Rumors of Mice

Suppose you are a Republican and you're on the ballot and the party's presidential candidate wasn't your first choice and the guy on the Democratic side of the presidential ticket has exhibited a knack for turning out voters and getting people on the Internet to send money.

You're nervous as an elephant with a mouse in the room.

Most of the Republicans at the state convention in Houston talked some about presidential politics and a lot about gubernatorial politics. The speakers talked about the presidential race, but their audiences were watching like the judges in round one of American Idol, measuring everyone for 2010 running shoes.

The scorecard?

U.S. Sen. Kay Bailey Hutchison seemed to get stouter applause than Gov. Rick Perry, and she did it in part with a swipe at the Trans Texas Corridor, Perry's signature program.

Perry signed his Boy Scout book for long lines of people at a mega booth at the convention, and gave a speech that included breaks for musical cues and ended with a small marching band on stage. (That was the second-best stage gimmick, behind an opening day National Anthem with a filmed backdrop that amounted to an indoor Air Force flyover, complete with the noise, right about the time the singer got to the Rockets' Red Glare.)

U.S. Sen. John Cornyn gave a perfectly acceptable speech, for this crowd, after an introductory video that missed its comic target by a furlong.

Lt. Gov. David Dewhurst brought out the boo-birds with a line about Real ID and Texas Driver Licenses with fingerprints on them (and got a standing O with a line blasting the aforementioned TTC).

Almost everybody had a line about the Democrats' calls for change being a code for sucking the change out of your pocket. Agriculture Commissioner Todd Staples even dropped a handful of change on the dais while he was talking, for effect. Railroad Commissioner Michael Williams and Attorney General Greg Abbott were both mentioned in the 2010 talk by delegates.

That left House Speaker Tom Craddick to talk about winning races in Texas this year. The GOP has a 79-71 lead in the House and Craddick called on delegates to win new seats and defend the ones they've got.

He reflected on the 2003 legislative session — the first since Reconstruction with a GOP majority — and on $10 billion in budget cuts made that year. And he boasted about the property tax/business tax swap, without mentioning the business tax: "We're not Washington. We don't have a deficit. We don't overspend. We gave you the largest property tax cut in the history of the United States."

Craddick told the delegates that homeowners insurance got moved to the top of the list of issues before the House when his wife told him their policy had been canceled: "It just takes a little incentive sometimes."

And like other speakers at the convention, he promised another look at voter ID legislation: "It is crazy to me to think you have to show an ID to buy Sudafed, but you don't have to show it to vote in the U.S."

Present (Not Future) Tense

Kay Bailey Hutchison didn't mention 2010 in her speech to Republican delegates gathered in Houston, or in shorter talks earlier in the day at smaller functions.

With delegates whispering about the possibility she'll run for governor two years from now, Hutchison kept her talk on 2008.

She served political red meat, talking to the Republicans about guns, war, defeatist Democrats, gas prices, immigration, toll roads and the unpopular — with this crowd, certainly — Trans-Texas Corridor. Not included this time: Her criticism of the new business margins tax that's due for the first time next week.

Most of those are issues you'd hear about in a gubernatorial campaign, and the road issues in particular have more to do with state than with federal policy.

Hutchison praised President George W. Bush in her speech — mentions of Bush have been noticeably scarce compared to years past.

And she went on offense, touting John McCain's experience and military record and saying Barack Obama sounded like he was running for a second term for Jimmy Carter. That morphed into an attack on congressional Democrats for their proposals to end Bush's tax cuts and for "bills that would lead to defeat in Iraq."

She encouraged them to help U.S. Sen. John Cornyn win a second term.

She blamed high gasoline prices for dragging down the economy, the job market, and the stock market and said congressional Republicans have set a goal of energy independence in ten years. They'd get there by allowing drilling in ANWR, in the Outer Continental Shelf and in Colorado, Wyoming, and Utah — plans she says have been blocked by Democrats in Congress.

Hutchison, like Perry the day before, stressed the crime and security line on immigration, saying the U.S. needs to stop criminals and drugs from crossing, and needs to welcome immigrants while stopping illegal immigration.

She touted an amicus brief against Washington, D.C.'s gun laws that was signed by her and more than 300 other members of Congress; they seek to end the ban on guns there.

The biggest reaction from the conservative audience came when Hutchison said she's against adding tolls on existing highways and that she "strongly oppose[s] the Trans-Texas Corridor."

She said she continues to support the war in Iraq and said Democrats "often keep calling for surrender."

She closed with a counter to Texas Democrats who have said they hope to extend their advantage in Dallas County and to take Harris County from the Republicans who dominate there. "I'm going to tell you what my goal is. It is to take back Dallas County, to keep Harris County, to make sure that we lead our charge for the United States of America."

Gas Man

Newt Gingrich concentrated on gasoline prices — a major theme at the convention — and asked the delegates to go to his website and sign a petition urging Congress to unfetter domestic oil exploration. He's going for a million signatures through that website, AmericanSolutions.com, using the slogan (he got his audience to repeat it several times) "Drill here, drill now, pay less."

And he brought them to their feet with this one, though it looks milder on paper than it seemed in the hall: "We should release a significant part of Strategic Oil Reserve to lower prices and punish the speculators who have been betting against the United States.... if we can bankrupt the speculators, I'm personally relatively happy."

Notes from the Republican Convention

Ron Paul officially quit the race for president to start up a new thing called the "Campaign for Liberty." He also unveiled a website where followers can sign up and read his letter leaving the presidential race and starting the new gig. The new group's mission? "The mission of the Campaign for Liberty is to promote and defend the great American principles of individual liberty, constitutional government, sound money, free markets, and a noninterventionist foreign policy, by means of educational and political activity."

• You heard wrong. Joan Huffman says she is running for state Senate in the seat abandoned by Kyle Janek earlier this month. And former state Rep. Brad Wright, who was standing next to Huffman when she told us that, says he will not be a candidate. Huffman says she's hired Jason Johnson of Austin to run her campaign and promised a fat campaign account when she files a finance report in two weeks. She's a former state district judge and before that, an assistant Harris County district attorney.

• Lt. Gov. David Dewhurst has appropriated the slogan of the late Bob Bullock, who served as Lite Guv and comptroller. Dewhurst's campaign passed out "God Bless Texas" t-shirts at the convention.

• U.S. Sen. John Cornyn looked to Jimmy Dean for his introduction, but added a caveat at the beginning of his speech to delegates. He said he hoped the delegate thought it was funny, and if not, that they blamed his staff. You can see it on his website.

• Presidential candidate John McCain threw Midland oilman Clayton Williams in the grease, deciding at the last minute not to hold a fundraiser at the home of the former Republican gubernatorial candidate. Why? Because of an 18-year-old line that's the only thing a lot of people remember about Williams' race against Democrat Ann Richards. It was Williams' comparison of bad weather to rape: "If it's inevitable, just relax and enjoy it." Under fire from national Democrats, McCain's campaign decided to cut and run. We did a quick search on the Federal Election Commission and Texas Ethics Commission websites: Williams has given $413,070 to state candidates since 2000, and $110,900 to federal candidates, all without a peep about his 1990 gaffe.

• A Houston appeals court tossed out the lawsuit challenging the way the state's GOP convention is run, and ordered the filers "to pay all costs incurred by reason of this appeal." The court didn't get to the merits of the lawsuit, but agreed with a lower court that said, "the trial court had no jurisdiction to issue the requested injunctive relief."

They can still sue, but they'll have to go to a different court. The misfire unhinges this year's challenge, as far as the convention is concerned: The suit was filed last week and went through three courts on the way to this result. If any changes ultimately come out of any of the legal wrangle, they'll affect the 2010 convention and not the one that's going on right now in Houston.

Gary Polland, the lawyer for the challengers, said the fight isn't over. "My clients want me to pursue this and that is what we're going to do," he said.

• Here's a link to the 2008 Texas GOP platform.

Sitting on Tax

Not that many normal people give a flip about the state's new business tax. It's too hot, and only business owners have to pay. But the people who do care — those taxpayers, officeholders, lobsters, budgeteers, etc. — have the fidgets.

The new tax was due on Monday. For a variety of reasons, the numbers — whether the tax will bring in what was budgeted and predicted — aren't available yet. Early returns, by some indications, are coming in more slowly than expected. Comptroller Susan Combs and her folks are processing returns and depositing checks and saying they won't have numbers until early next week.

It might be nothing, but officeholders bet a property tax cut on the income from the new tax, and they want to make sure it covers their bet. Until next week, they'll have to live with a bit of uncertainty and that's breeding all sorts of rumors. One: That the tax only produced $3 billion to $3.5 billion in the first three days of collection. If the numbers are right, they're lower than expected for a tax that's supposed to bring in $6 billion this year.

We'll leave that until the real numbers are in. In the meantime, some interesting little twists have surfaced:

• Some companies were able to dodge half their first year's tax bill when converting from one business form to another. Partnerships, including the so-called "Delaware Subs" — companies set up as partnerships with out of state papers to avoid the old franchise tax — could get the break by conversion to regular, Texas-owned companies. The return? They get to duck six months of the first year's taxes. Some of the state's biggest companies were organized that way.

• Taxpayers have until November, in some cases, to settle up with the state on their taxes. Some could pay an estimate (calculated according to the new tax law) now, and then pay the balance they owe later in the year. Others could pay what they owed last year under the old tax — often much less than they owe under this new one — and wait until November to pay the balance.

• Companies that are paying the tax for the first time don't have to pay the new tax electronically and can pay instead by mail. As long as it was postmarked on time, they can enjoy the interest earned while that tax payment is in the mail. Get a big enough company with a big enough tax bill and the float is worth real money. And the definition of a new company can be read to include an old company that did pay taxes that's been combined with subsidiaries that didn't.

Return of The Appraisal Creep

The state should get out of the business of appraising property and instead begin double-checking the work of local appraisers.

That was state Rep. John Otto's suggestion after hearing from experts that the convoluted appraisal method in Texas tends to push appraisal values upward. The Dayton Republican is chairman of the Select House Committee on Property Tax Relief and Appraisal Reform, which is trying to pull together recommendations for next year's legislative session.

Otto and other lawmakers who want to change the appraisal system aren't ready to say they'll support outright appraisal or revenue caps. Cities and counties kicked and screamed in past sessions at the idea of lowering the caps, which would further limit their revenue without excusing them from paying for unfunded state mandates like indigent health care and indigent legal defense.

City and county representatives said they're still wary that caps may be on the agenda come January. But they saw a ray of hope in the discussions when House and Senate committees heard testimony on appraisals this week. Lawmakers looked at potential flaws in the appraisal system instead of continuing their battles with leaders back home.

"There was finally discussion about what the real situation is," said Frank Sturzl, executive director of the Texas Municipal League. "In the past, members of the Legislature have blamed local officials."

Here's the problem. The Legislature expanded the franchise tax and cut property taxes two years ago, responding to orders from the Texas Supreme Court to rework the way schools are funded. But many Texans didn't get the relief — or got very little of it — because their appraised property values continued to rise, nullifying the tax reductions. To compound the trouble, some businesses are now paying new or higher taxes than before (the property tax cuts were reflected in January tax bills; the new business margins tax came due for the first time on Monday).

"I think the members of the Legislature are very frustrated that we provided $14 billion for tax relief that has largely been gobbled up by the appraisal tax increase," said Sen. Tommy Williams, a Republican from The Woodlands who chairs the Senate Finance Subcommittee on Property Appraisal and Revenue Caps.

Some lawmakers have pointed fingers at what they call greedy local governments who influence appraisal boards and want the tax dollars that come along with higher appraisals. Appraisers say they're just following rules of their trade, doing the best they can to attach a real market value to a property.

Every year, the comptroller's office collects information about local appraisals and does some appraising of its own to test the locally generated numbers. The law says the local appraisal has to be within 5 percent of whatever the state thinks the property is worth.

Back to Otto's idea. He said the system pressures local appraisers to keep their appraisals close to those from the state, regardless of whether the state is correct. So he suggests the state stop appraising and instead start auditing the locals to be sure they are using acceptable methods. That way, the local districts are held accountable without succumbing to alleged inflationary pressures from the state.

"I'm trying to take away forces that I feel might be causing it to go up that have nothing to do with market value," Otto said.

Otto filed a bill in 2007 that would have increased the allowable margin of error to ten percent from five percent. It passed the House, but never escaped a Senate committee. One possible reason: It came with a huge fiscal note; by 2012, it would have cost the state more than $800 million annually.

Loosening the margin to 10 percent would help keep appraisals in check, said Elna Christopher, director of media relations for the Texas Association of Counties. So would requiring sales price disclosure and doing away with unfunded mandates that require higher taxes, she said.

But the real issue is bigger, Christopher said. The state is in a tug-of-war with local governments over who will pay for schools. The state wants appraisals as high as possible because the more tax collected locally, the less the state must raise for education, she said. Counties and cities are caught in the middle and barraged with plans like appraisal caps, she said.

"We don't want to be a drive-by shooting victim of legislative knee-jerk reaction," Christopher said. "It's not the schools fault that this happens; it's the way the Legislature set up the school-finance system."

Both Williams and Otto said they didn't yet know if they will support caps on appraisals or revenue in 2009, but said they want to hear more public testimony in the coming months.

Williams said he wants a simpler way to figure the taxes. It now takes dozens of steps in a complex formula to figure a city or county's effective tax rate, which is used in turn to measure the change in taxes from one year to the next. That's not what the Legislature intended when it developed the current system in 1979, he said.

"The process has become so convoluted that it's crazy," he said.

— by Elizabeth Pierson Hernandez

Political Notes

Democrat Rick Noriega, trying to close the gap with U.S. Sen. John Cornyn in the fundraising game, got a line of other pols to raise money for him while he was on National Guard duty. That roster included U.S. Sens. Jim Webb of Virginia and Jon Tester of Montana and a mess of Texans: Ben Barnes, John Sharp, Garry Mauro, and Pete Laney, to name a few. Finance reports are due next month.

• The Democratic Senatorial Campaign Committee — the national folks — sent out a fundraising pitch asking for help in their top 11 races against Republican incumbents. The Cornyn-Noriega race in Texas isn't on their list, though they mention it among five states "where strong Democratic candidates are mounting serious challenges."

• The LBJ Library in Austin and the Ronald Reagan Library in Simi Valley, California, teamed up to invite John McCain and Barack Obama to a couple of town hall meetings in July. No details yet — just the invitations.

• You'll be seeing more of this as the year goes on: Sandra Phuong VuLe wants Angie Chen Button to agree to public debates in their competition for HD-112. VuLe is the Democrat. Button is the Republican. Rep. Fred Hill, R-Richardson, didn't seek reelection in that district.

• More details about the revival of the House's Office of Bill Analysis we wrote about last week: It'll be a part of the Texas Legislative Council, will have 30 session-only employees and will be part of TLC's research division.

Political People and Their Moves

Texas Republicans reelected Tina Benkiser to a third term as chair of their party. Benkiser fended off a challenge from Paul Perry of Ellis County. Perry was a Ron Paul supporter who said before the convention that he'd support John McCain, the party's presumptive nominee, in November. He said the party had drifted away from the GOP that elected Ronald Reagan and that the people at the top had taken control of an organization he thinks should be more answerable to its members. But the delegates didn't buy it. Unofficially, Benkiser got 68.5 percent of the vote to Perry's 31.5 percent. Like her Democratic counterpart a week before, she held onto her job. Robin Armstrong was reelected vice chairman right after that, by acclimation.

The state GOP delegates elected Bill Crocker and Cathie Adams to the Republican National Committee. Crocker, an Austin lawyer, was reelected; Adams, president of the Texas Eagle Forum, replaces Denise McNamara at the RNC.

President George W. Bush named state Sen. Florence Shapiro, R-Plano, to the U.S. Holocaust Memorial Council, which runs the Holocaust Museum in Washington, D.C.

Texas Banking Commissioner Randall James will retire after almost 17 years at that agency — half of them as commissioner.

Quotes of the Week

U.S. Sen. Kay Bailey Hutchison, asked about being John McCain's vice presidential nominee by MSNBC: "He has a wonderful group of people from whom to choose and I do not want to be on that list."

State Sen. Florence Shapiro, R-Plano, asked about running for U.S. Senate when Hutchison leaves office: "If this [the GOP convention] were the entire state of Texas, I'd be fine. But it's not. It's a microcosm, and I have a lot of work to do, I have a lot of places to go and people to see."

Gov. Rick Perry, after the Governor's Mansion was torched: "We'll restore this house. We'll renew this property. We'll rebuild this magnificent structure."

Lt. Gov. David Dewhurst, on the state's new source of revenue, at the Texas GOP convention: "As you know, I have never, ever liked the business margins tax."

House Speaker Tom Craddick, talking at the convention about resistance he encountered when he first became speaker: "Change is funny. Nobody likes change."

Bastrop ISD Trustee Glenn Peterson, quoted in the Austin American-Statesman after the school board voted to keep a student mural that some found offensive, saying there are more important things to do: "What offends me is our dropout rate."

State Board of Education member Bob Craig, quoted by Texas Monthly's Burkablog: "I bring greetings from the State Board of Education, which is kind of like bringing greetings from the IRS. We have a dysfunctional board. We couldn't agree to go to dinner together."

SBOE member David Bradley, to the delegates at the convention: "There are others who think their ancestors were apes. That's okay. But I'm going to vote the right way."

Charlie Cloud, a losing candidate for sheriff, telling the Hood County News that, unlike the sheriff who got knocked out of office in the primaries, he won't be suing the winner to contest the results: "I've got my big boy pants on."

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Texas Weekly: Volume 25, Issue 25, 23 June 2008. Ross Ramsey, Editor. Copyright 2008 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.