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, or dig it out of our Files section if you want to download a copy. www.texasweekly.com/documents/Join.wmv 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.

Republican Comptroller candidate Susan Combs is raising the stakes, saying if she's elected she will trash Comptroller Carole Keeton Strayhorn's rulemaking work on the new school finance package as soon as she takes office.That potentially frees lobsters, consultants and taxpayers from worries about whether the rules have anything to do with who's supporting who in the Texas governor's race this year. With the dual roles of candidate and referee on the tax bill, Strayhorn gave at least the appearance of a link between favorable rulings and campaign support. We're not aware of any actual connections, but there's been much gossip about the possibility and a lot of stories that begin with "I know a guy who knows a guy who..." Combs' public statement kills any conflict or appearance of conflict from Strayhorn, but moves it indirectly to Combs herself. She's the favorite in the race to replace Strayhorn, and the winner of the race now under way will be making the rules. Her pronouncement could fill her sails even as it deflates Strayhorn's. Politically, it's a two-fer: Combs helps herself and Gov. Rick Perry at the same time. Taxpayers and their representatives have to wait a while to get anything done, but they won't face the uncertainty of dealing with a lame duck comptroller and hoping her successor will follow her lead. The comptroller's office started working on the rules as the tax bills in the package passed the Legislature. The state's new business tax lets businesses choose between deductions — subtracting either cost of goods sold or employee compensation — and then pay taxes on what's left. Simple enough, until you get into the legal and accounting games over what gets included in COGS or compensation. The legislation spells it out, but there's a small industry built around favorable and unfavorable interpretations of the Legislature's tax language. With the rule making underway, the parade of supplicants has already begun. And there's no indication that the tax wonks at the comptroller's office will stop what they're doing based on the political crossfire. Combs had said earlier that she planned to review whatever rules the agency works up between now and January. Now she's gone further, saying the work will get tossed out and that she'll start fresh if she wins the election. Companies will pay the new tax for the first time in May 2008 — almost two years from now. But the taxes paid then will be based on their business activity in their 2007 fiscal year. Some businesses have already started that fiscal year; others will start their business year sometime between now and January. From a technical standpoint — ignoring the politics for moment — the tax folks want taxpayers to know the rules of the new game as early as possible, so those taxpayers can plan accordingly.

U.S. Rep. Tom DeLay, R-Sugar Land, is now officially a civilian, at least for purposes of reelection. Texas Republican Party Chair Tina Benkiser says she got the letter from DeLay saying he's moved to Virginia.That makes him ineligible to run for reelection to Congress (and also puts him in a state where he'll be paying a 5.75% personal income tax). DeLay is officially leaving Congress on Friday; Benkiser declared him ineligible to run but doesn't have the power to declare him ineligible to serve. Gov. Rick Perry has said he won't call an early special election to replace DeLay for the rest of his current term. Instead, voters will elect a lame duck in November who'll serve until January. As for the full term, GOP officials will pick someone to replace DeLay on the ballot. Benkiser told the party chairs in each of the four counties in the district to call meetings and elect someone who'll serve on a district committee. Those four people will meet and vote to replace DeLay on the ballot (if they lock up and can't do it, the full State Republican Executive Committee will meet and do the job for them). Contenders for the post include Houston attorney Tom Campbell, state Rep. Charlie Howard of Sugar Land, state Sen. Mike Jackson of La Porte, Houston City Council member Shelley Sekula-Gibbs, state Rep. Robert Talton of Pasadena, and Sugar Land Mayor David Wallace.

Ag Commissioner Susan Combs says she would get rid of the judicial operations at the comptroller's office if she's elected. She told a group of tax lawyers that she'll move contested tax cases out of her office and over to the State Office of Administrative Hearings, or SOAH, to avoid any appearance of conflicts of interest.Current Comptroller Carole Keeton Strayhorn, who's running for governor, came under fire after a state auditor's report on tax settlements and political support. State Auditor John Keel was careful not to say Strayhorn had done anything wrong, but his agency's report raised questions about the potential conflicts of a tax collector handling disposition of cases that involve political friends and enemies. And it detailed some of the overlap of politics and government at the comptroller's shop. Combs doesn't want her name in a report like that. Tax cases start, generally, with auditors who make a guesstimate of what a taxpayer owes. The tax collectors and the taxpayers try to reach a settlement and if they can't, the cases go to the administrative courts in the comptroller's office, a semi-separate operation that is answerable to the comptroller. Taxpayers can appeal rulings from the admin courts to state courts, and many do. But most cases get settled or ruled upon without going into the regular judiciary. And cases that go to the tax courts often come back to the comptroller for final judgment. Because there's usually some distance — sometimes a huge distance — between what the auditors initially say taxpayers owe and what they finally pay, the conflicts built into the system raise eyebrows. And because most taxpayer information is private unless the taxpayer wants to reveal it, there's no way to tell for certain from outside whether the results are honest: From outside, the conflict resolution looks the same, whether it's clean or corrupt. That's where a lot of any comptroller's political clout comes from, but Combs apparently doesn't think it's worth the hickey. She told the tax lawyers she'll move the tax courts to SOAH, and that she can do so with an inter-agency contract and no legislation.

Anti-tax activists in Houston filed suit "to stop and prevent unconstitutional and illegal spending by the Texas State government."CLOUT — the Citizens Lowering Our Unfair Taxes political action committee — contents the "excessive spending" between 1984 and 2000 cost the average Texas family $26,800. They define excessive as the difference between increases in state spending and increases in the gross state product. The lawsuit says it's illegal for the Legislature to delegate any of its budget authority to the Legislative Budget Board, which is made up of the lieutenant governor, the Speaker of the House, and a handful of lawmakers from each chamber. And they contend it's illegal for a panel that includes the governor and the comptroller to approve spending limits set by the LBB (which, the suit contends, shouldn't have set the number in the first place). Not only that, but by their reckoning, the LBB uses a most unreliable economic indicator as its measure of the state economy: increases and decreases in personal income. The LBB set the spending limit for non-dedicated general revenue at $52.1 billion in 2004, then adjusted it because of spending that had been certified by the comptroller. The new limit: $55.6 billion, according to the suit. CLOUT contends state lawmakers already crossed the line in spending before the special session on school finance. New spending that was approved in that session, they say, went even further over the limit. They want the court to throw out personal income as the measure of the economy. They want the spending cap trimmed back to $55.1 billion or less, or cut back to the LBB's original $52.1 billion. They want the court to "declare the various responsibilities" of the state officials involved in setting the spending caps. They want the court to declare gross state product or population to be used as the key indicator of the state's growth. They want that mid-course correction in the numbers by the LBB undone. They want growth projections corrected with actual numbers once those numbers are in, for setting future spending limits. They want the LBB's powers limited. They want the court to declare that the appropriations made in HB-1 during the special session — that's the bill that applied some of the surplus and new taxes to school property tax relief — went over the limit. That wouldn't mean school tax relief had to be cut, but would mean that some $1.5 billion would have to be cut somewhere in state spending. They didn't ask for an airplane or take any hostages. Gary Polland, the lead lawyer on the suit (and the former chairman of the Harris County Republican Party), said they made those demands in a way that gives the courts some ideas about what to do (each suggests the court make a change "alternatively or in addition"). If the state had settled up its estimated growth numbers with actual numbers over the years, the current budget would be $14 billion lower, he said. "We could have asked for that," he said, "but if we asked for that big a cut, the state would be in chaos." You can download a full copy of the lawsuit — and a pile of exhibits to go with it — at CLOUT's website. This isn't the first time the state's been sued over the spending cap. In the early 1990s, former Rep. Talmadge Heflin, R-Houston, challenged the state for ignoring the constitutional provisions on spending limits. The suit was tossed out of court, but the Legislature got the message and started paying attention to setting limits on spending growth, developing the system in use now. A spokesman for Attorney General Greg Abbott said that office is looking at the suit and isn't ready to comment. Gov. Rick Perry's office was dismissive of it. Comptroller Carole Keeton Strayhorn said in a statement that she would "welcome this, and any effort, to reign in out-of-control state spending." Lt. Gov. David Dewhurst's statement said the budgets are "well below the current spending limits." And House Speaker Tom Craddick said he hadn't seen the suit but said the state can defend its budget in court.

The big reports -- with money raised, spent, and in the bank — will be out in mid-July, but Democrat Chris Bell moved into second place in fundraising in the Guv's race during the special session.Gov. Rick Perry led the pack, raising $375,021.90. Bell reported $333,212.8 in contributions, Carole Keeton Strayhorn raised $307,534.35, and Kinky Friedman brought in $149,132. Bell's total included $60,500 contributed in the form of plane travel by Houston car dealer Richardo Weitz, and a handful of gems — a ruby and a sapphire, among others — appraised at $8,225. Bell's biggest contributor, Houston oilman Earl Swift, died a few days after contributing $100,000 to the campaign. Perry's list included 15 contributors who each gave a nickel or less; a spokesman said they wanted to fall on the strictly safe side reporting this stuff. Strayhorn's big contributor in this report was Donald Sloan of Chicago, who gave $50,000. Her total included $44,024 in contributed plane travel, legal expenses and "event expense." Perry and Strayhorn were far ahead in cash-on-hand amounts when the last reports were filed in mid-January. The next look at that will come in about a month, when the candidates report what they raised and spent during the first six months of the year.

Comptroller Carole Keeton Strayhorn has posted a "franchise tax calculator" to her website that she says will allow businesses in Texas to figure roughly what they'll pay when the state's new business tax takes effect.(The address: http://window.state.tx.us/taxinfo/franchise/calculator/) And she said she'll proceed with rulemaking on the new tax without worrying over what her successors will do. Agriculture Commissioner Susan Combs, who's running for Strayhorn's job, reiterated her promise to rewrite the rules if she's elected. And she says lawmakers have told her they'll be tweaking the new tax bill when they convene in regular session next year, so there'll be reason to fiddle with the rules anyway. Strayhorn says the new law requires her to write rules. That's correct enough for government work: It requires her to survey 4,000 big businesses in the state in mid-November and to cook up the forms and rules needed to do that. She's taking that to mean the survey will use the same rules the new tax will use, so she's going ahead with rulemaking. In any case, there's nothing to prevent her rulemaking, and nothing to prevent Combs or Democrat Fred Head from remaking the whole office when they move in. Combs got some rhetorical support from Sen. Tommy Williams, R-The Woodlands. He heads the Republican Caucus in the Senate and is a member of the Finance Committee that writes the budget. And he says businesses should ignore Strayhorn. "I have learned not to trust the information that comes out of this politically driven comptroller's office. I would urge the Texas business community to do the same." On the other hand, accountants and other tax practitioners are already peppering the comptroller's staff with questions. An online forum connecting Deputy Comptroller Billy Hamilton with those folks this week drew 2,000 listener/viewer/webheads. The normal crowd, agency folks say, is about 250.

I am proud of the work the Texas Legislature accomplished this spring with the passage of our new public school finance reform package. It was our finest hour.After a decade-long battle for a more equitable funding system for public schools, we delivered more money for schools, along with a teacher pay raise, educational reforms, and better accountability for our schools. And we also brought forth a more equitable school funding system and the largest property tax cut in our state's history. It was the culmination of years of hard work, and we accomplished what many said could not be done. While you have no doubt seen the news coverage about the tax reforms passed this session, I believe an equally exciting achievement was made on the education front. In the past legislative sessions, we had been too broad in our goals, trying to do too many things. This special session was different. We established well-defined goals on a few key issues, and set about to bring them to fruition. The result of our work was House Bill 1 (HB-1). We began this special session with a charge and a warning from the Supreme Court of Texas. The Legislature was mandated to fix the unconstitutional statewide property tax; and warned, "it remains to be seen whether the system's predicted drift toward constitutional inadequacy will be avoided by legislative reaction to widespread call for change." With HB-1, we responded enthusiastically to the Court, addressing both the charge and the warning, by allowing school districts to raise local funds, in addition to lowering property tax rates, and providing new dollars to for excellence in our schools. The new money includes a $2,000 across-the-board pay raise for teachers, school nurses, counselors and librarians, and restores $500 of the teacher health stipend. This increase continues a trend in teacher pay that has seen increases of $11,700 for classroom teachers in Texas since 1999. In addition, Texas has created the largest teacher performance pay program in the country, with more than $260 million to reward teaching excellence through locally-designed incentive programs, and another $100 million for the Awards for Student Achievement Program, aimed at high-poverty schools. Through these programs and a teacher mentoring program to keep young educators in the classroom, Texas can take the national lead in rewarding educational excellence and attracting top-performing teachers. This is a landmark step in the fight to give our children the best education possible. HB-1 will also keep Texas on the forefront of the national education reform movement with stronger curriculum requirements for high school students. Of those Texas graduates who go to college today, nearly 30 percent require remedial coursework. HB-1 speaks to that by requiring four years each of English Language Arts, Mathematics, Science, and Social Studies, in order to better prepare students for success after graduation. Additionally, Texas will create the nation's first ever alignment between public and higher education curriculum, to encourage college readiness standards. It is a positive step toward the seamless P-16 (Pre-K through College) pipeline I have always envisioned for Texas education. Another landmark reform for Texas high schools includes renewed investments in dropout prevention. Texas has one of the highest dropout rates in the nation. One-third of students who enter ninth grade in the Texas public schools do not graduate. To address this trend, the bill provides more than $1 billion over three years through a High School Allotment of $275 for every Texas high school student. Finally, for the first time in the history of the state of Texas we have changed the way we fund our schools. By 2008, HB-1 will allow nearly $1 billion to be kept in local communities and spent on the education of local children, instead of being exported to other areas of the state. This is a tremendous step toward reducing the impact of Robin Hood while we make a historic investment in funding equity. The bill includes a revolutionary provision to allow districts to add four cents of local enrichment by local school board approval without recapture. In 2009, districts can access an additional two cents of enrichment without recapture, by a vote of the people. We came into this session somewhat fractionalized, but we ended up in one of the most significant compromises I have witnessed in my 14 years of service in the Texas Senate. What we accomplished in this past special session is a very rare opportunity to see a body of people who can find their common ground and truly put Texas taxpayers, educators and students first. I am reminded of a favorite quote by Frank Lloyd Wright, who said, "I know the price of success: dedication, hard work, and an unremitting devotion to the things you want to see happen." We in the Legislature were dedicated to this cause. We worked hard for many years to make this change. And above all, we shared an unremitting devotion to the things we wanted to see happen — lower property taxes, more money for schools, and educational excellence for our students. We knew the price of success and we paid it proudly. And now our great state's taxpayers, students, and teachers can reap the rewards. Shapiro, R-Plano, chairs the Senate Education Committee.

It's fair to expect immigration and the Texas-Mexico border to come up in debates and campaign sniping later this year. It was a big issue at the GOP state convention, and it's a high profile issue in polls of Republican voters. Not so much with Democrats, though it depends on who you ask and what office they seek. And most of what the Democrats are doing is reacting to what Republicans are doing; the Democrats think their opponents are going too far.Democratic gubernatorial candidate Chris Bell left immigration out of his convention speech. He talked about it in a pre-speech press conference and in other interviews with reporters and delegates. It's a big issue for Republicans, he says, but not the leading issue for Democrats. And he acknowledges it'll be a campaign topic. For the record, he's against building a fence on the border, favors some form of "earned citizenship" and thinks the governor's proposals for Internet-connected cameras on the border encourages vigilantism and turns it into "some kind of home computer game." Bell says he wants what he calls order on the border and says he called for National Guard support before the Perry Administration came around to that view. He's against mass deportation, joking that "we couldn't even evacuate one city successfully" during the hurricanes last year. And he noted that the GOP's platform is silent on the subject of penalizing companies that hire illegal workers. Retired Gen. Wesley Clark called immigration a "huge emotional issue" and said President George W. Bush "has got a real problem with his own party on this." Like most of the Democrats who spoke about the issue in Fort Worth, he's anti-fence, in favor of some way of working illegal immigrants into citizenship. He added that he'd favor "a crackdown on firm that are systematically profiting from illegal immigration." Barbara Ann Radnofsky, the Democrats' candidate for U.S. Senate, is on that same wavelength on illegal immigrants: "You must learn English, you must keep your nose clean, you must pay fines, you must stay a period of time, and frankly, you must stand behind the line in terms of those who have legally applied." Hank Gilbert, a farmer who's running for agriculture commissioner, told the Democrats that migrant labor makes agriculture go in Texas and said the Republican's immigration plans would make a mess of things. "Without migrant labor, we stop... we're stagnant... you will not eat another American-grown product because it will rot on the ground." Bell thinks Republicans are "walking a pretty thin line" with their immigration stands, though to be fair, most of the state candidates from Perry on down aren't going as far as the GOP's platform goes. "I don't think it's lost on the eyes of the Latino community that they're simply trying to drive a wedge issue into the election," Bell says. Hispanic legislators took a harder line. Rep. Rafael Anchia, D-Dallas, accused the GOP of trying to criminalize families, immigrants, and the Catholic Church, which has provided sanctuary for illegal immigrants. He blamed the private sector's dependence on cheap labor for the flow of workers into Texas. "If you don't have insatiable demand (for immigrants), you won't have this supply," he said. "We don't have illegal aliens — we have illegal businesses... we want to increase the opportunities for legal workers."

Delegates at political conventions have more specialized clothing than fly fishermen. They have funny hats, weird clothes and funny buttons. And in spite of the fact that Texas Democrats don't control much of anything in state government in Texas, their delegates in Fort Worth were notably upbeat. We're not sure just what that means, but it was worth noting.• The Democrats have two candidates who lit up both the caucuses and the full convention when they spoke. David Van Os, who's run for several offices in the past and is challenging Republican Attorney General Greg Abbott this year, lit up the crowd with a populist attack on oil and insurance companies, among others. He quoted an old line about leaving the jam on a lower shelf where the little people can reach it and tagged it, saying, "The jam is so high now the little people can't even see it." • And Hank Gilbert, who's running for the open agriculture commission seat against Republican Todd Staples, railed against high gasoline prices and against the Republican immigration platform. He said he'd check the accuracy of gas pumps more often than they're checked now, and said gas station owners should "help people of Texas digest high gas prices at the pump by inserting one big canister of Vaseline on top of every gas pump so at least it takes a little bit of the sting out of it." • Bill Moody, who's running for a spot on the Texas Supreme Court and trying to overcome the El Paso curse — the state's sixth-biggest city has never elected a statewide official — plans to walk from his end of the state to the Louisiana border near Beaumont to attract attention to his candidacy. He told Democrats he's been training for it and will start the walk in August. Note: It's hot in August, especially in the Chihuahuan desert. "I think, for this kind of walk, I need your prayers," Moody told members of one caucus. • Back when Hispanic Democrats split the sheets, one group was called the Mexican American Democrats, and the other was called the Tejano Democrats. In the parlance of that fight, they were known as MAD and MADDER. And for the last decade or so, the Hispanic posts in the Democratic Party structure were dictated by the newer group, the Tejano Democrats. They've started working on peace and actually made some progress at the Fort Worth convention; those posts will be filled by consensus candidates of all of the party's Latinos, regardless of affiliation. The reconciliation was driven by House Democrats. • Sen. Gonzalo Barrientos, D-Austin, is leaving the Lege after this term and hoping to get into radio, among other things. He was touting a resolution to get Democrats to help get Tejano music back on the radio, and gave members of the Tejano Democrats a list of stations that will no longer play artists like Selena, Little Joe y la Familia, and Los Lonely Boys. • Most of the floor speeches from the Democratic convention are online at www.YouTube.com (in the search blank, type Texas, Democrat, convention and you'll get the whole string). We're not aware of any similar postings from the GOP convention, but we'll pass it along if we do. We found one video online, also at YouTube.com, that ran at the GOP convention, but no speeches. Look under "Texas Republican making history".