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Building the Foundation of Texas Conservatism

Its brand-new headquarters is almost done, and its influence on public policy in Texas — and nationally — cannot be denied. At age 25, the Texas Public Policy Foundation is the big kid on the block among Austin think tanks.

By Neena Satija, The Texas Tribune and Reveal
The Texas Public Policy Foundation's new building is under construction on Congress Avenue in Austin.

When the Texas Public Policy Foundation moves into its brand-new $20-million building in February, visitors will enter through the “Come and Take It” foyer. Then, perhaps, they'll take in a view of the Texas Capitol — two blocks north on Congress Avenue — from the second-floor "Governor Rick Perry Liberty Balcony."

The six-story, 40,000-plus-square-foot building — nearly six times larger than the foundation's current space — will have the feel of the “epicenter of liberty in Texas,” TPPF’s chief operating officer, Greg Sindelar, said during a recent tour.

The free-market think tank’s staffers see the move as fitting for the times. The nonprofit celebrated its 25th anniversary last year, and the building will open just weeks after one of the most conservative Legislatures in recent Texas memory convenes.

Among the myriad outside groups jockeying for influence on Texas policy, TPPF has claimed its place at the head of the table.

The group brought in more than $5 million in grants and contributions in 2013 (not counting donations for its new building) and now employs 37 people full time. By comparison, the left-leaning Center for Public Policy Priorities pulls in about $2.5 million a year and has 19 full-time staffers. The pro-business Texas Taxpayers and Research Association has six staffers and brings in about $1.3 million annually. 

“One would be crazy not to recognize that they still carry clout within the legislative process,” said state Rep. Sylvester Turner, D-Houston. 

By law, the nonpartisan foundation can't back candidates or contribute to campaigns. But its board members have been generous supporters of Gov. Rick Perry. Some major donors, including Midland oilman Tim Dunn, also fund more overtly political groups like Empower Texans, which was founded by former TPPF Vice President Michael Quinn Sullivan. 

But TPPF's longtime president, Brooke Rollins, won't shy away from claiming at least some credit for the more conservative makeup of the 2015 Legislature. TPPF's proposals to lower the sales tax using surplus oil and gas revenues, or to abolish property taxes through a "sales tax swap," were constant campaign fodder during last year's Republican primaries, she points out.

“We measure success in many different ways, but one of them is if we’re able to change the narrative,” said Rollins, who left as Perry's policy director to take over TPPF in 2003. “And the best way to know if you’ve changed the narrative is to watch political campaigns.” 

On Wednesday, TPPF’s ideas, and influence, will be out in full force at its 13th annual policy orientation, featuring virtually every newly elected state leader in Texas, and big names like media mogul Steve Forbes, former U.S. House Speaker Newt Gingrich and former U.S. Sen. Phil Gramm. The sold-out, three-day event will host panel discussions on everything from mental health policy to groundwater management to the perils of grade inflation. 

Rollins likes to draw parallels between the growth of TPPF, Texas and Perry's career. Indeed, in January 2003, shortly after Perry had won his first gubernatorial election, she joined a group that was nearly broke with just a handful of employees.

"My first day, I was told there was $9,000 in the bank and there wasn’t money to make payroll,” said Rollins, who was then 29, and would go on to run the foundation while living in Fort Worth and raising four children. “It could have gone either way. It could have gone a lot worse, or it could have gone the way it did.”

The group now is looking to go national by taking on federal issues like immigration and climate change regulation, the subject of a planned 2016 summit in Washington, D.C. But it as already well known outside Austin.

TPPF's proposals to run public universities more like businesses sparked some changes at Texas A&M, along with a backlash from academics across the country; its push for a less-bloated criminal justice system has led to bipartisan-backed reforms adopted in dozens of other states; and, according to Rollins, the group helped convince Perry that Texas is better off without billions of federal dollars to expand Medicaid.

Given the number of uninsured in Texas, that's nothing to boast about, said Turner, who will speak at TPPF's policy orientation. But he has found some common ground with the group. On criminal justice, "I think they’re right on target,” he said. He also agrees with TPPF that the government shouldn't spend money luring businesses to Texas, or divert funds meant for transportation into other programs. 

But like the story of Texas (and Perry, for that matter), with increasing power comes conflict. And TPPF has taken painful shots in recent years from some of its closest friends, including Perry. 

California Touches a Nerve

The fight broke out, as they often do in Texas, when someone invoked California. 

Conservative groups had pointed fingers for years at Republican leaders in Texas for what they called out-of-control spending. But they touched a real nerve when The Wall Street Journal published an editorial called "Texas Goes Sacramento" in June 2013, just as lawmakers were awaiting Perry's signature on a new budget. 

Citing TPPF, the editorial claimed that Texas would spend a whopping 26 percent more under the new budget than it had under the previous one, and called it the “biggest spending spree in memory." 

Not quite true. Most budget experts agree that state spending had actually increased by 8 or 9 percent, which they say was in line with inflation and population growth. The number looked bigger because lawmakers were plugging holes in a 2011 budget that had been vastly underfunded. By 2013, Texas needed to pay up for a nearly $5 billion Medicaid IOU, and also undo accounting gimmicks used to keep the previous budget artificially low.

The newspaper’s figures drew protest “even from my friend Governor Perry,” Rollins remembered ruefully. Shortly after the editorial ran, Perry told reporters that TPPF’s research needed some “remedial work.”

It was a rare rebuke from Perry, whose struggling campaign for lieutenant governor in 1998 was thrown a $1.1 million lifeline  by TPPF founder James Leininger. Years later, the governor even donated the royalties from his bestseller, Fed Up!, to the group.

The now-retired Republican chairmen of the Senate and House budget committees, Tommy Williams and Jim Pitts, took their own shots. "Apparently you used the same fuzzy math promoted by one Texas special-interest group to sully our rock-solid Texas budget," they wrote in a letter to the Journal

Perry ultimately signed the budget, and the "26 percent" figure was widely debunked. But Empower Texans latched onto the concept when backing far-right candidates during last year's elections. So did former state Sen. Dan Patrick, R-Houston, who will be the state's next lieutenant governor.

“Good men and women lost their elections, close elections, because of that budget lie," said state Rep. Jim Keffer, R-Eastland, one of TPPF's most vocal Republican critics. “That’s unconscionable to me.”

In retrospect, Rollins said, the group could have chosen better timing, and presented its figures before the 2013 session, rather than in the midst of it. But TPPF stands by the numbers. 

“It was an effort to be as transparent as possible so people could see how much money they had really sent in to run the government,” said Talmadge Heflin, TPPF’s budget expert and a former House appropriations chairman. Although the Journal’s claim was incorrect, “we can’t be responsible for how the press takes the data that we produce and uses it,” he said.

Nevertheless, TPPF claimed victory for reshaping the debate. In its 2013 Annual Report, the foundation boasted of "defining a fiscal baseline that was supported by about one-third of the members of the majority party and The Wall Street Journal in the face of intense pressure from leadership, setting the stage for fiscal restraint in future sessions.”

Clearly, the drumbeat on spending in Texas wasn't going away. 

A High-Stakes Budget Battle

In the past year, TPPF has taken aim at the way Texas restricts budget growth, to the ire of some Republicans and business groups. 

Among the more contentious ideas is tying spending growth to population and inflation, using the consumer price index. (Today, the state bases its spending growth rate on that of personal income.) That would help curb what TPPF says was a runaway state spending increase of 63 percent since 2004.

State Rep. John Otto, R-Dayton, a top candidate to chair the House Appropriations Committee in 2015, questioned the numbers. So did outgoing Lt. Gov. David Dewhurst in a December meeting of the Legislative Budget Board, which prepares the state’s biennial budget documents. 

“Does the consumer price index provide an accurate measure of what the government actually spends money on?” Otto asked LBB director Ursula Parks.  

“No,” she responded. For instance, the government buys goods like concrete and construction equipment. Those prices often rise more quickly than the price of the “basket of consumer goods” the CPI measures, which includes food and clothing.

Next up was Dewhurst, angered by the claim that the state's spending has grown 63 percent since 2004. That calculation fails to account for massive property tax cuts made in 2006. Perry wanted to give homeowners some local tax relief and let the state pick up the tab, costing billions of dollars more a year. 

“Is it correct to say that excluding property tax relief, where we cut taxes on people … that our budget, on average, has [grown at a rate of] 11.5 percent below inflation and population growth?” Dewhurst asked Parks. “That sounds correct to me, yes, sir,” she answered.

Dewhurst later continued, “I’ve seen in my experience over the years, special interests, oftentimes for fundraising appeal, say untrue things." He paused and flashed a grim smile, adding, "Surprise, surprise."

Dale Craymer, formerly a budget writer for Gov. George W. Bush and president of the Texas Taxpayers and Research Association, said he wants a conservative budget, too. But Texas also needs to pay for basic services and infrastructure, he said. 

“It’s unfortunate that people latch onto a number and, somehow, being on this side is a disaster and, somehow, the other side is nirvana," Craymer said. 

Whether lawmakers decide Texas' budget is growing too fast, slow or somewhere in between, "the stakes are extremely high," said Ann Beeson, executive director of the Center for Public Policy Priorities.

“The decisions that the lawmakers will make about the budget will impact whether or not my child … will have an adequate, high-quality education. They’ll impact whether our roads are passable. They’ll impact whether or not, if one of our family members gets sick, they’re able to get the care that they need,” Beeson said.

TPPF's role in that debate is sure to be big, but for Otto and some other Republicans, the goal will be to fend off the group's claims of skyrocketing spending.

"It’s hard refuting something like that when somebody like Texas Public Policy puts it out there, because their reputation in the past carried so much weight," Otto said.

“I think what’s important is that we get the facts out there, and we quit using talking points to raise money," he said.

Disclosure: The Texas Public Policy Foundation is a corporate sponsor of The Texas Tribune. A complete list of Tribune donors and sponsors can be viewed here.

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