Castaway

Skip the bit where your plane crashes into the ocean in the middle of a rainy night and strands you on the desert island. Ignore the time you're out there living on sushi and coconuts. Think, instead, about coming home.

Or you could move to Texas, and watch politics and government for about 36 hours. You didn't need a desert island — a long weekend in Vegas would have put you out of the loop.

Kay Bailey Hutchison isn't running for governor after all. Carole Keeton Strayhorn is running for governor, and as a Republican. Rick Perry vetoed the budget for public schools. David Dewhurst, Greg Abbott, Henry Bonilla, Jane Nelson, and Vicki Truitt all got stuck in a sort of political 21-car pileup when the front car slammed on the brakes. They'll stay put, along with most others, since the Hutchison decision shut down the expected game of musical chairs.

The Legislature in special session again, in spite of the governor's idea of bringing lawmakers back only if they'd come to a meeting of the minds. It started just like the special session a year ago — the one that wasn't going to happen until legislative leaders reached consensus. They didn't, but the session was called anyway, and it ended without a deal. This time, Perry is hoping things will be different. Though there is no deal at the start , he's got them back, looking at their own plans and at his. He's bought radio advertising and started a road trip to sell his ideas to voters; political aides say this is the start of a "campaign" for school finance and property tax cuts.

Two things are just as they were one week ago, or two: The Texas Supreme Court is still on track for early July hearings on state funding for public schools, which a lower court judge found unconstitutional. And Travis County prosecutors are still looking at allegations of campaign finance violations during the 2002 elections and could easily provide major distractions to people in high places in Texas government.

Hutchison Drops Out

After flirting with voters for months over a possible bid for governor, U.S. Sen. Kay Bailey Hutchison sent an email to supporters late last Friday afternoon saying she will run for reelection in 2006 instead of challenging Gov. Rick Perry in the Republican primary.

This is the second time Hutchison has backed down after seriously considering a gubernatorial run. Texas Republicans who were busy getting a second term for President George W. Bush four years ago asked her not to stir the pot. That would have been a no-risk race, since she wasn't up for election in 2002. This time, she had a choice between running for reelection — the only announced opponent is Houston attorney Barbara Radnofsky, a Democrat — or coming home to run against Perry and Strayhorn, two of the strongest campaigners in GOP politics.

With Perry on the verge of calling a special session on school finance and Strayhorn on the eve of announcing her bid for governor, Hutchison bowed out. That came as a terrific surprise to people who've been watching the pre-election posturing for the last year, and was as big a shock as another big moment in Hutchison's career, when Texas Travis County District Attorney Ronnie Earle folded his ethics case against her in open court in 1994.

The timing surprised everybody. Hutchison told reporters at a Friday luncheon in Plano that she would make her decision known within a few weeks and that she wouldn't announce anything until after an expected special legislative session on school finance. When she dropped out hours later, she said she explain her reasoning when she announces for reelection on Monday (June 27). A win next year would give her a third term in the Senate; when she first ran in 1993, she told supporters she'd serve no more than two full terms there. It also positions her for a run at one of the top leadership positions, among Republicans, in the Senate. That jockeying began within days of her announcement about the state race.

Hutchison, by most accounts, was well ahead in private polls of the race. It's too early for those to mean anything in terms of Election Day, but her camp considered the numbers in a race with Perry and/or Strayhorn promising. And other politicians were queuing up in anticipation: U.S. Rep. Henry Bonilla, R-San Antonio, hoped to run to replace Hutchison; several politicians were lining up to replace him in that instance. Cocktail party speculators wondered if Lt. Gov. David Dewhurst would run for her spot, and whether Attorney General Greg Abbott and perhaps Strayhorn would then turn their attentions to replacing Dewhurst. Lawyers were lining up to look at Abbott's job. Agriculture Commissioner Susan Combs, betting early that Strayhorn would move on, is already running for comptroller. Never mind all but that last race — Strayhorn is saddling up for a run at the only elected state office that comes with free housing.

Perry's prospects improve immensely with Hutchison out of the race. She's one of the state's most popular politicians, right up there with the president — who'd want to run against her? But the governor isn't off the hook yet. Strayhorn is in. Kinky Friedman is putting together an independent campaign for governor. Democrat Chris Bell, a one-term congressman and former Houston city councilman, is exploring a run. And a few other Democrats — insurance exec and former U.S. Ambassador Lyndon Olson of Waco, former Comptroller John Sharp of Austin, and advertising exec Roy Spence of Austin — have all talked about it.

One last bit of sand to throw in, however unlikely it might seem: There's nothing here to prevent Hutchison from deciding to run for governor after all. She's got the money to run, especially if she were to run a short race instead of a long one. The political filing deadline is after Christmas, and for a politician with solid name identification, there's no need for a "get to know me" campaign. Sitting out the next six months means six months with no attacks to tear down the positive numbers. If things look nasty for Perry in December, Hutchison could always reconsider and get back in the race.

And Strayhorn Gets In

Comptroller Carole Keeton Strayhorn is officially running for governor in next year's Republican primary. In a speech on a hot June afternoon with the Texas Capitol and a small church forming her backdrop, Strayhorn did the expected thing, jumping into the race against Rick Perry. She slammed the incumbent as a "drug-store cowboy," saying the state can do better, and offered herself as the alternative. You can download the text of the speech from our website.

Here's an excerpt, including what you might call the money shot (the punctuation is hers):

"Texas is great, but we can do better. Now is time to replace this do-nothin' Drugstore Cowboy with One Tough Grandma. I am Carole Keeton Strayhorn and I stand before you today as a Republican candidate for Governor in 2006. It is time for a change. It is time to send Governor Perry packin'. I am a fiscal conservative. I am a common sense conservative. I am not a weak leadin', ethics ignorin', pointin' the finger at everyone blamin', special session callin', public school slashin', slush fund spendin', toll road buildin', special interest panderin', rainy day fund raidin', fee increasin', no property tax cuttin', promise breakin', do-nothin' Rick Perry phony conservative."

Perry, asked about Strayhorn's entry into the race, said his attention is on other matters: "School reform, teacher salary increases, making sure that the technology gets into the classroom, making sure that the textbooks get into the classroom — this is what's important here. This is about one of the most, if not the most, important public policy issues that we have in this state, and politics is just white noise in the background, and that's where it should stay."

A Gun to the Head

Gov. Rick Perry vetoed $35.3 in public education spending and called a special legislative session on school finance, saying he wants legislators to fix the problem and threatening to keep them in Austin until they do it, whether in this session or another. He said lawmakers can redo that part of the budget and work on school finance at the same time, and said "we have plenty of time" to get a budget in place without threatening the start of the school year.

Perry called the veto a "bold" move. Lt. Gov. David Dewhurst called it "disappointing," though he applauded Perry's call for a special session on school finance. And Carole Keeton Strayhorn, after announcing her campaign for governor, said Perry's move was "irresponsible."

"That is the most irresponsible act that this governor has taken and perhaps any governor has taken to hold our children hostage and veto those dollars for public schools," Strayhorn said. "You shouldn't even be discussing the possibilities that schools will not open."

The veto raises the stakes for the Legislature, but won't directly force lawmakers to fix school finance. In fact, they now have two problems instead of one. They have to repair the budget and work on school finance (which also includes a tax bill). Those two things can be linked, but as lawmakers proved during the regular session, it's possible to write the budget without taking on property tax relief or textbook spending or teacher pay raises or school formulas.

Lawmakers have several options on the budget. They can:

• Reenact the public education spending vetoed by the governor;

• Revise public school spending by moving money from what lawmakers approved three weeks ago to other areas — like textbooks and teacher pay raises — without tackling school finance reform and property tax cuts.

• Go home and leave the mess for the governor and the Legislative Budget Board. That's not as far-fetched as it first sounds. Budgeteers included a provision saying money set free by vetoes can be budgeted by the Guv and the LBB without the help of the Legislature. In effect, Perry himself, along with the ten lawmakers on the LBB, is the safety net for this self-created high-wire act. LBB action could be needed anyway. If lawmakers get enough votes to pass a school finance plan but not enough to get immediate effect, the LBB would have to provide bridge funding to get schools and the Texas Education Agency through the beginning of the year without hiccups. Laws passed with simple majorities — though there are some exceptions — don't take effect for 90 days.

SIDEBAR: Perry put school finance/education reform on the agenda for the special session, but left off other things that had been speculated about: judicial pay raises, tuition revenue bonds, telecommunication regulation, and patches for the Teacher Retirement System, for instance. He'll consider additions, but not without some progress on school finance. And some things might find their way in as a result of the school finance effort: Lobbyists are already busy at work telling lawmakers that expanded gambling — anything from casinos to slot machines at horse tracks — would be easier than a tax bill. 

A Brand New Episode

The House and the Senate started the special session by filing the versions of school finance and tax remodeling that were on the table when talks broke down at the end of the regular session. It's like the old Batman series on television, where they'd imperil your heroes every Wednesday night and leave you with the cliffhanger for 24 hours. Now it's the next day — Same Bat Time, Same Bat Channel — and Batman and Robin are still hanging over the same pot of boiling oil while The Penguin cackles in the background (we're not assigning roles to the top officeholders, but you're welcome to try that at home).

The boiling oil this time —that impasse — is the new starting point.

The tax cuts they want are similar in size, and they even agree on much of the education reform package. They still disagree on a number of things, including these three: The size of the sales tax increase (the House wants more, the Senate less), the expansion of the business tax (the Senate would include some partnerships, the House wants them left out), and over a cap on the amount of locally raised school money a rich district must share with poor districts (the Senate wants no cap, while a faction in the House wants a "recapture cap" above all else.

Gov. Rick Perry's plan is an attempt at middle ground, but not the first. House Democrats, who filed a plan of their own during the regular session, brought it back with some revisions to see whether more people — having tried other plans — are willing to have a look. That's not an easy prospect in a statehouse where it would be hard to sell a Democratic cure for cancer, must less school finance. But even the governor — who presented his plan to the House Republican Caucus before showing it to anyone else — cribbed a couple of their ideas.

The Democrats would cut the cap on local school property tax rates by 25 cents, to $1.25, spending the rest of their tax relief money to triple homestead exemptions. In their plan, homeowners wouldn't pay taxes on the first $45,000 of their homes' values. That's a quick $450 cut in property taxes for every homeowner in the state, in addition to whatever savings they get from the lower cap. For the owner of a $200,000 home, the 25-cent drop in the rate would mean an additional $387.50 break, bringing that homeowner's tax cut to $837.50.

Some business property owners don't like the idea because it gives a better deal to homeowners, who get the exemption, than to businesses, which don't. But Perry has a similar component in his plan, which adds $7,500 to the $15,000 exemption that's already in place. That's worth $112.50 to every homeowner, in addition to the Guv's 30-cent rate cut. The owners of that $200,000 house would get a total break, under Perry's plan, of $645 per year.

The Democrats would raise teacher pay to the national average — or about $4,000. They'd fully fund school textbook programs that were cut back two years ago when the state had a budget shortfall. Their plan includes facilities funding. The Democrats say their plan would give better tax cuts to the average homeowners in 90 percent of the state's legislative districts than the Republican plan that won approval from the House earlier this year. They cribbed from Perry on "transparency" in school budgeting, which would allow taxpayers to get more details about how school districts are spending money.

Perry would give teachers an average raise of $1,500 — some would get more, some less. He's got textbook money in there, along with money for "education technology." The Guv also wants to revive a "taxpayer protection" bill that got through the House but not the Senate during the regular session; it would make it easier for local voters (but not state taxpayers) to turn back tax increases. The transparency idea picked up by the Democrats and by House Republicans started, apparently, in the governor's policy shop.

And Perry's plan includes a cap on recapture: He'd force the rich to share no more than 45 percent of their locally raised school property taxes. House advocates of a cap want that at 35 percent; education trade groups and a fair number of senators want no cap at all.

Schedules are mushy with all the legislating and deal-making underway, but the management in both chambers is pushing to get bills out of committee and to the full House and Senate next week. that would allow two weeks or more to try to settle differences, if, in fact, both chambers find something they can pass in the first place. Stay tuned for the next episode.

Up the Middle

When Gov. Rick Perry uncorked his own school finance/property tax plan on the first day of the legislative session, it came with some topspin: "I haven't the inclination or the patience to study this issue any longer, and neither do everyday Texans drowning in rising property tax bills." Perry would combine tax hikes on sales, cigarettes and businesses with property tax cuts for home and other property owners, pay raises for teachers, money for textbooks, and education technology.

Perry would get his money by closing loopholes in the state's business franchise tax, pulling in some corporations that don't pay it now while leaving partnerships untaxed (for fear of imposing an unconstitutional personal income tax on the partners), bringing in $864 million over two years.

He'd raise the state's sales tax from 6.25 percent to 6.95 percent, which would bring in almost $2.8 billion (and would make Texas' sales tax one of the highest in the country). The same rate increase on motor vehicle and boat sales would rake in $511.3 over the two years covered by the budget. An additional $1 per pack tax on cigarettes would put $1.4 billion in the state treasury.

Gov. Perry wants to add three items to the sales tax that aren't included now: vehicle repair and maintenance, $451.8 million; certain computer program repairs, $198.9 million; and elective cosmetic surgery, $71 million. A consultant we know has already dubbed that last one a "flap tax."

Dumping the "liar's affidavit" on car sales would yield $110 million, by the governor's figuring. Doubling "professional occupation fees" paid by some businesses would bring in $190 million. And repealing the discount given to businesses that remit sales taxes on time would add $157.7 million to the pot. Along with $316 million Perry says were freed by his vetoes, that totals $7.1 billion.

With that money, he'd lower school property taxes by 30 cents, lowering the maximum rate to $1.20 from $1.50. By 2010, that could be lowered to $1.05, though school districts would be allowed to add up to 12 cents to that amount, with voter approval, for local add-ons. The governor's plan also includes an increase in the state's homestead exemption. Right now, the first $15,000 of your home is tax-free on school rolls; Perry's plan would increase that to $22,500.

A potential hitch: Raising the homestead exemption requires a constitutional amendment, and a constitutional amendment requires supermajority votes — two-thirds — in both the House and the Senate. To help grade the difficulty, remember that both the school finance bill and its companion tax bill passed the House by five-vote margins during the regular session. Another one: Perry has issued press releases on his plan, but was slow to show lawmakers the actual language he's proposing for legislation. Showing details opens the plan to attack; not showing them makes lawmakers reluctant to give their support.

Perry Goes Public

After announcing the outline of his plan, Perry began running radio ads to sell his ideas to voters. The governor's statewide radio campaign designed to prompt state lawmakers to vote for school finance reform. Listen here.

The ad is a soft sell, voiced in part by Perry himself. It emphasizes that his plan would include "the largest property tax cut ever." It closes with an announcer asking voters to contact legislators in support of Perry's plan, but doesn't hand out phone numbers or anything like that (which would make it more provocative in the eyes of an average legislator). The ad copy:

Female Announcer: "Results, resources and reform. The three R's Texas schools need. Better education results, more education resources and real tax reform."

Perry: "This is Governor Rick Perry. My plan puts five billion additional dollars into Texas schools, requires 65 cents of every education dollar go directly into classrooms, and more accountability for how your tax dollars are spent. It has higher teacher pay. Fifteen hundred-dollar pay raise for classroom teachers. It's got new money for textbooks. We close the business tax loopholes to make them pay their fair share. And my plan provides the largest property tax cut ever. Seven billion dollars in tax relief, and real reforms to keep them low."

Female Announcer: "Better education results for our kids. More resources for our classrooms. And real property tax reform. Governor Perry believes Legislators — not judges — should fix school funding now! Contact your legislators today. Tell them you're with Governor Rick Perry and the three R's. Political Ad paid for by Texans for Rick Perry."

Perry's campaign is paying for the ad, and while a spokesman there says the commercials are running "statewide" and that it's a "significant buy," he didn't put a price tag on it. While that's going on, Perry also started doing local interviews (see Quotes of the Week) and traveling the state to sell his proposal.

Political Notes

Texas Land Commissioner Jerry Patterson, officially now, is running for reelection. He said on the night he won that office that he would seek a second term, getting some laughs and extracting himself from all of the speculation about who would be running for what next year. He wants to keep his parking space and says he loves the job: "Better than being Governor, but without the free housing." Patterson, 58, hasn't drawn any opponents so far. His campaign website is up and active, at www.votepatterson.com.

• As soon as Kay Bailey Hutchison was out of the way, U.S. Sen. John Cornyn endorsed Gov. Rick Perry in next year's race for governor. The Texas delegation to Congress stayed out of that family fight up to now.

• Brad McClellan will manage Carole Keeton Strayhorn's gubernatorial campaign. She's his mom. His last day at the attorney general's office was the day before she announced.

• Add new candidates to the top of the ballot. Felix Alvarado and his sister, Maria Luisa Alvarado, have a website up (www.onetexasforall.com) declaring their interest in running for governor and for lieutenant governor, respectively. They're Democrats, and both went to Edgewood High School in San Antonio, where the challenges to school finance began more than 30 years ago.

• Take Roy Blake Jr., R-Nacogdoches, off your list of candidates seeking to replace Sen. Todd Staples, R-Palestine in SD-3. Blake says he looked at it but has decided to seek a second term in the Texas House. But these guys are definitely in it: Frank Denton of Conroe, David Kleimann of Willis, Robert Nichols of Jacksonville, and Bob Reeves of Center. Staples has announced that, later this summer, he will announce his candidacy for Texas agriculture commissioner. We'll spend more time on this in a week or so, but put these names in as consultants: Jason Johnson with Nichols, Todd Smith with Reeves, and Bill Tryon with Denton.

• Texas Agriculture Commissioner Susan Combs says she has signed up 70 of the 87 Republicans in the Texas House as supporters for her bid for comptroller. She wants to replace Carole Keeton Strayhorn, who's running for governor.

• The fast thinker of the week: Democratic consultant Kelly Fero, who staked a claim to a new web address — www.adiosmofo.com — within hours after Gov. Rick Perry uttered those words to a television reporter from Houston. Perry's microphone and the camera were still hot, but he thought he'd finished a satellite interview with KTRK-TV when he popped off about something the station's reporter had said to him. Though Fero snagged the address, he hadn't put a web page at that address as we went to press.

Political People and Their Moves

The magazine's assessment of the ten best and ten worst legislators got buried under all the news last week. It'll be available on their website soon (if it isn't already), at www.texasmonthly.com, with write-ups and pictures and all. Their bests includeReps. Dianne Delisi, R-Temple; Dan Gattis, R-Georgetown; Charlie Geren, R-Fort Worth; Fred Hill, R-Richardson; Jim Pitts, R-Waxahachie; Mike Villarreal, D-San Antonio; and Sens. Robert Duncan, R-Lubbock; Steve Ogden, R-Bryan; John Whitmire, D-Houston; and Judith Zaffirini, D-Laredo. The magazine's list of the worst includesReps. Dwayne Bohac, R-Houston; Mary Denny, R-Aubrey; Al Edwards, D-Houston; Kent Grusendorf, R-Arlington; Terry Keel, R-Austin; Phil King, R-Weatherford; Robert Talton, R-Pasadena; Sens. Gonzalo Barrientos, D-Austin; Mario Gallegos, D-Houston; and Chris Harris, R-Arlington. And they gave "Dishonorable Mention" awards toGov. Rick Perry, Lt. Gov. David Dewhurst, and House Speaker Tom Craddick.

Kevin Ketchum takes over as executive director of the Texas Manufactured Housing Association. He'd been running external affairs — media and legislators — at the Texas Department of Licensing and Regulation, and before that worked in the Secretary of State's office.

Barbara Best is the new executive director of the Children's Defense Fund Texas after five years running the group's Houston affiliate.

DEATHS: Former U.S. Rep. J.J. "Jake" Pickle, D-Austin, after a long fight with cancer. Pickle, 91, was renowned for his retail campaign skills and for his care and feeding of constituents in need of help with anything from flood insurance to social security payments. A protégé of LBJ, he was elected in 1963 and decided not to seek another term in 1994... and Joe Beldon, founder of The Texas Poll, from Parkinson's Disease. He was 90.

Quotes of the Week

Gov. Rick Perry, caught on an open microphone — after a TV interview with KTRK-TV in Houston, mimicking something the reporter said: "Try as I may, Governor, I'm not going to wait that long. Adios, Mofo."

Sen. John Whitmire, D-Houston, talking to The Dallas Morning News when the governor's veto of the public education budget was only a rumor: "It's kind of a cowboy mentality. It is just being driven by Republican politics, and that is the bottom line."

Gov. Rick Perry, on vetoing $35.3 billion in public education spending from the state's 1006-07 budget: "I have taken this action neither lightly nor flippantly. I believe it's the best way to ensure that schools are fully funded when our children return this fall."

Speaker Tom Craddick, on the governor's proposal to close loopholes in the business tax and leave the rest of it alone: "We probably looked at 500 versions. It doesn't work. I don't believe that you can do a midway plan on that."

House Ways & Means Chairman Jim Keffer, R-Eastland, in the Houston Chronicle, after being asked by a reporter about the governor's tax plan: "Which governor is that?"

Mac Bernd, superintendent of the Arlington school district, in the Fort Worth Star-Telegram: "Students didn't bring this on. Parents didn't bring this on. Teachers working hard every day in the classroom didn't bring this on. This is a problem created in Austin, and it's got to be solved."

Rep. Harvey Hilderbran, R-Kerrville, in the Houston Chronicle: "It's hard for Republicans to vote for bills that say 'taxes.' It's harder than a man having a baby."

U.S. Sen. John Cornyn, asked by the Associated Press whether noisy primaries are bad for the GOP: "I think some of those worries are overblown. I think competition is part of the game. If somebody feels like they have something to offer to the electorate, they are free to do that."

Chris Paulitz, a spokesman for U.S. Sen. Kay Bailey Hutchison, telling the Wichita Falls Times Record News why she wasn't among the 78 co-sponsors of a resolution apologizing for not acting to stop lynchings: "She cannot sponsor everything."

From a press notice on Land Commissioner Jerry Patterson's reelection announcement, issued to the press after Comptroller Carole Keeton Strayhorn said she'd announce outside in the afternoon in the street near the Capitol with attractions for the kiddos: "NOTE: No hot dogs, pony rides or live music. But at least it's inside."

---

Texas Weekly: Volume 22, Issue 4, 27 June 2005. Ross Ramsey, Editor. George Phenix, Publisher. Copyright 2005 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 info@texasweekly.com. For news, email ramsey@texasweekly.com, or call (512) 288-6598.