008 elections. The address to do that is www.thewhitehouseproject.org. But the Hutchison gang directed their followers to a slightly different address, apparently by accident: www.whitehouseproject.org. The first one is a website devoted to the idea of putting a woman in the White House. The second one steals some of the same words but is all about dating and music and ads that range from starting a blog to finding all kinds of sex partners.
Political People and Their Moves
Sen. Mario Gallegos, D-Houston, made his private troubles public, apologizing, going for help and saying he'll return. In his own words: "I have been increasingly aware and concerned that I have a disease. I am an alcoholic."
"Through this disease, I have injured my health and caused pain to my family. For the sake of those whom I represent in the Texas Legislature, my family, and for my own well-being, under the guidance of my physician I recently quit drinking and am currently enrolled in a one-month residential treatment program to help get me on the right track toward a healthier lifestyle.
"I am in contact with my legislative staff so that I may remain abreast of the issues and responsive to my constituents. I plan to continue my legislative duties and will devote my full energies to representing the people of the 6th Senatorial district as we move into an expected special session on public education funding.
"I am proud to represent the people of my Senate district, and I want them to be proud of me. I ask for your support and prayers as I battle this disease."
Gov. Rick Perry appointed Ruben Gonzales Reyes of Lubbock to the 72nd District Court. He's a partner in a law firm there. He'll replace Judge J. Blair Cherry Jr., who retired.
Perry named Dionicio Vidal "Sonny" Flores of Houston to the Texas Department of Housing and Community Affairs. He owns and operates an engineering and construction company.
Ken Luce, a former employee of the Texas Department of Agriculture who now is a regional president of Weber Shandwick Worldwide, a public relations firm, was appointed by former Ag Commissioner Rick Perry to the Texas State University System Board of Regents.
Perry named Drs. John Coble of Rockwall and Carolyn Carman-Merrifield of Mansfield to the Texas Optometry Board and named Dr. D. Dixon Golden of Center to chair that panel.
James Lee of Houston will join the Teacher Retirement System of Texas board by appointment of the Guv. He's a private investor.
Quotes of the Week
Jack Abramoff, in Vanity Fair, on how Washington has reacted to his troubles: "You're really no one in this town unless you haven't met me."
Michael Amezquita, Bexar County's chief appraiser, talking about the need for disclosing home prices to make appraisals fair, in the San Antonio Express-News: "We have a 25-year history of not being fair to homeowners."
State Rep. Chuck Hopson, D-Jacksonville, in The Dallas Morning News on special session prospects: "Voters are beginning to say, 'What are you doing down there?' If we lollygag around and become divisive and start fighting, the voters aren't going to like it. If we get something done, we're OK. If we don't, we're not going to be."
Rep. Carter Casteel, R-New Braunfels, telling the San Antonio Express-News she'll ask for a recount in her 45-vote loss to Nathan Macias: "I certainly don't suspect any improprieties by the Hill Country county clerks. But my supporters are having a fit. I feel I owe it to the district, and I look forward to resolving it."
Texas Republican Judy Deats, quoted in Newsweek on her loyalty to U.S. Rep. Tom DeLay, R-Sugar Land: "Right now, I wouldn't vote Democratic if Jesus Christ was running."
Kinky Friedman, caught by The Dallas Morning News sipping a beer in a moving car (there's a law against it) in a parade: "Yes, I admit to holding a Guinness. I even admit to drinking it. But I did not swallow."
An irked U.S. Bankruptcy judge in San Antonio, Leif Clark, fired off a written order denying a motion because it was incomprehensible, and he ended it with a footnote just to make sure the lawyers in the case got the point: "Or, in the words of the competition judge to Adam Sandler's title character in the movie, "Billy Madison," after Billy Madison had responded to a question with an answer that sounded superficially reasonable but lacked any substance, Mr. Madison, what you've just said is one of the most insanely idiotic things I've ever heard. At no point in your rambling, incoherent response was there anything that could even be considered a rational thought. Everyone in this room is now dumber for having listened to it. I award you no points, and may God have mercy on your soul. Deciphering motions like the one presented here wastes valuable chamber staff time, and invites this sort of footnote."
Texas Weekly: Volume 22, Issue 37, 20 March 2006. Ross Ramsey, Editor. George Phenix, Publisher. Copyright 2006 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 email@example.com. For news, email firstname.lastname@example.org, or call (512) 288-6598.