The Wrong Kind of Boom

Republican budgeteers missed a shot at limiting the amount of spending to be done by the next Legislature, falling a vote short in their attempt to tie the state budget to a conservative measure of economic growth. And the numbers will have another chance or two to balloon over the next seven months, as lawmakers wrestle with the sputtering economy.

Personal income in Texas, according to Comptroller Carole Keeton Rylander, will grow at rate of 11.83 percent over the next two years. That number has a bit of magic about it, as will the revenue estimate expected from Rylander between now and the beginning of the legislative session.

The lower of those two numbers will become the upper limit on state spending over the next two years. Budget writers can only spend the money they have—deficit spending is unconstitutional here without a nearly impossible to achieve super-majority of the Legislature— and the comptroller is the official who says how much money they have to spend. The other barrier appears when the Legislative Budget Board votes to choose a forecast of how the personal incomes of Texans will fare over the next two years. The discretionary portion of the state budget is tied to that growth rate (or rate of decline). Pick a low growth rate and spending growth is limited to that; pick a large one, and the Legislature has more flexibility.

Three of the Republicans on the LBB wanted to pick a lower number. They're not confident about the economy at the moment, and said a lower growth rate would be more prudent. A lower rate would also have the effect of reining in the next set of budgeteers. It'll be a Republican Legislature for the first time since Reconstruction, but some of the GOP's leaders thought it would be easier to control spending at the LBB level than before the entire Legislature.

If the current budget remains on track, the LBB vote means that the $49.1 billion in discretionary spending (non-federal, non-dedicated spending) can grow as much as 11.83 percent next year. Now that the rate of growth is locked in, however, the base number will probably move.

Sales taxes last year fell $571.4 million short of the comptroller's estimate, and natural gas taxes were $199.1 million light. The drop in natural gas taxes isn't a direct hit on state spending, since most of that money is earmarked for the Rainy Day fund. About a fourth of the drop—about $50 million—hits state spending, and the rest—about $150 million—is money that would have gone into the state's savings account. Some taxes are doing better than expected, like franchise, tobacco and inheritance taxes, which brought in over $200 million more than they were supposed to. And the same thing that's been happening to your insurance premiums is happening to the tax on those premiums: Insurance taxes brought in $250.3 million more than the comptroller had predicted.

The bottom line? Overall state taxes were $310 million short during the last fiscal year, and the comptroller had predicted that they would rise. A quick turn in the economy could flip things right-side-up, but that doesn't appear to be happening. With nine months left in the fiscal year, the sales tax is not only behind predictions, it's bringing in slightly less money than it brought in last year. November sales tax numbers won't be out for a couple of weeks, but sales tax revenues have been down, on a year-to-year comparison, during each of the last four months.

That leaves lawmakers with the prospect of raising money through emergency appropriations next year to balance the current budget. An emergency appropriations bill would increase the base number for the growth limit, meaning the next state budget could grow by that much more.

Playing Defense

Speaker-apparent Tom Craddick, R-Midland, wants his own spin on his dealings with Cap Rock Energy, and he's sent a letter to fellow House members spelling out his version of what happened.

At the risk of repeating all of the allegations, Craddick starts with a reference to newspaper reports that he earned $28,500 in a deal involving a Cap Rock affiliate, that he amended a utility bill in a way that is beneficial to that company alone, and that his daughter's job as a lobbyist raises questions about conflicts of interest.

As for the first bit, he says he and a group of investors—not including anyone from Cap Rock—bought some land in 1995. One of the sellers later became involved with Cap Rock, but wasn't involved with the company at the time of the sale, he writes. In 1998, he says he acted as broker for some mineral interests held by an estate; the high bidder was a Cap Rock subsidiary and he did indeed split a commission of $28,500, he says.

Later, Cap Rock offered him a position on its board "because of my business background, and reputation in the community." He turned it down "to avoid any appearance of impropriety."

Next, he says his daughter, Christi Craddick, decided "many months ago" to give up her lobby practice should he succeed in his quest to become Speaker of the House. "I am touched and proud that Christi has chosen to make this professional sacrifice to dispel any appearance of a lack of integrity in my speakership." That's partly a new issue: The Fort Worth Star-Telegram reported she was one of the lobbyists for Cap Rock when the utility bill carrying her father's amendment was in the works. Apparent conflicts have risen before, however. Craddick once made a personal privilege speech on the House floor to protest a Houston Chronicle story about his daughter's lobbying. The paper said Craddick was pushing a tax break for one of his daughter's clients. Later, the Wall Street Journal's Texas Journal reported Craddick carried franchise tax legislation favored by one of his daughter's clients.

Finally, Craddick says the amendment he carried didn't do what the papers say it did. The favorable deal for Cap Rock was added in the Senate. The bill was rewritten on the House side, and he says he argued for certain appeals rights for ratepayers.

Dueling Fundraisers

Okay, it's probably not a sinister omen about cooperation or anything, but the incoming lieutenant governor, David Dewhurst, and probable Speaker Craddick, will be dragging the sack for contributions the same night. Both will have Austin fundraisers on December 3—Dewhurst at the Four Seasons Hotel, and Craddick at the Westwood Country Club. Craddick's is hosted by the same two lobbyists who are guiding his transition into office—Bill Messer and Bill Miller. Craddick, who hasn't had a serious opponent in years, lists only modest amounts in his campaign finance reports. But speakers spend a lot more money on officeholder business—from traveling to other parts of the state to supplementing staff salaries—and the lobbyists are helping Craddick raise money to take care of some of those expenses. What about Dewhurst? He loaned his campaign $13 million, including $3 million in mid-October. Contributions will help him pay himself back.

A Debt to Society

Judge Paul Womack of the Texas Court of Criminal Appeals owes the state $20,000 in fines because he didn't file a couple of campaign finance reports on time. Womack didn't file a required report before the March primary, and skipped another one a month later, before the April runoff election. The judge, who sits on the state's highest criminal court, waited until stories appeared in some of the state's biggest newspapers to do something about it, then asked the Texas Ethics Commission to reduce the penalties. After the November election—in which Womack beat Democrat Pat Montgomery by 634,638 votes—that ethics panel turned him down. The commission says the judge owes the state $10,000 for each violation of the law. They sent him a letter (with a copy to the attorney general's office) demanding payment by the end of the month. Womack couldn't be reached for comment.

Two Weeks, Noticed

Texas Railroad Commissioner Charles Matthews tried to start the holidays by firing the staff of outgoing Commissioner Tony Garza, but he was stopped for lack of another vote from RRC Chairman Michael Williams.

Garza quit the commission to become the U.S. Ambassador to Mexico, a posting that had been expected for some time, but without any definite timetable attached. President George W. Bush appointed Garza and then tossed his name to the Senate. That body could have acted any time during the last several months to either turn down the appointment or approve it, and Garza told his staff he'd give them two weeks to exit once he had a firm quitting date in hand.

But Matthews got the issue added to the commission's agenda—on an emergency basis—because he said the four employees who got the two weeks to close things down after Garza left amounted to "a request for the taxpayers to pay people for doing nothing." Matthews said former commissioners had taken their staffs with them, or let them go, when those commissioners left—all of them either because of elections or voluntary resignations—and that Garza might be expected to do the same.

"I'm not trying to be overly harsh, but I simply do not agree with people staying here for previous commissioners and I'll tell you that whenever my time comes to leave, this will not be an issue for my successors," Matthews said.

Williams responded by calling Matthews' request "perhaps one of the lowest" moments in his time at the commission and said the four Garza aides would have plenty of "close-up responsibilities" for their remaining time. He seemed pretty irked about the whole deal: "We're talking about two weeks. We're talking about eight thousand bucks."

He went on to attack Matthews, saying his own budget was lower than Matthews and suggesting that the costs of keeping the four employees on board for two weeks "could be more than made up by, quite frankly, the overages, commissioner, that we see in your own budget in looking at your out-of-state travel budget..."

Matthews said he disagreed with Williams' position, and Williams adjourned the meeting. The employees remain on the payroll through December 2, when they'll be leaving for other pastures. Meanwhile, Gov. Rick Perry is looking for someone to replace Garza at the agency.

Report Card

The state gave teachers a pay raise in 1999, but other states have been doing the same thing, apparently: The National Education Association says teachers here ranked 30th in the nation in pay last year. Texas got all the way up to 26th during the previous school year, right after the pay raise, but teachers in other states have seen some more recent advances and have crept back ahead of us. The average salary for a public school teacher in Texas last year, the group says, was $39,232. The national average was $44,499, up 2.7 percent from the year before.

Teachers in 15 states made more than the average, with the highest-paid, on average, in California ($53,870 a year) and the lowest in South Dakota ($31,295 annually).

Texas ranked second behind California in school population, with 4.1 million kids in school (California had 6.1 million in school last year). But among the states with the ten-largest school populations, Texas ranked last in the 2001-02 school year, right behind Florida.

Texas ranked third in overall public school spending, behind California and New York, and the state ranked third in state spending on education (as opposed to combined state and local spending). When NEA looked at total spending per pupil, Texas came in 28th, at $6,850. California was 29th.

A Republican State, By the Numbers

Texas political consultants like to talk about a natural Republican advantage of four to eight points, depending on their optimism and the amount of beer they've had in the previous hour. But those numbers were on the low side in November. Most Democrats had a hard time getting more than 42 percent of the electorate. Most of the Republicans on the statewide ballot got between 54 percent and 58 percent of the vote in the elections. We didn't notice this all by ourselves, but we got curious when someone pointed it out, looked into it, and the numbers stay remarkably consistent.

Start with the judicial races. There were five races on the ballot for spots on the Texas Supreme Court. Republicans won all five with percentage totals ranging from a high of 57.7 percent (Chief Justice Tom Phillips) to a low of 54.1 percent (newcomer Steven Wayne Smith). Three races for the Texas Court of Criminal Appeals ended up almost identically, with winning Republican percentages ranging from 57.4 percent to 58.3 percent. The GOP percentage didn't change appreciably when there were third party candidates in the races, either.

Better-known statewide candidates moved the numbers a little bit. The closest race was the contest for lieutenant governor. Republican David Dewhurst got 51.8 percent of the vote. The biggest margin was in the race for comptroller, where Carole Keeton Rylander got 64.2 percent of the vote. The rest of the races finished close to the margins in the court races, ranging from a low of 53.2 for Land Commissioner-elect Jerry Patterson to a high of 59.5 for Agriculture Commissioner Susan Combs. Gov. Rick Perry got 57.8 percent. U.S. Sen. John Cornyn got 55.3 percent.

Put Ticket-Splitters on the Watch List

What about the adage that Texans vote Republican at the top and then break for the Democrats? That was less true this year than in the past.

If you add up the votes in the 32 races for Congress, you'll find that 53.3 percent of Texans voted for a Republican and 43.9 percent voted for a Democrat. Now, because of redistricting and peculiarities of the map handed down by three federal judges last year, the Democrat-dominated Texas delegation held its ground in congressional fights. But Democrats were generally elected in districts where fewer people voted—Republicans in districts where more voters showed up. Those numbers are apparent in the margins in statewide races, and, as it turns out, in races for the Texas Legislature.

In the 31 races for Texas Senate, 58.3 percent of the votes went to Republican candidates, against 38.4 percent for Democrats. That's pretty close to the actual results in the Senate, which will open for business in January with 19 Republicans and 12 Democrats. Libertarians, by the way, got 4.3 percent of the votes cast in races for the Texas Senate, although they reserved their best performances for races with only one major party candidate.

The numbers held strong in the Texas House, too. There, Republicans got 58.75 percent of the total votes cast, compared to 39.4 percent for the Democrats. As with the Senate results, the ratios of Republicans to Democrats in the chamber next January, 88-62, matches right up with those results.

The districts were resized in redistricting, but you can't tell it from turnout. In all three types of legislative races—Congress, Texas Senate and House—Democrats who won took their victories with fewer votes than Republicans who won. The average Democratic incumbent in the Texas House got 17,384 votes. The average Republican incumbent got 23,530 votes. The average Senate Democratic incumbent got 79,500 votes; Republican incumbents got an average of 116,537. In Congress, the difference was slightly tighter, but only slightly: Democrats got 80,835; Republicans got 113,957.

Some high-relief examples: U.S. Rep. Gene Green, D-Houston, got 55,760 votes. Rob Beckham, a Republican who lost to U.S. Rep. Charlie Stenholm, got 77,622 votes. Sen. Jon Lindsay, R-Houston, won with 139,827 votes. Sen. Mario Gallegos, D-Houston, got the same kind of chair with only 54,130 votes. Republican Lester Phipps got 72,296 votes, while he was losing to Sen. Ken Armbrister, D-Victoria. The high-vote getter in the House was Frank Corte, R-San Antonio, with 39,048 votes. Jim Pitts, R-Waxahachie, got 5,989. Austin Democrat Ann Kitchen lost, but got 21,928 votes.

A Quick Start and a Short Run

Former Sherman Mayor Harry Reynolds, a Republican accountant who finished fourth in a six-way race for state Senate a year ago, is running for the Texas House of Representatives. That special election to replace the late Sen. Tom Haywood was won by Craig Estes, R-Wichita Falls. Reynolds won't get a bye this time, either. The field of candidates for the special election includes three more Republicans and a Democrat. They are running to replace Rep. Ron Clark, R-Sherman, who won reelection but is taking a job as a federal judge instead of his House gig. The candidates include Republicans Larry Phillips, an attorney; Kiki Osterman, an RN manager; John Hefton, an attorney, and Democrat Donnie Jarvis, who lost the race to Clark in November. The House district includes two counties, but all of the candidates are from Sherman, which is where the biggest bunch of voters lives. That's a quickie election: Voters will choose a favorite on December 14.

Junk Mail and Other Giblets

Some of the Democrats who lost House races on Election Day are blaming the Texas Association of Business for their fates, saying that group's $2 million mail campaign killed their candidacies. And they say corporations illegally financed the mailings. Reps. Debra Danburg and Ann Kitchen, and Democrat Danny Duncan say in the suit that TAB solicited contributions from corporations and then used the money to finance the mailings that influenced the elections. They want the group to reveal the names of the companies that contributed, and want the court to award them double damages allowed under the law for the harm they say they suffered.

TAB's folks say the lawsuit is buncombe—that the ads were tailored to court rulings on issue advocacy and didn't tell voters to support this candidate or to trash that one. The court rulings they're talking about concern federal law, however, and the suit was filed under state law. The mailers in question did accuse the Democrats of bad stuff, saying they were against teaching kids to read and were anti-business and things like that. But they didn't specifically tell voters what to do about it.

There are a couple of similar lawsuits in the works on the Democratic side. This issue has a long tail on it: If TAB prevails, it could clear the way for similar expenditures in the future. If they lose, the contestants will have to find new loopholes to hop through.

• Remember John WorldPeace and his annoying phone calls? The Houston lawyer—the first political figure to tear into Democrat Tony Sanchez and Tesoro S&L, by the way—has remained mostly quiet since March. But he now says he'll join the race for mayor of Houston. And although he ran in the Democratic Party primary for governor, he says he is an independent and thought of himself that way even when he was running as a Democrat. In an email announcing his candidacy, WorldPeace notes that he got "over 20,000 votes statewide," (20,121, to be exact) and that he "considers this a lot of votes considering that he did not run a single video ad."

• Here is yet another set of numbers on Hispanic voting for your consideration. Republicans say their polling indicates Gov. Rick Perry got 35 percent of the Latino vote in the November elections, almost three times what an earlier study claimed. Unlike past elections, there is no third-party exit polling out there to settle the fight.

• Rep.-elect Jack Stick, R-Austin, is a little more honest—more direct, anyhow—in his fundraising than some other officeholders. He says in a letter to lobbyists and other potential donors that he was in an expensive primary and an expensive general election and that he "funded a good deal of my campaign personally." He says he stacked up more debt than all but seven other House contestants and is trying to raise contributions to pay himself back the "more than $30,000" he loaned himself.

• Juan Sepulveda Jr. of San Antonio is the first winner of the Hobby Visionary Award, given by the Center for Public Policy Priorities for helping low- and moderate-income Texans. It's named for former Lt. Gov. Bill Hobby. Sepulveda founded The Common Enterprise, which consults nonprofits and other groups and businesses with management and organization.

• Details, details. By Monday, Phil Gramm will be a private citizen and John Cornyn will be a United States senator. Gov. Rick Perry has already made the appointment. But Cornyn hasn't officially resigned, and Perry has not yet named Republican Greg Abbott to replace him. It'll end soon.

Political People and Their Moves

Dr. Mike McKinney takes over as vice chancellor for health affairs for the University of Texas System, a job he says will mark a high point in his medical and public service career. McKinney was most recently Gov. Rick Perry's chief of staff. He has also been a state legislator and head of the state's Health and Human Services Commission. He'll start right after the Thanksgiving break... Speaker-presumptive Tom Craddick has let Sharon Carter know he wants his own parliamentarian and chief clerk when he takes over in January. He isn't saying who will be in those positions. Steve Collins, executive director of the Texas Legislative Council, which drafts bills for lawmakers, will apparently keep his job, and Chas Semple, a former Craddick aide who currently works for Comptroller Carole Keeton Rylander, will rejoin his old boss... Texas Tech University President David Schmidly is running for the border—he'll leave the post in Lubbock to become president of Oklahoma State University in Stillwater. Before he became Tech's president two years ago, Schmidly was dean of the graduate school there. He got two of this three degrees in Lubbock and grew up nearby, in Levelland... Pam Willeford will chair the committee handling the January 21 inaugurations of Gov. Perry and Lt. Gov. David Dewhurst, with assistance from Houston Astros owner Drayton McLane and Austin investor James Huffines. Willeford heads the Texas Higher Education Coordinating Board and is a partner in Pico Drilling Co... Lame duck Texas Supreme Court Justice Deborah Hankinson tells Texas Lawyer she'll go back to Dallas when her term is up to start a new law firm with former college chum Betsy Whitaker, who's also the incoming president of the State Bar of Texas. Hankinson will also teach contracts at SMU's law school... Brooke Rollins, the governor's policy director, is leaving that post. She apparently has the peculiar idea that she and her husband should live in the same city... Jene Lanclos Bearse is changing jobs and bosses but not phone numbers. She'll be chief of staff to Sen. Kyle Janek, R-Houston. He replaced her old boss, Sen. J.E. "Buster" Brown, R-Lake Jackson. Janek is keeping Susan Sherman and Elaine Arnold from his House staff, and adding Patricia Becker, now with Sen. Mike Moncrief, D-Fort Worth, Craig Chick, now with Rep. Fred Bosse, D-Houston, and Danielle Delgadillo, who is returning to the Senate after stints as a lobbyist and a campaign worker.

Quotes of the Week

Sen. Florence Shapiro, R-Plano, on the effects of a slowing economy: "Certainly in my part of Texas, it is unbelievable how high the unemployment rate is. We even had a story in the paper yesterday about child care centers being closed down in my community because mothers who had second jobs have now been laid off and they are staying home with their kids."

Sierra Club attorney Robert Wiygul, quoted in The New York Times after the Environmental Protection Agency approved drilling of two natural gas wells on Padre Island: "We now have an administration that thinks running a couple of hundred 18-wheelers over nesting grounds of endangered sea turtles inside a national park is not a significant environmental impact."

Chief Justice Tom Phillips of the Texas Supreme Court, quoted by the Associated Press: "The interest groups that try to shape the way government responds to problems have shifted their focus—all over the country—away from legislative and executive races and into judicial races."

Dick Lavine of the Center for Public Policy Priorities, asked by The Dallas Morning News about a poll showing 44 percent of Texans prefer a tax on cigarettes to other levies: "What it shows is that at least 44 percent of the people don't smoke."

Aleksei Venediktov, editor-in-chief of Ekho Moskvy, a radio station in Russia, quoted in The New York Times Magazine on his government's censorship of news about terrorism: "I'm not afraid of anything anymore. This is very sad, because instead of fighting terrorists, the government is fighting journalists. It's harder to fight terrorists."

House Majority Leader Dick Armey, quoted in The Dallas Morning News: "I'm like every other person in public office. I do not read papers except to look for my name... and my heart has been broken by the number of people in America that read the papers and don't look for my name."

Texas Weekly: Volume 19, Issue 23, 2 December 2002. Ross Ramsey, Editor. George Phenix, Publisher. Copyright 2002 by Printing Production Systems, Inc. All Rights Reserved. Reproduction in whole or in part without written permission from the publisher is prohibited. One-year online subscription: $250. For information about your subscription, call (800) 611-4980 or email biz@ texasweekly.com. For news, email ramsey@ texasweekly.com, or call (512) 288-6598.