Mixed Emotions

Folks who want to spend the state's surplus on school tax cuts are meeting arguments that the surplus is already used up.

People who want to finance tax cuts and replace the corporate franchise tax with a new business tax are meeting arguments that the surplus ought to be used first.

Some lawmakers resist the idea of fixing school finance without getting some reforms in education along with all the money stuff.

And there's a faction that doesn't want to do anything about school finance unless there's some new money in it for teachers.

That's just the legislators. All kinds of stuff is getting passed around and talked about outside the Pink Building, from sheets to figure out what a tax bill would look like, to petitions to bring teacher pay and per-student spending up to national averages, to pleas for ever-so-slight adjustments to the deductions in the tax bill. You name it.

But the thing is holding together, so far. House Speaker Tom Craddick and his staff has been briefing members and trying to get a feel for what they're willing to do. Lt. Gov. David Dewhurst, who's in the position of waiting to see what the House will do on taxes, is doing the same, though less formally.

Gov. Rick Perry is marketing the thing. He and Democrat John Sharp — the sometimes buddy, sometimes rival who led the panel that drafted the plan — are touting trade group support for the bill, working editorial boards and civic clubs, and they've hired someone to raise money to pay for the promotional effort, whether that turns out to be direct mail or TV or whatever.

Alternatives are starting to surface, although criticism of the tax bill has been muted. The state's hefty surplus is attractive to lawmakers who'd like to start the property tax relief but don't want to vote for new taxes, and all three of the state's top leaders are pushing the notion that the money isn't really available for education.

Craddick is discouraging use of the surplus, according to members who've been through his sessions, and the handouts he's giving them. (You can get a copy in the Files section of our website, at www.texasweekly.com/documents.)

One sheet is an assessment of how much of the money in the state's piggy bank is available for tax relief, starting with $4.275 billion and subtracting all but $45 million for state obligations that haven't shown up in the appropriations process yet. Page two is an explanation — provided, apparently, by the governor's staff — of the proposed business tax.

The argument is that hurricanes, textbooks, Medicare, tuition revenue bonds, and money for employee and teacher retirement funds will eat up all but $1 billion of the surplus and that the rest is needed to pay back money squirreled into the current budget by delaying payments from the last day of a budget period to the next.

At some point, that becomes an argument against the Perry-Sharp bill, which requires $1.4 billion from the surplus to balance. Like most government budgeting, there's a little Alice in Wonderland thrown in: The surplus money isn't available, except when it is.

On the Senate side, after a fumble over income taxes, there's some talk of consumption taxes. One idea is to leave the sales tax rate as it is while expanding sales taxes to services not now taxed. Politically hazardous exemptions like funeral services and newspapers would be left out, but service taxes could bring in a lot of money.

Sales taxes are more attractive to some conservatives because they're more transparent — customers see the tax. With a gross receipts tax, the cost gets buried in the price of the product. On the other end of the political spectrum the concern is about the regressivity of sales taxes — they take more, proportionately, from the poor than from the rich. Leaving the rate alone and taxing some services, however, is less regressive. A lot of services are invisible to most consumers anyway, like consultants, or architects. The notion is that some Democrats might be persuaded.

But tax bills have to start in the House; the Senate can't mess with taxes until they have a bill in front of them.

One more idea looking for traction: There's a theory on the Senate side of the building that Gov. Perry can't write an agenda for the special session that both includes school finance and excludes education reforms. As we understand the argument (which will fall to the lawyers and the schemers at some point), school finance requires changes to funding formulas. Those formulas are in the education code, and once you let lawmakers into that area of state law, you can't keep them from taking up other education matters.

A Foot in Both Puddles

Rep. Warren Chisum, R-Pampa, sent a little thrill through the Pink Building a couple of weeks ago, suggesting lawmakers should lower local property taxes with money already collected from taxpayers rather than raising taxes. Now he's modified that position.

The state should first escape a court judgment that the local school property tax is illegal, he says, and that can be done by using some or all of the state's $4.3 billion surplus. He also says he wants to replace the state's corporate franchise tax.

Read that with current events as a filter: Chisum is endorsing the tax bill touted by Gov. Rick Perry and former Comptroller John Sharp, and he's sticking with the idea that probably has the best chance of undermining that very same tax bill.

Chisum says the House ought to start the special session by passing a bill that would temporarily satisfy the courts. He'd do that by using $2.8 billion of the surplus to reduce those taxes by 17 cents (most school district tax rates are at or near the state limit of $1.50 per $100 in property value).

Then, he says, they should work on the $5.9 billion plan baked by Perry's Texas Tax Reform Commission. It includes a new tax on business receipts (companies could choose to deduct their costs of goods sold or their employee compensation), a $1 increase in cigarette taxes, an increase in smokeless tobacco taxes, and it would use about $1.4 billion of the surplus.

What would be the incentive to pass a tax bill after the courts' problems are solved by spending some surplus money? More tax relief, he says. The bill put together by Sharp and the other tax reform commissioners would lower taxes 17 cents the first year — just like Chisum's bill — and would add 33 cents in cuts the second year. Districts would be allowed to raise their rates — that local control over tax rates is a key part of the court rulings — but Texans would potentially have their school taxes cut to $1.

Meanwhile, Rep. Bill Keffer, R-Dallas, is giving succor to the small government advocates in and out of government, saying the new business tax is a bad idea and that the Legislature ought to use the surplus to cut rates and to cut other state spending to finance those tax breaks after the surplus is used up.

Keffer, part of a panel assembled by the Texas Public Policy Foundation, said he views the surplus as an overpayment of taxes; he wants the state to give it back to taxpayers. He told the mostly sympathetic crowd that he's against the Perry-Sharp plan because it gives government a new revenue source he doesn't want to give it: "We have to expect that it would probably go up."

Though he was deferential to Perry and Sharp, he starts in the "No" position. "The only thing permanent about this proposed solution," he said, "is the tax."

Keffer and Sen. Steve Ogden, R-Bryan, both said lawmakers should try to find a way to limit increases in local school taxes without running afoul of court orders to give the locals "meaningful discretion" over their own taxes.

Without DeLay

Members of Congress are generally less important to Texas politics than to national politics and with the exception of redistricting, that's been true of Tom DeLay. But he played big in Texas redistricting and in the Texas legislative elections that preceded it, and those efforts led both to a great triumph for DeLay and to his downfall.

DeLay created a political action committee — Texans for a Republican Majority — to help take over the Texas House for the GOP (the Senate was already in Republican hands). In the 2002 elections, after TRMPAC and other groups targeted more than a dozen races — seven close ones in particular — they won the House. That new Republican majority elected Tom Craddick as the first Republican speaker since Reconstruction. And, in fits and starts, that new majority drew congressional maps that flipped the partisan alignment of the Texas delegation to Congress and solidified the majority that DeLay headed in the U.S. House.

In the last stages of that map-drawing exercise, DeLay — who had also been involved, quietly, behind the scenes — came to Austin to close the deal. Gov. Rick Perry was out of the state, and Craddick and Lt. Gov. David Dewhurst couldn't push the last pieces into place. DeLay did a round of shuttle diplomacy between the two sides of the state Capitol, and the maps were complete. A panel of federal judges blessed the results, the elections were held, and DeLay's goals were met.

But his troubles started right away. U.S. Rep. Chris Bell, D-Houston, was unseated in his new district, but before he was out of Congress, he filed ethics complaints against DeLay that began the majority leader's decline in Washington. In Austin, complaints from Texans for Public Justice about the conduct of the 2002 elections caught the eye of prosecutors. An early sign of weakness appeared in the 2004 election, when DeLay won another term but only got 55 percent of the vote. He ran almost ten percentage points behind George W. Bush in that congressional district — a sure sign that his support was eroding even among Republicans.

Prosecutors and grand juries in Austin zeroed in on TRMPAC and then on DeLay and a handful of political associates. They were particularly interested in corporate money that apparently was used to help candidates in seven races. Corporate and union money can't be used directly in elections, and TRMPAC's treasurer, Bill Ceverha, already lost a related civil suit on that topic. DeLay and two others were indicted and face criminal charges. In Washington, meanwhile, scandal swirled around lobbyist Jack Abramoff and, in part, his ties to DeLay and to current and former aides to the congressman.

Opponents were emboldened. Former U.S. Rep. Nick Lampson of Beaumont — one of the Democrats unseated by DeLay's redistricting effort — moved to CD-22 to run against DeLay. The incumbent drew three opponents in his own primary. And former U.S. Rep. Steve Stockman said he would collect signatures to get on the ballot against DeLay as an independent.

DeLay told Time and the Galveston County Daily News — the publications he chose for his resignation announcement — that his polls showed his chances of reelection were in jeopardy. Rather than risk a Republican seat in Congress in a referendum on him, he said, he wanted to get out of the way to let another Republican run.

Without him as a foil, chances for the Democrat and for other challengers shrink in what DeLay and others say is solid Republican territory. It could dry up fundraising for Lampson, who was outpacing DeLay in the money race before the resignation announcement. Don't count Lampson out, though: His fundraising to date would make him a formidable candidate even if it slows now that DeLay is out of the contest.

His effect on elections in Texas was usually negligible, but his notoriety promised to shake Republican trees far outside his own congressional district this year.

DeLay's decision should buoy other Republicans who were, in effect, answering for the former House majority leader's alleged sins. Coattails work in both directions, and Republicans all over Texas were having to talk about him, defend him, and gently ease away from him. His departure could change the dynamics in races that seem unrelated, like the one in Waco — where Democrat Chet Edwards is near the top of the GOP's national congressional hit list. For Republicans elsewhere, it helps change the subject. Voters might not be talking about DeLay, or ethics, or Jack Abramoff, come November. That'd be a plus for the GOP.

DeLay said he wants to focus on helping Republicans and his own charities from a spot outside of Congress. But he still has the Texas charges pending, and the Abramoff investigation ensnared another former top aide to him at the end of March. Deciding against reelection frees him to defend himself in court without simultaneously defending himself before the voters in CD-22.

The Smoke-Filled Room

It's easy to get off the ballot under Texas law: Either take a bus or get hit by one. Unless he dies or is incapacitated, Tom DeLay has to move out of Texas to get his name off the ballot, and to resign. The race for his spot on the ballot is already well under way.

DeLay says he'll declare himself a resident of Virginia — a state with a personal income tax, no less — when he resigns. DeLay, who won the GOP nomination in last month's primary, would be disqualified and Republicans in his district can then get about the business of putting someone else on the ballot to face Democrat and former U.S. Rep. Nick Lampson and possibly, former U.S. Rep. Steve Stockman, who's gathering the 500 signatures he needs to get on the ballot as an independent running for non-statewide office.

The district includes parts of four counties: Brazoria, Fort Bend, Galveston, and Harris. GOP precinct chairs from each of those counties will elect one of their number, and those four designees will meet to pick DeLay's replacement on the ballot. If they lock up and can't make a decision, the ball goes to the 62-member State Republican Executive Committee.

Names in the hat so far include Tom Campbell, who came in second to DeLay in the GOP primary, Harris County Judge Robert Eckels, Houston City Councilwoman Shelley Sekula-Gibbs, Sugar Land Mayor David Wallace, and possibly, state Reps. Charlie Howard, Robert Talton of Pasadena and Martha Wong of Houston. Stockman, who served one term as a Republican, is ineligible for the party's nomination because he didn't vote in their primary last month. State Sen. Kyle Janek, R-Houston, says he's not interested in a run for Congress, since he has three little kids at home.

The precinct chairs choose their candidate for the November ballot, and that's who'll be running against Lampson and Stockman. They have until early September to name someone.

The law allows for another election before that. Gov. Rick Perry will have to call a special election to replace DeLay for what's left of his term. The Guv's got two options: call an election on the next uniform election date or call it an emergency and set a relatively quick election. DeLay says he'll stay in office until next month; the next uniform date after that is in November.

If Perry calls it an emergency, there will be a special election between now and November. The winner of that affair would serve until January, when the winner of the November election would take over. And the special election, whenever it is, will be open to all comers of all political persuasions. The local party people have an option, too: They can name their candidate before an emergency special session or wait to see who wins it.

But after mapping it out, Perry decided not to call an emergency election, telling reporters at a press conference on his tax bill that he won't call a special election before November except in the unlikely chance that DeLay quits before the end of this week. April 7 is the last day for a resignation to force a May election. Perry could call a special election in the summer or fall; that would give the area representation, but it creates a political muddle.

The first idea out of the gate was to get somebody on the ballot so the area would be represented during budget votes next fall. A spokeswoman for Perry advanced that idea, as did Texas GOP Chair Tina Benkiser.

But after thinking about it, Republicans grew concerned about a special election, since the Democrats have settled on a candidate — Lampson — and they have several people talking about the race. In a special, Lampson would likely get all of the Democratic votes while Republicans split their support into factions. That splintering could put Lampson into Congress for the rest of the year, increasing his fundraising abilities and allowing him to run as an incumbent.

Option Number 2 also presented problems: It's possible that a Republican could win a special election while losing in the "little election" before the precinct chairs. That would put one Republican in office for the rest of the year and a second on the ballot — another split that Lampson might be able to exploit.

A Succession of Republicans?

Try out this scenario, from Republican consultant Allen Blakemore of Houston: If Robert Eckels (a Blakemore client) decides to run for Tom DeLay's spot as the Republican nominee in CD-22, he'll be giving up his reelection bid as Harris County Judge.

That would leave local Republican Party officials with the job of replacing their nominee on the ballot with another Republican. There's no Democrat in that race, so that Republican's appointment to Eckels' ballot position would be tantamount to election as the top official in the state's biggest county. If it's someone like, say, Harris County taxman Paul Bettencourt (whose name has also been in the mix as a possible DeLay replacement), there'd be another round: Someone would have to be appointed to serve out the remaining two years of his term before they'd face voters.

Political Notes

Cheri Isett will take Rep. Carl Isett's place in the House during the special session. The Lubbock Republican is in the Navy Reserve and was called to Iraq and appointed his wife to fill in for him. They run an accounting business together, and also home-school their kids; for Cheri Isett, that could be a reasonable basis to hope for either a long session or a short one.

• House Democrats want the Texas Ethics Commission to reconsider its decision on gifts. The TEC ruled that Bill Ceverha was right when he reported receiving a check -- without reporting the amount of it -- from Houston homebuilder Bob Perry (the two men later told The Dallas Morning News that it was a $50,000 check, and that they'll report a second check for the same amount in a few weeks). And Rep. Lon Burnam, D-Fort Worth, filed suit to get the courts to push TEC to require disclosure of check amounts.

• Republican Drew Darby filed the latest lawsuit of the primaries, contending Rep. Scott Campbell, R-San Angelo, zoomed over the line with mailers and radio spots accusing the challenger of being a lousy father and husband, among other things.

• Former Texas Supreme Court Justice Steve Smith has filed suit over the results of the March primaries, which he lost to Justice Don Willett, an appointee of Gov. Rick Perry. Smith is questioning vote-counting irregularities in Tarrant and Gregg counties and also wants the courts to give him a peek at the Texas GOP's election records.

• With all of the votes counted — and recounted — Nathan Macias was the winner over Rep. Carter Casteel, R-New Braunfels. Macias, one of five candidates backed almost exclusively by Dr. James Leininger of San Antonio, got to the finish line 53 votes ahead.

• Lorraine O'Donnell, who lost to Rep. Pat Haggerty, R-El Paso, by 105 votes, didn't report a late $75,000 contribution from Leininger that allowed her to close the race with television ads. The El Paso Times reported she didn't file a required notice with the state ethics commission; the top fine for that sort of thing is treble damages, or $225,000. O'Donnell told the paper she opposes Leininger's pet cause: publicly financed vouchers for private schools.

• Take Gina Parker out of the running for chair of the Republican Party of Texas; she says she'll instead pursue a "leadership role" with the national Eagle Forum. Between that and Nate Crain's earlier decision not to run, it's starting to look like Tina Benkiser will get another term in the office without a serious challenge.

• It's on the website of the Texas Association of Business, and that outfit even sent out a press release touting it, but their form for figuring a business' taxes under the Perry-Sharp plan was done by the Texas Taxpayers and Research Association. References to TTARA are omitted on the TAB version. It is darned useful, though, and you can get a copy by clicking here.

• Republican House candidate Alex Castano got 100 percent of the votes on the Texas Railroad Commission: all three commissioners endorsed his campaign. He's running against Bill Welch, who lost a very close race to Susan Combs when the Agriculture Commissioner was first elected to the Texas House in 1992. Combs isn't on the endorsement list, but her husband, Joe Duran, endorsed Castano. Welch is leading easily with trade and lobby groups, most recently adding the Texas Civil Justice League and TEXPAC, the political action committee affiliated with the Texas Medical Association.

• Department of (forehead-slapping) Corrections: Rep. Jim Keffer is from Eastland, which is 70 miles from Weatherford, where we had him located in a recent issue. How embarrassing. Sorry, sorry, sorry.

Political People and Their Moves

Eric Bost, who headed what was then called the Texas Department of Human Services, is President George W. Bush's choice for U.S. Ambassador to South Africa. Bost is currently an undersecretary at the U.S. Department of Agriculture, and the nomination has to win a nod from the Senate.

Gov. Rick Perry appointed two Aggies and a lawyer to the Texas State Board of Veterinary Medical Examiners, the licensing agent for vets. Janie Allen Carpenter of Garland and David Wayne Heflin of Mission are both vets (and Aggies), and Cynthia Diaz of San Antonio is the deputy general counsel for Mission City Management.

Perry named Connie Sefcik-Kennedy of Austin to the governing board of the Texas School for the Deaf; she's a state employee at the Department of Assistive and Rehabilitative Services, and a member of the school's Alumni Association.

Railroad Commissioner Michael Williams won an appointment to the National Coal Council, which advises the U.S. Secretary of Energy.

Deborah Ingraham, after ten years as an administrative law judge for the State Office of Administrative Hearings, is the new director of regulatory and legal affairs for the Texas Electric Cooperatives.

Austin American-Statesman reporter Ken Herman — now in Washington after a long run in the Capitol press corps — won election to a seat with the White House Correspondents Association. Ever heard him complain about issues in a race? The big item for his group is... "the upcoming remodeling project."

Quotes of the Week

U.S. Rep. Tom DeLay, in Time: "This had become a referendum on me. So it's better for me to step aside and let it be a referendum on ideas, Republican values and what's important for this district."

Travis County District Attorney Ronnie Earle, in a written statement on DeLay's decision to resign from office next month: "Tom DeLay's political status has nothing to do with the criminal charges against him. This changes nothing."

Democratic consultant Glenn Smith, quoted in The Dallas Morning News on the relations between Tom DeLay and the religious right: "I'd be surprised if he was accepted by authentic people of faith. He's done nothing but manipulate and use these people for his own power. It'd be like putting Blackbeard in charge of the Navy."

Attorney Howard Wolf, who served on the Texas Tax Reform Commission with former John Sharp, introducing Sharp at a public forum: "John has been elected to — or not elected to — virtually every office in the state."

Lt. Gov. David Dewhurst, in the Houston Chronicle on the Perry-Sharp tax plan: "In a perfect world, I think I'd rather see a tax that's based upon income. Earn money, pay something. You don't earn money, don't pay anything."

Dewhurst, a day later, in a written statement: "I have always opposed a business or personal income tax..."

Sen. Steve Ogden, R-Bryan, on all the alternatives: "I don't have a favorite tax."

Rep. Bill Keffer, R-Dallas, on the Perry-Sharp plan: "It's like sending government to Golden Corral so they can go through the line five times... The only thing permanent about this proposed solution is the tax."

Rep. Charles "Doc" Anderson, R-Waco, quoted by the Waco Tribune-Herald on the difficulty of solving school finance: "If we had a panacea, we would certainly vote it in."

Texas Court of Criminal Appeals Judge Charles Holcomb in the Austin American-Statesman, on campaigning: "I never ask anybody for money. If I ask attorneys for money, well, then, they might be wanting favors. I just feel uncomfortable with it."

Democratic Senate candidate Barbara Ann Radnofsky, talking about her opponent — retired Universal City attorney Gene Kelly — with The Dallas Morning News: "Kelly's name has really had a tremendous effect. People think the guy is somebody."

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Texas Weekly: Volume 22, Issue 40, 10 April 2006. Ross Ramsey, Editor. George Phenix, Publisher. Copyright 2006 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.