The Week in the Rearview Mirror

Add these blogs to the list we wrote about a couple of weeks ago.• The United Way of Texas has one, zeroed in on legislation and such: www.uwtexas.org/display.php?tid=131. • Campaigns for people -- a group advocating tighter campaign finance law in Texas -- has a blog at www.cleanuptexaspolitics.com/scandalblog. • A Houston man, Kevin Whited, who describes himself as a political conservative, blogs about lots of stuff including Texas politics at www.publiustx.net. • Democratic U.S. Senate candidate Barbara Ann Radnofsky is blogging her way through that campaign. She's running for the seat currently occupied by Kay Bailey Hutchison, and oddly enough, is the only candidate who's said for sure she's running. Hutchison is still considering a gubernatorial bid and several Republicans are circling in case she jumps. But until then, Radnofsky, a Houston lawyer, is the only declared Senate candidate. Her blog is located at www.radnofsky.com.

Gov. Rick Perry likes to chide reporters who ask about process instead of focusing on policy issues and results. But now he's talking process himself, pushing education and tax bills forward "as vehicles" without endorsing their contents.His standard answer to specific questions about the education and tax bills is along the lines of "this isn't the final product and a lot can happen between now and the end of the session." The education package's support floated amendment to amendment from two-vote margins to 30-vote margins, with most of the record votes on amendments showing splits in the mid-20s. House Speaker Tom Craddick and Rep. Kent Grusendorf, R-Arlington, designed a game plan and stuck with it and didn't lose on any vote that was on their high priorities list. That was all the difference between this round and what happened last spring, when efforts to lower local school taxes came to pieces. • The school bill didn't win over any education groups, but conservative groups, for the most part, rallied behind it. They didn't rally around the tax bill, though. The Texas Association of Business couldn't get all of its executive board to run in the same direction and ended up not taking a position on the bill. The National Federation for Independent Business didn't like the payroll tax. A conservative group calling itself "Texans for Texas" that includes a gang of regular allies to Gov. Perry put out an email on the pros and cons of the tax bill; it included one column in favor and three against, including one from anti-tax activist Grover Norquist and another from an editorial writer for The Wall Street Journal. Perry himself responded to passage of the education bill with a vote for process on the tax bill, saying, "To ensure that the effort to reform our education system and to reduce property taxes stays on course, it is vital that the members of the House follow the leadership of Speaker Craddick and Chairman [Jim] Keffer and pass HB 3. I urge the House of Representatives to pass HB 3 and send the entire education reform proposal to the Senate so that work can continue and the process can proceed." • The final vote on the school bill (on second reading) was 76-71. Every Aye was a Republican. The Nays included 62 Democrats and 9 Republicans, and the strays -- those who didn't vote and/or were absent, included a Democrat and two Republicans. Craddick voted from the chair, giving the bill the last vote it needed to have more than half the membership of the House behind it. • Grusendorf would let school districts add two cents to their tax rate each year -- up to ten cents -- to raise "local enrichment" funds that wouldn't have to be shared with other Texas school districts. It would be equalized -- a fancy way of saying the state promises that penny of tax raises a minimum state-set amount per student. And districts that wanted to raise more would be allowed to do so, but with two strings attached. String 1: Only the first two cents allowed each year would be equalized with state money. String 2: And a district wanting to go beyond the two cents would have to have approval from two-thirds of its voters. That's not unheard of in other states, but it's a new thing here. According to the election wizards with the Texas Secretary of State, no other type of election requires more than 50 percent of the voters for a win. Under Grusendorf's bill, a super-majority is required before a district could raise extra local money from property taxes. • If the Lege ends the regular session with a school finance package and a tax bill in place, they won't be able to show all of their work to voters in time for the elections in 2006. New state taxes would be in place by then, but it takes a while for property tax changes to trickle down to the level of family budgets. Any changes that result from caps on property tax appraisals will take another year to sink in, if those caps make it into the final package. Lawmakers have time to cut school property taxes, and that would show up on bills sent to property owners in October. But most Texans don't itemize their deductions on their federal income taxes, and most don't directly pay their property taxes. The rest would likely see a school property tax cut in the form of an adjustment to their mortgage escrow payments. But those escrow accounts cover a mess of other stuff: Other property taxes make up about half of the average property tax bill, and escrow accounts cover homeowners insurance and homeowners association dues and such. Even a significant school property tax cut could be dulled by the surrounding costs. What looks like a 33 percent cut when you're just talking about school taxes quickly becomes a discount of ten to 15 percent off of the escrow part of a mortgage payment. It's still real money, but the political question is whether it's enough to overcome whatever pains result from new state taxes. • House Democrats distributed a list of 44 Republican lawmakers whose home-owning constituents would have fared better under the Democratic alternative than under Grusendorf's bill. Attached to that were more detailed sheets on each of those districts, with the name of the member, the additional savings for the owner of the average-priced home in that district, and the amount of extra money that would have gone to each of the school districts represented by the lawmaker. The list included every Republican member whose average homeowners would have saved at least $100 more each year and whose school districts would have seen more money coming in. In the end, the House voted 81-67 against that plan (the sponsor was Rep. Scott Hochberg, D-Houston). No Democrats voted against it, and only four Republicans voted for it. Each of those reps was among the 44: Fred Brown of College Station, Toby Goodman of Arlington, Bob Hunter of Abilene, and Tommy Merritt of Longview. Hunter voted with the Republicans when the full bill came up for a vote, but six other Republicans joined the Democrats: Charlie Geren of Fort Worth, Bob Griggs of North Richland Hills, Pat Haggerty of El Paso, Delwin Jones of Lubbock, Edmund Kuempel of Seguin, and Todd Smith of Euless.

Political consultant John Doner has been fiddling with state campaign finance databases again, cranking out the sort of information that's readily available on federal candidates and PACs but only indirectly available for state candidates and officeholders.To wit: Two new lists rank candidate/officeholder committees by the amount of cash they had in the bank at the end of 2004, and then the top 500 general purpose committees also by cash-on-hand at year-end. Ten state officeholders had more than $1 million on hand at year-end, and a total of 21 had more than $500,000 on hand then. Drumroll, please: Texans for [Gov.] Rick Perry, $7.9 million; Friends of [Comptroller] Carole Keeton Strayhorn, $5.7 million; Texans for [Attorney General] Greg Abbott, $3.2 million; [House Speaker] Tom Craddick, $2.9 million; [Sen.] John Whitmire, $2.3 million; Friends of [Agriculture Commissioner] Susan Combs Committee, $1.7 million; [Sen.] Rodney Ellis, $1.4 million; [Sen.] Ken Armbrister, $1.3 million; [former Rep.] Steven Wolens, $1.2 million; and [Lt. Gov.] David Dewhurst Committee, $1.0 million. You can download that list here. The top general purpose PACs don't have as much money on hand as the top candidates. Only five had more than $500,000 on hand, and only three -- two of them attached to the same group -- had more than $1 million in the bank at year-end. That list: Texas Association of Realtors PAC, $1.6 million; Union Pacific Fund for Effective Government, $1.4 million; Texas Association of Realtors Issues Mobilization PAC, $1 million; Compass Bancshares Inc. PAC, $791,492; and Friends of Phil Gramm PAC, $750,314. That one is also on our website, here. Doner put the lists together from candidate reports filed with the Texas Ethics Commission, which then added them to its online database.

Lawmaking sometimes follows the principles of courting. The only way to make legislators fall in love with an unattractive idea is to present them with an ugly alternative.The unattractive idea we're talking about here is gambling, whether in the form of slot machines or full casinos. The conversations about gaming peaked early in the session, then ebbed; getting the needed 100 votes out of the 150-member House and 21 out of the 31-member Senate is a tall order. Most officeholders seem to think gambling won't advance this session, but there's an effort afoot to join the racetracks, the slot machine people and the casino promoters together to push for new gambling in the state. And with a record-setting tax bill in front of the Legislature, they are hoping they've found the ugly thing that makes their proposals less unattractive. Gov. Rick Perry has said he doesn't think new gaming would fly. And U.S. Sen. Kay Bailey Hutchison has said she's against it, a way of setting out a marker for a potential race between her, Perry and Comptroller Carole Keeton Strayhorn. To review, both Perry and Strayhorn have voiced support for video lottery terminals, aka VLTs, aka slot machines; Hutchison is against. Either type of gaming would require a constitutional amendment and thus, electoral approval from voters. And with the deadline for filing legislation at hand, a couple of new bills would open the door to that vote. Rep. Charlie Geren, R-Fort Worth, proposed a constitutional amendment that would allow "casino-based development projects," VLTs at horse and dog tracks and on Indian lands. He'd create a Texas Gaming Commission to oversee that stuff, the state lottery and the venues now regulated by the Texas Racing Commission. Geren's bill would allow a dozen casinos in the state, including seven in urban areas "allocated by population," three in coastal counties, and two more in locations determined by the new gaming board, and they'd have to meet development requirements ranging from $150 million for the optional casinos to $400 million in development costs for the urban casinos. In other words, they'd have to spend at least that much on their projects. Cities would be barred from offering tax incentives to attract the casinos, and voters in each county would have to approve before a casino could be located there. It doesn't lay out requirements for bidding on licenses; some lobbyists for the gambling folks say a license to operate a casino in a major Texas city could be worth $500 million or more, and say the state should auction the rights to raise money. The state would get $15,000 for each VLT installed, and then would get 70 percent of the money wagered there. The racetrack or tribe would get the rest.

Tax bills are difficult to pass, and it never goes smoothly.Gov. Bill Clements signed a tax bill in 1987 that still holds the state record, and he did it over the objections of some of his fellow Republicans. In 1991, the political ambitions of then Ways & Means Chairman James Hury ended on the floor of the House when his fellow Democrats disassembled a multi-billion tax bill and left it to Lt. Gov. Bob Bullock to put Humpty Dumpty back together again. That one finally got passed, and is the second-place finisher on the state's all-time list. That was also the Legislature that approved the state lottery, and it's probably worth knowing that the bill was voted down when it first came up in the House. That killed it, everyone thought, but they revived the legislation later in the session -- after the budget and tax outlooks were clearer (and gloomier) -- and the lottery was approved. Another historical footnote: 1991 saw the birth of what became the Texas Performance Review, which scoured the budget for savings and tricks and all sorts of non-tax revenue magic to balance a budget that was too big to swallow even with a tax bill and a lottery. And a last bit of lore: The financial tangle wasn't finally combed out in the regular session. It took a special session on the budget to get it done. A tax bill big enough to make a dent in local school property taxes would dwarf either of those bills, and the lawmakers being asked to back it were elected, in large measure, on the basis of their opposition to taxes and growth in the state government's budget. You were expecting, maybe, a nice family movie instead? A compounding factor: 122 members of the current House weren't in the House in 1991. About half of them were in office in 1997, when then-Gov. George W. Bush took his stab at a tax bill to fix school finance. It was severely whittled before finally passing and giving him claim to pushing the largest tax cut in state history. Like Clements, he found his strongest opposition to the tax bill in his own party. And as with the earlier bills, his chance for a win didn't come until late in the legislative session. Gov. Rick Perry was around for all three -- as a House member, then watching from the Department of Agriculture. House Speaker Tom Craddick's name was in the author box on Bush's tax bill, and he was head of Ways & Means when it passed. He's been here for all of them. Lt. Gov. David Dewhurst, who was still a Houston businessman when the Bush plan was in play, will be doing this for the first time.

We don't have a transom, but the studies float in anyhow.• The U.S. Chamber of Commerce commissioned pollsters to talk to corporate general counsels (generals counsel?) to get some ranking of state liability systems. Guess what? In spite of years of lawsuit-limiting legislation, Texas still sinks to the bottom of their lists. They're not fond of the judicial system in general; 56 percent of the lawyers give "fair" and "poor" rankings to the system. Texas no longer ranks in the bottom five states -- that honor goes to Mississippi, West Virginia, Alabama, Louisiana and California. But it ranks in the bottom six states; Texas is 45th overall. See for yourself; their report is online at www.instituteforlegalreform.org/harris/index.html. • Medical malpractice claims were relatively stable from 1988 to 2002, according to a study done by the Center on Lawyers, Civil Justice, and the Media at the University of Texas Law School. They looked at claims information from the Texas Department of Insurance and concluded that the rhetoric bolstering legislative limits on med mal claims was empty. The number of large claims paid was constant. The mean and median amounts paid out were "roughly constant" and million-dollar awards accounted for about 5 percent of the cases each year. The number of claims paid per 100 practicing doctors dropped to 4.6 in 2000-2002 from 6.4 ten years earlier. Costs of payouts and defense rose about 1% annually, and that was driven, the study says, by the costs of defending cases. The gist of this one is in the TITLE: "Stability, not Crisis." The entire study will be published in a legal journal later this year, but it's online at www.utexas.edu/law/academics/centers/clcjm/project2.html. • Economist Ray Perryman did a report for the Texas Association of Counties spelling out the downside of caps on properties appraised for taxation, on state-imposed spending limits on local governments and on limits in revenue growth. You can find a full copy for yourself at www.county.org/resources/news/dynContView.asp?cid=492. The gist: "By restricting the capacity of local governments to provide services, appraisal caps, revenue limits, and expenditure limits lead to a reduction in the quality of life and economic performance of the state." The report says the current 10% cap on appraisal growth already causes problems and creates inequities between taxpayers. Lower caps, it says, can depress real estate activity (capped property values are reset to 100% when properties are sold). "In summary, appraisal caps and other limits have created substantial problems in providing adequate revenues in states where they have been implemented, resulting in major disparities among taxpayers, increases in other taxes, and significant increases in State transfers to local governments. They have also distorted economic behavior and limited growth potential." • Another economic study says the state gets $24 in return from every $1 it puts into higher education. The Institute for Economic Development at the University of Texas at San Antonio did the work -- with advice from Perryman and from state demographer Steve Murdock -- and concluded the UT System adds $4 billion in personal income and a total economic impact of $12.8 billion to the Texas economy. That one's also online, at www.utsystem.edu/news/2005/EcoImpact-Study03-09-05.htm.

Two tactical points on the tax billFirst, opponents of the House's public education bill -- most of them Democrats -- didn't get to put any significant ornaments on that plan. They don't have any reason to vote for the bill that would fund it, and in fact, since the fortunes of the education bill are directly tied to those of the tax bill, the vote on the tax bill offers opponents a second chance to kill the education package they don't like. And they could conceivably get some help from Republicans who like the public education bill but who just can't bring themselves to vote for this particular tax bill. That could be a continuing problem as the two bills progress through the session. Second, the House added a debate rule to prevent amendments that change the overall size of the tax bill. Management had its reasons: You can't pay for a local property tax increase without increasing state taxes, and lowering the size of the state tax bill would shrink that local property tax cut. If a component of the tax bill is removed, the amendment that strips it has to replace it with something that would raise the same amount of money. That preserves the overall scheme, but potentially endangers the tax bill itself by forcing members into an all or nothing vote. It's like the table rule we heard growing up: "You're going to have a serving of everything we've put on the table." A legislator who is adamantly opposed to a particular tax could end up choosing between an "aye" vote that "moves the process forward" and a "no" vote that's truer to that legislator's philosophy. To overextend the metaphor, they have to eat their asparagus if they want to eat anything at all. This happens with every tax bill, to some extent: Lawmakers have to choose between (or, if you prefer, "balance") the demands of their political patrons and the demands of their voters.