The 83rd Comes to Town

Time lapse video of the opening day of the 83rd Legislature on Tuesday, as the Capitol welcomed legislators, their families, staff, lobbyists and hundreds of other Texans.

It started with a relatively sunny fiscal forecast from Comptroller Susan Combs, who said the state will end the current budget with $8.8 billion, and that it will have $11.8 billion in the Rainy Day Fund at the end of the two years. That’s assuming lawmakers don’t use any rainy day money and that they leave that $8.8 billion alone — which is unlikely, since they’re writing a supplemental appropriations bill to cover Medicaid and other holes in the current budget.

The comptroller’s forecast was a couple of billion more positive than some of the Capitol’s budgeteers expected, fueling Gov. Rick Perry’s pitch for tax cuts or tax refunds. From the government’s standpoint — from the budgeteers’ standpoint — that’s a spending plan. And there is competition.

Lt. Gov. David Dewhurst took the first real crack at the supplemental bill, saying it will include $4.5 billion to finance Medicaid through the end of the fiscal year, and another $700 million to cover unexpected wildfires and health care costs in the state’s prison system. Not on his list: The $1.9 billion that would replace a missed Foundation School Plan payment in the current budget (which was balanced, in part, by moving one monthly payment at the end of the biennium by one day, into the next budget). Paying that in the supplemental bill would put the spending in the current budget. That would raise the base number that, when multiplied by the state’s adopted growth rate cap, limits how much lawmakers get to spend in the next budget.

It also doesn’t include any replacement money for education. The state’s three leaders are taking the position, for now, that public education cuts made two years ago don’t need patching right now.

Those limits might be pointless in the end; the verdict in the school finance trial that’s now underway could force lawmakers to spend more on public education, busting whatever cap they set.

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Rep. David Simpson, R-Longview, wanted to be speaker of the House but showed up in a racecar with no wheels and no engine. His challenge to Joe Straus, R-San Antonio, ended with a personal privilege speech in which he vaguely referred to a culture of retribution that made it difficult to force a vote when victory was uncertain. He never fleshed out those claims, at least publicly, and Straus was elected in a voice vote without objection.

On the other end of the building, the Senate left its two-thirds rule in place — that’s the one some Republicans were worked up about — and instead made a change that takes must-pass sunset legislation out of the hands of Sen. Judith Zaffirini, a Laredo Democrat who is not beloved in the Republican Caucus. Last year, Dewhurst moved her from the top spot in the Higher Education Committee and put her in charge of Government Organization. That’s where all of the sunset legislation goes, or was, until the new rules were passed. Now those bills go to their respective jurisdictional committees, and the sponsors of those bills don’t have to solicit favorable treatment from Zaffirini, who might turn out to be the most interesting idled senator since Lt. Gov. Bob Bullock busted Ike Harris, R-Dallas, in 1991.

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Last, the three state leaders are back to their weekly breakfasts and since it’s the start of the session, it’s kumbaya time. Perry, Dewhurst and Straus agree publicly that lawmakers shouldn’t rush to spend money and that they should concentrate on infrastructure, water, transportation, education and truth in budgeting. Perry wants money for tax breaks. Dewhurst wants to save money against the school finance verdicts.

Preliminary budgets and working papers should come out next week from the Legislative Budget Board, the House and the Senate.

Texas lawmakers don’t meet for 140 days every two years — they meet during a 140-day period every two years. They take off for weekends, and more. Presidential inaugurations and holidays, for instance. Next week, they’ll meet for three days and then they’ll break for six. The week after that, they’ll hear the governor’s State of the State speech. Then they’ll name committees. Then they’ll start working on legislation.

* * * * *

The special election to replace the late Mario Gallegos is underway in Houston, with early voting for the eight people — four Democrats, two Republicans, a Green and an independent — who signed up. Election Day is Saturday, January 26.

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The state Constitution doesn’t set the time for it, but it does apparently require senators to draw lots after their districts are drawn to find out who was elected to two-year terms and who was elected to four-year terms. There has been talk of waiting to see what the U.S. Supreme Court does with outstanding redistricting litigation, but tradition would have senators drawing sooner than that. Two year terms could arguably be vexing for Sens. Donna Campbell, R-New Braunfels, and Wendy Davis, D-Fort Worth. Campbell, a freshman, could face a challenge from San Antonio, where the same business community that ran over incumbent Republican Jeff Wentworth in the primaries would like to bring the seat back to their city. Davis has won twice in Republican territory, but never in a gubernatorial election year without Barack Obama at the top of the ticket.

It might not matter who draws what. The court could order changes that put all 31 Senate districts on the ballot once again in 2014, and the calculations could all change with new maps.

Two from Two Years Ago: Medicaid and Women's Health

With barely a foot in the door, legislators are already scurrying around the Capitol to make a deal to keep Medicaid afloat. Meanwhile, down the street at the Travis County District courthouse, the state’s lawyers are attempting to drown out Planned Parenthood’s arguments that the organization shouldn’t be excluded from the Texas Women’s Health Program.

“This is a must-pass issue, and we have to deal with it swiftly. We have until March to push this through,” said Sen. Jane Nelson, R-Flower Mound and chair of the Senate Health and Human Services Committee, in an email on the need for a Medicaid supplemental financing bill.

Based on current cost trends, the Health and Human Services Commission must receive $4.7 billion to continue financing Medicaid by March “to avoid cash flow issues,” said Stephanie Goodman, a spokeswoman for the agency.

Lt. Gov. David Dewhurst said that the Senate plans to present a $5.2 billion supplemental bill — including $4.5 billion to fund Medicaid — to cover unsupported spending in the 2012-13 biennium budget next week. That would eat up the majority of the $8.8 billion ending balance the state comptroller forecast for the 2012-13 biennium budget. 

The supplemental bill “will cover the six months of Medicaid funding which we didn’t pay for in 2011,” said Dewhurst, “…which in retrospect was a wise decision because we were able to realize $2 billion in savings that we would not be able to realize otherwise.”

In the last two years, the agency saved $1.1 billion by expanding Medicaid managed care statewide and $955 million in general revenue from other cost containment initiatives approved during the 2011 legislative session, according to a consolidated budget report presented to Texas lawmakers.

Dewhurst’s comment was made under the assumption that by not fully financing Medicaid, those reforms were more effective, because there was added pressure on the agency to save money.

Developments in the state’s ongoing legal battle with Planned Parenthood could also impact lawmaker’s plans in the coming weeks for legislation regarding the state-funded Texas Women’s Health Program, which replaced the joint state-federal Medicaid Women’s Health Program in January. The federal government cut off its share of funding for the Medicaid WHP in response to the state’s efforts to implement the Affiliate Ban Rule, which prohibits providers affiliated with abortion providers from participating in the program. 

Planned Parenthood has filed multiple lawsuits seeking to overturn the state’s Affiliate Ban Rule. At a hearing in Travis County Court on Friday, Planned Parenthood will ask for a temporary injunction to be included in the state’s family planning program for low-income women until a full trial can be held. The organization is also asking the court to overturn a “poison pill” rule created by the Department of State Health Services, which runs the Texas Women’s Health Program, that would force the state to shut down the program if a court overturned the Affiliate Ban Rule.

Planned Parenthood previously argued in court that a state agency does not have the authority to establish such a rule. “That is the kind of drastic action that you have to have statutory authority for and they don’t,” said Pete Schenkkan, a lawyer representing Planned Parenthood at a hearing in December.

Lawmakers considered adding the “poison pill” provision to the law establishing the Affiliate Ban Rule that passed in 2011, but the measure was ultimately not included. While Rep. Lon Burnam, D-Fort Worth, has already filed a bill to overturn the Affiliate Ban Rule in support of Planned Parenthood, Republicans in favor of excluding the organization from the Texas Women’s Health Program may consider adding stricter statutes to ensure Planned Parenthood’s court pursuits are not successful.

Proposed Rules Spark Concern About Campus Construction

UTEP campus on Jan. 31, 2012.
UTEP campus on Jan. 31, 2012.

University officials from around the state — baffled by proposed rule changes on construction funding — will seek some clarity from the Texas Higher Education Coordinating Board next week.

The proposed revisions deal with the board’s approval process for campus buildings funded with student fees. The rules would allow the board to consider the financial impact on students when determining whether or not to approve a project, and also require that student funds account for no more than 75 percent of any capital construction projects.

The change appears to have been inspired by discussions surrounding a new student union at the University of North Texas, which to the surprise of many observers, the board declined to approve at its October board meeting.

UNT students held an election and approved a $114 per semester fee that, in the initial proposal, would finance more than 90 percent of the building. But only 10 percent of the student body participated in the election, and within that small group, only 54 percent were in favor of the idea.

“You can scramble this, bake it, flip it up and down, hang it from the ceiling, whatever you want to do with it, that’s woefully low,” THECB board member Dennis Golden told UNT President V. Lane Rawlins.

UNT officials pointed out that a 10 percent turnout is actually higher than is typical in a student election on their campus, and said they had actively tried to encourage student participation.

For what it’s worth, it’s a higher turnout of eligible voters than in many statewide elections. But the board was not satisfied.

“In the future, I’m going to scrutinize the student participation of these types of projects,” Golden said.

Board member Munir Lalani noted that the building had been part of UNT’s plans for many years and wondered why the school had not secured more private funds to support it. He estimated they could have brought the burden on students down by up to 30 percent.

But with the exception of top-tier universities, it can be difficult to gin up interest in naming rights that sometimes go with private funding.

“In very few corners of higher education can you raise money to name buildings,” Rawlins explained. “You have buildings named, but that’s not why the gift was given.”

The 75 percent ceiling for student funding is already the coordinating board’s rule for athletic facilities. But particularly at the smaller institutions, there is concern that these new rule changes, if they go forward, will make it very difficult to get any non-athletic buildings approved.

University officials are not eager to discuss their concerns on the record, but several expressed frustration at what they perceived as a potential move toward increased regulation from the coordinating board.

Meanwhile, the student union at UNT, which was resubmitted with a new funding sources that reduced the students financing to about 88 percent, is still awaiting approval from the full board.

Newsreel: Opening Days

The kickoff of the 83rd legislative session packed few surprises. The Texas Senate voted on rules, Joe Straus won without breaking a sweat, Comptroller Susan Combs announced the state budget forecast and Gov. Rick Perry laid out his priorities for the 140-day session.

Inside Intelligence: About That Money...

Our insiders got a look at the first week of the legislative session and said the improved fiscal outlook from the comptroller is most likely to translate into tax cuts or refunds, in spite of budget cuts two years ago and pressing infrastructure needs. Tax relief was the only option that got votes from half or more of the insiders; the next most popular options were hold the money and wait for a school finance verdict, or use it on infrastructure or to restore budget cuts.

Flip a coin on the chances for change in the state’s business taxes. Lawmakers are talking about it, but school finance could be the bug in this soup, too. Around two in five insiders said chances are good or excellent; about as many said chances are poor or lousy.

The economic development funds in the governor’s office probably will be continued by budget-writers, 78 percent of the insiders said. Another oft-talked-about idea — curtailing gimmicks and diversions and such in the state budget — split the respondents: 51 percent said lawmakers will do something and 45 percent said they won’t.

As always, we have attached all of the verbatim responses to the questions. Here’s a sampling:


With the rosy budget outlook from the comptroller, what will legislators do with the money?

"If refunds are constitutional, maybe they should start by refunding the extra tax on electric bills paid each month by consumers in deregulated areas. After all, they've been helping certify the budget for the entire state for almost a decade now."

• "More money for education no matter what."

• "Infrastructure funding is the only thing likely to happen.  A distant second may be giving money back to the taxpayers."

• "Restore some cuts, namely education and Medicare, and hopefully be responsible adults and plan for our future: water, transpo, and infrastructure!  Without those, we lose our economic advantage."

• "Tax cut: their time horizon is the next election, not the next generation"

• "What else do we expect from this group of extremists?  Long term health of the state be damned."

• "All of the above."

• "Combination of water, highways, and tax cuts."


How would you rate the chances for revisions to the state’s business margins tax during the regular session, given the rosy revenue predictions from the comptroller?

• "We are working on several tweaks to the margins tax. While complete exemptions have increased from 150,000 to 1 million for some businesses in Texas since 2006, other are paying up to 20 x more in taxes than prior to 2006."

• "Interest is increasing. The possibility of delivering a mortal blow to an unpopular business tax is stirring campaign stump speech writers into a froth"

• "Any possible tax revisions considered will be minor, because the outcome of the pending school finance lawsuits will alter the tax landscape - so why cut off your nose to spite your face!"

• "It was a BAD idea from the beginning."

• "This leadership has shown a propensity for not tackling big issues."

• "Maybe they will rearrange the furniture, but large changes seem unlikely."

• "The revenue projection isn't rosy."

• "Republicans will avoid any issue that can be messaged into a 'he/she raised taxes.' For Republicans, every vote taken this session is an opening for a primary challenge."

• "They won't change any taxes until they find out what they need for school finance"


With the coffers full, will lawmakers continue the governor’s Emerging Technologies Fund and the Texas Enterprise Fund in the next budget?

• "The results speak for themselves - it's supported by the house and senate and acts like an earmark to the members in the district."

• "The Enterprise fund is here to stay.  The Emerging Tech fund may be on life support."

• "The ROI is proven.  Let's keep the party going!"

• "We need to stop corporate welfare it just doesn't work."

• "Not without changes and lots of oversight"

• "Why wouldn't they?  These are things that attract new business to provide our revenue stream."

• "The coffers aren't full, but they will continue the funds."

• "With an effort for added accountability and increased transparency...perhaps an attempt to limit projects eligible as well."

• "These quasi government agencies are starting to pose a danger to Republicans. The primary base does not believe in them."


Will legislators make major changes to their budget practices this session, curtailing fund diversions, delayed payments and similar practices?

• "They'll make some changes but total reform is unlikely"

• "Good reform - eliminate diversions. More good campaign deliverables."

• "There will be some reform of fund diversions because the fee-payers are growing tired of paying into a system that doesn't pay them back.  Other schemes like delayed payments will continue as means to certify the budget."

• "The game's been played like this for far longer than people care to admit; it didn't just happen last session.  In essence, you can't teach an old dog, like the Lege, new tricks."

• "Gotta keep the accounting tricks in place just in case those rosy predictions turn out not so rosy the next budget cycle, as is often the case."

• "Parks have been devastated because the license fee to which they are entitled and NEED for park improvements, infrastructure, etc. - will demand their monies be given to them.  No more sweeping of funds."

• "'Smoke and mirrors' is an insulting term for an important, legitimate process.  Any responsible private business, when under pressure, delays its payables and accelerates its receivables - and the State can and should (and does) do the same thing.  It would be irresponsible in the extreme to prohibit those practices for future economic downturns.  As for diversions and transparency?  We'll see if members have the intestinal fortitude to tackle those, and if leadership is serious about making changes."

• "Can't afford it."

• "They'll talk about it a lot.  Does that count?"

Our thanks to this week's participants: Cathie Adams, Brandon Aghamalian, Jenny Aghamalian, Victor Alcorta, Clyde Alexander, George Allen, David Anthony, Jay Arnold, Charles Bailey, Tom Banning, Amy Beneski, Andrew Biar, Allen Blakemore, Tom Blanton, Chris Britton, Andy Brown, David Cabrales, Lydia Camarillo, Thure Cannon, Janis Carter, Elizabeth Christian, Elna Christopher, Rick Cofer, John Colyandro, Harold Cook, Beth Cubriel, Randy Cubriel, Denise Davis, Hector De Leon, Eva De Luna-Castro, June Deadrick, Nora Del Bosque, Tom Duffy, David Dunn, Jeff Eller, Jack Erskine, John Esparza, Rebecca Flores, Wil Galloway, Neftali Garcia, Norman Garza, Dominic Giarratani, Bruce Gibson, Stephanie Gibson, Kinnan Golemon, Daniel Gonzalez, Kathy Grant, John Greytok, Jack Gullahorn, Clint Hackney, Anthony Haley, Wayne Hamilton, Bill Hammond, Adam Haynes, John Heasley, Jim Henson, Ken Hodges, Billy Howe, Laura Huffman, Shanna Igo, Deborah Ingersoll, Cal Jillson, Jason Johnson, Bill Jones, Mark Jones, Robert Jones, Lisa Kaufman, Robert Kepple, Richard Khouri, Tom Kleinworth, Ramey Ko, Sandy Kress, Pete Laney, Dick Lavine, James LeBas, Donald Lee, Luke Legate, Leslie Lemon, Elizabeth Lippincott, Ruben Longoria, Homero Lucero, Vilma Luna, Matt Mackowiak, Luke Marchant, Dan McClung, Parker McCollough, Scott McCown, Mike McKinney, Robert Miller, Bee Moorhead, Craig Murphy, Keir Murray, Keats Norfleet, Pat Nugent, Nef Partida, Gardner Pate, Jerry Philips, Tom Phillips, Richard Pineda, Allen Place, Royce Poinsett, Kraege Polan, Gary Polland, Jay Propes, Ted Melina Raab, Bill Ratliff, Karen Reagan, Tim Reeves, Patrick Reinhart, Jason Sabo, Andy Sansom, Stan Schlueter, Bruce Scott, Robert Scott, Dan Shelley, Bradford Shields, Christopher Shields, Jason Skaggs, Ed Small, Martha Smiley, Todd Smith, Larry Soward, Dennis Speight, Bob Strauser, Colin Strother, Sherry Sylvester, Jay Thompson, Russ Tidwell, Trent Townsend, Trey Trainor, Ware Wendell, Ken Whalen, Darren Whitehurst, Seth Winick, Lee Woods, Peck Young, Angelo Zottarelli.


The Week in the Rearview Mirror

State Rep. Allan Ritter, R-Nederland, filed two bills Thursday that would allocate a one-time, $2 billion sum from Texas' Rainy Day Fund to create a revolving fund for water-supply projects. Ritter, who chairs the House Natural Resources Committee, is a key figure on water issues in the drought-ravaged state. House Speaker Joe Straus, R-San Antonio, has said he is looking to Ritter's leadership on water. Of the several water bills and proposals from state leaders, Ritter's proposed sum is the largest; he wants to get initial money from the state's Rainy Day Fund.

Rice farmers could find themselves on the losing end of a water plan drafted by the Lower Colorado River Authority unless the state sees significant rainfall in the next few weeks. The Central Texas water authority is trying to preserve water in the Highland Lakes for use in the area, and is declining to release it downstream for the rice farmers' use unless lake levels rise by March 1. The same rice farmers did not get any Highland Lakes water last year and say that if they don’t get any this year, it will be economically devastating.

National debate over gun control has led officials in Central Texas to discuss banning gun shows that have been regularly held at the Travis County Expo Center. Opponents of the shows say customers can purchase guns from private citizens rather than dealers, who are required to run background checks. Both Travis County and the city of Austin are considering some sort of regulation of the shows, but are moving cautiously through the legalities of establishing new rules. County commissioners postponed a scheduled vote after meeting with county attorneys to discuss the legality of a ban. 

A new Super PAC formed by former U.S. Rep. Gabrielle Giffords and her husband Mark Kelley received a $1 million donation from Houston attorneys and major Democratic donors Steve and Amber Mostyn. Steve Mostyn is listed as treasurer of the association, Americans for Responsible Solutions. He is advocating for a common-sense discussion of gun control and a counterbalance to the National Rifle Association. He also announced that the group would have a nonprofit component that would wage public education campaigns. 

The School Land Board voted to release $300 million to the state's Available School Fund. Real estate investments earn money for the state through the General Land Office, and a constitutional amendment approved by voters last November allows the School Land Board discretion to disburse the proceeds directly into the fund. The board refused to distribute any of the funds in July, when its three members insisted that it wanted to preserve the funds for future investments. Under pressure from legislators, the board voted this week to release the money in two installments: $150 million in February and the remaining $150 million in June. Land Commissioner Jerry Patterson continued to object to releasing the money and voted against the measure.

As the state continued its defense of its public school funding during the state school finance trial, a Texas Education Agency official was forced to admit that she made calculation errors in a report relied on to provide information comparing districts. Lisa Dawn-Fisher, the Texas Education Agency’s associate commissioner of finance, revealed the errors during testimony, prompting Judge John Dietz to order the report to be redone. 

Google has announced that it’s investing in a West Texas wind farm. The $200 million investment will go to the Spinning Spur Wind Farm, a 28,000-acre development northwest of Vega. EDF Renewable Energy, the owner of the facility, expressed enthusiasm over partnering with a private company rather than a financial institution. In its statement, Google also expressed its hopes for making what it called a smart investment.

A Texas company that has been collaborating with scientists to develop a technique for preserving bread has applied for a patent on the technology and is publicizing the benefits in an effort to line up investors. MicroZap claims that its process of microwaving bread allows it to remain mold-free for up to 60 days. 

Political People and their Moves

Texas senators elected Leticia Van de Putte, D-San Antonio, to serve as president pro tempore of the 83rd legislative session.

Emily Fourmy Cutrer was appointed president of Texas A&M University-Texarkana by the board of regents and starts work next week. She was most recently provost and vice president for academic affairs at California State University San Marcos, and worked at Arizona State and the University of Texas-Austin before that. 

Former Rep. Burt Solomons, R-Carrollton, has officially hung out a lobby shingle; he’ll office with Adams & Zottarelli, and brought former general counsel Carsi Mitzner along to the new firm.

Chloe Lieberknecht joined The Nature Conservancy as director of government relations after 11 years at the Texas Sunset Advisory Commission.

James Bernsen, who did communications on Ted Cruz’s campaign for U.S. Senate, joins Crosswind Media & Public Relations in Austin.

Former House staffer Stephen Raines is now the government affairs manager for Preferred Care Partners Management Group, a nursing home operator.

Brendan Steinhauser joins the Texas Public Policy Foundation as the director of communications for its Right on Crime project. He was most recently at FreedomWorks. 

Gov. Rick Perry has appointed Ernest “Ernie” Kuehne Jr. of Dallas to the University of North Texas System Board of Regents. Kuehne is an attorney and president and board chairman of Kuehne Oil Company.

Perry also appointed Bradley S. Hart of Humble as judge of the 230th Judicial District Court in Harris County.   Hart is an assistant district attorney for Harris County.

Perry reappointed Alan Johnson of Harlingen, president and CEO of Valley Baptist Service Corp., to the Veterans’ Land Board.

The governor appointed veterinarian Kenneth Motl of Port Lavaca to the Guadalupe-Blanco River Authority’s board of directors.

He named banker Henry Borbolla III of Fort Worth and Tom Fordyce of Huntsville, chairman of the Huntsville Economic Development Council, to the Trinity River Authority board.

Perry appointed Randy Watson of Burleson to the state’s Public Safety Commission, which oversees the state police. Watson is the chairman and CEO of Justin Brands.

Press Corps moves: Texas Monthly adds Brian Sweany and Erica Grieder to its political staff, joining the venerable Paul Burka, who’ll continue his Burkablog... And radio newsman Scott Braddock joins the staff of the Quorum Report for the legislative session, officially starting next month. 

Quotes of the Week

Trust me when I tell you that there are interests all across the state who view Monday's revenue estimates as the equivalent of ringing the dinner bell. They all want more for their causes. They all figure we have manna falling from heaven, and they have all of y'alls' addresses and phone numbers.

Gov. Rick Perry on Comptroller Susan Combs' new revenue projections

I don't think we have a surplus. If you don't pay your bills of course you can have a surplus.

Sen. John Whitmire, D-Houston, on the state’s fiscal condition

I totally understand the comptroller having a hard time guessing what the revenue is going to be. I would hope this one is a little more accurate.

Lt. Gov. David Dewhurst, on the inaccuracy of the comptroller’s two-year-old forecast of revenues, and her new estimate.

Forty percent of our school districts have sued us. So we’re going to have a court, one or more courts, tell us what is the right number for us to put in and we’ll fund it.

Dewhurst, on what’s next for public school funding

I've been underestimated many times before so we'll just let it sit right there.

Perry, responding to a WFAA-TV report that Attorney General Greg Abbott might challenge him in 2014, and has more money on hand than the governor

For anyone who is a fan of limited government, for anyone who is a fiscal conservative and economic conservative, Nov. 6, 2012, was an ugly, ugly day.

U.S. Sen. Ted Cruz at a Texas Public Policy Foundation event

He’s just a goofy guy, so I wouldn’t think that he would do something like this. God told him that this is where he wants him to be.

Telsa Hildebrant, on her cousin-in-law, freshman Rep. Jonathan Stickland