House Speaker Tom Craddick, R-Midland, easily won reelection, getting 142 votes.Elizabeth Ames Jones, R-San Antonio, didn't vote. She declined to be sworn in (she's about to be appointed to the Texas Railroad Commission, and taking office would have made her ineligible). Melissa Noriega hadn't yet been sworn in as the substitute for her husband, Rep. Rick Noriega, D-Houston. Eddie Rodriguez, D-Austin, voted "present" instead of yup or nope, and four members voted against Craddick's election to the high chair: Lon Burnam, D-Fort Worth, Jessica Farrar, D-Houston, Joe Moreno, D-Houston, and Paul Moreno, D-El Paso. And Yvonne Davis, D-Dallas, was there to be sworn in on Tuesday but was recorded as "absent" on the vote for speaker.

The three people who won't say they're running against each other in the GOP primary for governor next year have a total of about $20 million in the bank.Comptroller Carole Keeton Strayhorn won't have the details of her report until next week -- it's not due until then -- but says she had $5.7 million in the bank on the last day of 2004. She says she raised more money in the last six months than in any similar time period in her political career. Gov. Rick Perry -- the only candidate who has definitely said he'll be running for Guv next year -- said earlier in the day he ended the year with $7.9 million in the bank. And U.S. Sen. Kay Bailey Hutchison reported in October that she had $6.66 million cash on hand at the end of September. She's got a report coming out next week, but it's not expected to show significant change. That's $20.2 million in the three bank accounts. The filing date for that election is 50 weeks away, and the primary election will be in March 2006 -- 14 months from now. Strayhorn also named a new campaign finance chairman: Ken Banks of Schulenburg, president of International Muffler Co., and a member of the Texas Quarter Horse Association's board.

The Texas Legislature, expecting bumpy skies, got a smooth takeoff.Piece number one fell into place Monday, when Comptroller Carole Keeton Strayhorn announced the state's financial fortunes have improved over two years ago and the ugly budget fight that ensued then might be avoided this time around. Budgeteers, nervous about Strayhorn's steady political attacks on Gov. Rick Perry, were braced for worse news. Instead, her numbers were within a hair's breadth of their own predictions about state income. Piece number two arrived on Tuesday, when the Texas Legislature came in for the opening of its 79th regular session, offering the media who cover the session twice every two years -- on the first day and the last -- enough pictures to last all the way to the end of May. We counted 25 TV cameras in the House at one point, or almost two dozen more than you'll see on a day in mid-session. They sent home video of House Speaker Tom Craddick winning a second term, of Melissa Noriega taking the oath to fill in for her husband, Rep. Rick Noriega, D-Houston, who is stationed in Afghanistan, and of Sen. Florence Shapiro, R-Plano, being elevated to the mostly honorary position of Senate President Pro Tempore, which puts her third in the government's line of succession and on center stage during "governor for a day" ceremonies later this year. Piece number three came on Wednesday, when Lt. Gov. David Dewhurst, surrounded by senators, announced he had corralled unanimous agreement to principles for a public school package he said will include education improvements, property tax relief, fairer business taxes, and more. Now that they've eaten their spinach, the senators can line up for dessert: Dewhurst will spend the next few days working out who will get the committee assignments they requested. He got their signatures while holding those assignments back. And as we closed this issue, piece number four -- the Legislature's opening attempt at a new state budget -- was set to be announced on Friday. That'll be the first real look at what legislative leaders think the spending priorities ought to be, and it'll frame the finance fight -- at least the non-school part of it -- for the whole session. With all that out of the way, lawmakers ended their first week by taking a week off to allow travel time for the horde of legislators who want to watch George W. Bush's second inauguration in Washington, D.C. When they're back for the rest of the 20-week session, Perry has set out three emergency issues to be tackled: Mending the torn safety nets in Child Protective Services and Adult Protective Services, a $329 million plan outlined last week; and taking on education and school finance reforms. Lawmakers aren't allowed to act on legislation during the first 60 days of a session unless it's been declared emergency material by the governor. Also coming soon: Committee assignments in the House and the Senate, and two election challenges in the House. Enjoy the initial quiet.

Perry opens the bidding for the 2006 governor's raceGov. Rick Perry says he's not "wasting any time" worrying about politics, what with the state's senior U.S. senator and its comptroller of public accounts circling his Mansion with 2006 in mind. He adds that he was a Boy Scout and still heeds the "Be Prepared" motto. Thus, last week's announcement of support from several other statewide elected officials, the announcement before that of support from conservative leaders around the state, and the announcement this week of a finance committee and a campaign bank balance of nearly $8 million. Numbers for Kay Bailey Hutchison and Carole Keeton Strayhorn aren't yet available, but are due next week. State finance reports and the details within have to be filed with the Texas Ethics Commission next week; federal reports are due soon at the Federal Election Commission. Perry jumped the deadline to proclaim he raised $7.1 million during 2004 -- a year when he wasn't even on the ballot. The governor also uncorked the names of people who've agreed to serve on his campaign finance committee: • Austin: Gary Farmer, Steve Hicks, Rae & Richard Hill, Richard Salwen • Beaumont: Kent Adams • Blanco/San Antonio: Julianna Hawn Holt & Peter Holt • Brenham: John Barnhill, Howard Kruse • Brownsville: Nick Serafy • Bryan/College Station: Phil Adams • Buffalo Gap: Lisa & Tom Perini • Center: James Campbell, Rick Campbell • Corpus Christi: Glenda & Jerry Kane, Colleen McHugh • Crawford: Joe Hinton • Dallas: Beth Anderson, Julie & Louis Beecherl, John Gill, M.D., Phillip Huffines, Aman Khan, M.D., Robert Rowling • El Paso: Robert Brown, Paul Foster, Rick Francis, Ted Houghton, Woody Hunt • Euless: Neal Adams • Graham: Fred Gough • Harlingen: Anne & Bob Shepard • Houston: H. Scott Caven Jr., Chairman, Ned Holmes, Alfred Jackson, James Lee, Philip Leggett, M.D., William McMinn, John Nau III, Lynden Rose, Mike Rutherford, Kim & Michael Stevens, John White • Jacksonville: Robert Lee Nichols • Laredo: Margaret Martin • Lubbock: Mark Griffin, Nancy Neal, Windy Sitton, Mr. & Mrs. Fred Underwood, Morris Wilkes • Lufkin: John Parker • McAllen: Elvia & Adrian Arriaga, Noe Fernandez • Midland: Jose Cuevas Jr. • Mineral Wells: Chester Upham, Robert Upham • Missouri City: Massey Villarreal • Odessa: Bob Barnes • Plano: Bobby Ray • San Antonio: Lowry Mays, Red McCombs, Allan Polunsky, Gene Powell, Weisie & John Steen, Karl Swann, M.D. • Sugar Land: Helen & Carmelo Dichoso, M.D., James Wilson • Texarkana: Rebecca & George McWilliams • Tyler: Margarita & Thomas Grahm, René & Gaylord Hughey Jr., A. W. "Whit" Riter III • Victoria: Steve Holzheauser • Washington, D.C.: Raul Romero • Wichita Falls/Possum Kingdom: Carol Carlson Gunn & Robert Gunn

The special election to replace Elizabeth Ames Jones, R-San Antonio, in the Texas House will be held on Saturday, February 5, just three weeks from now.Jones, who would have been starting her third session, is Gov. Rick Perry's choice for a soon-to-be-open spot on the Texas Railroad Commission. Taking the oath to start the third term she recently won would have disqualified her, so she didn't do the swearing. That opened a spot in the Legislature and Perry picked the February 5 date. It's strongly Republican territory, and four people told the San Antonio Express-News they're looking: Joe Straus III and former Rep. George Pierce on the Republican side, and Melissa Kazen and Chip Haass on the Democratic side. Straus appears to have the early edge in the money race; radio magnate Lowry Mays put his name on the letterhead, as did Peter Holt and Jim Gorman, who were the co-chairs for Jones. He's also claiming the support of Bexar County Commissioner Lyle Larson, who had been mentioned as a potential candidate earlier in the week. It's on a fast track: The candidates have until the end of the day Tuesday, January 18, to file for the election. Early voting will run from January 25 through February 1. Chances are good that a replacement will be in the Legislature before any real lawmaking gets done this year.

Legislators expect to increase taxes because of school finance, but the economic/budget outlook is much improved over this time two years ago, according to the state's Comptroller of Public Accounts.The surplus/shortfall that matters is the one you'll see at the end of the week, when the Legislative Budget Board opens the curtains to reveal its starting budget for the session. The number the comptroller controls -- how much money is available -- is now in hand. But Carole Keeton Strayhorn has little say over how and how much state money is actually spent, just as the Legislature has little to say over how much revenue will flow into the treasury over the next two years. Use her numbers for income, theirs for spending; the politics are muddled, but at least the arithmetic works out. Two years ago, Strayhorn started the session by saying lawmakers would have $54.1 billion in general revenue to spend, or about $7.4 billion less than they had appropriated in the previous budget. The comparable numbers this time: $64.7 billion in general revenue will be available to spend, or $6.4 billion more than they appropriated the last time they wrote a budget. Another way to put it: This estimate says the state's general revenue income (federal and some other funds are left out) is up $10.6 billion over the estimate two years ago. And where started last session with $7.4 billion less than they needed to maintain spending, they're $6.4 billion ahead of the game at the moment. If we were in an auditorium full of budgeteers and political and lobby types right now, they'd be yelling and throwing calculators and beer bottles at the stage. So let us quickly acknowledge some Ifs, Yets, and Howevers. The $6.4 billion doesn't include what it would cost to extend current services in critical areas to new students, patients and other recipients. School enrollments, Medicaid caseloads and utilization rates, increased costs of this and that and the other thing all eat into the starting number. Which is why the LBB's budget is the thing to watch. Strayhorn says that stuff will eat up $6 billion, but the LBB's version is the one that counts. Two years ago, for example, the LBB started with a baseline budget that called for $64.6 billion in general revenue spending and $124.6 billion in all funds spending. Combining those with the comptroller's revenue estimates, the finger-wavers in the Lege came up with their $10.5 billion budget shortfall estimate. After they whittled spending and raised revenue (but not, they would insist, by raising taxes), the thing was in balance. Lt. Gov. David Dewhurst and House Speaker Tom Craddick had predicted starting shortfalls of $1 billion to $2 billion, having seen the LBB numbers but not the comptroller's. Their guesses were based on what they think it'll cost to stay even, to fully or partially restore cuts to the Children's Health Insurance Program, and what it'll cost to bail the state out of its self-created scandals in the child and adult protective services programs. Strayhorn told reporters the state would begin with a surplus of $400 million, and that might turn out to be right. But it's not clear what all she added in and what she left out. Two years ago, she began by saying the shortfall was $10 billion after all those things were added in. When the Lege was finished raising money here and there and cutting programs here and there, it all balanced. The second part of the fight will be over what to add. Here, school finance could be the mechanism for a huge sleight of hand. If lawmakers reach an agreement on a school finance plan and a tax or revenue scheme to pay for it, they'll be able to hide revenue increases there. Who'll know in the end whether new revenue measures attributed to school finance raised 100 percent of what was needed, or 104 percent? That's not a conspiracy theory: Estimates of what new taxes would produce are usually conservative, and any overflow can be used for general spending. If, on the other hand, lawmakers get everything done during the regular session except for school finance, they can avoid tax bills and such by saying they'll do that and school finance together in a special session. They'll write specific budgets for everything else, write a "placeholder" budget for schools, and then figure out that education piece during a special session when the rest of the budget is locked up and kept away from the finance negotiators. Either way, Strayhorn wasn't likely to get any leverage. In the first case, a tax/fee/revenue bill resulting from school finance would cover any shortfall budgeteers might produce. In the second, the education "place-holder" can be sized to make the budget balance. That takes the suspense out of her session-end budget certification, and reduces any impulses from the comptroller's office or the Pink Building to politicize the numbers. Other Numbers • Strayhorn said the state will have a total of $130.5 billion available for the 2006-07 budget -- including federal funds, general revenue and everything else. That's up from the $114.2 billion she estimated at this point two years ago. • The numbers tend to grow during the legislative session, largely because lawmakers fiddle with tax and revenues on one hand, and spending patterns and federal matching funds and such on the other. When the comptroller revises the estimate at the end of the legislative session, she incorporates the changes made in the Pink Building, plugs in any new economic stuff she thinks is important, and spits out a new estimate. At the end of the 2003 legislative session, Strayhorn's final revenue certification estimated $58.4 billion in general revenue would be available, up from the $54.1 billion she predicted in January; the all funds revenue projection grew to $118.1 billion from $114.2 billion. It happens often. At the end of the 2001 session, she said general revenue sources would produce $61.6 billion and that all funds would total $109.4 billion. The corresponding January projections: $60.8 billion in general revenue, and $106.8 billion in all funds. • Strayhorn is forecasting a 3.2 percent annual increase in the state's economic output during the 2006-07 biennium, down from the 4.1 percent rate in the current two-year period. • Sales tax collections are expected to rise. Franchise taxes, which have been in an actual and rhetorical slump for several years, are expected to rise slightly. That's the tax in the headlights when you hear people talking about "broad-based-business-taxes" as a solution for school finance. Strayhorn and her estimators expect drops in the levies on natural gas, cigarettes, insurance, oil production and regulation, and inheritances. They're also expecting some non-tax revenue sources to go backwards, including the state lottery, and interest and investment income. Insurance taxes are dropping in spite of the number-crunchers' belief that rates are still rising; it's because of a lag between premiums paid the companies and taxes the companies pay to the state. The entire biennial revenue estimate is available on the comptroller's website if you want or need to read the fine print: www.window.state.tx.us.

The Senate's public school finance package doesn't include the kinds of details that will ultimately make the difference between rejection and acceptance, but it's a start.Lt. Gov. David Dewhurst got all 31 senators to sign off on the proposal, which generally calls for two major state taxes that would replace the money currently raised by local school property taxes. Much of it repackages options and ideas that you've seen in other forms before. Some highlights: • The Senate's version of a business activity tax -- there are endless permutations of this in the tax world -- would take a company's net pre-tax income, add back the compensation paid to their employees (with the first $30,000 for each employee deducted) and multiply that result by 1.95 percent. Sole proprietors wouldn't be subject to the tax, nor would small businesses whose compensation and net income totaled less than $150,000. It would raise about $7.2 billion over the first two years. • The local school property tax, which is at or edging toward the constitutional limit of $1.50 per $100 in valuation in most local districts, would be replaced with a $1 state property tax that could not be raised without a popular vote. Locals would be allowed to raise 15 cents on their own for local programs. Each of those changes would require constitutional amendments, and thus, voter approval. It would cost the state about $5.6 billion to replace local property taxes with state ones each year. • Sales taxes on consumer goods and on motor vehicles would increase, as would taxes on smokes, alcoholic beverages. This section was vague in the printed hand-outs given to reporters and lobsters (get your own copy at www.texasweekly.com/Documents/TexasChildrenFirst.pdf), but senators have talked about taxing real estate transactions at rates of up to 1.5 percent and are looking at extending current infrastructure taxes on telephone bills that are supposed to expire, at tighter enforcement of sales taxes on used car sales, and at improving the state's delinquent tax collections. That basket of taxes would produce an estimated $7.5 billion over the first two years. • It includes a higher standard of equity, meaning the differences in basic funding for schools in richer and poorer areas would shrink. School ratings would be linked to the success of their students on after-high school readiness tests, and students at lousy schools would have the option of transferring to better schools in the same areas. Teacher salaries would be raised -- no timetable was described -- to the national average. Schools would be pressed to lower dropout rates. And charter schools would have to meet tougher academic and financial standards. Without the teacher pay raise in there, Dewhurst & Co. put a $6.7 billion price tag on those and other items termed "educational improvements." Dewhurst and the senators were careful to say the plan would not raise taxes, since it would lower some and raise some others. The net effect on taxes would be zero. But the net effect on revenue would be fairly sizable. The new taxes and other revenue tricks would bring in more money, and the plan would result in more money going into education. That's not possible if the same amount of revenue is available, but it is possible if you don't call every source a tax, and if you don't refer to hidden revenue raisers -- like normal economic growth, and the growth of the values of the properties being taxes -- as new taxes. There's more money, but they'll insist taxes were, on average, flat. One more thing of note: The Senate plan doesn't include legalization of slot machines. That's still an option, but lawmakers have real doubts about the chances a conservative Texas House could muster the necessary 100 votes to allow so-called video lottery terminals in the state.