Still unclear what legislators will be facing come January, state officials announced that collections of sales and business franchise taxes are well behind projections. Legislative budgeteers expect a shortfall — projected revenue less the costs of current state services — of up to $18 billion in the next budget. The business tax was originally expected to bring in almost $6 billion, but is now only expected to bring in $3.4 billion. The big revenue source, sales tax, had been in steady decline until April of this year, when receipts finally began to grow again.

The whole picture won’t be clear until Comptroller Susan Combs makes her new revenue estimate in January, but she 'fessed up a little bit in filings required for the state's cash-flow borrowing on Wall Street. Tidbits: The state's running a $1.3 billion deficit in the current budget; Texas' cash-flow needs have worsened, in the amount of $3 billion, over the last year; and the state will need to temporarily borrow money from other funds, possibly including the Rainy Day Fund, to cover that $3 billion difference.

• Texas school superintendents have their peepers on money in the federal jobs bill passed last week, though it had specific restrictions on funds for the state of Texas. They're hoping Gov. Rick Perry will go along with the restrictions imposed by Congress so their districts can claim their share of the booty. Districts are facing tough choices on how to allocate their money this fall, and the millions of dollars of federal funds could go a long way to alleviate layoffs or program cuts. U.S. Rep. Lloyd Doggett, D-Austin, stuck a provision in the jobs bill designed to require the state to spend the federal money on top of what it would already be spending, instead of replacing state money with federal money, as lawmakers did with federal stimulus money in the current budget.

• El Paso could be a big loser in redistricting next year based on preliminary census numbers. The early count shows the city growing more slowly than other urban areas, making it a candidate for the loss of a seat in the Legislature if the official population in December matches the projected 754,000. State and city officials are concerned that’s due to an undercount of as many as 100,000 people.

• Anchor babies brought national attention to a couple of Texas pols — state Rep. Debbie Riddle, R-Tomball, and U.S. Rep. Louie Gohmert, R-Tyler, went on CNN's Anderson Cooper 360 on different nights to broadcast their notion that anchor babies are the hottest thing in immigration scams. Each citing unnamed FBI sources, Riddle and Gohmert attempted to make the case that not only are illegal immigrants profiting from giving birth to babies who automatically become U.S. citizens, but also that there is a plot afoot to raise these babies abroad, indoctrinate them, and send them back to the U.S. as terrorists when they are grown.

• U.S. Sen. John Cornyn of Texas thinks the debate over placement of a mosque near Ground Zero qualifies as an election issue. Speaking on NBC’s Meet the Press, Cornyn expressed his belief that candidates’ opinions on the issue would affect the outcomes in their races. His statement followed remarks from the president, who defended the right of Muslims "to build a place of worship and a community center on private property in Lower Manhattan, in accordance with local laws and ordinances." Cornyn might be right. Democrats are running from the president. For instance, U.S. Rep. Chet Edwards, D-Waco, who's in a tough reelection fight, zigged when Obama zagged, telling supporters that the building idea is a bad one that he doesn't support.

• Self-style taxpayer watchdog Joe Driver, R-Garland, admitted to the Associated Press he had routinely double-billed many of his travel expenses, using campaign funds for travel and then billing the state for the same expenses. The longtime member of the House, who sits on the Appropriations Committee, told the news service that he had consulted the Ethics Committee years ago and received a thumbs-up on the practice. But he couldn't produce any evidence of that advice and says he'll pay the money back.

• Former U.S. House Majority Leader Tom DeLay, R-Sugar Land, is no longer under federal investigation for ties to a disgraced lobbyist, but is still facing state charges related to campaign finance. His attorneys announced that the Department of Justice investigation into DeLay’s ties with Jack Abramoff is being closed — with no charges filed. In Texas, though, he was indicted on charges of conspiracy and money laundering in 2005 — prosecutors contend he laundered corporate money through the national GOP so the money could be used in state campaign. Procedural hearings in the state case are set for next week.

—Ceryta Hom

Getting to college might get more difficult in the next biennium. Amid serious budget concerns, the state’s ability to help qualified students afford higher education may be on the chopping block.

State agencies have been asked to find ways to cut 10 percent from their current budgets, most of which were already reduced by five percent this year in anticipation of a budget shortfall estimated to be as high as $18 million. That could be painful. “The cuts will be pretty draconian for financial aid,” Arturo Alonzo, deputy commissioner for business and finance at the Texas Higher Education Coordinating Board, told lawmakers at a joint session of the House and Senate Higher Ed Committees.

Asked by Senate Higher Ed Chairman Judith Zaffirini, D-Laredo, whether it would be possible for the THECB to meet its 10 percent goal without cutting back on financial aid. Nope, Alonzo said: “It’s impossible.” Of particular concern is the fate of TEXAS Grants, a prized program among legislators that serves students with significant financial need. According to the THECB's proposed budget, ten percent cuts would mean that TEXAS Grants, the supply of which already falls well short of demand, would be available to 23,745 fewer students. The state currently provides 113,228.

Rep. Mike Villarreal, D-San Antonio, points to the potential loss of thousands of TEXAS Grants as a reason to look at ways of balancing the budget beyond cuts. "We must make sure that when we 'tighten our belt,' we don't actually tighten the belt of families struggling to put their kids through college or put a chokehold on our economic growth," he said.

As the state attempts to increase participation and success in higher education as funding falls, such concerns will probably become a theme during next year's legislative session. “We’ve got to get through a short-term trough without losing our momentum,” says House Higher Ed Chairman Dan Branch, R-Dallas. “That’s going to be the challenge of the session.”

—Reeve Hamilton

A briefing this week for lawmakers who sit on the House State Affairs provided a crash course on how to craft immigration-related legislation — and not get sued by the U.S. Department of Justice.

Last month, a federal district judge blocked provisions of Arizona immigration legislation that criminalized failure to apply for or carry immigrant-registration papers; for immigrants to solicit, apply for or perform work; and that authorized warrantless arrests of people if there is probable cause to believe the person has committed a public offense.

But David Morales, the deputy first assistant to Attorney General Greg Abbott, told lawmakers that parts of the bill that survived could be generally referred to as “anti-sanctuary city” provisions, which is a popular party platform for some more conservative lawmakers, including Debbie Riddle, R-Tomball, and Leo Berman, R-Tyler, who have made their intentions to file similar legislation well-known. They’ve drawn the ire of some lawmakers who allege, however, that doing what Arizona did will produce the same result Arizona got — a suit filed by the DOJ. But Morales said the injunction ordered last month left several provisions of the Arizona bill intact, including a provision that prohibits Arizona agencies and political subdivisions from limiting enforcement of federal immigration laws, and another that requires state officials to work with federal officials with regard to undocumented immigrants. It could provide a roadmap for Texas lawmakers to follow.

The lay of the land could change before lawmakers in Texas go into session in January. Arizona’s brief to the 9th U.S. Circuit Court of Appeals is due soon and oral arguments are expected to begin in November.

—Julian Aguilar

Texas ranks fifth nationwide in Supreme Court candidate fundraising, according to a recently released study that tracked campaign spending in state judicial races between 2000 and 2009.

The report, commissioned by three legal reform groups — the Brennan Center for Justice, Justice at Stake, and the Institute on Money in State Politics — found that contributions surged nationally and by state, what it calls "a grave and growing challenge to the impartiality of our nation's courts."

The report comes as states are still struggling to define the contours of their campaign finance laws in the wake of two recent U.S. Supreme Court decisions. In Caperton v. Massey, the court held for the first time that campaign contributions threaten judicial neutrality and could serve as grounds for recusal, and in Citizens United, it paved the way for corporations to spend money in elections. In a conference call with reporters, Charles Hall, Justice at Stake’s communications director, said an "arms race between corporations, nation business groups and unions, attorneys party leaders" has exponentially increased judicial campaign spending throughout the past decade. According to the study, nationwide spending in judicial races rose to a total of $206 million between 2000 and 2009 —compared with $83 million from the previous decade. Those donors are overwhelmingly what Hall calls “super spenders” — special interest groups that have reason to pay attention to who’s on the court.

In Texas, the biggest donors during that period included three of the state's white-shoe law firms, Vinson & Elkins, Haynes and Boone, and Fulbright & Jaworski; tort reform powerhouse Texans for Lawsuit Reform; and, surprisingly, for an all-Republican court, the Texas Democratic Party. During the 2007-2008 cycle, the state Democratic Party spent an estimated $904,000 on TV ads for three candidates— Sam Houston, who challenged Dale Wainwright; Jim Jordan, who challenged Chief Justice Wallace Jefferson; and Linda Reyna Yañez, who challenged Phil Johnson. That sum was enough for the group to trump spending by all others on the list during the whole ten-year period.

In February, The Texas Tribune looked at the top contributors to judicial elections among law firms since 2000. Vinson & Elkins, Haynes and Boone, and Fulbright & Jaworski topped that list, too, but when broken down by employee contributions — that is, how much individuals working at each of the firms contribute — Baker Botts was at the top. Haynes and Boone partner Lynne Liberato, who oversees the firm's political action committee, said at that time it was "just crazy" to believe that “by giving $1,000 or $5,000 to a judge, that's going to change his or her opinion.” She said her firm contributes because of its “interest in a stable judiciary” and that it felt a responsibility to participate in the “system as it exists.”

Still, as James Sample, a law professor at Hofstra University who helped conduct the study, put it: "Nobody wants to look across the aisle in a courtroom knowing that their adversary has spent millions of dollars in support of the individual who's supposed to be impartially deciding their case."

—Morgan Smith

The difference between news and news lite, in one announcement from U.S. Rep. Chet Edwards, D-Waco.

News lite: He won the endorsement of the Texas Farm Bureau. It's important, but not unexpected. News: He won the endorsement of the National Rifle Association Victory Fund, which he's won before but which you might expect to favor the Republican in a closely contested race important to conservatives in Washington. Edwards' challenger is Bill Flores of Bryan, who gets good grades from the NRA, but not its PAC endorsement. Edwards played it nicely, too, creating a diversion from the other story of the day — his non-appearance with visiting VIP Barack Obama, who was in Texas to raise money in Austin and Dallas.

• Put this away for later, if San Antonio Republican Jeff Wentworth really does leave the Senate later this year to take a job (not yet offered, at last check) at Texas A&M. Former House member Bill Seibert, R-San Antonio, is kicking the tires, and Rep. Doug Miller, R-New Braunfels, has friends calling reporters to say he's interested. Others on the list, mentioned here previously, include former Bexar County Commissioner Lyle Larson, who's running for the House, former Chamber of Commerce honcho Joe Krier, who is married to former Sen. Cyndi Krier, R-San Antonio, and Texas Racing Commission Chairman Rolando Pablos, also R, also San Antonio. Were Wentworth to win reelection in November and then quit, it would set up a special election. Miller and Larsen would be able to run without quitting the House (we're assuming here they'll both win in November), and Pablos would have to quit the racing panel to run.

• Republican state officials are once again threatening to sue the federal government, this time over legislation to provide emergency funding for government employees jobs. Texas Democrats in Congress added language requiring the state of Texas to use money designated for education only for that purpose, prompting the governor and other state officials to accuse the congressmen of playing politics with more than $800 million in funding. The Guv says the provision would require the state to guarantee future spending, and that would violate state law.

• Barack Obama was only briefly in Texas this week, but long enough to raise a reported $1 million for the Democratic National Committee. And that was just the Austin fundraiser. After a speech at UT touting the importance of higher education, the President jetted off to Dallas for another fundraiser for the Democratic Senatorial Campaign Committee. The DNC pledged to give at least $250,000 of the money raised here to the Texas Democratic Party.

• The expected budget shortfall continues its path of destruction, as Texas universities, anticipating reduced funding, are offering to buy out tenured faculty members. The University of Texas and Texas A&M currently have offers out to qualified faculty members, and hope to use the savings to avoid cuts to degree programs. The University of Houston is also considering buyouts, after it considers the economic impact of such a move.

• The state’s economy is improving, Comptroller Susan Combs said in an interview with the Associated Press. Her agency has been reporting increases in sales tax receipts since April, although months of drops that preceded that still have the state behind its targets to keep the budget in balance.

The Texas Ethics Commission has July cash on hand numbers for 2,694 political committees and campaigns that together held $167 million last month.

More of the money is at the top than at the bottom. Three hundred of those outfits reported no money on hand. Zero. Zip. Zilch. Less than half — 1,031 — had $10,000 or more. And $10,000 is chump change in a Texas political season. Only 459 had more than $50,000; only 274 of the reports show balances of $100,000 or more. That last bunch is a little over 10 percent of the total number of PACs and campaigns (10.2 percent, to be precise), and they hold $136.2 million, or 82 percent of the money reported by all the filers. Just 48 of the filers had more than $500,000 and they held $90 million at mid-year — more than half the money in all the political accounts. The top tier — those in the million-dollar-plus club — numbers 25. Those accounts had dibs on $73.4 million, or 44 percent of the total.

Enough of that.

The elite include Texans for [Attorney General] Greg Abbott, who led with $11.2 million in his account. Democratic gubernatorial candidate Bill White was next, at $9 million, followed by the Texas Association of Realtors Issues Mobilization PAC, with $7 million; Texans for Rick Perry, with $5.9 million; the Texas Association of Realtors PAC, at $5.1 million; Friends of [Comptroller] Susan Combs, $4.6 million; [Sen.] John Whitmire, $3.6 million; [Lt. Gov.] David Dewhurst Committee, $3.6 million; Texans for Lawsuit Reform PAC, $3.3 million; [Sen.] Kirk Watson, $1.6 million.

The next ten: [Rep. and former House Speaker] Tom Craddick, $1.5 million; Texans for [House Speaker] Joe Straus, $1.5 million; Joe Straus [a separate committee], $1.5 million; [Sen.] Rodney Ellis, $1.4 million; [Sen. Troy] Fraser for Texas Senate, $1.3 million; [former Sen.] Kip Averitt, $1.2 million; Texans for [Rep.] Dan Branch, $1.2 million; [former Rep.] Steven Wolens, $1.2 million; Texas Dental Association PAC, $1.2 million; and [Sen.] Royce West, $1.1 million.

The rest of the top 25: Associated Republicans of Texas Campaign Fund, $1.1 million; Border Health PAC, $1.1 million; Texans for [Agriculture Commissioner] Todd Staples, $1.1 million; [Sen.] Kevin Eltife, $1 million; and the North Texas Leadership PAC, $1 million.

Download a printable copy of the biggest balances here, or get a spreadsheet version here.

Rick Perry and Bill White are starting to engage on a daily basis. The shape of their election fight is starting to solidify, ads are in the works on both sides and if you count third parties on the Democratic side, already running. Mark Barack Obama's fundraising visit to Texas and the campaign gyrations leading up to it in your diary as the public start of the 2010 general election for governor, get your pizza and wings, and settle in for the show.

Campaigns traditionally start around Labor Day. It's more accurate to say they start at about the same time public school students return to class (August 23, if you don't have a school calendar on the fridge). Vacation season is over for most folks at that point, and they're settling into the fall, the football and election seasons.

Maybe, however, not the debate season. Perry, after talking to the Texas Association of Broadcasters, told reporters he won't debate until White releases personal tax returns from his time as assistant U.S. secretary of energy. "I suggest there's something there, or he would have already laid them out and said, 'Not a problem,'" Perry said.

White countered a few minutes later (the two appeared about 20 minutes apart at the TAB's convention and weren't in the room at the same time), saying he's disclosed far more than the governor has. And he reopened his criticism of Perry's blind trust. "People know a lot less about Rick Perry's income, assets, and debts than they do mine. That's a fact. As governor, I would not hide assets in a blind trust."

They're sparring on ethics and each other's finances as much as on issues, and on similar tacks. White says Perry has become wealthy while serving the last quarter century in government jobs and raises questions about how that's possible. Perry accuses White of using his public positions in state and local government to create opportunities he's exploited floating between the public and private sectors. White unveiled an ethics proposal this week that would limit contributions from people a governor appoints to office; White himself has received roughly $2 million in political contributions over the years from people he appointed as mayor. He says the city's contribution limits were within what he's proposed for the state. And he says Perry has been particularly abusive of the appointment process, with more than 1,000 appointees listed among his donors and 44 appointees who've given $100,000 or more.

It's not all ankle-biting. Perry gave the broadcasters his standard stump speech on the strength of the Texas economy, on the problems the state has with the federal government and about some of his campaign proposals, such as requiring a two-thirds vote of the Legislature before taxes can be raised (right now, a simple majority can raise taxes). Perry again scolded the Obama administration for not sending more troops to secure the border and said, "it's only a matter of time" before drug cartel violence in Mexico spills over into Texas.

White's pitch shared some elements of Perry's. He touted the state's economic strength, but took the time to argue that Perry had nothing to do with the state's present prosperity, and he said the state should focus on education to maintain its economic position, cutting dropouts and increasing graduation rates.