Bummer, Dude

Pity Tom Pauken. The Dallas lawyer tapped to head a task force on property tax reform turned in his report in January, with plenty of time for lawmakers to work on it. The governor listed property tax reform as a priority in all of his pre-session interviews with reporters. The Guv mentioned it again in his state of the state speech.

All that's been in the news since then is a speakers' race, a goofy panic over constitutional spending limits, and the ongoing Plague of the Three-Letter Acronyms: HPV, TXU, TTC, TYC, and HHS. The legislative session is at the halfway point. The last rush of bills is being sent to committee, and the bottlenecks that kill most legislation will become apparent any second now.

Pauken isn't pessimistic, but he said the delays and distractions have hurt. "It's had a very deleterious effect on getting the Legislature to focus on these issues," he said. And that last rush of bills did not include one that encompassed all of his task force's recommendations. Some of the ideas can stowaway as amendments to other legislation. He's particularly disappointed that there'll be no constitutional amendment to let property owners average their values over five year periods — an idea designed to take some of the sting out when values rise rapidly.

Some things didn't come out the way they were proposed, like legislation regulating growth in spending by local governments. He wanted automatic elections; what's been proposed would instead allow voters to petition for elections.

Pauken still thinks that cap will be the toughest fight, and said he is surprised at the "institutional opposition" from cities and counties and their trade groups, the Texas Association of Counties and the Texas Municipal League.

Proposals to reform the appraisal system to get elected people in the system and to allow more slack when market and appraised values don't match, he said, appear to be in good shape.

"I wouldn't handicap it at the moment. Our chances are much more difficult than they were... [but] if we can get to the floor, our chances are pretty good." At that point, he thinks, "it's very difficult for a legislator to vote against it."

Most of the legislation will go to Local Government Ways & Means, where Rep. Fred Hill, R-Richardson, is the chairman. Hill wouldn't handicap most of the bills, but said sales price disclosure has a chance and so does the appraisal process reform stuff. Caps could have a harder time and binding arbitration could fare well, he said. Hill said some of the ideas don't hold up well under legislative scrutiny: "There's a lot more politics than substance in some of these proposals, and that might explain the lack of interest."

Abbott, Inoculated

Attorney General Greg Abbott, staring at a legislative request for his opinion of whether the governor has the power to mandate HPV vaccines for pre-teen girls, talked his way out. His opinion — spelled out only in conversation with Sen. Jane Nelson, R-Lewisville, and Rep. Jim Keffer, R-Eastland — is that Perry's diktat is an advisory order with no force of law. Perry, in essence, was playing air guitar and hoping everyone would keep dancing.

Health and Human Services Commissioner Albert Hawkins can ignore it if he'd like (though that's got it's own risks). And — according to Abbott as distilled indirectly through a statement from the two lawmakers — the governor can't authorize an agency to do something through an executive order that the agency doesn't already have the authority to do.

Abbott's aides say there's no paper trail on this and say the request for his opinion wasn't official, at least in the sense that it would require a written response.

Abbott stole a page from an old Boston pol named Martin Lomasney, best known nowadays for this line: "Never write if you can speak; never speak if you can nod; never nod if you can wink."

It appears that HHSC does have the authority to order the vaccines, at least for now, which sets up an interesting layout:

• Perry can't order HHSC to make HPV immunizations a condition for girls entering the sixth grade.

• Hawkins' reappointment to his job is pending before the Senate Nominations Committee, which is now teed up to ask him what his decision will be on HPV (since he doesn't have to follow the Guv's orders, but knows what the Guv wants).

• House Appropriations has a rider in their budget draft — added by Rep. John Davis, R-Houston — that prevents anyone from shuffling their budgets to pay for HPV vaccines without written permission from the governor and the Legislative Budget Board.

• UPDATE: The House voted 119-21 to prevent the state from mandating the vaccine. That's on its way to the Senate. Perry's holding his ground, but if more than two-thirds of the Senate is against him, each of the two chambers appears to have enough votes to override a gubernatorial veto.

TYC's Board Will Quit on Friday

The remaining members of the board at the Texas Youth Commission will resign en masse Friday morning, after voting on a rehabilitation plan for the scandal-plagued agency. The announcement came from the governor's office, which proposed governing TYC with a single full-time commissioner instead of a part-time board.

For now, the agency will be run by Ed Owens, the interim executive director on loan from the Texas Department of Corrections. And Jay Kimbrough, appointed as special master to straighten things out, will keep going as well. Owen is drafting the rehab plan that will be presented to the board Friday.

The announcement followed another legislative outburst from the Texas Senate, which voted for a second time to fire the board. And Lt. Gov. David Dewhurst got hit with several questions about whether he'd move to fire the board in the governor's absence. Dewhurst won't sign the fire-the-board bill in the governor's place if the House passes it quickly.

He's the governor while Rick Perry is out of the country, and could sign a bill if he wanted to. He told reporters he won't do that — an aide said "it wouldn't be productive in the short term or in the long term." But reporters aren't the only ones asking; a group of state representatives — four Democrats and four Republicans — sent Dewhurst a letter asking him to put TYC into a conservatorship.

The Senate already voted to do that, but Perry opted instead to appoint a special master to overhaul the agency. That's similar to a conservatorship, but it leaves the board in place. A conservatorship begins with the firing of the board.

A copy of the letter is attached, signed by Democratic Reps. Valinda Bolton of Austin, Jim Dunnam of Waco, Pete Gallego of Alpine, and Scott Hochberg of Houston, and by Republican Reps. Pat Haggerty of El Paso, Delwin Jones of Lubbock, Tommy Merritt of Longview, and Robert Talton of Pasadena.

Perry's announcement about the board resignations took the wind out of that movement. It leaves the seven board slots open, but aides to the governor say he'll likely wait to see what the Legislature wants to do with the structure of the agency before trying to fill any of those.

• The TYC circus now includes road shows, with House Democrats offering to take reporters along on a tour of TYC facilities near Austin. Their Friday tour will take them to the Marlin facility (northeast of Austin, southeast of Waco), where inmates stop on their way to wherever they'll finally be sent. And the Lone Star Project — a Democratic outfit based in Washington, D.C. — piles in with news that federal prosecutors prepared indictments based on the abuses at TYC's Pyote facility, but dropped the case after talking to superiors. That's a two-fer for those guys, who get in a shot at U.S. Attorney General Alberto Gonzales as well as a shot at the Perry Administration.

D-I-V-O-R-C-E

The state is splitting the sheets with one of its biggest contractors — Accenture — unable to come to terms on revisions to a huge Health and Human Services contract that was supposed to save hundreds of millions of dollars.

Accenture — the leader of a consortium called the Texas Access Alliance — and the Health & Human Services Commission apparently couldn't settle a $100 million difference in what the state was willing to spend on call centers and related computer equipment and programming. According to state officials, the company has tentatively agreed to pay about $30 million and will walk away from its contract. A spokesman for Accenture, however, said no money would change hands to terminate the contract.

The state will have to hire as many as 800 workers — that's one estimate, and it's early in the game — to pick up the slack, delaying or possibly forfeiting some of the cost savings lawmakers were hoping to see when they consolidated eligibility systems from various state and federal welfare and health programs. Workers in the call centers that deal with clients of those programs, for instance, now work for Accenture. The state will have to hire them or their replacements — or bring in a new private company to do the work — to keep those programs going. An early estimate from House budget-writers is that those hires will cost $17 million to $18 million in the next budget.

And savings the state had hoped to realize from the Accenture deal — around $200 million over five years — will be delayed or lost now that the partnership between the state and the company is ending.

HHSC still hopes to see some savings from the switch to call centers and the new integrated eligibility program, which was supposed to consolidate the various applications for help Texans had to file under the old system. You'll also find lawmakers and policy makers who never thought this would work. Sen. Judith Zaffirini, D-Laredo, said she wasn't surprised: "Since the initiation of Accenture's contract, independent audits, investigations by the Comptroller's staff and reports from eligible persons who were denied services revealed Accenture's growing list of problems."

A spokesman for Accenture says the state would have realized the savings it originally hoped for if it had stuck with the contract and the procedures put in place by the company.

Jim McAvoy said the company agreed to scale back the contract in November, from $899 million to $543 million. The negotiations that followed that announcement didn't produce a deal, however, so the company and the state agreed to call the whole thing off.

"Negotiations start tomorrow on how to implement the unwind," he said.

Albert Hawkins, the state's commissioner of HHS, said the state and the company ended up around $100 million apart, with most of that attributable to work on the computers and programs used to run the state's integrated eligibility system. HHSC says that money was for services not included in last year's agreement to shrink the contract; the company says it was. That's the stuff divorces are made of.

Accenture will run the computer end of that through November, according to McAvoy, and when it'll stop doing other things it's doing will be determined in negotiations starting this week.

Maximus, another state contractor, will take over part of what Accenture is doing now; the state will take over the rest. And in its statement announcing the divorce, HHSC indicated that the grand privatization experiment might be over. The state will eventually take over most of what it farmed out to Accenture and others.

The broken deal will delay and probably shrink any savings the state hoped to realize. Hawkins said about $200 million in expected savings will be delayed. The state's top budgeteers were less specific, saying it's almost impossible to tell whether any money would have been saved at all.

In a press release, HHSC said the transition out of the contract will be done by November. They'll decide between now and then which services should be performed by state employees and which might go to new contractors.

Most of what was covered in the contract has been done by the private sector all along. But the call centers where claims and details are handled are new, and most of the savings were supposed to come from cutting state payrolls and letting the contractors do the work. Those cuts never came, and the state and Accenture were already shrinking the contract a year after they signed it.

The two legislators in charge of the budget — Sen. Steve Ogden, R-Bryan, and Rep. Warren Chisum, R-Pampa — said the numbers are too fuzzy at this point to say whether the breakup would have any impact on the budget. Senate Health and Human Services Chair Jane Nelson, R-Lewisville, was a proponent of the privatized eligibility system.

"I'm disappointed that it didn't work, but my goal is just to make sure that our clients get services. I don't care if it's state, I don't care if it's a vendor," she said. "But we had great frustrations, and we continue to have great frustrations."

And that Other One, Too

Texas senators, already in an investigative lather over the Texas Youth Commission, want a detailed review of the state's dealings with private contractors in two high-profile health and human services programs.

The letter, started by Sen. Bob Deuell, R-Greenville, now has the signatures of everyone else in the Senate. They're asking for an "integrity review," perhaps followed by "a full-scale investigation concerning procurements, management, development, effectiveness, efficiency, usability, and cost-effectiveness" of two contracts that are now being terminated by the Health and Human Services Commission. That went to Bryan Flood, the inspector general of HHSC.

And it got a soft reception; Health and Human Services Commissioner Albert Hawkins said through a spokesperson that he's all for a review that will make legislators more comfortable about spending at contract at the agency.

Shortening the Leash on Power Companies

The Texas Senate — angered over high rates, a new report that shows utilities manipulating markets to keep prices up, and a company buyout that might slide past state approval — took a step toward new regulation of electric utilities.

Three bills by Sen. Troy Fraser, R-Horseshoe Bay, would force utilities to sell plants if they control too much of a given area's wholesale market. It would force them to compete outside their home areas, a measure designed to use competition to keep rates down. The legislation would force a company in a buyout — that'd be TXU at the moment — to seek regulatory approval from the state. And the package includes a number of consumer measures added by senators concerned about people being cut off.

Fraser and others said they grew concerned about rates when gas prices fell and electric rates didn't follow. He estimated some companies are charging up to 20 percent more than they should be charging, and he wants the Public Utility Commission to have the power to question the utilities about that.

One fear from state officials is that deals like the TXU buyout could leave heavy debt loads on the "wire companies" that move power between generators and retailers. If the costs of transmission rise because of debt from buyouts (or anything else), they fear their market-based deregulation will unravel.

The PUC, meanwhile, says in a scathing report that TXU abused its market power to overcharge customers, netting $19.6 million more than if it had played fairly. That's in the form of an accusation at the moment; it could go to administrative court or to conference if the company decides to fight. But the timing wasn't great for the company. The PUC's memo and a long report were made public this week, on the eve of the Senate vote to tighten the regulatory net around utilities.

Bad, but Less So

The Texas Tomorrow Fund is in about the same shape it was in a year ago, according to an actuarial report done for the fund last year for inclusion in a still-uncompleted annual report. And the actuaries aren't nearly as gloomy as a group of financial advisors who did a special report for Comptroller Susan Combs when she took office.

The report from Buck Consultants says the prepaid tuition plan's unfunded liabilities total $110.3 million. That's the difference — in current dollars — between the amount of money in the fund over time and the amount it has to spend sending all of its contract holders to college.

The actuaries say they were off a little from last year for two reasons: They weren't optimistic enough about what the fund's investments would earn, and they were too optimistic about college tuition rates, which rose faster than predicted.

And they conclude that allowing new people to enroll would spread the costs of operating the plan and would narrow the gap between the fund's assets and its liabilities.

The consultants working for Combs were critical of some of the actuary's assumptions (See Assuming the Worst, in our Notebook section). And they came to the conclusion that the fund will be short by $1.7 billion to $3.3 billion by 2029 (in an apples-to-apples comparison of those future numbers, the actuaries paid by the fund predict a 2029 deficit of $683 million).

The Tomorrow Fund has refused new contracts for four years; some lawmakers want to reopen it or to replace it with something that'll help Texas students pay for school.

Flotsam & Jetsam

The increasingly infamous "Frew" case gets its hype punctured in a new report from the Center for Public Policy Priorities, which has been involved in and has followed the case for years. Their basic take: It won't cost as much as you might have heard. Estimates have run from about $450 million a year to as much as $5 billion a year. The budgeteers who watch this say they won't have numbers until the court makes its orders (the conference with the judge and the lawyers for both sides is April 9). And the CPPP folks do the same while downplaying the scare. The state's total tab for children's Medicaid — which is what the suit is about — is $2 billion annually.

Their theory is that even a shocking order from the judge wouldn't double the tab. And they use the state's numbers, saying it would cost $1.5 billion to raise doctors fees in Medicaid enough to cover actual costs; only 30 percent of that, or $450 million, would apply to kids. Their whole report is online.

• The state will have a constitutional amendment election on May 12. The issue in question is whether property owners who've got an over-65 property tax freeze should be able to take part in the property tax cuts for public schools. They were left out of last year's reforms, and the Legislature voted to add them. Now it's up to voters. 

• Does anybody really want to read through the expenditures of state agencies? They can if they want, sometimes. Comptroller Susan Combs has posted spending for eight agencies on her agency's website: Texas Education Agency, Texas Workforce Commission, Health and Human Services Commission, Department of Family and Protective Services, Department of Aging and Disability Services, Department of Assistive and Rehabilitative Services, Texas Department of Housing and Community Affairs, and Department of State Health Services. Knock yourself out.

• How about this one? You'll be able to watch live-streamed video of the Texas Supreme Court starting next week (March 20). The court and St. Mary's School of Law are cooperating to put oral arguments on the Internet. You can get in two ways: Through the court's site, or through the law school's site.

• More bills have been filed this session than two years ago. The Texas Legislative Service tallies a 13 percent increase, counting 5,921 bills filed this session, against 5,263 two years ago. The House filed 503 more bills this time; the Senate, 155 more. That puts the totals at 3,977 bills in the House and 1,944 in the Senate, averaging 26.5 bills per representative and 62.7 bills per senator.

• Presidential wannabes are prospecting for money in Texas. On the program for the next ten days or so: Hillary Clinton will hit Austin and Houston; Bill Richardson, another Democrat, will raise money in Austin; and Republican John McCain has funders in Austin Dallas, San Antonio and Houston in a two-day sweep at the end of the month.

• Wow your friends and amaze your hosts at parties with this: The state's permanent school fund, started with $2 million in 1854, topped the $25 billion mark for the first time in its history.

Damn Californians

Details, details: When you're gifting your friends in the Legislature with mugs full of candy, remember to check the labels. In many legislative offices this week, you could find a nice glass mug filled with candy, compliments of a well-known charitable organization. The logo on the side of the says: "March of Dimes, Saving Babies, Together." The label on the bottom says: "CALIFORNIA PROP 65 WARNING: Some materials used as decorations on this product contain lead or cadmium, chemicals known to the State of California to cause birth defects or other reproductive harm."

Political People and Their Moves

James Waller of Dallas got a pardon from Gov. Rick Perry after DNA tests proved he wasn't guilty of the aggravated assault that sent him to jail in 1982. He was released under mandatory supervision in 1993. Perry also commuted a death sentence for Doil Lane, who was convicted of murder but is mentally retarded. He'll spend his life in prison.

Former Gov. Dolph Briscoe Jr. will get a Lifetime Steward award from the Texas and Southwestern Cattle Raisers Association later this month.

Rep. Frank Corte, R-San Antonio, got the Bronze Star for his service in the Middle East last year. He's a Lt. Colonel in the U.S. Marine Corps Reserve.

Rep. Larry Taylor, R-Friendswood, will head the House Republican Caucus' policy committee. That panel makes recommendations on legislative votes, and the 15 members elected Taylor to lead them.

Kevin Holtsberry joined the Texas Public Policy Foundation as an analyst. He worked for a public utility commissioner in Ohio and as a legislative aide there before that.

The Guv appointed Troy Alley Jr. of DeSoto to the Texas Real Estate Commission. Alley works in real estate in that Dallas suburb.

Perry named four to the board that runs the Texas School for the Blind and Visually Impaired: Caroline Daley of Kingwood, who coordinates care for special needs kids; Michelle Goodwin of Fort Worth, a caregiver for a special needs child; and Robert Peters of Tyler, retired dean of Tyler Junior College and a news and weather reporter for the paper and a radio station there. Perry reappointed Deborah Louder of San Angelo for another term on the board; she works for an educational service center.

The governor named four to the Texas Board of Professional Geoscientists, which licenses and regulates people in that business: Charles Hallmark of Hearne, a professor at Texas A&M University; Ronald Kitchens of Harper, former executive director of the Texas Railroad Commission; Barbara Roeling of Austin, local operations manager for a consulting firm; and Gregory Ulmer of Houston, a partner with Baker & Hostetler.

Quotes of the Week

Rep. Jessica Farrar, D-Houston, debating the HPV vaccine with Rep. Charlie Howard, R-Sugar Land: "As you and I both know, everybody lies about their sexual activity, that they do it and that they don't do it."

Gov. Rick Perry, asked by Texas Monthly whether he's breaking Lt. Gov. David Dewhurst's heart by saying he might seek another term in 2010: "I break his heart every day. And I might be breaking somebody else’s heart. There are a lot of people who want to be governor."

Sen. Robert Nichols, R-Jacksonville, telling the Austin American-Statesman why he, a former highway commissioner, wants a two-year hold on toll roads: "I'm an engineer, and engineers believe the world is held together by tiny pieces. And if you disrupt those tiny pieces, it starts a chain reaction that can have negative consequences."

Jay Kimbrough, appointed by Gov. Rick Perry as special master of the Texas Youth Commission, in The Dallas Morning News: "I knew there would be some people that bark at me. My focus is on the solution, not history... I'm not going to be distracted by barking dogs."

Lt. Gov. David Dewhurst, asked about calls from state GOP officials and a state rep for him to push Senate consideration of a voter ID bill: "I'm sure they're being misquoted because I don't tell them how to run their offices."

Texas Railroad Commissioner and former state Rep. Elizabeth Ames Jones, talking to a Republican Women's Club and quoted in the Midland Reporter-Telegram: "I learned to be a champion for my district and Speaker Craddick taught me how to do that. Now I'm in charge of all the oilmen."

Rep. Rob Eissler, R-The Woodlands, on the need for fine arts education in public schools, quoted in the Houston Chronicle: "Left brain is logic, right brain is creativity. We don't want our kids to compete internationally with half of their brain tied behind their backs."

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Texas Weekly: Volume 23, Issue 37, 19 March 2007. Ross Ramsey, Editor. Copyright 2007 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 (512) 302-5703 or email biz@texasweekly.com. For news, email ramsey@texasweekly.com, or call (512) 288-6598.