The Week in the Rearview Mirror

Staffers for House Speaker Tom Craddick were told today to clear their desks before tomorrow — the first day of the legislative session.Staffers we've talked to say Terral Smith told them this morning that Speaker-apparent Joe Straus isn't keeping any of them after he's elected speaker tomorrow. Smith met this morning with Straus' chief of staff, former Rep. Clyde Alexander. After that meeting, he told staffers to clear their things out, and said some clerical employees are being asked to stay through the end of the month. House employees in the clerk's office, the sergeant-at-arms' office, and the like, were not included in the layoffs. The House convenes tomorrow at noon, swears in its members and elects a speaker. Barring a surprise, Straus is the only candidate for that job, having secured pledges from well over half the 150 members of the House. He's putting together a staff now and will have a couple of weeks to name committee chairs and members. When Craddick took over from Laney, he kept a handful of the 25 to 30 people who work in the Speaker's office. And he also had more time for a transition. Craddick's win was apparent right after the elections put the Republicans in the majority with 88 members. In the current case, the race for speaker was open until the first week of the New Year. Straus, compared to Craddick, and to Laney, too, has to organize in a hurry.

The new numbers from the comptroller aren't all that bleak, to tell the truth, but if you read the report that came with them, you'll rush out and buy an umbrella and some galoshes.

Comptroller Susan Combs says the state Legislature will start with $77.1 billion available for general revenue spending in the 2010-2011 biennium. That's down more than 10 percent from what was available to the budgeteers two years ago.

And put the first asterisk here: Combs' new "biennial revenue estimate" also comes with the biggest balance ever reached in the state's Rainy Day Fund — enough to nearly cover the difference between this year's estimate and the one Combs made two years ago. At the end of the biennium, that fund is expected to have a balance of $9.1 billion. Put it another way: If they can get two-thirds of the Lege to go along, they can use that money for general spending.

The lower numbers are based on two things, mainly: Lawmakers start with a cash balance of about $2.1 billion, as against $9 billion two years ago; secondly, Combs and her forecasters appear to have adopted negative assumptions about the economy wherever they had the choice. They could well be right, but any mistakes they've made will bring relief — more money — rather than grief. It would be hard for the state to do worse than she's predicting, financially; it could do better, adding money to the pot.

The comptroller expects actual general revenue — not counting that starting cash balance — to drop by $2.2 billion, to $75 billion (general revenue is what they call non-dedicated state funds in the $167 billion budget).

And she's expecting the Texas economy to share the national economy's troubles — if later and to a lesser extent. "Our new economic forecast indicates Texas will be affected in fiscal 2009 before regaining economic momentum in 2010."

They're predicting Texas will lose 111,000 nonfarm jobs between now and mid-summer before starting to add jobs again in the fourth quarter of the year. In fiscal 2009, they're forecasting gross state product will increase by 1.8 percent, then by 1.9 percent in 2010, and 3.8 percent in 2011.

The state's biggest revenue-producer — the sales tax — is expected to rise, but more slowly. Combs expects a drop in income from several other taxes, including the natural gas tax, the insurance tax, motor vehicle sales and rentals, and oil production and regulation taxes.

The state franchise tax, she says, will be flat over the next few years. This is an example of a place where she's taking the dimmest possible view. A one-time break cut the franchise tax revenues in its first and only year of collection by hundreds of millions of dollars. But in her projection for the second and third years of that tax, Combs didn't add those numbers back in. That might turn out to be right, but it's another place where a little light could shine and the numbers would grow. That said, it's clear the tax isn't producing what the comptroller and her predecessor predicted. When that tax was revised in 2006, the comptroller said it would produce almost $6 billion a year; in fact, it's producing only about $4.4 billion annually.

That puts some pressure on budgeteers. The state is obligated to spend about $14.2 billion every two years to fulfill a promise to offset cuts in local school property taxes. That was the deal in 2006: Cut local property taxes, replace the money lost with state funds. But the property tax fund doesn't cover that nut: The $14.2 billion cost stacks up against a fund that's projected to have $8.5 billion this biennium. Lawmakers will have to make up the difference out of general revenue.

Combs expects the Texas Lottery's numbers to slide about three percent.

The whole BRE is available online, with charts and tables galore. Read the executive summary up front — you'll see what we mean about the bad weather gear.

Rep. Joe Straus III, R-San Antonio, is officially the speaker of the Texas House.Straus was elected by acclamation after six nominating speeches on a day marked by ceremony, crowds of families and friends, and the start of another legislative session. He was sworn in by a fellow San Antonian, Texas Supreme Court Chief Justice Wallace Jefferson, and gave a short speech. He said the Biblical line invoked by Houston and by Lincoln applied here: "A house divided against itself cannot stand." And he ended on a similar note: "Let their be no walls in this House." The House will do rules within the next two weeks or so. Straus will assign committees, and they'll be off to the races early next month. The Senate, meantime, made Robert Duncan, R-Lubbock, the president pro tempore. That body's expected to organize more quickly, since it has only two new members and no management and staff overhaul in process. And the Senate revved up an old fight over its two-thirds rule. That body won't take up legislation unless two-thirds of the people in the room agree. Democrats have just enough members to block partisan bills, and some Republicans, led by Sen. Dan Patrick, R-Houston, want to get rid of the rule or lower the requirement to, say, 60 percent. That argument was deferred for now. Notes from the opening: Rep. Senfronia Thompson, D-Houston, on Straus' nomination by a group of eleven Republicans: "I wasn't surprised. I was shocked." Rep. Jim McReynolds, D-Lufkin, in his nominating speech: "In this 140-day sesion, policy should transcend politics." Rep. Veronica Gonzales, D-McAllen, in hers: "With the numbers [of Republicans and Democrats] so close, I take comfort in knowing that bills will live or die based on their merit and not on a partisan basis." Rep. Burt Solomons, R-Carrollton, will oversee changes in the House rules. Among the things in that grab-bag: How many committees the House will have and how many people will be on each of them. Gov. Rick Perry ended the day with a rhetorical flourish: "The first day of a session is a beautiful thing — it's like a blank canvass. Here's hoping we paint a masterpiece." One last note: We filed this from the House, on the public wireless system that was put in and activated in the last week. For several years up to now, the House has been one of the few wifi-free zones in the state Capitol, due to "technical problems."

Texas senators stepped into the first partisan fight of the new session, with Republicans trying to cut out an exception to rules that govern how many senators it takes to consider legislation. UPDATE: Senators voted 18-13 in favor of the exception: Voter ID legislation won't require the two-thirds vote required for other issues. And Sen. John Carona, R-Dallas, was the lone Republican voting against the change in the rule.The upper chamber has a rule barring consideration of bills that are objectionable to more than a third of the senators. And with 12 Democrats among the 31 senators, there are enough votes to block consideration of partisan bills. Republicans, led by Lt. Gov. David Dewhurst, want to pass a Voter ID bill — one that requires voters to show a photo identification before they're allowed to vote. Republicans say that's a security measure against voter fraud. Democrats say it suppresses votes disproportionately, hurting their side more than the GOP side. And the only way to bring the legislation to the floor — with the Democrats in opposition — is to change the rules. The debate echoed the arguments over redistricting that sent 11 Democratic senators packing to New Mexico several years ago, where they denied the Senate a quorum by leaving the state. That incident — like a previous one that saw House Democrats decamping to Ardmore, Oklahoma — ignited a call within the GOP for an end to the two-thirds rule. Voter ID is the issue of the day; redistricting — up for consideration every decade — will be the issue in its place in two years. The Senate spent its first two days in Austin working on that battle, with Republicans — Sen. Tommy Williams, R-The Woodlands, suggesting the two-thirds rule should have an exception for partisan issues in general and, as the battle went on, for the Voter ID bill in particular. Every preliminary vote along the way had the same result: 19 Republicans to 12 Democrats. Senators did much of the negotiating and debate — as is their custom — behind closed doors (thus the headline above). They came out at one point and actually did some debating in public. With Republicans proposing an exception for Voter ID, the Democrats proposed several amendments, forcing Republicans to vote against amendments that would have substituted the Voter ID exception with other issues, like insurance reform, higher veterans benefits, job programs, public school finance, college tuition rollbacks, and the Children's Health Insurance Program. They disappeared again for several hours, emerging with a proposal to send the Voter ID bill to a Committee of the Whole — that's the whole Senate at once — so that everyone can debate there before the bill comes to the floor. But it could come to the floor with a simple majority vote — and without the two-thirds support required for other legislation. Carona told senators he favors the Voter ID bill, but didn't want to change the Senate rules. He was the lone Republican voting against the change. Williams argued that this is a one-time thing on "an issue of bipartisan concern" that won't necessarily lead to other exceptions. But Sen. Dan Patrick, R-Houston, is hoping this is the first step in undoing the two-thirds rule. He has argued for years that it's undemocratic and that the Senate should do away with it or at least lower it to 60 percent. Either option would give the Republican majority a final say in any partisan issues before the Senate. Sen. John Whitmire, D-Houston, said the Voter ID episode will lead to more exceptions and said senators were drawing a road map for outside partisans and political consultants who want to pressure the Senate to vote on other "emotional issues." So why the first day? Because you can change the rules on the first day with a simple majority. Wait until later in the session, and you have to have a two-thirds vote to bring it up. The Democrats can't block it now, but could do so later.

While they were debating, a court in Georgia said that state's voter ID bill is legal.

Hutchison moved $7 million to her state account; Perry has $6.6 million on hand; Combs starts the cycle with $3.6 million on hand.State campaign finance reports are due today (they can be postmarked, so it'll take a few days to fill out the lists). Big news so far: • Gov. Rick Perry reached the end of 2008 with $6.6 million in hand, raising $4.7 million in the second half of the year. • U.S. Sen. Kay Bailey Hutchison's exploratory committee will have enough money to chart Antarctica if they want to: She moved $8 million ($1 million first, then $7 million more) from her federal account to her state account. That's probably a one-way street: She can't move it back — the rules are different — without some serious lawyering. Hutchison's detailed report isn't available yet. Her actual fundraising was skimpy: just over $30,000. Perry himself ducked the chance to comment on the finances, saying his attention is on the legislative session and suggesting the federal government (that'd be the senator, see) could help the state out by working on immigration and border security and such. His spokesman, Mark Miner provided the towel-snap on finance: "It’s clear her campaign is already faltering when they have to use their federal campaign dollars to bailout their dismal state efforts. It’s just like a Washington politician to use money intended for one purpose and spend it on another." Hutchison is still in exploratory mode, but she's inching toward a commitment. "Today, as we file the first campaign finance report for the committee, we are starting fundraising in earnest, and making a major step toward a campaign for Governor," she said in a press release. "In the coming weeks, I will be taking additional steps toward a race for governor. This is a critical time for our state and nation. I am going to be traveling our state, talking to Texans from all walks of life, and working hard to make certain that the wisdom and opinion of people across our state is heard." Perry says flatly that he's in the race for another term after his current one. • Comptroller Susan Combs starts the 2010 cycle with $3.6 million in the bank and has said she plans to stay where she is, if voters will go along. She raised $1 million during the last six months of 2008. • Attorney General Greg Abbott ended the year with $8.6 million in the bank — more than either Hutchison or Perry. He was coasting, though, raising $582,514, and spending $318,994. Abbott has feinted at a run for U.S. Senate should Hutchison step aside for the governor's race; his state money is incompatible with federal finance laws and he'd have to start all over again. He's also got his eye on the lieutenant governor job, should David Dewhurst run for Senate or something else. • What of Dewhurst? He's been paying down his loan balances, now at $1.3 million. Dewhurst raised $3.1 million during the second half of the year, spent all of it, and ended the period with $759,856. He's generally suspected of wanting Hutchison's spot — since the race for governor is crowded — and could self-finance all or part of a federal race, giving him a leg up on other candidates. • Deposed House Speaker Tom Craddick, R-Midland, ended the year with $2.1 million in his political account after bringing in $314,987 and spending $511,390 during the last two months of the year (his report, since he was on the ballot in 2008, covers everything since his last report filed in October). • Craddick's successor, House Speaker Joe Straus, ended the year with $647,966, raising $50,650 since his October report and spending $26,562. Interesting tidbit: Straus' mom recently showed up on a fundraising notice for Hutchison (she's pulled out of that now that her son is speaker); Straus' campaign report shows a mid-November contribution of $1,000 to Texans for Rick Perry.