Prosecutors Call on the House

The grand jury investigating campaign contributions and expenditures in the 2002 legislative elections sent subpoenas to House Speaker Tom Craddick and a number of other House members, asking for their testimony and/or records relating to Texans for a Republican Majority, a political action committee set up that year to win more GOP seats in the Texas House.

Craddick was asked to appear before the grand jury next Thursday and to bring along any records he's got. He's retained Austin attorney Roy Minton. Minton is well-regarded, and the very act of hiring him is an announcement that it's time for the big guns; he's been the top criminal defense lawyer in high-profile public integrity cases in the Capital for years, representing a number of state officials who've found themselves nose to nose with Travis County prosecutors.

Craddick acknowledged the subpoenas in a written statement: "The Travis County District Attorney's office issued a summons today seeking documents from the 2002 Speaker's race. We intend to fully comply with the summons and cooperate with the DA's office. I am satisfied that I, and all other candidates for Speaker of the House of Representatives for the 78th Legislature, conducted our races appropriately, and I am happy to have helped elect a Republican majority — as I have tried to do since I was first elected to the House in 1968." After he did that, Travis County District Attorney Ronnie Earle issued a statement saying the request came after "possible criminal conduct in connection with the race for Speaker of the Texas House of Representatives was uncovered" in the course of an inquiry into the use of corporate money in the 2002 elections.

Rep. Kent Grusendorf, R-Arlington, said he received a subpoena and he was blunt in his assessment: "You might think it's political season when Ronnie Earle starts sending out his love notes." He described the inquiry as a "fishing expedition" and said the prosecutors asked for documents "relating to legislative races and the speakers' race in the fall of 2002."

Another went to Rep. Arlene Wohlgemuth, R-Burleson, who is in the middle of a run for Congress (early voting starts next week). Through a campaign aide, she said she "looks forward to cooperating." That aide, Todd Smith, said Wohlgemuth didn't take part in fund-raising for TRM-PAC, and didn't have any role in handing out the PAC's money. She'll provide documents next week, but was told by prosecutors she won't be asked to appear at that time, he said.

With the exception of Craddick, the grand jurors appear to be interested in lawmakers who were in on periodic calls to talk about TRM-PAC's work during the elections — fundraising, contributions, targeting, and the like. Some were involved primarily in fundraising, and others were mainly helping Craddick gather and hold support for the speaker's election that would mark the beginning of the 2003 legislative session. As it turned out, the Election Day results were overwhelmingly Republican, and Craddick announced he had the votes for the top job before that week was out — two months before that regular legislative session began.

Rep. Mike Krusee, R-Round Rock, said he got a subpoena but also was told he won't have to appear on Thursday. Rep. Dianne White Delisi, R-Temple, said through an aide that "it is best not to comment on this matter" while the grand jury is working. Two other legislators closely involved in TRM-PAC and/or helping Craddick with votes — Beverly Woolley, R-Houston, and Phil King, R-Weatherford — didn't return calls. And a spokeswoman for Sen. Florence Shapiro, R-Plano, said her boss — a TRM-PAC board member active in the elections — was not on the subpoena list.

The Story So Far

The subpoenas ended a week that began with a story in The New York Times that Tom Craddick helped pass out checks from campaign contributors to friendly House candidates. His detractors say that was a violation of the law governing speaker elections because it put Craddick in a position to take credit for helping members whose votes he was simultaneously seeking. A Craddick aide, Bob Richter, said the speaker had the votes lined up well before TRM-PAC was involved in the elections. Another report, in The Dallas Morning News, concerned a $190,000 contribution from the PAC to a GOP fund that then doled out $190,000 in checks to a handful of statehouse candidates here.

As those reports landed, House Democrats and a couple of outside groups — Campaigns for People and Public Citizen — asked Craddick to call an internal House investigation of the race for Speaker of the House that he himself won. The speaker ignored that, and his aides said he would hand over whatever information the grand jury might be interested in seeing. There's no knowing what triggered what, but a couple of days later, the subpoenas came out.

The latest news is a natural extension of what the prosecutors have been looking at for the last year. The investigation started with the Texas Association of Business, which ran a campaign ripping Democrats in almost two dozen races without also promoting the Republicans in those contests. The group said the ads weren't telling people how to vote, and thus didn't trigger the same campaign finance laws that regulate donations and spending in campaigns. They didn't reveal their donors, for instance, and said the ads were done in a way that allowed the use of corporate money.

TAB's candidate list — and some of its consultants — were also involved in various other campaigns, like Craddick's run for speaker, and TRM-PAC's efforts to get a GOP majority in place in the Texas House. It's all the same investigation, and it's all being handled by one grand jury. (Just to keep you on your toes, its' the second grand jury to look at this; the term of the first panel expired while lawyers for TAB and the DA were arguing in court over who had to produce what records.)

Put it in simple terms: The prosecutors and grand jurors want to know whether the money raised and spent in the last House elections was raised properly, spent properly, and whether anybody illegally influenced the race for Speaker of the House, which was completely dependent on the outcomes of those House races. Craddick says it was all on the up-and-up: Win the House for the Republicans, install a Republican speaker and govern as Republicans. The Democrats and outside detractors accuse the winners of spending corporate money where the law prohibits it, and allege Craddick allies orchestrated the elections to manipulate the results of the race for speaker.

Friendly Fire

After U.S. Sen. Kay Bailey Hutchison scolded the Mexican government for not giving the U.S. all the water it's due under treaty, Gov. Rick Perry scolded her for getting out the whip after Mexico made good on part of that deal. But the Texas Farm Bureau is siding with Hutchison and not the former state agriculture commissioner, saying she is "focusing attention on Mexico's blatant disregard for its water treaty with the U.S." The sharp elbows are appearing more often now that Republicans are talking about Hutchison and Perry as possible competitors for the Governor's Mansion in 2006. Before Perry sniped at Hutchison in the water fight, she was griping about his position on federal standards for military base closings.

A CORRECTION OF THE MOST MADDENING KIND: We're correcting a correction, just to see if anyone pays attention over a three-week span. Last week's note that we had incorrectly spelled Darin Cowart's name in a commercial misidentified the purchasers of that ad: It was from Texans for Lawsuit Reform, and not from the Kevin Eltife campaign. We are sorry to the Nth degree. Another, while we're at it: TLR didn't back Les Tarrance, but ducked that Senate race until Todd Staples won.

Sound and Fury

The two mayors running for open Senate seats in special elections both won, toppling former senators, current state representatives, political financiers, bidnessmen and assorted wannabes. Former Tyler Mayor Kevin Eltife and former Amarillo Mayor Kel Seliger, both Republicans out to replace Republicans, are on the way to Austin to be sworn in. Eltife will be here until at least 2007, but Seliger has to turn around and run again so he can remain in his new office after January of next year.

Start in the East

With more than $1 million in help from "unofficial" friends, Eltife is on his way to Austin for the next three years. He's the replacement for Sen. Bill Ratliff, R-Mount Pleasant, and he won't face another election until 2006. He'll need the rest: Eltife survived a special election and a runoff that featured at least six outside groups weighing in either on his behalf or against his opponents. State Rep. Tommy Merritt, R-Longview, didn't survive the first round (along with three minor candidates who scored in the low single digits), and former state Rep. Paul Sadler, D-Henderson, came up four points short in the runoff, which Eltife won with about 52 percent of the vote. Merritt was outgunned, spending less than half what Sadler or Eltife spent in the first heat; Sadler was outgunned in the second round when you add in the third-party money, but he wasn't unarmed: He spent well over $1 million in a Senate district without expensive media markets.

Both Sadler and Merritt were attacked, among other things, for supporting tax bills to support public schools, which has to be an omen of some kind for lawmakers who are being asked to vote to raise taxes for schools later this year. In Merritt's case, the attacks came from Americans for Job Security, a national group headed by the same Dave Carney who manages Gov. Rick Perry's political affairs. He has said his activities for the one thing are not linked to his activities for the other thing, and we're not aware of either client lodging a complaint with him. Merritt proposed a package of sales tax increases that would be used to lower school property taxes and increase the state's share of the costs of public schools. Carney said the ads were designed to tell him and other politicians in Texas and elsewhere that taxes are bad and will get you attacked. His package wasn't identical to the sales tax-funded legislation passed last year by the state Senate (and ignored by the House), but the concepts were similar. Senators, we're guessing, heard the bullet whiz by their ears.

Eltife won in five of the district's 16 counties, but those counties made up about 46 percent of the total vote. He got 26 percent of his votes from his home county — Smith — and another 18 percent from the county next door — Gregg. Smith County underperformed the rest of the district in overall turnout, with 15.5 percent of the voters showing up, but it turned out the greatest raw vote. And it was fatal for Sadler, since Eltife ended up with almost 74 percent of his home vote. When it was done, Eltife won Smith County by 7,760 votes; he won the overall race by 3,334.

Nearly one in five registered voters actually voted, compared with 15.1 percent in the first round. That's an increase of 20,316 voters from the first round of the special election to the runoff. Remember those turnout numbers next time you're in a conversation about the effects of negative campaigning on voters in East Texas: People apparently come out for a fight. Sadler finished first in the initial round, and grew his total by 58 percent in the second. But people who voted for other Republicans in the first round mostly stuck with Eltife, and some of the newbies did, too: His total increased 86 percent from one round to the next. In Bowie County, a Democratic zone that was lukewarm in the first round, Sadler got less boost than he hoped for. And in Gregg County, where Longview voters like to thumb their noses at folks from Tyler, voters preferred the Tyler Republican to the Henderson Democrat; the local vote that favored Merritt in Round One drifted to Eltife in Round Two.

Eltife's results were a percentage point better on Election Day than in early voting. Late attacks from Sadler's campaign — and a late, unsigned smear that ran on the Internet and got passed around on paper — apparently worked in the Republican's favor. Blame that on the material, but also the timing: Late attacks, whether they'd have appealed to the voters or not, didn't have time to sink in.

In the West, Voting Starts Again on Monday

West Texas finished the second of what could be four elections in as many months, with former Amarillo Mayor Kel Seliger a 12-point victor over Kirk Edwards of Odessa. Seliger was outspent, and he got walloped in the Permian Basin. He even lost in early voting: Up until Election Day, he was behind. But turnout on Election Day turned the race around, and Seliger won handily with 56.2 percent of the vote. That's not necessarily a turnaround — Permian Basin voters showed up early and they were overwhelmingly for the local fellow. When the Panhandle voted, the geography of the district was clear: It's heavier on top.

The four big counties in the district voted geographically, but the North outdid the South. Ector and Midland counties turned out 25,377 voters, and they voted overwhelmingly for Edwards. He got 90.4 percent of the vote in Ector County, where he lives, and 77.3 percent in Midland, next door. Potter and Randall counties showed up for the fight with 29,782 voters, and they were homers, too, giving Seliger 83.3 percent and 85.1 percent, respectively. Those four counties made up three-fourths of the vote in the 26-county district. Edwards won in eight counties, Seliger in 18.

The real story here was in Amarillo, particularly in Randall County: Voter turnout hit 28 percent in an election that drew an overall turnout of 19.6 percent. That's similar to what happened in the first round of voting, but several of the professionals out there weren't expecting a repeat. Put it this way: They were talking about it afterwards like they hadn't expected it.

Unlike the East Texans, the West Texans have to go right back and do it again. There were four well-financed candidates in the first round, and all of them still have their names on the March ballot. One, Don Sparks of Midland, already said he won't actively campaign. Another, Bob Barnes of Odessa, is testing the waters to see if he could win a new round of support after finishing fourth in the first round of the special election. Either or both of those candidates would take Permian Basin votes away from Edwards, who would have to figure out how to overcome that and the 12-point disadvantage he already showed in a race against Seliger. But he'd only have to prove it to himself, since he is self-financing the race.

One more X-factor in Seliger's favor: He's now running a reelection campaign.

Political Notes

Make a note: The Dallas Morning News, which has supported U.S. Rep. Ralph Hall, R-Rockwall, in the past, switched horses when Hall switched parties. The former Democrat is now running for reelection as a Republican, and the biggest paper in his neck of the woods prefers Mike Mosher of Paris. They don't like Hall's positions on international issues, including his notion that National Guard troops should be posted along the border between the U.S. and Mexico. (While we're here, a correction is in order: In some editions last week, we unintentionally flipped Hall's affiliation. He's a Republican now, and was a Democrat before that.)

• Supreme Court candidate Paul Green picked up an endorsement from Gov. Rick Perry and also from CLEAT, the Combined Law Enforcement Associations of Texas. He's challenging Justice Steven Wayne Smith, who's seeking reelection.

• After years of working with Rep. Arlene Wohlgemuth, R-Burleson, the Texas Medical Association endorsed Dot Snyder of Waco in the Republican primary for CD-17. Snyder is married to a doctor and has several more in her family, and TMA and Wohlgemuth have warred over patient protection, physician negotiation and the Children's Health Insurance Program. Wohlgemuth picked up an endorsement from the Young Republicans; the Texas Association of Business is staying out.

• Rep. Jaime Capelo, D-Corpus Christi, says the Good Government Political Action Committee that's opposing him is financed entirely by the Watts Law Firm, and it's partly true. The group got contributions from three dozen people, but two are for $50,000 and they're from the Watts firm and the Edwards Law firm down the street. The PAC's cover letter went out on a partner's letterhead: She is Vilma Luna, another Corpus Democrat who is one of Capelo's colleagues in the House.

$100 Million for Your Thoughts

File this away for use during the battles over school finance: It costs about $1 billion to lower school property taxes by 10 cents, if you're doing that by replacing the local money with state money. Want to cut the rate from $1.50 to $1.00 and let the state pick up the difference? That's $5 billion. The legislators who assembled this week to look at fixes for school finance were told that, to get rid of the Robin Hood money-moving formulas altogether, they'd have to lower the property tax caps to 60 cents. That would cost $9 billion, and to that you would have to add the costs of other stuff the Legislature wants or needs to work on at the same time: Increased enrollments, the governor's teacher and school incentive plans, hold harmless agreements that keep districts from losing any money when the current formulas are refigured, and so on. And as one particular Republican keeps pointing out to us, every dollar in this particular game gets added onto a tax/revenue bill of some kind.

A Property Tax Dodge That Puts Money into Schools

The General Land Office is getting into the real estate business in a new way, agreeing to turn undeveloped land in Chambers County in a leaseback deal with Wal-Mart. The discount chain will buy the land, build a huge distribution center/warehouse on it, and sell it to GLO. As part of the transaction, they'll also agree to lease the land with the building from the state. Wal-Mart will still pay taxes on the stuff in the building, but not on the building and the land, which is what makes this pretty for them. The local tax entities won't get as much this way as they would get with a regular property taxpayer, but they probably wouldn't get anything without the deal: Their overall take will jump from $2,900 a year on the current undeveloped land to something like $2.5 million a year. The state gets a return on investment for the Permanent School Fund of about 7.8 percent, which is supposed to be higher than the average return they're getting now and will probably get during the 30- to 40-year term of the lease. Land Commissioner Jerry Patterson has about 10 other such deals in the works, and aides say the PSF will keep the overwhelming majority of its assets invested just like they are now.

Flotsam & Jetsam, and Some Moving Political People

New term: Felony Disenfranchisement. MALDEF — the Mexican American Legal Defense and Education Fund — is using that to describe people who are barred from voting because they have felonies on their records. Not all states handle this the same way, and the group did a survey here and in nine other places, concluding that 496,041 Latinos can't vote because of those laws. They say the laws disproportionately affect Blacks and Hispanics, and while they don't say it straight out, they're trying to figure out changes to those laws.

• Mike McCaul, who's running for Congress in CD-10, won the endorsement of U.S. Sen. John Cornyn. McCaul worked for Cornyn when the senator was a mere attorney general.

• Charles Patton is the new Texas state president for American Electric Power. He had been the company's veep for governmental affairs here. He's getting the office that belonged to Julio Reyes, who moved to Oklahoma to be president of the company there.

• Texas Supreme Court Justice Michael Schneider was elected to the American Law Institute, one of seven Texas justices admitted to that group.

• Curious: The Young Conservatives of Texas blasted — that's their word — Gov. Rick Perry for his opposition to Texas Supreme Court Justice Steven Wayne Smith, saying that's linked to "his own tacit support for racial preferences and quotas at the University of Texas." Perry has endorsed Smith's opponent, Paul Green, but his opposition to Smith dates from Smith's successful campaign against Xavier Rodriguez, who'd been appointed to the court and who had the Guv's backing.

• Trick or treat: Paul Sadler picked up some press for a smear on his opponent, Kevin Eltife, by issuing a press release denouncing the smear and listing the title of the website where what was supposed to be a court deposition detailed unsavory things about Eltife. In the announcement of the smear, Sadler called on the unnamed owners of the website to pull it down.

Political People and Their Moves

Gov. Rick Perry named five people — one new one, and four re-appointees — to the Texas Board of Pardons and Paroles. The last Legislature changed the makeup of the board and Perry had to reappoint people he wanted to keep. The new guy is Beeville attorney Jose Aliseda Jr., a former prosecutor and judge who is now in private practice. Perry reappointed Lafayette Collins of Round Rock, a retired U.S. Secret Service agent; Linda Garcia of Deer Park, a former Harris County prosecutor who specialized in child abuse cases; Juanita Gonzalez of Round Rock, who worked for the Texas prison system, including a 10-year stint in the parole division; and Rissie Owens of Huntsville, a social worker and substance abuse counselor....

Perry named former state District Judge Ernest Aliseda of McAllen to the 139th Judicial District Court, to a term that will last until the next general election...

Corpus Christi lawyer Colleen McHugh will get another term on the board of the Texas Public Safety Commission, where she will continue as chairwoman. He tapped Carlos Cascos of Brownsville for a spot on that board, which oversees the state police. Cascos is an accountant and a former Cameron County Commissioner...

Sen. Todd Staples, R-Palestine, named Lori Friedman general counsel of the Infrastructure Development and Security Committee and said Jon Schnautz will be the chief policy wonk for the Select Interim Committee on Workers' Compensation. Friedman had been working for State Affairs; Schnautz was at the Research and Oversight Council on Workers' Comp.

She's not through yet — not that we're aware of — but Sen. Jane Nelson, R-Lewisville, is getting the American Medical Association's award for "outstanding government service" for "lifetime achievements in public health advocacy." She's the chairwoman of the Senate Committee on Health and Human Services...

Pre-nups: William Grayson Phenix proposed marriage to Monica Blazejewski last weekend, and she accepted. Stop the presses...

Deaths: David McCall Jr., former mayor of Plano, the principal of Plano Elementary when that was the only school in town, and the father of state Rep. Brian McCall, R-Plano, of cancer. He was 79.

Quotes of the Week

Bob Richter, spokesman for House Speaker Tom Craddick, after House Democrats called for an investigation of Craddick's election to that office, and before prosecutors asked Craddick to appear and to bring his records, quoted in the Odessa American: "If the grand jury thinks he did something wrong, they can ask for the records, and he’ll gladly turn them over."

Arkansas Gov. Mike Huckabee, a Republican who just delivered a record tax bill after a long special session, talking to the Fort Worth Star-Telegram about Gov. Rick Perry's plans for an upcoming special session on school finance: "Maybe he ought to take an appointment in the Bush administration and leave this to" others.

John Poindexter, who owns Cibolo Creek Ranch south of Marfa, quoted in the Odessa American on proposals to pump water from the Texas desert for sale elsewhere: "I can scarcely imagine a worse idea...It’ll be stopped. It’ll be stopped either by public outcry or secondary public reaction from people who don’t live here who think it’s a special region, or it’ll be stopped with court action, or it’ll be stopped with (Land) Commissioner (Jerry)Patterson’s defeat at the polls in the next election."

Glenn Honaker, farm manager of Belding Farms, a large pecan orchard near Fort Stockton, in that same paper: "Anytime they take water out of the desert, it’s a concern. I can’t figure out how people somewhere else are more important than I am."

Scott McCown, who heads the Austin-based Center for Public Policy Priorities, quoted in The Dallas Morning News on public schools: "Education is not something we do for children. Education is something we do to children for us."

Texas Weekly: Volume 20, Issue 34, 23 February 2004. Ross Ramsey, Editor. George Phenix, Publisher. Copyright 2004 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.