So here's a question: Does the huge budget surplus make it harder or easier to pass the governor's proposed tax bill? Comptroller Carole Keeton Strayhorn added $3.9 billion to the $4.3 billion that was already in the surplus — and those numbers don't include about $1 billion that's already in the state's Rainy Day Fund.

Legislators generally don't approve new taxes except in times of fiscal crisis. If you're inclined to stick with historical examples, you'll probably conclude the flood of cash will wash away chances for a new business tax that would be used to offset cuts in local school property taxes. That's getting a boost from conservatives and conservative groups outside the capitol who view the surplus as money that ought to be refunded to taxpayers.

But $8.2 billion is enough money — if you're of another mindset — to bribe lawmakers to do almost anything (we're using the word bribe to mean an inducement that's not of interest to prosecutors). It's enough money to pay for a substantial teacher pay raise, for instance. Increasing teacher pay is a big deal for a lot of lawmakers from both parties, including some Democrats who aren't inclined to help Gov. Rick Perry and the Republicans do a finance deal that doesn't include new money for schools.

Straight, No Chaser (At First)

House leaders are making their first run at this without sweeteners. Gov. Rick Perry has said he might add new items to the special session agenda if lawmakers solve the courts' problems with school finance. That could come in one bill — a measure that lowers school taxes by 17 cents using money from the state surplus. Tax bills would come next, if lawmakers think they need to do more. Some argue that a 17-cent cut would satisfy court orders to give school districts "meaningful discretion" over their tax rates and that the Lege could do that one bill and quit.

House Speaker Tom Craddick says you'll see tax bills on the floor of the House early next week, starting with that tax cut funded solely by the state's huge budget surplus. And while this sounds a little contradictory, he also says he'll support Perry's tax proposal.

The first bill on the floor would lower school property taxes by 17 cents, funded with the budget surplus. That's the idea that's been touted for weeks by Rep. Warren Chisum, R-Pampa. He says his bill would lower taxes enough to satisfy the courts, while spending just little enough — about $2.37 billion — to avoid hitting a cap on growth in state spending. And when that's done, he says he, like Craddick, will vote for the Perry plan.

Next comes a handful of single-shot tax bills, each addressing a piece of the tax proposal forwarded by Perry's Texas Tax Reform Commission. One would raise cigarette taxes by $1 per pack. Another requires people selling and buying used cars to use blue-book values for tax purposes, replacing something now known as the "liar's affidavit," where they simply sign a form noting the price. The big one would replace the current corporate franchise tax with a new tax on adjusted gross receipts.

Putting the taxes in single-shot bills limits what can happen to them if they make it all the way to the Senate. A tax bill with three taxes in it is classified as a general tax bill, and it can be amended with any other tax — even one not included in the original bill. The Senate could take a bill like that and send back a completely different tax bill and still be operating within the rules. But a bill with only one tax included is only open to that one tax. The Senate could change the rate or any other aspect of it, but they wouldn't be able to jump in with another levy.

Perry didn't include anything but school finance in the official agenda for the legislative session, but Craddick and Lt. Gov. David Dewhurst have been meeting to work on an education reform bill that includes the reforms the two houses had in common. There's already some argument about what ought to be in there, but this is the Texas Legislature, right?

Bug Report

The tax apple has (at least) two big worms in it, one named Robin Hood and one that could keep the local school taxes from being cut to $1. As it stands, the tax package in the House lowers school taxes without touching school finance formulas and without leveling out what schools can raise in local "enrichment" taxes.

If taxes are lowered to $1.33 and districts are allowed to raise rates a bit to get some local projects going, the amount of money raised with a one-cent tax increase varies widely from district to district, a situation that sets off alarms with poorer schools, education groups, and others. The Center for Public Policy Priorities did an analysis: The average district gets $27.14 per student for every penny increase in taxes. A really wealthy district — Highland Park ISD — can raise $127 per student with a 1-cent tax increase. They get more for their schools and don't have to "recapture" any of that money to share with poorer districts, leveling things out.

The rich districts like it, but it's a deal-breaker for everybody else.

Next is a bug in the way the legislation dedicates revenue from new taxes to property tax relief. It puts it in a separate account, but doesn't add in any other funds. But the new taxes don't cover all of the costs of the lower property taxes. In the first year, the Perry-Sharp plan requires $1.4 billion in money from the surplus. Strayhorn contends that gap grows every year; Sharp says economic growth will cover it. But the school finance package doesn't force legislators to close the gap if it exists. That $1.4 billion could go missing in the first round, meaning what started as a $1 target tax rate could end up at $1.10 or $1.15. Nothing in the bill forces lawmakers to contribute more than is raised by the new taxes. 

Reading the Instructions

The first fight in the tax debate will be over the rules of the fight. The House Calendars Committee has asked members about a number of possibilities that would limit the debate on school finance. They hadn't voted on one when we went to press, but the Pink Building was buzzing with plots and counterplots. The polling sheet used to test support for various rules — and tax plans — had several proposed limits:

• Forcing tax amendments to be revenue neutral, an idea stolen from budget debates, where amendments that increase spending without cutting a like or greater amount are often prohibited.

• One that would require all amendments to stick to the property taxes line. Amendments spending money on anything else, in other words, would be disqualified.

Democrats, who are pushing a package of education measures including teacher pay raises, health insurance and funding for textbooks, are miffed about the possible restrictions, but Calendar rules can't take effect without approval from the full House. Expect that vote to get spun as the pro- or anti-education vote, particularly if the House approves a limiting rule. This isn't just a Democrats' thing — though that's who's pushing in the House. Lt. Gov. David Dewhurst is running TV spots promoting a bunch of stuff — teacher pay raises, and health insurance, and textbooks, for instance — that wouldn't be allowed under the proposed House rules.

You can argue that same point the other way: Gov. Rick Perry left everything but property taxes and school finance out of the official agenda for the Legislature, and adding them to the bills would flout the Guv's instructions.

Members were also polled (we saw the questions but not the answers) on their support for:

• 17 cents in school property tax cuts funded with the budget surplus.

• Prevention of "appraisal tax creep" — when property taxes increase not because rates went up but because property values rose.

• Dedicating all new revenues — presumably from the new tax bill — to property tax relief and not to spending on education or anything else.

• The three major taxes the governor wants to create or increase: A levy on adjusted gross receipts of companies, an end to the "liars affidavit" that lets car buyers and sellers to understate sales prices, and increases in cigarette taxes.

A spokesman for House Speaker Tom Craddick, asked about the proposed calendar rules, said they hadn't been voted on yet, and said his office didn't know what the committee would be considering or what had been proposed.

Strayhorn: Who Needs Taxes?

Lawmakers looking for a way to cut school property taxes got a gift from Comptroller Carole Keeton Strayhorn on the first day of their special session: They can spend $8.2 billion without new taxes. There's even more if you count the $1 billion balance in the state's Rainy Day Fund.

And Strayhorn, who's also running for governor (not that that has anything to do with it), says the state could raise up to $7.7 billion more for education and other state programs with a combination of relatively small taxes, video lotteries at race tracks and reinstatement of a government efficiency program in her office.

Gov. Rick Perry wants lawmakers to approve a new $5.9 billion tax on businesses that would replace the current corporate franchise tax and generate $4 billion or so in new money. That new money would be used to cut local school property taxes by up to 50 cents over the next two years (he suggested some of the Strayhorn money could finance even bigger school tax cuts).

The gross receipts tax worked up by a 24-member commission — headed by former comptroller and Perry rival John Sharp — has survived in the open field for weeks without a fatal blow. That's some sort of a record for a tax bill, and some businesses have gone past neutrality on the thing and said they'll actively support it. Weirder still.

Lawmakers have held their cards close, however, and it's not clear how that big money will affect the debate. Outside groups fired up websites and demonstrations to push against any new taxes; they want the Legislature to work with the surplus and go home. You can see some of their handiwork on websites, like www.bigpileofmoney.com, www.texansforlimitedgovernment.com, and www.texasfornonewtaxes.com.

That was enough of a problem a week ago, when the budget surplus was — officially, anyhow — only $4.3 billion. Strayhorn, citing growth in the economy, a boom in taxable sales and in taxable energy prices, added $3.9 billion to that number. You can get a copy of her revenue estimate on the comptroller's website, but the short version is that she added $1.7 billion to her estimate for sales tax revenues, $719 million to her estimate on franchise taxes, and $2.5 billion to what she thinks will come into state coffers as a result of high oil and gas prices, and the taxes based on them.

Strayhorn didn't come out and say lawmakers ought to use the surplus on school finance — she listed some suggestions she says would raise $7.7 billion every two years. But she said they don't need a new business tax like the one the governor is proposing. She'd use some of the surplus, but would increase the amount going into the state's rainy day fund, to $2.4 billion. Using all of the surplus, she said, would set the table for a "massive tax increase" later.

She agreed with Perry and others that lowering local school property taxes would keep the courts at bay in the short term, but still wants a $4,000 across-the-board pay raise for teachers as part of a $1.7 billion annual increase in spending she would add to the state's education budget.

She continued her assault — begun last week — on Perry's business tax. She says it runs up a deficit, since it relies on the budget surplus in the first year and then correct that imbalance in later years when there might or might not be extra money (Sharp contends growth in the state economy will fill the gap).

Give at the Office? The Track?

The comptroller and the governor disagree on how to pay for cuts in local school property taxes in the years to come. He'd do it with a new business tax, an increase in the tax on smokes, and by using some of the state surplus. Comptroller Carole Keeton Strayhorn would do it with efficient government, legalized slot machines, smoke taxes and revisions to the existing business tax. Neither included any changes to state sales taxes in their plans.

His has been out for weeks; Strayhorn's list looks like this:

• Strayhorn said budgeteers could get $3 billion if they'd reinstate the e-Texas program (it was previously called the Texas Performance Review). That's like leaving a baby on the doorstep for the next comptroller. Strayhorn leaves office at the end of this year either to become governor or a retiree and her successor would be in the position of actually coming up with those dollars. It's possible, but it's not exactly ready to be counted.

• She reiterated her call for video lottery terminals at racetracks, where "voters have already approved gambling," saying that would raise at least $2 billion every two years.

• Perry and Strayhorn agree on a $1-per-pack increase in cigarette taxes, but not on how to use the money. He'd apply it to tax relief; she wants the $1.4 billion to go to the health programs, including the Children's Health Insurance Program, or CHIP.

• Instead of a new business tax, Strayhorn wants to keep the current corporate franchise tax, closing loopholes that allow businesses to avoid $1 billion in taxes every two years (several independent number-crunchers have said her numbers are conservative, and that closing the so-called Delaware Sub and the Geoffrey's loopholes would bring in much more than that).

• She included a swipe at Perry, saying the state ought to save the $300 million now going into two funds used by the governor to spur economic development.

Dewhurst TV

Lt. Gov. David Dewhurst launched a television ad campaign on school finance, saying the state should use part of the surplus, ought to lower local school property taxes, give teachers a raise, install some education reforms. He says the state should close the loopholes in its business taxes. Gov. Perry's plan doesn't rate a mention.

You can watch the ad at this link — www.texasweekly.com/documents/Join.wmv — or dig it out of our Files section if you want to download a copy.

Aides said the ads will run for at least two weeks, and that they started in three markets: Austin, Dallas-Fort Worth, and Houston. San Antonio is apparently going to be added later. The ads are running on broadcast and cable channels, and aren't targeted just at Republicans; Dewhurst bought CNN time as well as Fox News.

If you take apart the content, Dewhurst doesn't sound far off the plans that Comptroller Carole Keeton Strayhorn laid out earlier in the week. Like her, he wants a pay raise for teachers. Both would use part of the budget surplus. Both want to close loopholes in the existing business tax. Both want property tax relief. That said, he's putting more emphasis on education reforms. And he's not on the gambling bandwagon she's driving.

What do the ads accomplish? Hard to say. But they put Dewhurst in the public eye pushing education and asking for a pay raise for teachers, which could position him to take some credit — if there's credit to be had — when something finally passes. And if the public feels prompted to phone in any requests of legislators, the ads could drive that agenda, possibly moving education reform or teacher pay raises higher on the list of legislative priorities.

Buffalo Nickel

Lawmakers, faced with a record state surplus and a governor-backed business tax, also a record, are now thinking about borrowing money to pay for state operations.

That would slow down the drop in cigarette sales and let the state enjoy the taxes a little longer. It would also help the tobacco companies who would still lose customers to higher prices, but more slowly than if the tax is raised by $1 per pack.

Moments like this are why we have never turned our pens to fiction.

The governor's tax reformers didn't buy the idea, but the House Ways & Means Committee approved a plan to cut a proposed cigarette tax in half, to 50 cents, and then to add on a nickel. The 50 cents would go to property tax relief. That nickel would be used to pay off new bonds, and the money borrowed through those bonds would be used for property tax relief.

The rest of what started as a $1 tax would be phased in, 25 cents at a time, until the additional tax on smokes reached $1.05. The Coalition for Tobacco-free Kids, which has been lobbying for the $1 increase, says a phase-in would kill 9,800 people — the number they figured would be saved from premature death if the prices went up more quickly and that many people quit. By their math, the higher prices would keep 20,500 kids from taking up smoking.

Tax Shorts

• The Texas Medical Association, which was initially chilly about the tax plan, endorsed it after the deal for doctors was sweetened. Doctors will be allowed to deduct an extra 50 cents for every dollar in Medicaid and Children's Health Insurance Program services they provide, on the theory that they do that amount of charity medicine without getting paid.

• After thinking it over for a few days, the leaders of a group promoting the Perry-Sharp tax bill say they'll report the names of contributors to their group. Texans for Taxpayer Relief doesn't have to do that reporting, under the law, but say they'll do it anyhow. They hope to raise as much as $6 million to run television, radio and print ads pushing the new business tax now under legislative consideration. Perry's three gubernatorial opponents question whether the group is promoting his candidacy — not his tax bill.

• Fun Facts: Texas has 22,490,022 people, according to the Census Bureau's 2004 estimate. And the comptroller says the budget surplus — the amount of officially uncommitted money that will be available during the current two-year budget cycle — is $8.2 billion. That's $361.64 for every human in the state.

• Whatever you call that tax cooked up by Perry's tax reformers, it's constitutional, according to the attorney general's staff. In a letter to Perry's chief of staff, First Assistant Attorney General Barry McBee (Perry's former chief of staff), says the proposed tax isn't an income tax. In particular, he writes, it's not a tax on the income of the people in partnerships. Instead, it's a tax on the partnership, which is legal. Taxing the individuals wouldn't be copacetic under what's known as the Bullock Amendment to the state constitution.

Early Exit

Lame duck state Sen. Frank Madla, D-San Antonio, won't serve out his full term, but will be around for school finance. In a letter to Gov. Rick Perry, Madla said he intends to resign May 31, the day before the courts say the school finance knot must be untangled. Madla, who was seeking another term in the Legislature, lost the Democratic primary to Rep. Carlos Uresti, another San Antonio Democrat. Leaving seven months early probably won't cost his district a vote on school finance, and frees Madla to start collecting a legislative pension and starting something new.

From his resignation letter, dated on the opening day of the special session: "It has been my greatest honor and pleasure to serve the citizens of this great state as both a member of the House of Representatives and a state senator, and making the decision to depart at this time was not easy. However, after many hours of thoughtful consideration and reflection, I ultimately decided that after 33 years of prioritizing public service, it was time to put my family first."

Roll Call

Tax bills and education reforms can induce ulcers in legislators who will soon face voters. But some of the people in Austin for the special session are at their last rodeo and could — theoretically, anyway — relax.

Five state senators and 19 members of the Texas House are serving now but won't be back for more of this fun come January, either because they gave up their seats or lost them. (Three House seats already turned over in special elections to replace two Republicans who resigned and joined the lobby — Reps. Ray Allen of Grand Prairie and Todd Baxter of Austin — and one Democrat who died near the end of last year's regular session, Joe Moreno of Houston.) And some number of current lawmakers don't know they're almost finished: The November elections are still ahead. The first votes taken by their successors — in order, Republican Kirk England, Democrat Donna Howard, and Democrat Ana Hernandez — will be on tax bills.

The senators in office now but already studying political retirement include three who didn't seek office, one who lost a primary and one who's reaching for higher office. They are Ken Armbrister, D-Victoria, SD-18; Gonzalo Barrientos, D-Austin, SD-14; and Jon Lindsay, R-Houston, SD-7, who all retired. Frank Madla, D-San Antonio, SD-19, lost his reelection bid in the primary, and Todd Staples, R-Palestine, SD-3, won the GOP's nomination to be Texas Agriculture Commissioner.

State representatives who find themselves in that situation include six who didn't seek reelection: Mary Denny, R-Aubrey, HD-63; Bob Griggs, R-North Richland Hills, HD-91; Bob Hunter, R-Abilene, HD-71; Suzanna Gratia Hupp, R-Lampasas, HD-54; Pete Laney, D-Hale Center, HD-85; and Jim Solis, D-Harlingen, HD-38.

Eleven state reps lost primaries, either for reelection or for higher offices they were seeking: Roy Blake Jr., R-Nacogdoches, HD-9; Scott Campbell, R-San Angelo, HD-72; Carter Casteel, R-New Braunfels, HD-73; Al Edwards, D-Houston, HD-146; Kent Grusendorf, R-Arlington, HD-94; Peggy Hamric, R-Houston, HD-126, lost Senate primary; Ruben Hope Jr., R-Conroe, HD-16, lost district judge primary; Jesse Jones, D-Dallas, HD-110; Terry Keel, R-Austin, HD-47, lost Texas Court of Criminal Appeals primary; Joe Nixon, R-Houston, HD-133, lost Senate primary; and Elvira Reyna, R-Mesquite, HD-101.

Carlos Uresti, D-San Antonio, HD-118, beat Madla in the Democratic primary for Senate. And Glenn Hegar, R-Katy, won the GOP nomination to succeed Armbrister (since the Democrat dropped out after winning the primary, Hegar can safely measure the curtains for his new Senate office). Those are the only guys on the list with a chance of returning to the Legislature — albeit in another chamber — unless the unexpected happens in November.

DeLay Wins a Round

U.S. Rep. Tom DeLay and two others won't face charges that they conspired to violate state election laws governing political contributions, but other charges against the three men will proceed. The state's Third Court of Appeals said the state Legislature made conspiracy an offense in 2003, but that was after DeLay, John Colyandro and, James Ellis put together the operation that won a Republican majority in the Texas Legislature in 2002.

The 3rd Court went along with state District Judge Pat Priest, who'd tossed the conspiracy charge. Travis County District Attorney Ronnie Earle appealed that, and his appeal resulted in this new ruling. He's still got the option to appeal to a higher court, and said in a statement after the ruling that he's thinking about it.

Prosecutors said conspiracy was already against the law in 2002 and that all the Lege did the next year was make the law more clear. The appeals judges seemed open to that argument, but said in the ruling that they're bound to follow a higher court precedent. They even said, more or less, that they disagreed with the precedent, but they followed it.

That sends the case back to Priest (unless Earle decides to ask the Texas Court of Criminal Appeals for another shot). In an email to reporters covering the case, he said Earle has 30 days to make that decision and that he himself will be on vacation in Europe in June ("there are some benefits to being semi-retired," he wrote), so the earliest he'll be back on the case is probably around July 1.

Political People and Their Moves

Scott McClellan, spokesman for President George W. Bush and son of state Comptroller Carole Keeton Strayhorn, is leaving his post behind the podium in the White House press room after two years and nine months as the nation's most prominent tackling dummy. He didn't announce his next step, but he's run statewide campaigns in Texas for his mom in the past.

Sworn in: Republicans Valerie Corte and Cheri Isett, the brides, respectively, of Reps. Frank Corte of San Antonio and Carl Isett of Lubbock. Both legislators are military reservists called to duty in the Middle East. And both appointed their wives to fill in during the special session.

Michael Schneider Jr. won the GOP primary against Beverly Malazzo, but he won't have to wait until the end of the year to replace state District Judge Kent Ellis. Ellis quit early, and Gov. Rick Perry appointed Schneider to fill the spot on the 315th District Court. A few years earlier, Perry appointed Michael Schneider Sr., now a federal judge, to the Texas Supreme Court.

The governor appointed Robert "Bobby" Bland IV of Odessa to be Ector County's District Attorney until the November elections. He's a former assistant DA there, now in private practice.

Gov. Perry appointed Lana Edwards of Hunt, Mike Boyd McKenzie of Kerrville and Karol Schreiner of Hunt to the Upper Guadalupe River Authority. Edwards runs a bed & breakfast; McKenzie is retired; and Schreiner owns a ranch and serves on the Divide ISD.

Deaths: Billy Goldberg, former head of the Texas Democratic Party, a banker, attorney, and real estate investor. He was 90.

Quotes of the Week

Maine campaign consultant Roy Lenardson, quoted in the San Antonio Express-News on public financing for campaigns: "Taxpayer dollars are being used to buy balloons, bumper stickers and tulips... It's cold here. People can't heat their homes. And we're handing out tulips."

Lt. Gov. David Dewhurst, when his gavel fell apart on Day One: "I hope that's not a reflection on the session."

Former House Speaker Pete Laney, quoted in The Dallas Morning News on reports that allies to the governor are trying to raise $6 million to promote his tax plan: "If you have to spend $6 million to sell it, it means that this is not going to be easy."

Republican political consultant Royal Masset, in The Dallas Morning News on the tension of other state officials waiting to see what Comptroller Carole Keeton Strayhorn would say about the state's accounts: "They're like monkeys that can't do anything in the shock experiment. All they can do is wait for the shocks and hope they don't hurt too much."

House Ways & Means Chairman Jim Keffer, R-Eastland, in the Austin American-Statesman after Strayhorn said Gov. Rick Perry's tax proposal won't work: "If people are looking for a reason not to be positive, that's a dang good reason right there."

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Texas Weekly: Volume 22, Issue 42, 24 April 2006. Ross Ramsey, Editor. Copyright 2006 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.

Lt. Gov. David Dewhurst, asked by Sen. Royce West, D-Dallas, wouldn't say whether he thinks -- officially -- that HB 3 is an omnibus tax bill.It's a fielder's choice call, as we've said: He's probably got enough arguing room there to rule either way. West directed his question to Sen. Steve Ogden, R-Bryan, the head of the Senate Finance Committee, for his opinion. Ogden said he didn't think so, but he's not the guy who'll make the final call. Analyze it this way: If the Senate decides to cut its own path on the tax bill, separate from the House and the governor, they'll call that an omnibus bill and replace it with their own preferences. If they're sticking to the play called by Gov. Rick Perry, they'll keep the bill pretty close to what it is now.

U.S. Rep. Tom DeLay and two others won't face charges that they conspired to violate state election laws governing political contributions, but other charges against the three men will proceed.The state's Third Court of Appeals said the state Legislature made conspiracy an offense in 2003, but that was after DeLay, John Colyandro and, James Ellis put together the operation that won a Republican majority in the Texas Legislature in 2002. The 3rd Court went along with state District Judge Pat Priest, who'd tossed the conspiracy charge. Travis County District Attorney Ronnie Earle appealed that, and his appeal resulted in this new ruling. He's still got the option to appeal to a higher court, and said in a statement after the ruling that he's thinking about it. Prosecutors said conspiracy was already against the law in 2002 and that all the Lege did the next year was make the law more clear. The appeals judges seemed open to that argument, but said in the ruling that they're bound to follow a higher court precedent. They even said, more or less, that they disagreed with the precedent, but they followed it. That sends the case back to Priest (unless Earle decides to ask the Texas Court of Criminal Appeals for another shot). In an email to reporters covering the case, he said Earle has 30 days to make that decision and that he himself will be on vacation in Europe in June ("there are some benefits to being semi-retired," he wrote), so the earliest he'll be back on the case is probably around July 1.

The first fight in the tax debate will be over the rules of the fight. The House Calendars Committee has asked members about a number of possibilities that would limit the debate on school finance. They hadn't voted on one when we went to press, but the Pink Building was buzzing with plots and counterplots.The polling sheet used to test support for various rules — and tax plans — had several proposed limits: • Forcing tax amendments to be revenue neutral, an idea stolen from budget debates, where amendments that increase spending without cutting a like or greater amount are often prohibited. • One that would require all amendments to stick to the property taxes line. Amendments spending money on anything else, in other words, would be disqualified. Democrats, who are pushing a package of education measures including teacher pay raises, health insurance and funding for textbooks, are miffed about the possible restrictions, but Calendar rules can't take effect without approval from the full House. Expect that vote to get spun as the pro- or anti-education vote, particularly if the House approves a limiting rule. This isn't just a Democrats' thing — though that's who's pushing in the House. Lt. Gov. David Dewhurst is running TV spots promoting a bunch of stuff — teacher pay raises, and health insurance, and textbooks, for instance — that wouldn't be allowed under the proposed House rules. You can argue that same point the other way: Gov. Rick Perry left everything but property taxes and school finance out of the official agenda for the Legislature, and adding them to the bills would flout the Guv's instructions. Members were also polled (and we saw the questions but not the answers) on their support for: • 17 cents in school property tax cuts funded with the budget surplus. • Prevention of "appraisal tax creep" — when property taxes increase not because rates went up but because property values rose. • Dedicating all new revenues — presumably from the new tax bill — to property tax relief and not to spending on education or anything else. • The three major taxes the governor wants to create or increase: A levy on adjusted gross receipts of companies, an end to the "liars affidavit" that lets car buyers and sellers to understate sales prices, and increases in cigarette taxes. A spokesman for House Speaker Tom Craddick, asked about the proposed calendar rules, said they hadn't been voted on yet, and said his office didn't know what the committee would be considering or what had been proposed. He deferred calls to Calendars Committee Chairman Beverly Woolley, R-Houston, who wasn't immediately available.

Lawmakers, faced with a record state surplus and a governor-backed business tax, also a record, are now thinking about borrowing money to pay for state operations.That would slow down the drop in cigarette sales and let the state enjoy the taxes a little longer. It would also help the tobacco companies who would still lose customers to higher prices, but more slowly than if the tax is raised by $1 per pack. Moments like this are why we have never turned our pens to fiction. The governor's tax reformers didn't buy the idea, but the House Ways & Means Committee approved a plan to cut a proposed cigarette tax in half, to 50 cents, and then to add on a nickel. The 50 cents would go to property tax relief. That nickel would be used to pay off new bonds, and the money borrowed through those bonds would be used for property tax relief. The rest of what started as a $1 tax would be phased in, 25 cents at a time, until the additional tax on smokes reached $1.05. The Coalition for Tobacco-free Kids, which has been lobbying for the $1 increase, says a phase-in would kill 9,800 people -- the number they figured would be saved from premature death if the prices went up more quickly and that many people quit. By their math, the higher prices would keep 20,500 kids from taking up smoking.

So here's a question: Does the huge budget surplus make it harder or easier to pass the governor's proposed tax bill?Comptroller Carole Keeton Strayhorn added $3.9 billion to the $4.3 billion that was already in the surplus -- and those numbers don't include about $1 billion that's already in the state's Rainy Day Fund. Legislators generally don't approve new taxes except in times of fiscal crisis. If you're inclined to stick with historical examples, you'll probably conclude the flood of cash will wash away chances for a new business tax that would be used to offset cuts in local school property taxes. That's getting a boost from conservatives and conservative groups outside the capitol who view the surplus as money that ought to be refunded to taxpayers. But $8.2 billion is enough money -- if you're of another mindset -- to bribe lawmakers to do almost anything (we're using the word bribe to mean an inducement that's not of interest to prosecutors). It's enough money to pay for a substantial teacher pay raise, for instance. Increasing teacher pay is a big deal for a lot of lawmakers from both parties, including some Democrats who aren't inclined to help Gov. Rick Perry and the Republicans do a finance deal that doesn't include new money for schools.

The tax apple has (at least) two big worms in it, one named Robin Hood and one that could keep the local school taxes from being cut to $1. As it stands, the tax package in the House lowers school taxes without touching school finance formulas and without leveling out what schools can raise in local "enrichment" taxes.If taxes are lowered to $1.33 and districts are allowed to raise rates a bit to get some local projects going, the amount of money raised with a one-cent tax increase varies widely from district to district, a situation that sets off alarms with poorer schools, education groups, and others. The Center for Public Policy Priorities did an analysis: The average district gets $27.14 per student for every penny increase in taxes. A really wealthy district -- Highland Park ISD -- can raise $127 per student with a 1-cent tax increase. They get more for their schools and don't have to "recapture" any of that money to share with poorer districts, leveling things out. The rich districts like it, but it's a deal-breaker for everybody else. Next is a bug in the way the legislation dedicates revenue from new taxes to property tax relief. It puts it in a separate account, but doesn't add in any other funds. But the new taxes don't cover all of the costs of the lower property taxes. In the first year, the Perry-Sharp plan requires $1.4 billion in money from the surplus. Strayhorn contends that gap grows every year; Sharp says economic growth will cover it. But the school finance package doesn't force legislators to close the gap if it exists. That $1.4 billion could go missing in the first round, meaning what started as a $1 target tax rate could end up at $1.10 or $1.15. Nothing in the bill forces lawmakers to contribute more than is raised by the new taxes.

Next week's debate on using the surplus for property tax relief shouldn't take long -- the Texas House voted to bar any amendments that would raise or lower the amount of relief or exceed a certain dollar amount that could be applied.That means the debate on the first bill up for consideration will be confined to two issues: Whether members want to use $2.4 billion from the surplus to cut local school property taxes by 17 cents, and whether wealthy districts should share locally raised money for schools with poorer districts. The House voted 79-62 to limit the debate. Proponents said the narrow subject area fits the governor's agenda for the session. Opponents said the limits will prevent anyone from increasing the amount of property tax relief or considering any other issues, like teacher pay raises. That first issue is well within Gov. Rick Perry's "call" for the legislative session; the second is outside, and Perry has said he'll consider adding it once property taxes are lowered. As it's written, the legislation lets the richer districts raise "local enrichment" funds without having to send any of it to the state for distribution to poorer districts. On average, school districts in the state bring in $27.14 per student for every one penny increase in local tax rates. In Highland Park -- a rich district that has become the poster child of the arguments about Robin Hood funding -- that one-cent increase raises $127 per student. That imbalance has been a subject of the debates on school finance for years, and now it'll likely be the focal point of the argument on the first tax bill. Two other Calendar rules were also adopted: The House easily approved a less restrictive rule on the Perry-Sharp tax bill; it bars amendments that haven't been priced out by the Legislative Budget Board. A third rule, tied to what's been called the "no money for anything else" bill, was close. The rule would bar any amendments dedicating revenue from the various tax bills to anything but property tax relief; thus, the name. The House initially approved the rule 73-70. The folks on the losing side asked for a verification and after each members was polled by name, the vote was 75-67.

Got any idea how many cigarettes it takes to raise $700 million a year in new taxes?It's easy to figure, since the big number is the comptroller's estimate of what a $1 per pack increase would bring in. There are 20 cigarettes in a pack, so you're talking a nickel per smoke. Divide $700 million by five cents: 14 billion cigarettes. Per year. That's just a fraction more than 26,636 cigarettes per minute every minute of every day of the year. If each of the 22,490,022 million people in the state chipped in, we'd each be on the line for 622 cigarettes per year, or 31 packs. Okay, here's another goofy number. If you got the Legislature to go out and lay the cigarettes end to end, and if we use the standard 80-millimeter smoke (we'll ignore 100s for this silliness), the number of cigarettes smoked in Texas every year is enough to go around the world at the equator almost 28 times (27.946, if you're doing the math). And the state would get a nickel for about every three inches of that long trip.

Two numbers disappeared somewhere between the proposal of the Texas Tax Reform Commission and the bills passed by the House.One is $1.30, which was proposed as the new cap for local school property taxes after rate reductions are in effect. It's no longer in any of the bills that were passed this week by the House. The other is 33 cents -- the amount those local taxes were supposed to drop in year two of the Perry-Sharp proposal. The TTRC proposal used a combination of new taxes and state surpluses to lower local property taxes by 17 cents one year and 33 cents the next, bringing districts to a maintenance and operations tax rate of $1. The districts would be allowed to raise taxes themselves, but to constrain that, the commission would have lowered the state cap on school taxes to $1.30 from $1.50. Most legislators we've talked to think that stuff is still in the package. It's not. If you look at the whole bundle of bills, the House voted to use surplus state funds to lower school property taxes in year one by as much as 17 cents (it's actually a percentage now -- 11.3 percent -- and the drop depends on each district's current tax rate). A district with a $1.50 tax rate now would drop rates to $1.33. One with a rate of, say, 1.20 right now, would drop rates to $1.06. Most districts are within spitting distance of $1.50. They voted to create a lockbox: All the money raised by these new state taxes would go into the box, and the money in the box could only be used for local property tax relief. Lawmakers didn't obligate themselves to cut the local property tax rate to $1, and they didn't promise on paper to supplement the tax proceeds with general revenue if more money is needed to hit the property tax targets. No second-year cut is specified; the amount would be set by the amount of taxes coming in. If it's greater than expected, rates would be lowered more; less than expected state revenues would lead to higher than promised school taxes.

House-approved legislation that appropriates $2.4 billion to buy down local property tax rates is broad enough to accommodate education reforms; watch for the Senate to plug in the reform bill that's been under construction in the upper chamber.HB 1 was narrow enough, originally, to hold the surplus-funded tax buy-down and little else. But the House added a section creating Education Research Centers that is more familiar to the ears of education wonks than to those of budgeteers. A snippet: "A center shall conduct research for the benefit of education in this state, including research relating to the impact of state and federal education programs, the performance of educator preparation programs, public school finance, and the best practices of school districts with regard to classroom instruction, bilingual education programs, special language programs, and business practices." The Senate and the House have been working behind the scenes to compile items that were on last years education reform lists that didn't also provoke the chambers to skirmish. Those things aren't in the governor's official agenda for the session, but Gov. Rick Perry has said he'll add education reform to the list if the school finance lawsuit has been addressed and if there's agreement on the reforms. Now the Senate has a vehicle for those goodies, if the House and the Guv are willing to go along.

And then there's the question of what was added in HB 3 -- the biggest of the tax bills. You can argue -- and we've heard some of the amateur parliamentarians do it -- that the House added enough stuff to the new business tax bill to make it an "omnibus" tax bill. If that's right, the Senate can do any tax work it pleases, from sales to VATs to BATs to income to you-pick-your-favorite.A tax bill with only one tax in it can be amended, but only with provisions related to that one tax. You can't put oil taxes in a sales tax bill, for instance. A tax bill with more taxes -- usually, that means at least three different levies, but it can mean only two -- is considered an omnibus bill that can be amended to include anything related to any sort of taxes. The House put the tax bills together so they'd only have one tax each -- smokes here, used cars there, and business franchise taxes in the big bill. But when they were amending the bidness bill, they stuck on amendments relating to other sections of the tax code. Suppose you were mischievous and you wanted to go into areas of taxation where the House did not go. You could -- hypothetically, anyway -- decide the House's work allows major changes in direction. Some senators have talked about bagging the Perry-Sharp bill and raising the money by extending sales taxes to services, like those provided by lawyers and architects and other professionals, for instance. And Lt. Gov. David Dewhurst has, in the past, been partial to variants of business activity taxes. Stay tuned.

Senate scheduled committee hearings for three of the four tax bills passed by the House for Friday, Saturday and Sunday, and it's possible they'll have those ready for floor debate by the middle of next week. HB 3 -- the big bill that includes the Perry-Sharp plan -- hasn't been set for committee hearings. Final House versions aren't available yet, apparently.• The House agreed with Rep. Rafael Anchia, D-Dallas, and added an amendment that prevents businesses from deducting the salaries and wages of illegal immigrants on their payrolls. • They also adopted one from Joaquin Castro, D-San Antonio, that would wipe out deductions for workers who are on Medicaid. That's a shot at Wal-Mart and other companies that have wages low enough to allow workers to qualify for poverty programs. • The minimum for a "meaningful" pay raise for educators, according to the Texas Federation of Teachers, is $3,000 a year and full restoration of the health care stipend. The union has some sympathetic lawmakers on both sides of the partisan canyon, but the amounts, like the mileage in your car, may vary according to who is at the wheel. The range in most conversations is $2,000 to $4,000 per teacher per year. And the back-of-the-envelope cost is that every $1,000 increase in pay costs the state about $300 million a year.

An old fight over smokeless tobacco taxes might be the biggest lobby deal going right now, even with big ol' tax and school and teacher issues in front of lawmakers. A proposed change in the levy on snuff has become a lobby full-employment act, and the topic of a disproportionate part of the conversation over school taxes.The companies that dominate the more expensive end of the smokeless business want to switch the existing price-based tobacco tax with one based on weight. Brands on the high-priced end of the deal would pay more taxes under the proposal, but the brands on the lower end of the market would see a much bigger hike in their taxes and, because of that, in their price. The net effect would be to narrow the price gap between cheap and premium snuffs. For the state, the net effect would be an additional $32 million a year in the treasury. The tax on snuff accounts for about $1.06 on premium brands, and is in the 25-cent to 30-cent range on cheaper brands. Basing the tax on weight -- a $1 per ounce tax is what US Tobacco and others suggest -- would move everybody to a $1.20 tax (sales taxes are added to the final price at the checkout stand). They couldn't get their version into the House's tobacco tax bill, but they're hopeful the Senate will do it for them. This issue flared in 2001, when Comptroller Carole Keeton Strayhorn was pushing it. Legislators then took a pass on it, and Strayhorn shot back by lowering her estimate of state revenue by $18 million -- the amount it would have raised. She hasn't jumped into the legislative fight this time, but said then that it would be easier for the tax agency to administer than the price-based tax. One argument when this came up five years ago -- and which still has some currency -- was that a price-based tax would rise with prices. That makes for nice politics: Lawmakers would get increased revenues into the treasury without having to vote on tax rates. A tax based on weight wouldn't act that way. The counterpoint: Low taxes on cheap brands encourage customers to avoid the high-priced ones, which put more money in the state's purse. A weight-based tax would kill that advantage.

The House can adopt calendar rules to limit debate. The Senate doesn't. But they've got their own tricks:To amend a tax bill while the full Senate is debating it, a senator has to have brought up the amendment when the bill was still in committee. What you'll see when these bills hit the floor, in other words, you'll have already seen in committee. Sens. Eliot Shapleigh, D-El Paso, and Royce West, D-Dallas, prodded Lt. Gov. David Dewhurst for some pre-interpretation on that rule, with this result: Dewhurst says the rule doesn't apply to two of the bills passed by the House. HB 1, which uses surplus money to lower local property taxes (and which is the likely vehicle for changes in education regs, school teacher raises, and such) isn't a tax bill, he says. Neither, he says, is HB 2, which sets up the lockbox for new taxes and forces those funds into property tax relief. It doesn't raise any taxes itself, and the rule won't apply to it. And that means anybody with a surprise can hold it till the bills are in front of the whole Senate.

If the Senate Finance Committee can make it to Monday or Tuesday of next week with four or five of the school finance components intact, there's a good chance Texans will see a new business tax, a cut in school property taxes, teacher pay raises and a bag full of other legislative wonders. But it's gonna be a long weekend.If the upper chamber makes big changes in the business tax bill, in school "reforms," in legislation restricting the use of new tax money to property tax relief, for instance, people in the Pink Building won't be so optimistic next week. We're not seers by any stretch, but lawmakers have been plotting, and some of the possible plays are visible. The Senate will almost certainly add some or all of Sen. Florence Shapiro's SB 1 into HB 1, where there's a nice slot for it. Her bill includes a mess of things, including a teacher pay raise and restoration of the $1,000 health care stipend for educators that was revoked and then half-replaced by earlier legislators. There's been talk of passing HB 3 as is -- that's the big tax bill -- and sending it straight to Gov. Rick Perry without shooting it back to the House. And there's been talk -- probably less reliable but still out there -- of gutting it and replacing this business tax with something else. That scenario sets up a long siege; the first might be the way to a quick finish. HB 2 -- a must-have for some Republicans and a must-not-have for some Democrats -- could get passed or ignored altogether, depending on which war-gamer you're hearing. It was created to force new tax money into tax relief and provides cover for Republicans who swore to their voters they hate, hate, hate taxes. The GOP is in charge and that's why it's gone this far. But Democrats want to use some of the new money for education and HB 2 forecloses the possibility. Leave it out of the package, and both groups would be a little less certain; lawmakers could direct all of the new money to tax relief for now and decide later whether to use the money for tax cuts or whatever else. It's not what he asked for, exactly, but Perry wouldn't want to veto his own tax bill, the reasoning goes, just because the lockbox didn't pass.

Texans for Taxpayer Relief -- the organization promoting Gov. Rick Perry's tax plan, has its first $220,000 and it's going on the radio in Houston.The group was formed under federal laws that don't require disclosure of who's giving or how much (unless they're doing something where Texas laws require reporting), but they say these groups have given these amounts so far: Maxxam, $50,000; Texas Motor Transportation Association, $50,000; Texas Apartment Association, $30,000; Texas Beer Alliance, $30,000; Texas Association of Builders, $25,000; Texas Credit Union League, $25,000; and the Texas Restaurant Association, $10,000. They list more backers on their website -- www.taxpayerrelief.com -- under "Supporters." The groups listed above are apparently the only ones that have contributed to the campaign. The ads say it's time for "strong conservative leadership" and go on to say taxes on the average Houston home would drop $2,000 over three years under the proposal. * * * * * Audio of the first spot Here's the text of the first spot: "Female: With skyrocketing property taxes and an unconstitutional school funding system, we need strong, conservative leadership now. Fortunately, the legislature is considering the Texas Tax Commission's plan to cut school property taxes 33 percent. It will make home ownership more affordable and fix the school funding system. "Male: The plan closes corporate loopholes and cuts property taxes $15 billion dollars. The average Houston homeowner will save more than $2,000 over the next three years. An economic advisor to former President Ronald Reagan says this tax cut will spark greater economic growth. That's why the Greater Houston Partnership and more than 50 business and trade associations have endorsed it "Female: Some legislators favor a plan for smaller, temporary tax relief that will cause future budget deficits. We deserve real, long-lasting tax relief. "Male: Tell your legislator to vote "yes" for record taxpayer relief. To vote yes for a stronger, constitutional finance system for Texas schools. "Female: Legislative advertising paid for by Rolando Pablos, president, Texans for Taxpayer Relief, San Antonio, Texas" * * * * * Audio of the second spot And text of the second commercial: "Male: With skyrocketing property taxes and an unconstitutional school funding system, we need strong, conservative leadership now. Fortunately, the legislature is considering the Texas Tax Commission's plan to cut school property taxes 33 percent, make home ownership more affordable and fix the school funding system. "Female: The plan closes corporate loopholes and cuts property taxes $15 billion dollars. The average Houston homeowner will save more than $2,000 over the next three years. That's why the Greater Houston Partnership and more than 50 business and trade associations have endorsed it. "Male: Some legislators favor a plan for smaller, temporary tax relief. This Band-Aid, get-outta-Dodge approach will create a large budget deficit and higher taxes in the future. We deserve real, long-lasting tax relief. "Female: Tell your legislator to vote "yes" for record taxpayer relief. To vote yes for a stronger, constitutional finance system for Texas schools. "Male: Legislative advertising paid for by Rolando Pablos. president, Texans for Taxpayer Relief, San Antonio, Texas."

Texas bloggers this week are consumed, like the rest of us, with the special session on school finance, the ballooning state surplus, and what action the legislature will take before the June 1 deadline. The start of session, the extreme heat, the rolling blackouts, and the breakage of Lt. Governor David Dewhurst's gavel left several bloggers wondering about the omens. Let's lead with cash:The Surplus When the budget surplus jumped to $8.2 billion on opening day, Greg's Opinion said, "Comptroller (and Gubernatorial candidate) Carole Cougar Mellencamp Strayhorn has just located nearly $6 billion in new dough for the budget. Of course, she's also pushing video lottery terminals like a Lake Charles slot jockey. I'm just curious when someone other than Scott Hochberg is going to start talking about dedicating some of this "new" money toward undoing many of the horrible cuts made in the Wohlgemuth era." Rawhide, a regular contributor on PinkDome, got out his crystal ball to make this prediction: "Look for support to grow in spending the surplus, then having Strayhorn spin it as a loss for Perry come November... Finally, look for a calendar by the end of the week. Last we heard the tax bill will be in 5 parts... meaning there will be 5 bills that die in flames before the Lege blows the surplus and gets out of town." Comptroller/Independent Candidate for Governor Carole Keeton Strayhorn is a popular target of bloggers from the left and the right. Conservative writer Right of Texas said, "Do you remember the teacher from the Snoopy cartoon? The teacher whose voice would always be 'wamp, wamp, wamp' and no clear sound would come out? That's beginning to be all I hear out of the Strayhorn campaign." * * * * * Madla's Retirement "As of May 31, you won't have [Sen. Frank Madla, D-San Antonio] to kick around anymore," PinkDome said. "Well, you probably will, but he'll be a lobbyist then and it's not that much fun to kick a lobbyist, they don't fight back." Lucius Cincinnatus of The Jeffersonian is also betting Madla will become a lobbyist. "It's amazing what one bad election cycle can do to a guy. Here he was going around SD-19 asking for another four-year term in office and now just weeks after his defeat he's realized it's a good time to put his family first. Yeah, that's sincere... When Madla says he hasn't decided what he's doing after he resigns he means he doesn't know which, and how many, lobbying contracts he's going to accept." Charles Kuffner at Off the Kuff: "[Madla's resignation is] actually a fairly decent gesture in and of itself, but what happens if the school finance mess isn't resolved by then? Because, see, as things stand now, Governor Perry has no plans to call for a special election to replace Madla... What if... there is another special session? Do the people of SD19 go unrepresented? It'd be a little late to call the election by then. Would Madla change his mind and agree to stick around until the job is done? I've got a bad feeling about this." * * * * * Hutchison Goes for Three Several blogs are making a campaign out of U.S. Sen. Kay Bailey Hutchison's 13-year-old promise to limit her career to two six-year terms in office. Annatopia is leading the charge, along with Off the Kuff. Kuffner said, "One-time support for term limits among current (almost exclusively Republican) incumbents is to the Nineties what pot smoking was to the Sixties: everyone who was anyone did it, nobody wants to talk about it now, and when forced to confront it, the accused chuckles nervously, shrugs his or her shoulders, makes vague references to the prevailing culture of the time, and changes the subject as quickly as possible." Should we mention here that the opinions expressed here are not necessarily those of the staff or management of this enterprise? * * * * * Speaker's Race The news last week that State Rep. Senfronia Thompson (D-Houston) is running for Speaker of the House had some bloggers in a tizzy. Off the Kuff said "Well, hot damn. I'll have to make some calls in the morning to see if I can learn more, but I'll venture out on a limb now and suggest that she wouldn't do this unless she thought she had a decent shot at winning. I'll be in the corner, cheering loudly for her." A blogger who's actually done time at the Capitol, Eileen Smith of In The Pink Texas, said, "Now don't get me wrong. I like Senfronia. But she has as much chance of becoming Speaker as I do. Is she better than Craddick? Of course. But it's not about who's better. It's about who's got the better shot, like Republicans Jim Pitts and Charlie Geren." In the same vein, an anonymous poster on PinkDome speculates that Rep. Thompson is fronting an effort to get pledge cards for Rep. Jim Pitts, R-Waxahachie. One blogger who actually has a pledge card -- Rep. Aaron Pena, D-Edinburg, who writes A Capitol Blog -- hasn't spoken up on the issue yet. * * * * * Fun & Games Having lawmakers in town gives political junkies easy material. John Cornyn's Box Turtle -- that's the chosen name of a contributor on In The Pink Texas -- predicts the 2008 presidential campaign will pit Texan vs. Texan in a heated battle to be the vice presidential nominee on the GOP ticket. Mr. Turtle: "... Perry's been attending some out of state events in order to boost his conservative credentials and allow people outside of Texas to admire his hair... This is creating some behind the scenes tension with backers of Kay Bailey Hutchison such as Breck Shampoo. They say she's a more viable VP candidate in 2008, and that her hair can hold its own against Perry's." From PinkDome, "... we know the staff is super-pumped you all are back in town. Those endless days of surfing porn on the Capitol computers and doing the word jumble can numb the mind of even the most dedicated Lege staffer."

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OUT THERE is something new for Texas Weekly: Robyn Hadley will cherry-pick the state's political blogs each week, looking for news, info, gossip, and new jokes. Robyn, a veteran of both journalism and the state Capitol, is the owner of Capitol Crowd, a networking site for people who work in and around state government. The opinions she quotes belong to the bloggers, and we're including their links each week so you can hunt them down if you wish. Please send comments, suggestions, gripes or retorts to Robyn at robyn@capitolcrowd.com, or to Texas Weekly's editor, Ross Ramsey, at ramsey@texasweekly.com.

You just have to write this down to believe it: The Republican Texas House voted for the biggest tax bill in state history -- and the biggest property tax cut -- while sitting on the biggest surplus of taxpayer money ever piled up in Texas. It's just unusual, is all.Get out of Dodge? Check. Dedicate new tax money solely to property tax relief? Check. Send the Perry-Sharp tax bill to the Senate? Check. More money from car sales taxes? Check. A higher tax on smokes? Well, four out of five isn't bad. The House started the second week of the session by spending enough of the state surplus to lower local school property taxes by as much as 17 cents, by setting up a mechanism that sends any new state taxes raised during this session to property tax relief. And then they spent hours debating changes to the tax bill proposed by the Texas Tax Reform Commission that was appointed by Gov. Rick Perry and headed by former Comptroller John Sharp. The first 17 cents of a proposed school property tax cut -- funded with $2.3 billion from the state's $8.2 billion surplus -- got out of the Texas House with nary a scratch. Lawmakers changed the bill to keep rich school districts from leaving poor school districts behind -- an amendment by Rep. Charlie Geren, R-Fort Worth -- and then approved the bill 139-5 (the Nopes came from Reps. Lon Burnam, D-Fort Worth; Garnet Coleman, D-Houston; Harold Dutton, D-Houston; Jim Jackson, R-Carrollton; and Pete Laney, D-Hale Center). They approved legislation dedicating the money from any new state taxes levied during the special session to school property tax relief. That was a closer vote: 81-65. That was nearly a party-line vote. Two Democrats -- Joe Deshotel of Beaumont and Patrick Rose of Dripping Springs -- voted for it with most Republicans (Deshotel went back and changed his vote with the clerk, leaving Rose as the lone Democrat voting for the bill). Four Republicans joined most of the Democrats in opposition: Carter Casteel of New Braunfels, Toby Goodman of Arlington, Pat Haggerty of El Paso, and Mike "Tuffy" Hamilton of Mauriceville. The big tax bill -- HB 3 -- was argued for hours and ended up being a net tax increase of $3.445 billion. That's the amount of money the Legislative Budget Board says it would raise after taking into account the repeal of the current corporate franchise tax. The 38 amendments adopted during the House's floor debate cut about $58 million from the original bill, and it's on its way to the Texas Senate for further tinkering. The vote went largely along party lines, but with big exceptions. Of the 80 votes in favor, 10 came from Democrats; of the 69 votes against, 16 came from Republicans. House Speaker Tom Craddick voted for the bill -- he usually doesn't vote -- and only one member was absent. The mother of Rep. Roberto Alonzo, D-Dallas, died before the debate began and he was with his family. The health of the tax bill was in question, particularly after a weekend barrage of criticism from conservatives who wanted the Lege to use the surplus and leave new taxes alone. In rallies, through websites, and in volleys of email, they implored Republican lawmakers to leave taxes alone and to sue the surplus to cut property taxes and mend the constitutional problems in school finance found by the Texas Supreme Court. Democrats didn't like the idea of raising new money for school finance without using any of it for education, and many of them complained about promises that things like teacher pay raises and money for textbooks might be added to the agenda once property tax cuts were adopted. Two small bills provided the anti-climax. Lawmakers voted 77-65 to force buyers and sellers of used cars to use blue-book values instead of filing what are known as "liar's affidavits" setting the taxable sales prices at whatever the signers say they were. Nobody's pointing at anyone in particular, but lawmakers think using the published prices will bring in another $41 million to $56 million in taxes every year. And what started as the least controversial of the tax bills -- a $1 addition to the state's tax on a pack of cigarettes -- drew some arrows because of some committee changes. That legislation got to the floor as a 55-cent increase in taxes, followed by two increases of 25 cents each in later years, and coupled with a bond program that would be paid off by the new taxes. Proponents said the state would have more to spend if it borrowed money through bonds and used the increase in taxes on smoking to pay off the debt. Higher tax increases, they argue, would accelerate the decline of smoking in Texas, cutting into future state revenue. "More people would quit [and] our revenue would drop quicker," said Rep. Peggy Hamric, R-Houston, the bill's sponsor. The House stripped the bonding idea from the bill and reinstated the $1 increase in cigarette taxes, by an overwhelming margin. And then, Rep. Garnet Coleman, D-Houston, called a point of order on the bill and killed it. That's worth about $700 million a year out of the tax relief package -- enough for a $2,000 teacher pay raise, or for 6 to 7 cents in local property tax relief. Fear not: The Ways & Means Committee patched it and repassed it after the House adjourned. It'll be back on the floor, in its original form, later this week. When they were done with all that, a few minutes before midnight, the House gave final approval to each of the four bills that survived the day.

Opponents and supporters of the Texas Tax Reform Commission's plan came out of the woodwork during the first week of the special session. Conservatives are attacking the state's Republican leadership. Adversaries are joining hands. If you're confused about your own leanings in this political mixmaster, you can take the World's Smallest Political Quiz, created by Libertarians, that may tell you where you belong -- left, right, or center field.Day-Long Debate on House Bills Vince Leibowitz at Capitol Annex called the day-long debate a "watershed moment in Texas History." He live-blogged the debate (posted notes and comments to his site) all day and all night and came up with his personal list of Best and Worst Performances. The amendment to HB 3 that would require the Secretary of State to send out notices of tax cuts to taxpayers in October led "John Cornyn's Box Turtle" -- a real person who writes under a funny name on In the Pink Texas -- to say, "House Democrats led by [Rep.] Jim Dunnam tried to change the provision to allow State Comptroller Carole Keeton Fisher Burton Fortensky Strayhorn to send out the mailing. It's so cute when Democrats try to pass stuff. It's like when your 3-year-old kid draws you a picture, and you tell them how pretty it is. You don't know what the hell it's supposed to be, but you just want to encourage them. Rep. [Beverly] Woolley 'quipped that "maybe she [Mrs. Strayhorn] has a little too much to do."' When did Republicans start quipping?" The rest of JCBT's comments are here. * * * * * The Opponents At least two new opposition websites sprung up, Texans for No New Taxes and Big Pile of Money. The Texans for No New Taxes group was also behind a telephone campaign urging people to attend a Monday morning rally at the Capitol called the "Texas Tea Party." Nate Nance of Common Sense was none too impressed. Big Pile of Money is promoting a catchy country and western song you can download. It includes the lyrics "It's not about RepubliCANS or even DemoCANTS, It's all about the folks of Texas getting taxed right through the pants." In what could be the greatest service to every political or civic or charity campaign in Texas, the BPOM website also has a list of e-mail links to all of Texas' major newspapers so people can quickly shoot off a letter to the editor. The Lone Star Times ran a press release from CLOUT (Citizens Lowering Our Unfair Taxes) urging business owners to contact their legislators to oppose the tax plan and showed examples of possible tax implications for different businesses. Several of that blog's readers reported contacting their state representatives, as requested by CLOUT, and said they were treated well by those they talked to at the Capitol. Legislative staff members have my deepest admiration for gracefully answering phones this week. Pink Dome posted direct mail pieces and Red State posted a political consultant's memo that says Democrats and Republicans alike can be attacked this Fall if they support the governor's tax plan. * * * * * The Supporters When the Texas Medical Association (TMA) announced its support of the tax plan, Eileen Smith of In The Pink Texas said, "If TMA endorses Perry's plan, they will join the Texas Trial Lawyers, who have already expressed their support. Dude. That's like Israel and Palestine." * * * * * House Procedural Vote Matt at Just Another Blog was upset by the procedural vote on the House floor Friday that limited amendments to HB 1, which he calls the "Highland Park Windfall Proposal." (The language HP and other rich districts were rooting for, however, was stripped by a Charlie Geren amendment when the bill was up for debate on Monday). Sean-Paul Kelley at the Agonist said, "I hope they actually get this passed. If they do, Democrats across the state will have the best issue to campaign on since Clayton Williams equated rape with inclement weather when he said, 'as long as it's inevitable, you might as well lie back and enjoy it.'" He doesn't have his own blog -- yet -- but Rep. Scott Hochberg, D-Houston told Bay Area Houston Blog, "Voting on rules instead of on actual amendments is how Congress in Washington operates under the current Congressional leadership, but, as I said, is new to Texas." * * * * * School Finance Primer While you're watching or listening to history as it's written, you can read about those who've fought previous Texas school finance battles. Vince Leibowitz at Capitol Annex provides links to several sources of information. * * * * * Lobbyists The San Antonio Express-News' series on lobbyists garnered the admiration of The Agonist and led to a two-part series on In the Pink Texas by lobbyist-blogger Lawrence Collins, (Part 1 / Part 2) who may be the only person to have ever run the staffs of the House Appropriations Committee and the Senate Finance Committee (not at the same time, of course). There were/are supposed to be four parts to his series on the E-N's series, but a "Welcome Back to the Special Session" party hosted by several bloggers delayed production. * * * * * Charge Your Laptop Nothing seems to upset a blogger more than unreliable electricity. The rolling outages on the opening day of special session led Annatopia, The Agonist, and Capitol Annex to lament the "Kalifornication" of Texas. * * * * * It Doesn't Have to Last 30 Days Rawhide, a contributor on Pink Dome, harkens back to Greek literature to suggest that spouses of lawmakers sign a pledge to withhold sex until a school finance solution is found. Who needs a Supreme Court deadline with that kind of pressure?

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OUT THERE is something new for Texas Weekly: Robyn Hadley will cherry-pick the state's political blogs each week, looking for news, info, gossip, and new jokes. Robyn, a veteran of both journalism and the state Capitol, is the owner of Capitol Crowd, a networking site for people who work in and around state government. The opinions she quotes belong to the bloggers, and we're including their links each week so you can hunt them down if you wish. Please send comments, suggestions, gripes or retorts to Robyn at robyn@capitolcrowd.com, or to Texas Weekly's editor, Ross Ramsey, at ramsey@texasweekly.com.

Tax bills and education reforms can induce ulcers in legislators who will soon face voters. But some of the people in Austin for the special session are at their last rodeo and could -- theoretically, anyway -- relax.Five state senators and 18 members of the Texas House are serving now but won't be back for more of this fun come January, either because they gave up their seats or lost them. (Three House seats already turned over in special elections to replace two Republicans who resigned and joined the lobby -- Reps. Ray Allen of Grand Prairie and Todd Baxter of Austin -- and one Democrat who died near the end of last year's regular session, Joe Moreno of Houston.) And some number of current lawmakers don't know they're almost finished: The November elections are still ahead. The first votes taken by their successors -- in order, Republican Kirk England, Democrat Donna Howard, and Democrat Ana Hernandez -- will be on tax bills. The senators in office now but already studying political retirement include three who didn't seek office, one who lost a primary and one who's reaching for higher office. They are Ken Armbrister, D-Victoria, SD-18; Gonzalo Barrientos, D-Austin, SD-14; and Jon Lindsay, R-Houston, SD-7, who all retired. Frank Madla, D-San Antonio, SD-19, lost his reelection bid in the primary, and Todd Staples, R-Palestine, SD-3, won the GOP's nomination to be Texas Agriculture Commissioner. State representatives who find themselves in that situation include six who didn't seek reelection: Mary Denny, R-Aubrey, HD-63; Bob Griggs, R-North Richland Hills, HD-91; Bob Hunter, R-Abilene, HD-71; Suzanna Gratia Hupp, R-Lampasas, HD-54; Pete Laney, D-Hale Center, HD-85; and Jim Solis, D-Harlingen, HD-38. Eleven state reps lost primaries, either for reelection or for higher offices they were seeking: Roy Blake Jr., R-Nacogdoches, HD-9; Scott Campbell, R-San Angelo, HD-72; Carter Casteel, R-New Braunfels, HD-73; Al Edwards, D-Houston, HD-146; Kent Grusendorf, R-Arlington, HD-94; Peggy Hamric, R-Houston, HD-126, lost Senate primary; Ruben Hope Jr., R-Conroe, HD-16, lost district judge primary; Jesse Jones, D-Dallas, HD-110; Terry Keel, R-Austin, HD-47, lost Texas Court of Criminal Appeals primary; Joe Nixon, R-Houston, HD-133, lost Senate primary; and Elvira Reyna, R-Mesquite, HD-101. Carlos Uresti, D-San Antonio, HD-118, beat Madla in the Democratic primary for Senate. And Glenn Hegar, R-Katy, won the GOP nomination to succeed Armbrister (since the Democrat dropped out after winning the primary, Hegar can safely measure the curtains for his new Senate office). Those are the only guys on the list with a chance of returning to the Legislature -- albeit in another chamber -- unless the unexpected happens in November.

State legislative leaders have reached agreement on a $2,000 across-the-board pay raise for teachers and an average of $1,000 more in incentive salary increases that would be phased in over two years, according to a spokeswoman for House Speaker Tom Craddick.The incentive pay would start with teachers in high-poverty districts that show big performance gains. About $100 million would be available for that. In 2008, they've proposed adding another $200 million that would go through both local and state incentive programs. And they'd phase in spending on "high school improvement measures" of up to $500 per student with the goal of preparing students for college. All of that would be added to HB 1, which also includes using $2.37 billion of the state surplus to lower school property taxes by 11.3 percent, or up to 17 cents. The deal hasn't been voted on by anyone but follows a month or so of talks between Craddick, Lt. Gov. David Dewhurst and a handful of legislators. It's designed to keep the state budget from triggering a cap on spending -- the growth in spending isn't allowed to exceed growth in personal income without legislative approval, and nobody wants that vote on their record. The pay raises fit inside the cap, as does that first $2.4 billion spending of the surplus. The high school program might be limited at first because of it.

Scott McClellan, spokesman for President George W. Bush and son of state Comptroller Carole Keeton Strayhorn, is leaving his post behind the podium in the White House press room after two years and nine months as the nation's most prominent tackling dummy. He didn't announce his next step, but he's run statewide campaigns in Texas for his mom in the past. Sworn in: Republicans Valerie Corte and Cheri Isett, the brides, respectively, of Reps. Frank Corte of San Antonio and Carl Isett of Lubbock. Both legislators are military reservists called to duty in the Middle East. And both appointed their wives to serve in their spots during the special session. Michael Schneider Jr. won the GOP primary against Beverly Malazzo, but he won't have to wait until the end of the year to replace state District Judge Kent Ellis. Ellis quit early, and Gov. Rick Perry appointed Schneider to fill the spot on the 315th District Court. A few years earlier, Perry appointed Michael Schneider Sr., now a federal judge, to a spot on the Texas Supreme Court. The governor appointed Robert "Bobby" Bland IV of Odessa to be Ector County's District Attorney until after the November elections. He's a former assistant DA there, now in private practice. Gov. Perry appointed Lana Edwards of Hunt, Mike Boyd McKenzie of Kerrville and Karol Schreiner of Hunt to the Upper Guadalupe River Authority. Edwards runs a bed & breakfast; McKenzie is retired; and Schreiner owns a ranch and serves on the Divide ISD. Deaths: Billy Goldberg, former head of the Texas Democratic Party, a banker, attorney, and real estate investor. He was 90.

Boyd Richie, who wants to be the next chairman of the Texas Democratic Party, will hold the job until the party's June convention; the State Democratic Executive Committee named Boyd to serve the remainder of Charles Soechting's term. Soechting says he wants to spend more time with his family and on his law practice. Boyd, who's also the Young County Attorney, will face former lawmaker Glen Maxey of Austin and San Antonio attorney Charlie Urbina Jones in the election at the June convention. MacGregor Stephenson is the new associate vice chancellor for academic and student affairs at the Texas A&M University System. Up till now, he's been a higher education budget and policy wonk for Gov. Rick Perry. The U.S. Senate confirmed Houston attorney Gray Miller's nomination for a federal judgeship. He is -- or was -- a partner at Fulbright & Jaworski and will fill the spot opened when U.S. District Judge Ewing Werlein took senior status. Press corps moves: Dallas Morning News reporter Dave Michaels is leaving Austin and that paper for a gig with the Bergen (NJ) Record, where he'll be covering transportation issues. Deaths: Harold Dudley, campaign manager and executive assistant to former Gov. Preston Smith and a veteran of several state agencies, after a nine-year bout with Alzheimer's Disease. He was 82.