Cutting the Strings

Texas can get $556 million in federal stimulus money without any permanent changes in its unemployment insurance program, according to an advisory letter from the U.S. Department of Labor.

Gov. Rick Perry says the state shouldn't take the money, because it requires changes that would cost the UI program an estimated $70 million to $80 million annually. Those strings, he says, are too high a price for the stimulus money. His chief political rival of the moment, U.S. Sen. Kay Bailey Hutchison, agrees but says Perry should be looking for ways to take the money and cut the strings instead of rejecting it outright.

Policymakers from both sides have been trying to find a way to take the money without permanently accepting those new federal requirements. With the economy worsening, the fund is expected to have an $800 million deficit by October. That'll have to be made up with an increased tax on employers, and one argument for taking the federal money is that it would cut that tax bill by $556 million. And a letter from the Labor Department appears provide the answer they seek:

The memo, written in a question and answer format, includes this bit:

"Question. UIPL No. 14-09 provides that applications for incentive payments should only be made under provisions of state laws that are currently in effect as permanent law and not subject to discontinuation. Does this mean that my state may never repeal any of the provisions that qualified it for a UC Modernization payment?

"Answer: No. If a state eventually decides to repeal or modify any of these provisions, it may do so, and it will not be required to return any incentive payments. However, in providing the incentive payments, Congress clearly intended to support states that had already adopted certain eligibility provisions and to expand eligibility to additional beneficiaries by encouraging other states to adopt these provisions. By specifying that the provisions must be in effect as permanent law, Congress also made clear its intention that the benefit expansions not be transitory. While states are free to change or repeal the provisions on which modernization payments were based subsequent to receipt of incentive payments, Congress and the Department rely on states' good faith in adopting the eligibility criteria, and the application must attest to this good faith as required by the following Q&A..."

They're saying, in essence, that states have the right to come back and change their standards later, but that legislation written to comply with the higher standards cannot include "sunset" provisions on those standards. They can change back later, but can't include that intention in their law at the outset.

"It seems to answer that [objection]," said Rick Levy, legal director of the Texas AFL-CIO. "The Legislature will always be in control of what the laws are like."

He and others have talked about creating a commission to look at the state's UI program after the session to decide how it ought to work in the future.

But Bill Hammond, a former lawmaker and Texas Workforce commissioner who now heads the Texas Association of Business, still opposes taking the stimulus money. "It's short-term gain and long-term pain," he said.

He questions whether the Texas Legislature would change the law back once the new standards are in place, and he doesn't trust the guidance from the Labor Department: "Their guidance conflicts with the statute — it doesn't make any sense."

Mark Miner, a spokesman for Perry, echoes that: "The Legislature does not have a great track record of undoing programs. There's nothing here we haven't known."

Elephants in the Room

Texas is outperforming the rest of the country economically, but that's no credit to Gov. Rick Perry, his chief Republican rival told a roomful of newspaper executives in Austin. U.S. Sen. Kay Bailey Hutchison said the state has formidable problems, including high property taxes, high dropout and high levels of uninsured children. That's why, she said, "it's so important that we have a competition" in the 2010 governor's race.

Hutchison said the state's strengths are location, weather, right to work laws that limit unions, and the lack of a state income tax. She gives credit for that last one to herself, claiming she was "the only state official" who was against the idea when it arose in the early 1990s.

Perry attributes the state's relative prosperity to "low taxes, controlled government spending, and a fair legal system," all of which he has promoted as governor. "Ultimately, I think those decisions that we have made over the last five, six, seven years in particular, will allow us to work quickly to resume our progress and our lead as we go forward," he said.

Hutchison told the Texas Daily Newspaper Association audience that Republicans haven't had much input into the federal answers to the recession and decried the stimulus package as too much, too early. She said only a third of the package will stimulate the economy and says the government should have stabilized the banking and housing industries before starting the stimulus spending.

Hutchison told the newspaper people she's in favor of a federal shield law protecting journalists, as long as they can show "real journalistic intent." That's a pet issue of many news execs.

With the lines between traditional and nontraditional journalists and bloggers growing more vague, she said, "it's very important we have the ability to discern when a journalist is a journalist."

And then she did a riff (the full thing's here) on the governor's race in 2010. Some excerpts:

"The governor is going to be here today, later. He's going to tell you that Texas is in good shape, that we're in better shape than most other states. I would agree with him. We are in better shape that most other states. But it's not because he's handing out $5 million checks to companies to move here... The reason Texas is in good shape today is because of the attributes that we have that neither the governor nor I produced. One is our location in the country. We have more Fortune 500 companies here because we're in the middle of the country and we have good weather and we have good air service... Number two, we are a right to work state... Number three, we don't have a state income tax. Now I'm going to take some credit for that because I was the only state official that stood up against the governor and the lieutenant governor in 1991 when they decided it was time for Texas to look at an income tax... But there are clouds on the horizon and this is why I think it's so important that we have a competition. Texas has the highest property taxes of any state in America... Number two. We have one of the highest high school dropout rates of any state in our nation... Number three. We have one of the highest rates of health care uninsured in America...

Asked after her speech, Hutchison said she doesn't agree with the governor's approach to the unemployment insurance stimulus money. But like Perry, she doesn't like the attached federal strings. And she doesn't like the idea of leaving $556 million from the feds on the table if it means Texas businesses will have to pay that amount in taxes to shore up UI. She told reporters she'd be looking for ways to get the federal money without saddling business with new and more expensive UI rules. Legislators are working on that now, and Perry left himself room to take the money if the state isn't stuck with higher costs after the federal money runs out.

"I hope that he is looking for innovative ways not to dock the taxpayers of Texas with $550 million turned down, without looking at all of the avenues to produce the right result but without all the mandates that the federal government should not have put on," she said. "And I think that there might be a way to do that, and I hope so."

Perry, talking to that same audience, and later, to reporters, repeated his objections to the UI stimulus and the changes it would require here. "I think most Texans look at Washington, D.C. today and see what's going on up there, and they're like, 'Listen, the last thing we want is Washington coming down here to Texas and telling us how to run our state,'" he said.

"We have a system in place that works," Perry said. "The people who lose their jobs by no fault of their own are going to be covered, and so, the fact of the matter is, it's working in Texas."

Quick math catch-up: The stimulus would require the state to change its eligibility rules in a way that would add an estimated $70 million to $80 million to the annual cost of the program.

Limits and Caps

Q: Name a bill that was filed before Thanksgiving, has bipartisan support with more than two-thirds of the senators signed on as sponsors or co-sponsors, and involving an issue of major interest to the public, and that has not been referred to a committee.

A: College tuition.

All the college tuition bills in the House have been sent to that chamber's higher education committee. But five bills aimed at tuition freezes and filed in the Senate — four in November, one in March — are still sitting in Lt. Gov. David Dewhurst's In Box.

One of those — SB 105 — would require student approval before a university's tuition could rise. Tuition could rise with inflation, but other than that, the bill by Sen. Juan "Chuy" Hinojosa, D-Brownsville, would freeze the rates for two years. Other bills would freeze it indefinitely.

Dewhurst let one bill out, a proposal by Sen. Judith Zaffirini, D-Laredo, which would put a leash on the colleges without freezing tuition. Her version would cap the amounts of their increases at five percent and tie it to other funding from the state. Colleges were allowed to set their own rates because state budgeteers were starving them. Zaffirini's fix would allow them to slow the tuition increases if the Legislature is willing to put some food on the table.

Zaffirini's Higher Education Committee will hear that bill on April fool's Day, and she's got 19 co-authors on board. But none of the proposals to freeze tuition will be on the agenda; they haven't even been referred by the Lite Guv to that or any other committee.

It's not partisan: 13 of the 22 signers on Hinojosa's bill are Republicans. And if you include the authors of similar legislation — Wendy Davis, D-Fort Worth, Rodney Ellis, D-Houston, Florence Shapiro, R-Plano, and Leticia Van de Putte, D-San Antonio — 25 of the Senate's 31 members are officially on board with Hinojosa.

But most of those are also signed onto Zaffirini's version.

Aides say Dewhurst isn't blocking the issue. They don't know when or whether he'll send the remaining bills to committee, but they say it could happen soon or it could take a while. Really, they said that.

The House is a couple of weeks away from this particular melee. Their Higher Education Committee, chaired by Rep. Dan Branch, R-Dallas, will look at specialty college tuition bills (cuts for veterans, good students, etc.) next week and general bills with freezes and limits a week later.

Boy's State

By accident, at the end of a meeting with the leaders of the Tigua Indians, Rep. Valinda Bolton learned that women cannot vote or hold elected positions in that tribe.

That's stirred up some dust in the House, where Bolton and other legislators want to talk to women from the Ysleta Del Sur Pueblo in El Paso and find out more.

Rep. Norma Chavez, D-El Paso, says it's a tribal issue and that she'll back the Tigua women. She says they have twice been offered the right to vote and twice have turned it down. "The white man has been telling the red man what to do for a long time now," Chavez said. "That is a decision that's up to the women of the Tigua tribe — it's not my decision."

This came up as Bolton, D-Austin, was exchanging pleasantries with Tigua Gov. Frank Paiz at the end of a meeting. She said she stands for election every two years; he replied that he stands for election every year by the men of the tribe, and that women can't run and can't vote. "I said 'Really?' and then, 'Okay, see you later.' I needed time to process that one."

Bolton and others say they're interested in empowerment. The Tiguas came to Austin to promote legislation that would allow them to reopen the Speaking Rock Casino closed by the state in 2002.

"I'm not a big proponent of the expansion of gambling," Bolton said. "I have mixed feelings — most of them not good... but I also felt this was a way to help the tribe back to where they had been — they did kind of get messed over."

Indian gaming legislation came up two years ago and the House voted 66-66 on it, marking its failure. Bolton voted with the Tiguas on a record vote that was verified, but added a note to the House Journal saying she was shown voting yes but intended to vote no.

Bolton talked to other legislators in the week-and-a-half since that meeting. She hasn't decided what, if anything, ought to happen. But she and her colleagues are flabbergasted. "It's been a fairly consistent response: 'Wow. Seriously?'" she said.

The Tigua government isn't controlled by state law — tribal regulation, such as it is, is a federal issue. But the Legislature does have something the tribe wants: Bills that would allow them to reopen Speaking Rock. Bolton and other lawmakers want to talk to the tribe's leaders and to women in the tribe. Chavez said they'll all be here next week, when hearings on the legislation they're interested in (she mentioned HJR 108 and HR 1308) is set for committee hearings. The Tiguas had 1,638 "enrolled members" as of January, 54 percent of them female, according to the tribe's website.

"Somehow, this issue needs to come forward," Bolton said. "The full enfranchisement of women is in the state's interest."

Chavez points out the tribe's sovereignty. It's in her legislative district, and she'll stick with her constituents on this one. "I find it very do-gooder of Rep. Bolton to be concerned, however, I will back the Tigua women in whatever they want."

Next?

Democrats are facing a tougher run at statewide offices in 2010 than they will in 2012, former Rep. Rick Noriega told a group of UT public affairs students Wednesday afternoon. An upbeat Noriega reflected on his own run for U.S. Senate, which ended just a few months ago, and didn't rule out taking another shot at a big-time political office.

Asked about Democrats' chances in a possible special election to replace U.S. Sen. Kay Bailey Hutchison (should she step down to run for Governor), Noriega said anything's possible, but Democrats should be in a better position in 2012 to win statewide. His reasons: 1) After the U.S. Census and redistricting, the addition of three to five U.S. Congressional seats to the state's total should incite additional political participation; 2) Pres. Barack Obama should top the ticket again — "He's carrying the ball for the whole team," Noriega said; and, 3) State demographics are trending in a Democratic direction.

He added as a caveat that Obama's performance, which will likely be graded according to the state of the economy, will probably dictate Democrats' fortunes while he's President, for better or for worse.

Looking back at his own campaign — he lost to U.S. Sen. John Cornyn — Noriega said it was "disappointing" to witness the visceral emotions Texans had about immigration. In focus groups for his campaign, it wasn't uncommon to hear inquiries about how to pronounce "Noriega" and people saying they wouldn't be voting for him if he called himself "Mexican-American" instead of plain ol' American. (Laughing, Noriega said he thought it was "cute" that supporters would invariably choose to hold campaign rallies for him at Mexican restaurants. "They'd find every little taqueria..." he said.)

There were plenty of good moments on the trail, too, he said, like when an East Texas couple gave up their bedroom to his wife Melissa Noriega, relegating themselves to the trailer out back. Or in West Texas, when a woman tracked him down to apologize for not donating sooner, saying she had to wait on her Social Security payment before cutting him a $25 check. "We won every part of the state that believes in evolution and global warming, and we lost every other part," is a favorite observation of Melissa's, he said.

Noriega talked about the rapid evolution of technology and its increasing effectiveness in organizing campaign supporters and raising money. He also said that Obama's success proved that a message of hopefulness and motivation can beat attempts to appeal to people's fears and cynicism.

"Community organizing is back in vogue again," said Noriega, who is working as vice president for community-based initiatives for Neighborhood Centers Inc., a nonprofit with seven community centers in Houston.

As for his political future, Noriega didn't drop any hints that he's considering any particular office, but he didn't say he wouldn't run again in the future, or even in 2010. (He did say that various people have told him that voters — when facing special elections attracting a myriad of candidates — will often pull the lever for the candidate they've previously supported.)

"Never say never," he said, "and never say always."

Ill Winds

Claims against homeowners' insurance policies in Texas rose to $6.6 billion in 2008, up from $1.8 billion the year before and enough to swamp what insurers charged in premiums last year.

But the industry did well enough in the years leading up to 2008 to come out ahead, according to figures from the Texas Department of Insurance. From 2003 to 2008, the companies collected $28.1 billion from policyholders, and paid out $16.3 billion in losses. When you add in their expenses, they were still head, paying out 93.5 cents on every premium dollar they collected.

The 2008 loss ratio — what they paid out in claims against what they collected in premiums — was the worst in the last 17 years, according to the Texas Department of Insurance. Last year's ratio was 127, meaning they paid out $1.27 in claims for every $1 collected in premiums. That's only the fourth time it's gone over 1.0 in the 17 years the agency reported.

According to another ratio that combines losses and company expenses and compares that to premiums collected, the companies paid $1.65 for every premium dollar they collected.

The Party Line, Upheld

It's okay for the Texas Democratic Party to require candidates to swear they'll support the winner of the party primary in the general election, according to a federal appeals court.

In a case filed by U.S. Rep. Dennis Kucinich of Ohio, the 5th U.S. Circuit Court of Appeals agreed with lower courts on the loyalty oath and said it is constitutional.

"This court need not judge the wisdom or utility of the TDP oath requirement," the judges wrote. "We do affirm, for the foregoing reasons, that it does not violate the Constitution."

Kucinich was running for president when he filed to get on the Texas ballot in 2007. He crossed out the part of the filing form that said he agreed to support the party's candidate in the November general election. The Texas Democrats disqualified him. He sued (with Willie Nelson as his state-resident wingman), failed to get on the ballot, and then moved to get the oath declared unconstitutional. And now he's lost that effort, though he can appeal.

Flotsam & Jetsam

State unemployment rose to 6.5 percent in February, up from 4.5 percent in the same month last year, according to the Texas Workforce Commission. The state lost 46,100 non-agricultural jobs last month; over the last 12 months, Texas is down 62,600 jobs.

• Look next week for the public launch of Innovate Texas, an Austin-based nonprofit tasked with helping Texans commercialize new technologies. Ryan Confer, former investment manager of the Texas Emerging Technology Fund, says they'll be connecting researchers with entrepreneurs, connecting entrepreneurs with researchers and assisting fledgling high-tech companies who've been weaned off ETF money. Innovate Texas was created in mid-2008 using a federal Wagner-Pizer grant coming through the Texas Workforce Commission, Confer said. Other folks connected to the new think tank include Austin attorney and eco devo guru Pike Powers and serial entrepreneur David Nance. The closest thing around to Innovate Texas is the Kauffman Foundation in Kansas City, Confer said, but his organization's initial focus will be exclusively on Texas.

• More than half the members of the Texas House have signed their support for full-day pre-kindergarten in the state, moving that a notch forward. The Pre-K bill got a hearing in Senate Education but hasn't come to a vote there. In the House, it's got 79 signatures (of 150 members), but hasn't yet had a hearing. The legislation would expand part-time Pre-K programs, on a local option basis, to full-time. And school districts would be allowed to pay private programs to handle the load. The main hangup? The cost: $300 million per year.

• The Senate-approved "take your gun to work" bill includes an out for public, private and charter schools. It lets people keep their legal guns in their cars, even in the company parking lot or garage, and indemnifies the companies, in most instances, against whatever happens as a result. But it doesn't apply to educators and their colleagues. They have to leave the guns at home.

• The first thing out of the House this year was Rep. Dawnna Dukes' legislation allowing the state to spend money trying to lure moviemakers to Texas. Funding is still up for grabs. Some conservatives took potshots at the bill, saying the state shouldn't be spending tax money on such things; only six House members voted against it... The Senate struck first on the Top 10 rule that required state universities to show preference for applicants from the top 10 percent of their high school classes. The fix, from Sen. Florence Shapiro, as amended: Only the first 60 percent of each incoming class would be subject to the top 10 rule. An add-on would provide $1,000 scholarships to some of those students, limited by the charity of the state's budgeteers... College tuition is up in the Senate's Higher Education Committee next week; Voter ID's set for its debut in House Elections week after next.

Political People and Their Moves

The dean of the Texas Capitol press corps — Clay Robison of the Houston Chronicle — is among the latest casualties of the shrinking news business in the state. Robison, who first covered the Capitol in 1971 as a reporter for the late San Antonio Light, became the Chronicle's Austin bureau chief in 1982 and has been in that chair since then. He's one of dozens of reporters laid off this week by the Chronicle. Janet Elliott, whose pink slip arrived prematurely a couple of weeks ago, is on that same list. She'll finish the legislative session with the paper; Robison will finish this week. The Chronicle's Austin bureau is combined with the San Antonio Express-News bureau; Lisa Sandberg, a reporter with that paper, was laid off a few weeks ago.

Sharon Keller, chief judge of the Texas Court of Criminal Appeals, filed papers with the State Commission on Judicial Conduct saying what she said last month: She did what she was supposed to do when in September 2007. The commission complains that she denied the final appeals of a condemned man because it was after her court's 5 p.m. closing time. She'll fight their complaint and her lawyer has asked the commission to pay his fees, since the judge isn't allowed to accept pro bono work and doesn't have the money to pay a high-priced lawyer.

Some appointments of note from your governor:

• Derrick Mitchell of Houston, an attorney with Bracewell and Giuliani, to another term on the State Securities Board.

• William White, vice president of Cash America International, as the chairman of the Finance Commission of Texas. And Perry added Darby Ray Byrd Sr. of Orange to that board. Byrd is retired president and CEO of Orange Savings Bank.

• David Cibrian, a partner at Strasburger and Price in San Antonio, Gary Janacek, CEO of Scott and White Employees Credit Union in Belton, and A. John Yoggerst, general partner at Texas Construction Alliance in San Antonio, to the state's Credit Union Commission. Janacek is the chairman and a reappointee.

• Cherie Townsend to another term as executive director of the Texas Youth Commission.

• Gen. Jose Mayorga to Adjutant General of Texas, the top spot in the state's military. He was previously commander of the 36th Infantry at Camp Mabry in Austin. He's joined by Brigadier Gen. Joyce Stevens of Tomball, who'll be Assistant Adjutant General for the Army; Col. John Nichols of Spring Branch, who'll have the same posting for Air; and Col. Jeffrey Lewis of Center Park, the new deputy to Stevens.

• C. Kent Conine of Dallas and Tom Gann of Lufkin to the Texas Department of Housing and Community Affairs. Conine is a reappointee and will continue as chair of that board. Gann is president of Gann Medford Real Estate in Lufkin.

• Burnet County Judge Donna Klaeger of Horseshoe Bay to chair the Texas Commission on Jail Standards. And he reappointed Irene Armendariz of El Paso, Midland County Sheriff Gary Painter, and Carson County Sheriff Tam Terry to that board.

• Richard Rhodes of El Paso, Dora Ann Verde of San Antonio, and Welcome Wilson of Houston to the Texas Guaranteed Student Loan Corp. Rhodes is president of El Paso Community College; Verde is a CPA and director of internal audit with the San Antonio Water System; Wilson is president of GSL Welcome Group.

Quotes of the Week

Gov. Rick Perry, to an audience of newspaper executives: "In a lot of ways, the Internet has turned the media business into the Wild West. I think that's good when you consider the enormous potential of that. But it's not so good if the spirit of lawlessness is what we get out of the Wild West. I find that some of the greatest dangers in life take shape in the absence of accountability. When a blogger can write under a pseudonym or a person can comment on an article under the name 'anonymous,' maybe be hurtful, maybe be inaccurate, be as irresponsible as they like..."

Eagle Pass Mayor Chad Foster, quoted in the McAllen Monitor on fears that Mexican drug wars are spilling into Texas: "There are some entities out there that think that the louder they scream, the more funding they're going to get."

Brownsville Mayor Pat Ahumada, indicted for depositing a $26,129 check meant for a city vendor into his personal account, quoted by the Associated Press: "I don't have an explanation and neither do they."

Mallory Carrick of Plano, talking to The Dallas Morning News about rising taxes on smokes: "First we have to deal with the economy, and now the government. I guess it's better that it's on cigarettes 'cause they're killing us, but still, what about our freedom?"

Rep. Joe Heflin, D-Crosbyton, quoted in the Austin American-Statesman on the subject of Voter ID: "Have you ever been so sick you felt like you could throw up your toe nails? This is not something for anybody to die over."

---

Texas Weekly: Volume 26, Issue 12, 30 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.