The 3% Solution: Give at the Office

Limiting the growth of homeowners' taxable property value can shift the property tax burden to businesses and other commercial property owners even when cities and counties and hospital districts aren't increasing the revenue they receive from those taxes. We erred — semantically — when we called it a split roll in last week's issue. But the 3 percent limit on homeowner appraisal increases touted by Gov. Rick Perry and others ends up shifting the cost of public schools from Texans who own homes to businesses and, indirectly, to renters.

Perry's plan would allow local governments to raise property taxes only if taxpayers vote to do so, with three exceptions: an allowance for population growth and inflation, and another for unfunded mandates from the state. Any increase beyond what's required for those three things would have to go to a vote. The aim is to put a leash on the growing cost of local government, and to keep local tax increases from wiping out any savings that might result if state lawmakers can agree on a new school finance plan that would cut property taxes. Perry points to then-Gov. George W. Bush's tax cuts, which were overwhelmed by other tax increases; many targeted homeowners never saw a dime.

That's the explanation for the limits on government-driven increases in property tax bills. But even with those in place, the property tax burden can easily shift to business from residential property.

Over the ten years ended in mid-2003, the appraised value of single-family homes in Texas rose from $264.1 billion to $547.1 billion. All other property over the same period (we cut out farm and ranch and didn't include the value of property exemptions for any property) went from $371.7 billion to $560.2 billion. Over that decade, the value of single-family homes rose 107.1 percent — much faster than other properties, which rose 50.7 percent.

Last year, single-family homes made up 49.4 percent of the total school tax rolls in Texas. If values had been capped in 1993, so that residential property appraisals — at least for tax purposes — were limited to 3 percent annually, residential property would only have gone up 30.5 percent over the decade. The total tax roll would be smaller (requiring a higher tax rate to raise the same amount of money) and businesses would pay 61.9 percent of all school property taxes.

Now you understand why businesses are squawking about the cap. Here's why residential taxpayers are mad enough to inspire the idea in the first place: Ten years ago, single-family homes made up 41.5 percent of the property tax base, and now they make up 49.4 percent (remember that we're not including exemptions and such for any taxpayers). The burden is close to even now, but the shift came at homeowners' expense. With appraisal increases for homeowners capped at 3 percent, and businesses left to the free market, homeowners' share would be 38.1 percent. At the end of that particular decade, however, businesses would pay taxes on 100 percent of their property value, while homeowners whose values rose would be paying, on average, on 63 percent of their property value.

Gov. Perry's earlier proposal, which wasn't made public but was shared with lobbyists and some lawmakers, would have actually split the tax rolls and created a statewide property tax on business. Appraisal amounts would matter less, since businesses and homeowners would be paying different tax rates, with business paying school taxes to the state and homeowners paying their school districts. The two groups would be lumped back together for other local taxes. For businesses, the difference would be semantic; they'd still be paying property taxes on a different basis from homeowners — who vote — and their lobsters fear that would make them easier to tax when more money is needed.

Inside Outside

The grand jury investigation of campaign finance will go past the end of the month and will be handed from the current secret panel to a new grand jury, according to prosecutors. That little bombshell — expected, but not especially welcomed by the people being investigated — was at the tail end of a press announcement of some records opened at the request of the state GOP. The party wanted to know about contacts between the prosecutors and the press.

That's the lesser of two open records requests that went to Travis County District Attorney Ronnie Earle. The GOP query was primarily for public consumption. The second request, from attorney Andy Taylor, asks for records of contacts between prosecutors and the civil lawyers who are pursuing suits on behalf of several Democrats who lost their campaigns for the Texas House in 2002. Earle is investigating and/or quizzing some of the same groups and individuals who are involved in the civil cases, and Taylor wants to know whether the criminal and civil lawyers are talking. If they are, it could violate a court order, and it's not kosher to share certain kinds of information even when the courts are quiet. Taylor asked for 83 different kinds of documents, all looking for contacts between prosecutors and others who might be helping those Democrats. If that falls flat, he can ask again in court, where his client, the Texas Association of Business, has been battling Earle for a year.

Some info can cross from the civil case to the criminal case, and that's because it's been filed in court already. Some of the people in the civil case gave depositions now on file at the courthouse, and that's open to any prosecutors who want a peek. For whatever reason, the lawyers for those people decided not to ask for a delay in the civil case until after the criminal investigation is over, and one way to see what the grand jury might be doing is to look at the burgeoning civil file. Taylor and others are looking for communications other than what's in that public file.

The Damned Media

The people who have to talk to grand jurors aren't really in a position to kick, so the Republican Party of Texas has taken up the boots and commenced. The Party, which earlier suggested stripping Travis County DA Earle of both his power and his funding to investigate allegations of political crimes involving statewide officials, is now after the media, too. There's a P-R reason for that, but also a substantive one: Republican lawyers want to prove the whole stir over campaign finance in 2002 is about politics and not about criminal violations of campaign finance laws. This is just the start.

The power/funding issue comes up whenever there's an investigation. GOP Chairwoman Tina Benkiser suggested moving the duties to the state attorney general's office. Stories soon appeared about the connections between John Colyandro, a political consultant who is a central figure in the investigation of the campaign financing of the 2002 Republican House races, and AG Greg Abbott, whose campaign that same year also employed Colyandro.

Benkiser sent Earle an open records request asking for contacts with reporters, and Earle produced a stack of mostly mundane documents, and a couple of troubling ones involving communications between his office and one of the state's best-known political columnists and also with a TV reporter.

The columnist, Dave McNeely of the Austin American-Statesman, sent Earle drafts of a story on the investigation, seeking his comments before the article went into the paper last summer. The paper wouldn't say whether that courtesy was extended to others involved in the story, but McNeely says he was only checking facts, and not the tone and tenor of what he was writing. Editor Rich Oppel won't talk about "what goes into the assembly" of a given story, but he did say Earle didn't affect the final version that appeared in the paper. He added that the story itself was never challenged by anyone, including the conservatives now demanding McNeely's pelt.

The TV reporter, Nanci Wilson of KEYE-TV in Austin, sent fawning notes to the DA expressing admiration for Earle and agreement with what he's doing in the investigation. There was no evidence in either case that Earle went out of bounds, but the reporters' activities gave the GOP an opportunity to say the prosecutors are playing footsie with reporters to the detriment of the grand jury's targets.

Runoff Rundown

The Republican primaries produced one statewide runoff, five in congressional contests, and just two for the statehouse.

Railroad Commissioner Victor Carrillo, an Abilene Republican appointed and backed fiercely by Gov. Rick Perry, got 49.59 percent of the votes in the first round, coming up 2,313 votes short of what he needed to win outright (those returns are unofficial; canvassing is set for next week). That's the kind of result that makes candidates wonder about that last TV ad they didn't buy. He'll face Robert Butler, who got less than half as many votes and who finished with 23.5 percent of the total. Butler ran for the State Board of Education two years ago — as a Democrat — losing in the primaries to a candidate who went on to lose badly in November of that year. He's a retired state employee who lives in Palestine. The winner of that primary has a Democrat in the way in November: Bob Scarborough of Fort Worth.

Congressional races could draw some voters to the runoffs, particularly in Northeast and Central Texas. In CD-1, where six Republicans were barking at each other for a chance to challenge U.S. Rep. Max Sandlin, D-Marshall, Louis Gohmert and John Graves made it to the runoffs. Gohmert is a former judge from Tyler and is carrying the endorsement of former Sen. Bill Ratliff, who's still popular back home. Graves is a Longview attorney and businessman — you might remember him from two years ago, when he challenged U.S. Rep. Ralph Hall, who at the time was a Democrat.

The race in the newly drawn, incumbent-free CD-10 could go down as the most expensive primary in the country. Michael McCaul of Austin and Ben Streusand, who moved to Spring to make the race, will go another round on April 13. Streusand, a mortgage banker, loaned his campaign $1.34 million through mid-February (your federal government hasn't put newer reports online yet) and had spent $1.2 million. By comparison, McCaul was a piker, loaning himself only half as much and spending a mere $739,000. Total spending by all the candidates at that point had reached $2.6 million, and that's before they poured it on for the finish. After the April round, it's free sailing, with no Democrats in the race for what was drawn to be a lopsided Republican district. How about geography? Turnouts in Harris and Travis Counties were close to even in the first round.

U.S. Rep. Ruben Hinojosa, D-Mercedes, didn't draw an opponent in the primary, but three Republicans ran and two of them — Alexander Hamilton and Michael Thamm — are in a runoff next month. Thamm is a self-employed plumbing contractor from Cuero. Hamilton's filing with the GOP lists a Dallas address, even though CD-15 stops about 200 miles south of the Metroplex. He's in the trading business and also has an address in Alice. Hamilton finished first in round one, with 41.5 percent of the vote to Thamm's 37.1 percent. That's a dramatically redrawn district, stretching from Cameron County at the tip of the state's toe all the way north to Bastrop County near Austin. It's 64 percent Hispanic, and Hidalgo — Hinojosa's home county — has far more voters than any other spot in the district. It's also prime Democratic territory: Democrat John Sharp got 60.7 percent of the vote in that district in 2002 while losing to Republican David Dewhurst statewide. In the GOP primary, Bastrop outvoted Hidalgo by 8-to-5; it was almost 10-to-1 the other way in the Democratic primary.

The race for CD-17, which stretches from Texas A&M country through Baylor country and almost up to TCU's domain, will be a race for the rest of the year. Former Waco school board president Dot Snyder squeaked into a runoff with state Rep. Arlene Wohlgemuth of Burleson. Dave McIntyre, a retired military man making his first run for office, surprised some of the consultants and other watchers in that race by pulling 28.2 percent of the vote. Almost all of it came out of Snyder — who beat him 37 to 21 in early voting and ended up with 30.5 to his 28.2 percent. Wohlgemuth held steady at over 41 percent in both early and Election Day voting. McIntyre left the south end up for grabs: He got 60.5 percent of the vote there, and now he's gone. Wohlgemuth, likewise, dominated her home county, Johnson, getting 67.9 percent of the vote. Snyder's home stand was weaker: She finished first, but only got 43.9 percent of the vote in McLennan County. The winner gets a crack at U.S. Rep. Chet Edwards, D-Waco, in November.

Recounts and More Runoffs, Run Down

Jim Hopson of Seguin nearly ducked a runoff in CD-28, but will face Francisco "Quico" Canseco of Laredo next month. Both men are lawyers; the winner in that one will apparently face U.S. Rep. Ciro Rodriguez, D-San Antonio. That could change: Henry Cuellar, D-Laredo, decided to wait for the official canvass before deciding whether to seek a recount of the votes in his challenge to Rodriguez. Cuellar, a former Texas House member and Secretary of State, came within 200 votes (the numbers have changed a couple of times since Election Day) of knocking off the incumbent. If he asks for a recount, the first thing he'll have to do is present a certified check for $15,000. A canvass could flip the election, put it completely out of reach, or anything in-between, and Cuellar wants to see those numbers before he decides whether to part with all that money.

Outside of that possible fight, the Democrats are finished with their picks for Congress. Their primary produced four statehouse runoffs, while the Republicans have just two:

• Jean Killgore, a former State Republican Executive Committee member from Somerville, will face Bastrop engineer Jay Yates in HD-17; the winner will run against Rep. Robby Cook, D-Eagle Lake, who easily won in a crowded Democratic primary. Rep. Arlene Wohlgemuth's decision to run for Congress produced an opening, and that produced a runoff between Sam Walls, a Cleburne investor, and Rob Orr, a Burleson real estate agent, in HD-58.

• Three and maybe four races on the Democratic side will be noisy. Rep. Jaime Capelo, D-Corpus Christi, finished third and left Abel Herrero and Nelda Martinez to duke it out in HD-34. Rep. Gabi Canales, D-Alice, survived the first round, but has a trial-lawyer backed opponent in Yvonne Gonzalez Toureilles, who finished first in the first round, to contend with in HD-35. Rep. Roberto Gutierrez, D-McAllen, was being encouraged to forge ahead by some of his friends, and to concede by other friends, and hadn't made a final call at our deadline. He finished second to Veronica Gonzales, another favorite of the trial lawyers, in round one in HD-41. She finished 55 votes shy of an outright win, and Gutierrez can keep going or bag it. Finally, there's a runoff in HD-117, a district that's Democratic on paper but held by Republican Rep. Ken Mercer of San Antonio. David McQuade Leibowitz, who ran expensively and acrimoniously against Leticia Van de Putte in the special election that put her in the Senate, is facing Ken Mireles. They finished 67 votes apart in Round One.

Read the Movie, See the Book

On the heels of the premiere of a documentary based on Bush's Brain, former Capitol reporter-turned-Democratic political op Jim Moore has a new book out on the subject of George W. Bush. The new one, called Bush's War for Reelection: Iraq, The White House and the People, is his take on the Iraq war, 9/11 and how all that plays into this year's politics. He and Wayne Slater, a political reporter for the Dallas Morning News, saw Bush's Brain, their book on Karl Rove turned into a documentary that premiered during the South-by-Southwest festival in Austin. Within a week, you'll hear from the other side, when sales open for Karen Hughes' Ten Minutes from Normal about the 2000 campaign, the first months in the White House and her decision to bag all that and come home to Austin to spend more time with her family. Hughes, one of Bush's top advisers, will return to the political fold later this year to help on his reelection campaign. And since we're also talking movies here, Paul Stekler's Last Man Standing also opened at SXSW. It's a look at elections in general and at a couple in particular, including the nail-biting contest in 2002 between Rep. Patrick Rose, D-Dripping Springs, and Rick Green, a Republican who held the seat until Rose knocked him off in a very close contest. Stekler, who doubles as a professor at the University of Texas, was part of the team that did Vote for Me, which included an inside look at the Texas Lege and an infamous hidden microphone in the lapel of state Sen. Rodney Ellis, D-Houston, who was on the Senate floor rounding up votes for a bill.

Flotsam & Jetsam

The Joint Select Committee on Public School Finance's final report came out not with a recommendation but with a list of things the Lege might want to do if and when it convenes for a special session on the subject. Four of the 15 members didn't sign the report, which in spite of the lack of recommendations has some interesting tidbits inside. The panel wants to cut local school property tax rates by at least 50 cents and perhaps 75, which would cost between $5 billion and $8 billion. They want to kill recapture so districts don't send local tax money off to other districts. They want a school finance plan that keeps all districts, at a minimum, at their 2005 spending levels (that's not a typo).

Finally, they listed, but did not endorse, several things that might raise the money to pay for it all: increasing the sales tax rate, expanding the sales tax to include items that are currently tax-free (they didn't specify items), create a new business activity tax, institute a statewide property tax, split the tax roll so that business and residential taxpayers pay different rates, set up video lottery terminals "at a limited number of locations," and increase cigarette "and/or other 'sin' taxes."

• The last pre-primary reports finally turned up the trial lawyer support that had been chattered about since the passage of Prop. 12 last fall. A political action committee called Texans for Insurance Reform filed a report showing $616,465 in contributions and $493,797 in spending as of February 28. They supported challengers who lost: Jim Selman, David Bernsen and Nancy Archer. They supported challengers who either won or made the runoffs: Veronica Gonzales, Alma Allen, Marc Veasey, Tracy King and Abel Herrero. And they split the difference on incumbents, backing winner Aaron Peña and loser Miguel Wise. Nine law firms gave amounts from $25,000 to $100,000 to fund that PAC.

• Republican Michael McCaul picked up the endorsement of Dave Phillips in his quest for CD-10. Phillips finished out of the money in that race. McCaul is in a runoff with Ben Streusand of Spring, who got the endorsement of John Devine, another also-ran. The biggest advantage in the endorsement contest goes to McCaul, who'll get help from former President George H. W. Bush in his fundraising for the runoff.

• Streusand has a campaign consultant you might know: Rep. Ray Allen, R-Grand Prairie, says he was hired by the campaign to do some writing, for $2,500. He said they wanted his help with pro-life and pro-gun materials, making sure those things used just the right phrases and words for a hypersensitive audience. He didn't do any consulting in his professional specialty: Corrections.

• Democrats satirized Gov. Rick Perry's eco devo trip to Italy with a series on ailing Texas school districts that have Italian names, like Italy, Florence, and Roma, and they pointed out to anyone who missed it that he took the family for the working trip during spring break. Feel the Amore.

•Pardon our shorthand: We said Democratic House Caucus when we should have said "Majority Political Action Committee of Texas" or MPACT in last week's item on House races. The PAC backed Democrats who went to Ardmore to temporarily block a vote on congressional redistricting. The Caucus doesn't directly act in elections. Sorry for the error, and has anybody else noticed how careful everyone is when there's a prosecutor on the prowl?

Political People and Their Moves

Texas gets two seats on the National Republican Committee, and Tim Lambert of Lubbock is term-limited out of that job this year. New people can jump in, but two candidates are already working the delegates to that summer convention: Bill Crocker of Austin, a member of the State Republican Executive Committee, and Mark Cole of Houston, who you might remember as a candidate for the state House two years ago. He lost that primary to Rep. Martha Wong, R-Houston...

Jon Opelt, who's been the chief of the Houston Citizens Against Lawsuit Abuse and sort of a statewide spokesman for that wing of the tort reform movement, has moved to Austin to be executive director of the Texas Alliance for Patient Access. That group is best known as the front for medical malpractice reform during the last legislative session; it's a coalition of trade groups for doctors, hospitals, nursing homes and insurers...

After six years with the Texas Sunset Advisory Commission, Michelle Luera has joined Strategic Partnerships, a consulting firm that specializes in government contracting. That same firm hired Jason Glass, who'd been at the Attorney General's office for three years...

Senate moves: Lisa Barton, who had most recently been with the Hotel and Motel Association in Fort Worth, is now working for Sen. Frank Madla, D-San Antonio. She worked for Rep. Todd Smith, R-Burleson, before joining the trade group...

Sen. Jeff Wentworth, R-San Antonio, named M.L. Calcote the director and Stephanie Hoover the clerk of the Senate Jurisprudence Committee, which he took over after the resignations of two senators shook up the committee assignments in the Senate. Calcote has been his general counsel for five years and used to work at the AG's office. Hoover was the clerk at Senate Finance and did previous stints on three other Senate panels...

Nancy Fleming, who's been the chief of staff for Sen. Jane Nelson, R-Flower Mound, since 1995, is taking a position — ready? — in the U.S. Embassy in Riyadh, Saudi Arabia. Steve Roddy will be chief now, and Amy Lindley will take his spot as director of the Senate Health & Human Services Committee. It was 80 degrees in Riyadh this week, but it won't last...

Jennie Costilow will be director of the Senate Committee on Veteran Affairs and Military Installations, now that Sen. Leticia Van de Putte, D-San Antonio, is at the helm. She had been at Senate Research. David Holmes is back in the Senate as a policy wonk on that panel, replacing Mario Obledo Jr., who went home to work for San Antonio Mayor Ed Garza...

Lt. Gov. David Dewhurst promoted Amber Maxwell to finance director; Ashley Loeffler will stay on as "senior advisor," until she moves to New York City this summer...

Appointments: Gov. Rick Perry named former Parmer County Attorney Charles Aycock of Farwell (it's in the Panhandle, on the Texas-New Mexico border) to the Texas Board of Pardons and Paroles. That newly refigured board decides who gets parole and of what kind, and makes pardon recommendations to the governor. Aycock's term lasts for just under a year...

Former San Antonio Mayor Bill Thornton is Perry's choice to chair the Bexar County Regional Mobility Authority, which would oversee any turnpike projects in that area...

The governor named three to the Lower Colorado River Authority: Ida Carter, who works for an architectural firm in Marble Falls, Walter Garrett, a hay producer from Wharton and a retired USDA conservationist, and Lucy Cavazos, an assistant district attorney in Kerrville...

Quotes of the Week

Texas Association of Business President Bill Hammond, talking to the San Antonio Express-News about a possible spring special session on school finance: "We're awaiting a sense of direction."

Joe Trippi, former campaign manager for Howard Dean, on candidates' use of the Internet, in The New York Times: "Look, this system that's currently there is busted. I mean it's broke, it's rotted, it's just rusted up. You know, let's go do a bunch of dinners, $2,000 [a plate], let's buy a bunch of television. This is what the system was and is. Well look, there's a lot of power in that system. And it’s been built up for 40 years... These are the initial steps of really changing a system that's broken."

Episcopal Bishop Gene Robinson, quoted by The New York Times: "Let's be clear. We've always had gay bishops. All I'm doing is being honest about it."

Democrat Maria Pappas, quoted in the Dallas Morning News on overall news coverage during her losing bid for Illinois Senate race: "If you didn't have a glitzy sex life and you weren't using drugs, you couldn't get covered."

Bexar County Elections Administrator Cliff Borofsky, quoted in a San Antonio Express-News story about 41 dead people who "requested" mail-in ballots for the March primaries: "That's the important thing to stress here. No ballots were sent out to deceased individuals. No dead person voted."

Comedian and author Kinky Friedman, touting his 2006 gubernatorial bid in a bookstore, reported by the Fort Worth Star-Telegram: "I like his hair, and I have as much hair as Rick Perry. It's just not in a place where I can show you."

Texas Weekly: Volume 20, Issue 38, 22 March 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.