March Madness

Our bracket says Pitt will win the NCAA men's basketball championship. That doesn't mean it'll happen. And if it does happen, we won't be able to claim (honestly, anyway) that we knew it was gonna happen. We'll just have guessed right. [eds. note: After this was written, Pitt lost to Villanova, failed to make the Final Four, ruined our bracket, and painfully proved our point about predicting the future.]

And there's no way to know right now whether the governor will call a special session in the summer, unless your name is Rick Perry and you've been talking to yourself. A summer special was the media-driven rumor of the week at the Capitol, presumably on the state budget, based on the notion that Perry will veto the budget that's now being written, etc., etc., etc.

The best thing you can say (honestly, anyway) is that it's too early to know what's going to happen with the budget, the stimulus, vetoes and all of that.

We have a theory, however, on why the rumor has traction, and why the rumor of an Unseat-New-Speaker-Joe-Straus petition got legs last week. Lawmakers gossip more than a church choir, especially when there's nothing to distract them. And in the House, there's clearly nothing to distract them.

Every session is odd in its own way. This one has had a remarkably slow start. The session is a few days shy of the halfway mark, and the House has not yet considered a bill. Near the end of the week, only 17 pieces of legislation had been moved to the House Calendars Committee — the panel that schedules what other committees have considered for a vote in the full House. Only 60 bills had come up for votes in the various House committees, and only 23 had been "reported" from those committees — sent on their way to Calendars. The Senate had passed 73 bills.

The standard line is that there's only one bill — the budget — that has to pass each session. Lawmakers are eternally optimistic: 4,706 bills have been filed in the House (of 7,152 total), and there are 10 weeks left in the 20-week session.

One of those 73 Senate bills — Voter ID — got all the attention. It passed unaltered and on a party-line vote. It goes to the House, which could have it up in committee in a couple of weeks.

That Sinking Feeling

The state's biggest pension funds lost a combined $40.8 billion in value between the end of the fiscal year in August and the end of February, and might soon be asking lawmakers for more money.

The market value of the Teacher Retirement System's assets dropped to $70.6 billion from $104.9 billion, or 32.7 percent.

The market value of the Employee Retirement System did a little better, falling to $15 billion $21.5 billion, a 30.2 percent drop.

The market's to blame, but the costs will be borne by the state and the educators and state employees that contribute to those funds unless the markets turn around and earn all that money back. (A note: These aren't actual losses until and unless the funds sell their assets; the lost value is the difference between what the assets were worth six months ago and what they're worth now.)

The market disasters put the Legislature in a bind: They probably need to send some money to the funds, eventually, so ERS and TRS can meet their obligations. ERS, where the numbers are less bleak, has 89 cents on hand for every $1 of liabilities. At TRS, the plunge left 68 cents for every $1 in liabilities.

"This is not rocket science," says Rep. Vicki Truitt, R-Keller, chair of the House Pensions, Investments & Financial Services Committee. "You get a market turnaround... adjust the contributions... or adjust benefits."

She and others are still trying to figure out what needs to be done to the funds right away. She's concentrating on calming retirees: "No one's in any danger of not getting their check."

TRS' actuaries — Irving-based Gabriel Roeder Smith & Co. — said in their assessment that lawmakers should wait before they do anything dramatic.

"We believe the current financial environment is too volatile, with future expectations too uncertain, to create a long-term solution during this legislative session," the TRS actuaries said in their mid-year report.

But the fund's executive director suggested they'll be looking for money before lawmakers leave town.

"[The outlook] has changed from neutral to consider some type of contribution increase ... that would be very helpful," Ronnie Jung told Truitt's committee.

And they recommended "no unfunded benefit enhancements be considered by the Legislature." To get the fund in shape for any extras, they said, would require the contributions from both the state and the educators to be raised above 9 percent. Each increase of one percent raises about $707 million for the retirement fund per year (while taking it from the state budget or teacher paychecks, or both). At ERS, a smaller fund, a one percent increase in contributions the corresponding number is about $55 million annually.

For TRS, the state contributes 6.58 percent of an educator's pay; the educator pays 6.4 percent. The ERS numbers: 6.45 percent state, and 6 percent employee.

That probably kills the idea of a "13th check" — an extra month's check for current retirees. The actuaries again, from their letter: "It is possible that the Legislature could authorize a 13th check for retirees and separately fund these benefits outside of TRS. However, we believe the first priority of the State should be ensuring the long-term viability of the System."

The ERS numbers, while better, still present some budget problems. That combined 12.45 percent of pay doesn't cover the "normal cost" of the fund — that would take an additional three percent. Rep. John Otto, R-Dayton, says he's not sure how much, if any, the Lege will spend. But it won't just come from the state: Otto, whose Appropriations subcommittee will look at ERS, says the employees should bear some of the costs, too.

"Nobody's interested in cutting benefits," Truitt says. "We're going to adjust the contributions and pray for a better market."

Healthier Than Average — But Still Ill

The Texas chapter of the current recession began with 2009 and the state "was probably on the brink weeks or months before then," according to the Federal Reserve Bank of Dallas.

Texas is doing better than the country as a whole, and the recession here began at least six months after the national downturn, according to a new report from the Fed.

Key points:

• The leaders of the recession here: Energy prices, high-tech activity, and exports.

• Employment was up in the first half of 2008, but fell in the second half, particularly in September (Hurricane Ike gets the cite) and then in November and December. And the rates elsewhere are rising as more people lose jobs; according to the Fed, the Texas numbers rose because the labor force grew faster than jobs grew.

• Home foreclosures, inventories and mortgage delinquencies all grew in Texas, but less so than in other parts of the U.S. Prices here rose through the third quarter of the year even as they were plummeting elsewhere. The Fed expects them to "dip" this year.

• Energy industry layoffs are expected this year, too, and the Fed predicts the areas that led the upturn — Permian Basin and Barnett Shale drilling — will lead the way downhill.

• Among the big cities, Austin and Dallas have led the recession, with Houston continuing its growth. But then there's this line: "In 2009, all the major metro areas in Texas will likely experience recessions."

• Unemployment in the state will rise by 2.8 percent — "the equivalent of 296,000 jobs."

Hold 'em

The nominations of Texas Workforce Commissioners Tom Pauken and Andres Alcantar are on hold in the Texas Senate, which is watching to see how the battle over unemployment insurance and the federal stimulus comes out.

Gov. Rick Perry appointed both men. Alcantar was on the Guv's budget and policy staff before this. Pauken, a Dallas lawyer, is a former head of the Texas GOP and has run for various offices over the years.

But the senator who heads nominations — Mike Jackson, R-La Porte — says the hold isn't partisan and blames it on the stimulus tussle.

Perry declared his opposition to the UI stimulus money — $556 million worth — last week. Pauken had been working with lawmakers to find a way to accept the money without locking the state into unfunded federal mandates when that stimulus money is gone. And a couple of Republicans — Sen. Kevin Eltife of Tyler and Rep. Tan Parker of Flower Mound — filed legislation last week that attempts to take the money and weaken the federal strings on it.

While that was developing, Jackson says, a number of senators from both parties asked him to take Pauken and Alcantar off the "nominations eligible" list pending in the Senate. That allows senators to approve other gubernatorial nominees who, like the TWC pair, have been okayed by Jackson's committee. He revised the list, removing their names. "Several members in the Senate have questions they'd like to ask..." he says. "There's no need to rush."

He says Pauken and Alcantar could be up for confirmation "in a couple of weeks."

Fixing a Hole

The expected deficit in the state's unemployment insurance accounts could be erased with federal stimulus money and with the balance of an economic development fund in the governor's office.

That "Texas Enterprise Fund" got its money from the insurance fund in the first place.

Rep. Jim Dunnam, D-Waco, told a group of reporters that the UI deficit will hit $800 million later this year. Most of that — $555 million — could be covered if the state will accept federal stimulus money targeted at UI. The other $245 million, he said, just happens to be the current balance of the TEF.

"I'm not gonna stand around and allow the governor to willingly create insolvency in the unemployment trust fund, and double the tax on employers," Dunnam said.

Gov. Rick Perry said this week that he wants the state to refuse the federal UI money, because it comes with some requirements he says could cost the state well after the federal money runs out. Dunnam and others dispute that, saying the costs of those changes is far outweighed by the stimulus money.

And Perry's way would result in larger tax increases for Texas employers, who'll be assessed for that deficit.

He's off for Arlington, where his House committee on the stimulus money will hold a public hearing this weekend. Perry taped a phone message urging Republicans in that area to flood the hearing to tell the committee of their low regard for the federal stimulus.

Dunnam and Rep. Garnet Coleman, D-Houston, said they were at a loss to explain Perry's desire to turn down the money. Coleman blamed national politics and suggested the governor and his Republican peers around the country want to annoy the new administration.

"Taking money out of a proven job creation fund would be shortsighted and irresponsible," Katherine Cesinger, a spokeswoman for Perry, said in an email. "The best way to address unemployment in Texas is by creating more jobs, and that’s exactly what the Texas Enterprise Fund continues to do."

Money v. Health Care

House lawmakers started the discussion over state's uninsured children by hearing testimony on proposals — some with nine-figure price tags — that would significantly expand public health insurance programs in Texas.

Advocates for the Medicaid and Children's Health Insurance Program proposals plead human decency — Texas ranks last in the U.S. in the percentage of children with coverage. The proponents argue that expanding coverage will save healthcare providers and the government money in the long run. But with budgeteers trying to hold costs down, the cheapest initiatives are most likely to succeed. And fiscal conservatives say they will resist throwing good money into what they consider a bad system.

In this first foray, the House Human Services Committee looked at more than two dozen bills in four general categories: Allowing parents to reenroll in children's Medicaid once a year, instead of once every six months; expanding CHIP to cover families with incomes from 200 to 300 percent of the federal poverty level; improving the eligibility process for social service programs; and specialized programs.

Rep. Warren Chisum, R-Pampa, a former House Appropriations chair, said before the hearing that he hasn't looked into specific proposals yet this session, but is strongly against extending the child Medicaid continuous eligibility period to 12 months from six. (He heads the Texas Conservative Coalition, which lists the decision to limit that period to six months as a "conservative victory".)

"I have health care for my family, and I pay it every month," he said. "Six months does not seem unreasonable to me, and we've been very diligent about getting people to come in and fill out their stuff and try to make it really easy for them."

Witnesses provided visceral narratives about gaps in the state's safety net. Representatives of physician and hospital groups also supported legislation designed to insure more people and shift the patient burden from emergency rooms to primary care providers.

Testifying in favor of extending the child Medicaid reenrollment period, Ofelia Zapata of Austin said her adult daughter had to quit her job after getting written up repeatedly by her employer for missing work to renew her three children's health coverage and to go to the doctor. Zapata's daughter worked for Maximus, a private company under contract with Texas to help enroll children in public health insurance programs.

The 12-month reenrollment period is the "industry standard" for health insurance, said a physician representing the Texas Medical Association and other doctors' groups.

The Rev. Lisa Hunt, rector of St. Stephen's Episcopal Church in Houston, spoke in favor of allowing families with incomes between 200 and 300 percent of the federal poverty level to purchase CHIP coverage, with premiums on a sliding scale tied to their abilities to pay. That would relieve pressure on small businesses wanting to make sure their employees have health insurance, she says.

Zapata and Hunt came to the hearing as part of the Texas IAF Network, a nonprofit coalition of organizations, including religious ones, that lobby for social causes.

Chisum said he's open to a CHIP expansion if it involves families buying into the program and incurring no extra cost to the state. Anne Dunkelberg, associate director of the Center for Public Policy Priorities, expressed cautious optimism that others in the GOP could also be open to the idea.

"Obviously we still have Republican leadership and a Republican majority in both of our chambers. We've also gotten encouraging signals on creating a CHIP buy-in program. It's getting a warmer reception," she said.

Chisum does draw the line at offering CHIP outright to all families at 300 percent of the poverty level. Expanding CHIP like that is a step toward socialized health care that Chisum doesn't want to take, he says.

"What we're doing is moving our state, every time we come back through the appropriations process, closer and closer and closer to socialized medicine," Chisum said.

Proposals to improve the state's eligibility process are a continuation of long-running battles once involving private contractors, like Accenture, hired to enroll people in social service programs, followed by significant drops in the number of clients in those programs.

Closer Than You Think

Texas Republican voters prefer Kay Bailey Hutchison over Rick Perry, but the gap between the two is not that large and the actual vote is a year and a few million dollars worth of campaigning from now.

Hutchison wins the support of 36 percent of the voters to Perry's 30 percent. Nearly a quarter of those voters — 24 percent — haven't decided, and 11 percent said they'd prefer a third candidate (that adds up to 101 percent, because of rounding).

"The large number of people who are undecided in all of the election numbers suggest that while insiders and political junkies are paying attention to the run-up to 2010, many Texans are not tuned in yet," said Jim Henson, who heads the Texas Politics Project. "Among those who have a preference this early in the contest, the Perry-Hutchison race appears much closer than many people seem to think."

Pollsters at the University of Texas at Austin's Government Department and the Texas Politics project polled 800 Texas adults between February 24 and March 6. The margin of error in the Internet poll is +/- 3.5 percent; it's higher on the Perry Hutchison question — +/- 5.7 percent — since that was limited to Republicans and not all Texas adults.

Unemployment and jobs are the biggest problem facing the country and the state, according to those voters. On the national level, they're also concerned about the banking crisis/credit crunch and by the national debt. On the state level, top concerns included banking and also mortgages/home ownership/foreclosures, though the housing collapse has been much milder in Texas than elsewhere in the U.S.

More people think the governor is doing a good job than think he's doing a bad one. The Legislature doesn't fare as well, with about equal numbers of hoorahs and raspberries. About two-fifths — 39 percent — approve of the job Perry's doing, while 34 percent disapprove. For the Lege, those numbers are 30 percent to the good, 30 to the bad. They're a bit more intense about the Guv, with 11 percent strongly approving his performance and 17 percent strongly disapproving.

President Barack Obama gets good marks from 45 percent of Texans and crummy ones from 42 percent. Congress? Not so many fans: 25 percent of Texans approve of the national legislature, while 53 give Congress bad marks. Intensity is stronger with the national folk: Obama gets strong good marks from 29 percent, bad ones from 30 percent; Congress is strongly approved by under four percent, disapproved by 37 percent.

Queried about issues, Texans want the Legislature to take back control over college tuition rates (47 percent to 26 percent). A third of the respondents said the top ten percent rule for college admissions should be left as is; 25 percent would modify in some way, and 22 percent would abolish it. And 46 percent of those asked said state revenues should be increased to make college education affordable; 15 percent said they'd address affordability only for the most needy, and 14 percent said state revenues should not be increased to bring college prices down.

Nearly half — 45 percent —think the public schools should teach evolution and creationism or intelligent design as competing theories. Shown an array of education proposals, their favorites were higher teacher pay (27 percent), publicly funded vouchers for private schools (19 percent) and giving new funding to the state's poorest school districts (16 percent). Just over half said standardized tests are unbiased measures of student performance.

Only 12 percent of Texans would ban gambling in the state. Another 17 percent would leave gambling laws unchanged. About 13 percent would allow expansion only where it's allowed now. And 40 percent would allow full casino gambling.

Texans aren't crazy about immigrants: 69 percent support ending in-state college tuition for undocumented immigrants; 59 percent support adding an English-only amendment to the state constitution; 48 percent would end bilingual education in public schools; and 78 percent would require businesses to verify the immigration status of their workers and fine businesses that intentionally employ undocumented immigrants.

Oh, yeah: That Voter ID thing working through the Lege? It's favored by 69 percent of voters.

The "If" Job

The pollsters in that new UT poll asked voters how they feel about various candidates who might be running for U.S. Senate if Kay Bailey Hutchison steps down early to run for governor.

Instead of a head-to-head (more on that in a second), they had the respondents say where, on a scale of 1 to 100, they'd rate their chances of voting for each of those candidates. The results, from top to bottom: Republican Attorney General Greg Abbott, 51.4; Republican Lt. Gov. David Dewhurst, 48.5; Republican Railroad Commissioner Michael Williams, 47.7; Democratic former Comptroller John Sharp, 47.2; Democratic Houston Mayor Bill White, 45.4; Republican Railroad Commissioner Elizabeth Ames Jones, 44.8; Republican state Sen. Florence Shapiro, 44.3; Republican former Secretary of State Roger Williams, 44.1.

They put each Republican in a head-to-head race with Democrat Sharp, who outperformed only Shapiro (by one percentage point) and Roger Williams (by four points). They did it with White, too, who outdid Williams by one point and ran behind everyone else. Abbott did best in those fantasy matchups, followed by Michael Williams.

Flotsam & Jetsam

Attorney General Greg Abbott says the state has the right to make sure cities comply with federal immigration law: "The Texas Legislature is not prohibited from adopting some form of legislation designed to compel local governments to comply with any duties they may have under federal immigration laws, so long as such legislation is not inconsistent with federal law." Gobbledygook? It means state lawmakers can tell Texas cities they can't become "sanctuary cities" under federal law.

• Four of the nation's metro areas grew by more than 100,000 people in the 12 months that ended in mid-2008 and two of them were in Texas. Dallas-Fort Worth added 147,000 people, according to the Census Bureau, and Houston added 130,000. Harris, Dallas, and Tarrant counties were among the ten fastest-growing counties in the nation. And Austin-Round Rock was the second fastest-growing metropolitan area in percentage terms, up 3.8 percent in those 12 months. Harris County, with four million residents, is now the third-largest county in the U.S. (behind Los Angeles County, California, and Cook County, Illinois). Texas had the largest share of the 100 fastest-growing counties, with 19. One more thing: Andrews, Texas, grew 4 percent in that year, making it the second-fastest growing "micro area" in the country.

• Twenty years ago, another senator asked Judith Zaffirini, D-Laredo, if she had a green card. He was referring to the cards senators use to count votes on their bills; she thought he was making a crack about the work permits the U.S. gives to foreign nationals working in the U.S. It's apparently still on her mind, because she asked Senate staffers to put them on another color of paper this year. But she was too late: The green cards have already been printed up.

Political People and Their Moves

Former Dallas Mayor and Texas Secretary of State Ron Kirk is now the U.S. Trade Representative; the U.S. Senate approved his nomination 95-5.

Sen. Tommy Williams, R-The Woodlands, joins the State Preservation Board; the Lite Guv appointed him.

Reps. Ana Hernandez of Houston and Marc Veasey of Fort Worth are the new finance chairs for the Texas House Democratic Campaign Committee, heading that group's efforts in the 2010 election cycle.

Darlene Brugnoli, who did tax policy for former House Speaker Tom Craddick, now has that same posting, more or less, with Gov. Rick Perry.

Dr. Christopher Madden of Dallas is the new president of the Texas Association of Neurological Surgeons.

John Drogan, formerly press secretary for U.S. Sen. John Cornyn, is the new executive director of Citizens Against Lawsuit Abuse. That's a part-time deal; he's also opened a public relations shop in Austin.

The Guv appointed Dionicio "Don" Flores of El Paso and reappointed Curtistene McCowan of DeSoto and Tracye McDaniel of Houston to the board of trustees at Texas Southern University. Flores is former publisher of the El Paso Times. McCowan is a retired senior investigator with the Federal Trade Commission. And McDaniel is an exec with the Greater Houston Partnership.

Perry named retired Garland policeman and former Rep. Thomas Latham and real estate investor Vicki Smith Weinberg of Colleyville to the Texas Racing Commission.

Deaths: John Moseley, the first executive director of the Texas Legislative Council, and the president of Austin College for 25 years. He was 93.

Quotes of the Week

Rep. Rafael Anchia, D-Dallas, asked by The Dallas Morning News if Voter ID legislation would distance the GOP from Hispanic voters: "The Latino community is not stupid. You can't call us fat, ugly and stupid for a year and then ask us to go to the prom with you. It's just not going to happen."

Rep. Chuck Hopson, D-Jacksonville, talking about Voter ID with the Austin American-Statesman: "This apparently is the thing that decides if you're a good person or a bad person this year."

Senate Finance Chairman Steve Ogden, quoted in the Houston Chronicle on the relative size of the federal stimulus money bound for Texas: "So when you talk about a million here and a million there, it's just not that much money."

Judge Cathy Cochran of the Texas Court of Criminal Appeals, in a written opinion on the competency of Andre Lee Thomas, who killed his estranged wife and son, and later tore out his own eyes and ate one of them: "This is a sad case. Applicant is clearly 'crazy,' but he is also 'sane' under Texas law."

Norm Eisen, ethics advisor at the White House, in the Washington Post: "Sometimes my job is to scare the bejesus out of everybody. That's part of my function. That's what I do."

Rep. Leo Berman, R-Tyler, in the Austin American-Statesman: "Personally, I don't believe in evolution. I don't believe I came from a salamander that came out of a pond."

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Texas Weekly: Volume 26, Issue 11, 23 March 2009. Ross Ramsey, Editor. Copyright 2009 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.