Wanna Bet?

Legislation that would expand legal gambling on two fronts while also funding a quarter of a million college scholarships could go to voters if two-thirds of the Texas Legislature approves.

Sens. John Carona, R-Dallas, and Rodney Ellis, D-Houston, would allow up to 15 casinos — seven of them in urban areas, two along the Gulf Coast, and three in places where they'd boost job creation and local economies. The state's three Indian tribes — the Alabama Coushattas in East Texas, the Kickapoos in Eagle Pass, and the Tiguas in El Paso — would also be allowed to open casinos. And they'd allow the state's racetracks to add video lottery terminals — slot machines — to their mix.

The racetracks haven't signed on — some are pursuing legislation that would allow them to add VLTs without creating casinos. The backers of this legislation say they want to create "destination gaming" in Texas, and that racetracks don't fit the bill. They're looking for the sorts of big and expensive operations now found in Las Vegas, which combine hotels, gaming, fancy food, and expensive entertainment and shopping.

You know the usual setup for a gambling bill in the Texas Legislature. You start with a budget problem, mix in the natural political aversion to new taxes, and offer up a new form of gambling as the solution to the state's fiscal problem. And be sure to include a vote, so that legislators can tell folks they didn't vote for gambling — only to allow the public to decide whether it wants gambling.

Carona and Ellis are trying a new formula. This time, the state has plenty of money. So they're pointing to a fiscal problem — rising tuition rates at state colleges and universities — and saying casino gambling would raise enough money to send 240,000 kids to college. "It's common knowledge around this Capitol that we don't have enough money to meet all the needs of this state," said Carona, who until now has opposed casinos in Texas. And there'd be money left over for anyone who wants to sign on. Everything else is still there — the aversion to taxes, the constitutional amendment. There's even a local option election built in. If state voters allowed casinos and VLTs (slot machines), local voters would still have the ability to allow or ban those operations. "If you don't want this, turn it down," Ellis said.

The pitch came with two consultants. Economist Ray Perryman put together estimates of how much money the thing would generate for the state and for the economy. Pollster Mike Baselice asked 1,000 people in November how they'd like the idea, and peppered them with variations to see what worked and what didn't. Both were hired by the Texas Gaming Association, an industry group that wants the state to drop its ban on casinos.

Insert the standard caveat here, which is that the only numbers that count in state government come from the comptroller — Perryman's analysis says the casinos could create 315,000 to 461,000 new jobs, generate $31 billion to $45 billion in new construction, and bring $3.2 billion to $4.6 billion into state coffers every year. He said Texans gamble $3 billion annually in adjacent states and Mexico, and $10 billion overall. "There are very few taxes that people line up to pay — people love paying this tax," Perryman said of gaming.

Ellis and Carona would put $1 billion of that into a trust fund to pay for higher education tuition. They said the bill is only a starting point, but added that the higher education provision is the one part they're determined to keep.

Baselice's polling focused on what voters might do with a constitutional amendment allowing casinos in Texas, and on the wording that might be used to sell it. His firm polled 1,000 Texans from November 12-15 and the poll has a margin of error of +/- 3.1 percent.

Right out of the box, 54 percent had positive impressions of high-end casinos and 32 percent had negative impressions. Democrats and independent voters were friendlier to the idea than Republicans. Overall, 49 percent said they'd favor opening the state to casinos and to VLTs at racetracks, while 43 were against it. On the plus side, 27 percent were strongly in favor, compared to 33 percent who were strongly opposed. The anti-gamblers are more intense.

Ask them if, regardless of their position, they think the Lege should let them vote on it, 84 percent said yes, and 65 percent said they'd support their state legislator for giving them a chance to vote (18 percent said they wouldn't). Asked about using the proceeds of casino gambling to provide money for tuition, fees and books for Texas kids in college, the tally was 61-31.

Most — 84 percent — believe their fellow Texans have access to gambling through casinos, the lottery, eight-liners, or the Internet. And if you appeal to their competitive streak, 61 percent think the state should have casinos to prevent gambling dollars from fleeing to New Mexico, Louisiana, Oklahoma and Mexico.

Finally, if you ding them with all of that, 64 percent said they'd support casino gaming if the proceeds went to higher ed.

Jack Pratt Sr., former owner of the Sands Casino in Vegas and the head of the Texas Gaming Association, said exit interviews at casinos in adjacent states found a lot of Texans and also found that they would rather stay here than travel to, say, Louisiana. And he said high-end casinos would hurt lower-end forms of gambling: "This will suck the money out of riverboats like Grant took Richmond."

Scrutiny, Two Years Late

Sometimes a list is the best way to get your head around something. Here's what's happened around the Texas Youth Commission sex and management scandal during the last week, ending with this week's call for resignations by the agency's board:

• The Legislative Audit Committee voted to put the agency into a conservatorship, but also gave the governor a chance to leave the current board in place and to develop a rehab plan for the agency. He went for the second option. Lt. Gov. David Dewhurst and House Speaker Tom Craddick appointed a Joint Select Committee on TYC, co-chaired by Sen. John Whitmire, D-Houston, Chair of the Senate Criminal Justice Committee, and Rep. Jerry Madden, R-Richardson, Chair of the House Corrections Committee. The Senate appointees are Chris Harris, R-Houston, Juan "Chuy" Hinojosa, D-Mission, Kel Seliger, R-Amarillo, Florence Shapiro, R-Plano, Royce West, D-Dallas, and Tommy Williams, R-The Woodlands. The House appointees are Harold Dutton, D-Houston, Aaron Peña, D-Edinburg, Larry Phillips, R-Sherman, Debbie Riddle, R-Tomball, Sylvester Turner, D-Houston and Corbin Van Arsdale, R-Tomball.

• Gov. Rick Perry, after the LAC acted, put Jay Kimbrough in charge of an investigation of the agency. Ed Owens, who was installed by the agency's board as interim director, is supposed to work with the State Auditor on a rehabilitation plan. Owens is a top official at the Texas Department of Criminal Justice. Kimbrough has worked for Perry and for Attorney General Greg Abbott, and oversaw the only conservatorship in state history when he was assigned to clean up the Texas Commission on Alcohol & Drug Abuse during Gov. George W. Bush's tenure. Some House Democrats say he's a partisan; Kimbrough, as a deputy attorney general, called the FBI when the Democrats vamoosed to Ardmore, Oklahoma, to stop a redistricting vote, to see if there was a way to force them back.

• Perry gave TYC legislation emergency status, which allows lawmakers to work on it during the first two months of the session (a period that's almost over). He listed three pieces of legislation: one creating an inspector general at the agency, one giving Abbott concurrent jurisdiction that would allow him to step in on TYC matters when local prosecutors drag their feet, and another that would give a special prosecution unit jurisdiction over crimes at the agency.

• The Texas House, working on Jessica's Law legislation, added an amendment by Rep. Jim Dunnam, D-Waco, which would make it a crime for state employees or contract employees to cover up "continuous sexual assault of a young child or children." That would come with a 2- to 20-year penalty.

• There have been numerous calls to dump the board (a friend and former Senate staffer points out a constitutional provision that allows a governor to impeach his own appointees, with Senate consent). That would have happened automatically had the governor chosen to put the agency into conservatorship. And at least some senators are willing to go along. The joint committee gave the board a "no confidence" vote this week after board members refused to quit.

• Leaked reports hinting at what the agency and lawmakers knew and when, as well as reports of alleged sexual abuse at other TYC facilities.

• Travis County District Attorney Ronnie Earle launched an investigation after reports that TYC officials altered documents about alleged sexual assaults at the TYC facility in Pyote. In a press release, he said "tampering with a government document is a crime, as is lying to the Legislature."

Restoring CHIP

Legislation relaxing requirements for the Children's Health Insurance Program, or CHIP, sailed through a House committee and are on the way to the full House.

The legislation by Rep. Sylvester Turner, D-Houston, would remove restrictions put on the program four years ago in the midst of a budget crunch and a Republican takeover of the Legislature. Republicans still have a majority in both the House and Senate, but the state's budget isn't as tight now as it was then.

Turner's HB 109 would make several changes to CHIP:

• Change eligibility requirements to allow families to qualify after deductions for childcare, work-related and other expenses; current law doesn't allow any of those "offsets" against gross income when qualifying. Eligibility, in other words, would be based on net family income instead of gross family income.

• Start an education program and promote enrollment in CHIP, including outreach through school-based health clinics and private sector community organizations.

• It would amend a provision that allows state agencies to consider what assets a family has while determining eligibility, allowing them at least $10,000 in assets in addition to up to two cars.

• CHIP recipients would have to demonstrate their eligibility to stay in the program every year instead of every six months.

• The waiting period for new insureds would change. Now, they have to wait 90 days after they sign up for CHIP. The new law would keep the 90-day number, but it would toll from the end of their last insurance coverage instead of their enrollment date in CHIP. Someone who'd gone without insurance for three months wouldn't have to wait as they do now.

The changes would cost around $180 million annually, including $59.1 million in state funds; the balance would come from federal matching funds.

When legislators put current law in place, they touted money savings and downplayed the number of kids who would be knocked out of eligibility by the changes. Now, with a budget surplus and heightened anxieties about the numbers of uninsured Texans, they're moving to make more people eligible for CHIP. The moves aren't all smooth, though: Some conservative groups want the current law — particularly the six-month eligibility check and the asset test — left in place. And some liberals, like Rep. Garnet Coleman, D-Houston, say the assets test remains too strict and that the legislation puts into statute some restrictions that currently exist only in rules, which are easier to change.

Houses of Spouses

Legislators wouldn't be allowed to rent property from their spouses using campaign funds under legislation by Rep. Vicki Truitt, R-Keller. She's one of several lawmakers who have done just that, complying, she says, with an opinion from the Texas Ethics Commission.

This tripped up a number of lawmakers during last year's campaigns. The commission said they could use campaign money to pay rent to spouses so long as the properties in question were "separate property" not subject to community property laws in marriages. Two of the lawmakers who were doing that — Reps. Toby Goodman, R-Arlington, and Gene Seaman, R-Corpus Christi — lost their reelection bids, in part because of publicity about those arrangements. Truitt, Rep. Rob Eissler, R-The Woodlands, and Sen. Kim Brimer, R-Fort Worth, had similar arrangements at the time and got out of 2006 with their political hides intact.

Truitt's proposed legislation would end the practice, making it illegal for a lawmaker to use campaign funds to rent from a spouse, whether the property in question was separate or not.

Lakes in Waiting

A slightly modified form of Sen. Kip Averitt's omnibus water legislation will be considered by the Senate Committee on Natural Resources when members meet next week. However, aides say the Waco Republican doesn't plan to change the legislation's most contentious portion, which designates 19 reservoir sites throughout the state.

The legislation in question is actually two bills, SB 3 and SB 675. The first deals with a range of water issues, including environmental flows and conservation plans for small communities. The second is a single-shot bill that duplicates the first bill's provisions on the reservoir sites. If they want to split the issues, they've got a vehicle.

Averitt's aides said there's a change the committee will vote on the bills next week. Provisions on environmental flows will be changed to match Rep. Robert Puente's HB 3, which was passed by the House last week.

Critics of Averitt's bill say they've got real problems with the designation of 19 reservoir sites in Texas, arguing that the value of property within the site will diminish, even if no reservoir is ever constructed. The designations alone amount to property takings, they say.

Sen. Glenn Hegar, R-Katy, described the potential decrease in property values as "a cloud of darkness over these areas," saying, for example, that people would be much less likely to move onto a piece of land that may be underwater in the near future.

Hegar also stated concerns about a part of the legislation requiring reporting of water pulled from the ground, arguing that the process may place an undue burden on rice farmers in his district.

Sen. Kevin Eltife, R-Tyler, has come out as a major opponent to the 19 reservoir sites, especially the proposed Marvin Nichols Reservoir in northeast Texas. Water from this reservoir would be piped to the Dallas-Fort Worth area, in an adjacent water region. Eltife has suggested raising the level of nearby Wright Patman Lake as an alternative to building a brand new reservoir.

Eltife's aides said that, in addition to the land actually within the reservoir, so-called "mitigation land" will be affected by new reservoir sites. Basically, if you flood a piece of pristine land, the federal government says you have to reserve additional land to make up for the land you put underwater.

They said 60,000 to 70,000 acres would be flooded for the Marvin Nichols Reservoir, but 2 to 4 times as much area could be designated as mitigation land.

Also, he contends the statute is unnecessary because the state water board currently has the authority to designate reservoir sites. (Staffers for committee Vice-Chair Craig Estes, R-Wichita Falls, countered that sensitive decisions impacting private property rights should be made by the legislature, not by a state agency.)

Eltife has help. Sen. Robert Deuell, R-Greenville, has signed onto Eltife's amendment to excise the 19 reservoir sites. Aides say he's comfortable with the rest of the bill.

• In other water news, Estes filed SB 1338, which would allow groundwater conservation districts to require annual reports on water withdrawal by currently exempt entities, such as oil, gas and/or mining operations and agriculture.

Hegar filed SB 1341, which would create the Edwards Aquifer Recovery Implementation Program, a process though which the aquifer's major stakeholders (namely, San Antonio, people downstream from San Antonio, and people west of San Antonio who rely on water pumped from the aquifer) can reach a consensus on how to protect the groundwater, especially during times of emergency or drought. Similar programs have had reported success in places like New Mexico, Utah, Colorado, Nebraska and Wyoming.

Hinojosa's SB707 and SB847 (both with Sen. Eddie Lucio Jr., D-Brownsville) were referred to the National Resources Committee. The first bill would give teeth to the Rio Grande Regional Water Authority, in Willacy, Cameron, Hidalgo, Starr, Zapata and Webb Counties. As it stands now, the water authority has no way to raise money. The second is aimed at resolving long-standing conflict among irrigation districts and the cities and developers to whom they sell water.

—by Patrick Brendel

Flotsam & Jetsam

It's the end of bill filing, for what it's worth. Members can still file legislation with permission, but for normal stuff, the end of the week is the end of the first leg of the trip.

It also marks the end of the constitutional slowdown enforced this year by House Democrats. The Legislature often suspends the rule that prevents consideration of bills during the first two months of a session, but this time there weren't enough votes to suspend it. Gov. Rick Perry made a list of "emergency" measures to let the House do some business, but most things were forced to wait. And in the time-constricted world of the Texas Lege, that shortened the fuse to less than three months for most legislation. When the calendar reaches the bottleneck dates in late April and early May, don't be surprised when the black plague sweeps through proposed legislation.

• House budgeteers added a provision that allows the state to pay for an HPV vaccine, but only with the signatures of the governor and the members of the Legislative Budget Board. Without those signatures, it would prevent any of the state's budget to be spent on those vaccinations. That's a way of preventing a quiet shift of funds to HPV vaccinations from some other program after the Legislature leaves town.

• The Texas Education Agency would do an inventory of all of the state's public education mandates under legislation proposed by Rep. Dianne White Delisi, R-Temple. That'd be in place for the next legislative session, two years hence.

• Changing the way snuff is taxed in Texas could raise $91.4 million for the next state budget and over $50 million a year after that, according to Comptroller Susan Combs. She hasn't taken a position, but the fiscal note on the bill indicates it would raise some tax money. US Tobacco wants to change the tax from a price-based levy to one based on weight. That would have the effect of narrowing the price difference between regular and premium brands. The company's opponents want it left alone.

• Federal Judge William Wayne Justice will start a conference April 9 to decide what the state should do to resolve an 11-year-old case involving part of the Medicaid program. The state settled the case — it's titled Frew v. Hawkins — in 1996, when then-Attorney General Dan Morales and then a state district judge signed a consent decree. The state's later efforts to duck that order were fruitless, and now that the U.S. Supreme Court has declined to jump in, the state has to go to Justice to take its medicine.

It could be expensive, with some pessimists saying the state could have to spend $5 billion annually to do what it agreed to do. The case started with the Early and Periodic Screening, Diagnostic, and Treatment (EPSDT) program for kids. The folks who sued said Texas wasn't adequately promoting that and other programs for children — that it was blocking their access to programs guaranteed them by federal law. Their proposed remedies include everything from increased promotion to higher reimbursement rates for doctors, dentists and other Medicaid providers. Texas Health Steps — the state's name for the federal EPSDT program — covers about 1.5 million children (and doesn't have anything to do with the Children's Health Insurance Program, or CHIP).

Justice will look at the proposed fixes from the state and from the plaintiffs and will put a remedy in place. Once he does that, the budgeteers will be able to cost it out.

• One Medicaid rate — for ambulances — hasn't changed since 1991, according to the trade group for ambulance companies (a 1999 raise was obliterated during the 2003 budget cuts). Medical transportation for children is an issue in the Frew lawsuit, but the ambulance folks want their rates stepped up for everything in Medicaid. They contend the state's reimbursement rate for ground ambulances is 70 percent lower than the federal Medicare rate.

• Democratic gubernatorial candidate Chris Bell endorsed John Edwards for next year's presidential primaries.

• The private citizens who got the ball rolling on a $3 billion fund to pay for cancer research in Texas have a name — Kill Cancer — and a website, at www.killcancer.org. That's the bunch we wrote about several weeks ago; the coalition was started by Cathy Bonner of Austin and expanded to include the Lance Armstrong Foundation, the Susan G. Komen for the Cure Foundation, former Comptroller John Sharp, scientific, medical and higher education institutions, and a mess of lawmakers.

• Comptroller Susan Combs, responding to a request from someone she didn't name, wrote a memo spelling out two ways to save the state's prepaid college tuition program. The state could put in between $53.2 million and $69.2 million annually for 19 years, with smaller payments to finish it off. Or the state could limit increases in college tuition to 4.2 percent to 4.9 percent per year. That program has been suspended since the state deregulated tuition and the gap between what had been paid in and what was owed widened dramatically. But the Texas Tomorrow Fund was already in a hole before tuition deregulation, mainly because of adverse investments. Now the investments are doing better, but the soaring tuition costs are bedeviling the program.

Political People and Their Moves

Former political consultant and state Rep. Ed Emmett of Houston is now Harris County Judge Ed Emmett. He replaced former lawmaker Robert Eckels, who quit to join a law firm. Eckels was just reelected in November, and Emmett will have to stand for election for the rest of Eckel's term next year.

Gov. Rick Perry appointed Albert Betts Jr. of Austin to run the workers' compensation division at the Texas Department of Insurance. Betts had been the agency's chief of staff; he's a former assistant attorney general and was general counsel for the State Office of Risk Management.

The governor named Cynthia Delgado of El Paso to the State Commission on Judicial Conduct. She's a former employee of his, having worked as his Gulf Coast regional representative before moving to the desert.

Perry chose James Wendlandt of Austin for a spot on the Texas Board of Orthotics and Prosthetics. He's a financial advisor.

And the Guv tapped Allan Polunsky, a San Antonio lawyer who used to be on the state's prison board, to the Texas Public Safety Commission. That's the three-member panel that oversees the state police.

James Bernsen and Chad Wilbanks will advise the Texas House Republican Caucus on media and strategy, respectively. Wilbanks used to work for the Texas GOP and for U.S. Sen. Kay Bailey Hutchison; Bernsen worked for Hutchison, former U.S. Sen. Phil Gramm and for the Lone Star Report.

James Grace Jr. is rejoining Baker Botts, where he'll work in government relations. He's most recently been with Winstead Sechrest & Minick, and worked for Centerpoint Energy, in the utility's lobby shop.

Quotes of the Week

Jay Kimbrough, appointed by Gov. Rick Perry to investigate the Texas Youth Commission, quoted by the Associated Press on the child molestation scandal there: "If you are part of this gig, you need to move on or we're going to find you and prosecute you."

Texas Ranger Brian Burzynski, whose investigation of abuse at TYC was ignored for two years, testifying before a legislative committee: "I promised each one of those victims that I would do everything in my power to ensure that justice would not fail them, the Rangers would not fail them. I can only imagine what the students think about the Ranger who was unable to bring them justice."

Wayne Pacelle, head of the Humane Society of the United States, talking about horse slaughters in the Fort Worth Star-Telegram: "Because of the special place of the horse in American culture and all that horses have done to build and expand this country, it seems like the height of ungratefulness."

Sen. Mike Jackson, R-La Porte, on the cameras appearing on traffic lights all over the state: "It is too much big brother. The next thing is we will be mailing out speeding tickets and it will go on and on after that."

U.S. Rep. Ron Paul, R-Surfside, talking in the San Antonio Express-News about his potential bid for president, and his message: "If you don't like the government spying on you, telling you what you can read and what you can do on the Internet, and this invasion of your privacy and looking at your library cards and arresting you without search warrants and going into your houses and holding you without habeas corpus. How is that gloomy?"

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Texas Weekly: Volume 23, Issue 36, 12 March 2007. Ross Ramsey, Editor. Copyright 2007 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 (512) 302-5703 or email biz@texasweekly.com. For news, email ramsey@texasweekly.com, or call (512) 288-6598.