A Change in the Lineup

Democrat Tom Schieffer dropped out of the gubernatorial race after nine months of trying to raise money and nonfinancial support, saying he'll endorse Houston Mayor Bill White and hopes other gubernatorial candidates will do the same.

White says he'll announce his decision by December 4. There's not much exploring to do; insiders say the planning for an event at the end of next week is well underway. Schieffer said he decided while the two were meeting on Sunday — a meet-up requested by Schieffer — that he would get out of the race if White would get in, and spent much of his campaign's last press conference throwing laurels in White's direction.

"Since Friday a week ago, Texans from all backgrounds and all regions have asked me to consider running to be our next Governor of Texas," White said a little later in Houston. "Today I agree to consider running for Governor, and shall make a decision by Friday, December 4th."

It was a three-venue day. Democratic Party Chairman Boyd Richie called a meeting of the gubernatorial candidates — no staff allowed — for the same afternoon in Dallas. He told the candidates and their staffs (four candidates were there, excluding Schieffer and White) that the party will put together a $5 million to $8 million coordinated campaign for the ticket next year as part of his outline of what the Democratic Party can do for them, asked them not to cut each other up too badly in a primary, and asked them to support the nominee, whomever that turns out to be. Then he asked the staff to leave and talked to the four candidates. It's not clear that he asked anyone to get out of the governor's race, but several of the campaigns issued statements saying their guys weren't getting out or switching. Filing for office starts next week and ends in January 4; don't be surprised if you see some adjustments on the ballot by then.

Schieffer was the self-styled establishment candidate in a Democratic primary where no one has really gained traction. Kinky Friedman had more support in the University of Texas/Texas Tribune Poll earlier this month, but 55 percent of Democratic primary voters said they hadn't yet chosen a candidate. Others in the contest include Hank Gilbert, who ran four years ago for agriculture commissioner, Felix Alvarado, a Fort Worth educator, and Houston billionaire Farouk Shami, who joined the race last week. Former Travis County District Attorney Ronnie Earle has talked about getting in, but hasn't made a move; the same is true of state Sen. Eliot Shapleigh, of El Paso, who endorsed White Monday afternoon.

With the huge undecided numbers, and with Kay Bailey Hutchison tapping the brakes on her own plans for an early resignation, speculation has centered on White. He's in the Senate race, if and when that happens, and has demurred on questions about switching to the race for governor. Schieffer's departure opens a door.

White said on Friday that he's focused on the Senate race, but — if you're parsing — didn't absolutely rule out a switch to the race for governor. And the rumors that he'll jump in quickly revived on Monday morning, as news of Schieffer's plans spread.

He's still teasing, a little. He said he'll consider the move to the race and will announce his decision on December 4. That has the advantage, for him, of moving the news of his entry into the race to the other side of the Thanksgiving break — who wants to compete with turkey, family, football, and shopping? — and of sustaining political conversations about the fallout for another week. Schieffer fades to black, camera turns to White: It's a new scene.

Schieffer, a former U.S. Ambassador (to Australia and then Japan) and state representative, got into the race on March 2 — Texas Independence Day and exactly one year before the Democratic primary. He started with the support of some well-respected Texas pols, like Rep. Senfronia Thompson of Houston, former House Speaker Pete Laney of Hale Center, and former Rep./former Ambassador Lyndon Olson Jr. of Waco. Others joined, including leaders among current House Democrats, who followed Thompson into the fold.

But he never put together the kind of organizing or fundraising machine that makes an impression in statewide races. At mid-year, Schieffer reported raising $505,842 and borrowing $200,000. The two leading Republican candidates, Rick Perry and Hutchison, both had the advantage of being in office, but that said, their campaign treasuries dwarfed Schieffer's and made it easy for detractors to say he wasn't catching on.

The other Democrats weren't exactly impressive: Friedman raised about $62,000, and Gilbert hadn't been in the race long enough to show numbers at the mid-year reporting deadline (the next reports come out in mid-January). Shami said last week that he'll spend up to $10 million of his own. Why is the money so central to the story? It costs more than $1.5 million a week to buy the sort of statewide TV advertising that powers a gubernatorial race in Texas. That's a burn rate of more than $6 million a month, before you pay for staff, voter contact, mail, and travel.

White had $4.2 million in his federal account at the end of the third quarter; he could move most of that money to a state race without penalty if he chose to do so. (It appears that about $1 million is beyond reach for a transfer, but White could return that federal campaign money to donors and ask them for contributions to his state account.)

Schieffer said money was the big reason he got out of the race. "I actually did quite well politically," he said, referring to the reception he got for his ideas and his appearances. But the finance race sunk him. "I just never could convince enough people that I could win," he said.

Schieffer is a Fort Worth businessman and attorney and was one George W. Bush's partners in the Texas Rangers Baseball Club. Bush later appointed him to those two ambassadorships, and Schieffer has taken flak from Democrats for saying he'd voted for Bush every time Bush was on the ballot — twice for governor, and twice for president.

His withdrawal came as little surprise to political analyst Cal Jillson of Southern Methodist University. Schieffer's close relations with Bush, among other things, made him a hard sell to Democrats. "Schieffer declared himself a conservative Democrat, a businessman and a friend of Bush," Jillson said. "He didn't realize the Democratic Party he grew up with no longer existed, and never tried to explain where he differed from Bush and what he would do differently as governor."

Other Democratic candidates said they'll stay in the race.

• "I came to America with $71 in my pocket and founded a multi-billion dollar company that has created thousands of jobs for Texans," Shami said. "Even Rick Perry says I embody the American Dream. I got into this race to create jobs for Texans, and that's why I'm sticking in this race. Let's have a positive Democratic Primary dedicated to discussing how to create the most jobs for Texans, and no matter who's part of that discussion, Texas will be better off."

• "The departure of Tom Schieffer and the possible entry of Bill White into the governor's race doesn't change anything for Hank's campaign," said Vince Leibowitz, Gilbert's campaign manager. "We're going to continue to stay the course, and we welcome all comers into the governor's race... It's not going to change our base of grassroots support, and I'm sure that the departure of Ambassador Schieffer from the race will likely bring some more people over to our side. We welcome Mayor White if he wants to get into the race, but it's not going to change anything for us."

• "Our campaign plan was never dictated by who was or wasn't in the race," said Friedman spokeswoman Rania Batrice. "Our strategy has been and will continue to be one of common sense and honesty. Returning power to the people is Kinky's top priority, and that includes education reform, justice reform, and insurance reform."

— Texas Tribune writers Reeve Hamilton, Elise Hu, Emily Ramshaw, Abby Rapoport, and Brian Thevenot all contributed to this report.

Moderate Democrat 2.0

Bill White is the sort of Democratic gubernatorial candidate Tom Schieffer had hoped to be. He's well-funded. He's got an organization and a base of voters. He's the kind of moderate who can attract votes from independents and not just Democrats.

And he never voted for George W. Bush.

The speculation about White's run for governor tells you that the Democratic field is weak enough that someone can enter the race just 100 days before the election and maybe get away with it. And it tells you that Kay Bailey Hutchison is not the irresistible political force she was thought to be a year ago.

White, term-limited out of the Houston mayor's job, has been part of the talk about the 2010 governor's race for almost two years. But when Hutchison decided a year ago that she would run against Gov. Rick Perry in the GOP primary, the calculations changed.

The conventional wisdom was that Perry would either get out of the race after serving for more than two terms, or that he would lose a primary to the popular Hutchison. For Democrats, that looked like lousy math: Running against an incumbent with a 10-year record and 10 years worth of battle wounds is one thing; running against a popular Republican coming into the election with a relatively clean slate is another. They'd like to run against Perry, but were afraid they'd have to run against Hutchison. Even to this day, most polls show she runs better against named and unnamed Democratic opponents than Perry does, though both Republicans are ahead of the Democrats in those straw matches (none of which, by the way, had White as a candidate).

Plus, the prospect that Hutchison would leave office opened up another opportunity with better odds for a Texas Democrat. If Hutchison quit early, the special election to replace her would feature a mess of candidates in a winner-take-all race, instead of two primaries and then a face-off between the GOP and Democratic winners. In Texas, the latter setup favors Republicans. The all-in special election creates an opportunity for a conservative Democrat who can pull votes from party regulars and from independents.

That's an improvement in the odds that attracted both White and former Comptroller John Sharp to the Senate race. For White, it had the added advantage of calming Houston political people who support both him — a nonpartisan mayor — and the Republican Hutchison.

Now, everything's different. Hutchison isn't quitting right away — and there's no certainty about when she will leave. She's behind Perry, and by double digits, in all but one recent poll.

For someone in White's position, the governor's race looks more attractive than before. He's got money in the bank that can be moved to the state race without penalty. The chance of running against Perry in November instead of Hutchison looks possible now — in a way that it didn't a year ago. And the Senate thing has moved down on the calendar. White's spending on the federal race is a clue: He's burned through $1.8 million already, a sign that he was gearing up for a sprint that has now turned into a marathon.

It looks better to the Democratic Party and some of its big constituencies, too. White and Sharp aren't in a tussle anymore. The party would have a gubernatorial candidate with money and significant name ID (at least in Houston), and there's a chance that others in the top race could be convinced to move to lower races and fill out the ballot. It might not matter, in this field of political midgets. In a primary race featuring White, Kinky Friedman, Farouk Shami, Felix Alvarado, and Hank Gilbert, the mayor of Houston would start with significant advantages. Only he and Friedman have name identification, only he and Shami have money. And he's the only one who's won an election.

Winners and Losers

Tom Schieffer's out, and for the sake of this analysis, let's say Bill White is running for the Democratic nomination for governor.

How's that work out for everybody?

John Sharp: Can you hear the cackling? The only other Democrat who wants to run for the U.S. Senate might have won the lottery here. The theory: The Republicans in that race split up the vote on their side, and without White in the race, there aren't any other (major) Democrats to carve up his side of the vote. Probably not the formula for a first-round win — the last such special election had 23 candidates in it — but it could save Sharp some money and some blood in the first part of the race and leave him well-positioned for a runoff. On the other hand, the Republicans could have their fight and the state might turn out to be just as red as ever in the end.

David Dewhurst, Elizabeth Ames Jones, Florence Shapiro, Michael Williams, Roger Williams: Bummer. These are the Republicans in the Senate race (the one to replace the state's senior senator, who hasn't resigned yet). Four of them won't make it to the final. The good news is that the final is being held in a Red State, probably against a Democrat.

Kay Bailey Hutchison: Not so hot. She was counting on moderate and independent votes in her campaign for the Republican GOP nomination (let's ignore that fundraiser and press conference last week with former Vice President Dick Cheney), and the crossover vote probably won't materialize now. If it's a straight GOP primary with no visiting moderates, it's Perry country. This is Perry spin, to some extent, but White and Hutchison have some overlap with the independents. If Hutchison remains behind Perry in the polls and voters don't think it's a tight race, she suffers here.

Rick Perry: Joy now, pain later. For the first part, see above. For the latter, look at The University of Texas/Texas Tribune Poll earlier this month or the Rasmussen Poll that came out last week. Both said Perry is ahead of Hutchison in the primary, and both said she's the stronger of the two Republican candidates next November. Perry's still ahead of the Democrats, but not by as much. And White's the Democrat who polled best against him.

Kristi Thibaut: All good. The guy at the top of the ticket in November is one of the best-known, most popular pols in Houston, and Thibaut, a freshman Democrat trying to win a second term in the Texas House, gets to run on his side of the ballot? In Houston?

Jim Murphy: Ouch. The former representative, a Republican, is running against Thibaut. What's good for her is not good for him.

Dwayne Bohac and Ken Legler: Twitchy. They're Harris County Republicans. See above.

Statewide Democrats: This goes into the category of faith-based political thinking, but the Democrats down the ballot do better if the candidates at the top attract some voters. And if White & Co. get the ticket going, and if the party can really produce the $5 million to $8 million coordinated campaign Boyd Richie is talking about, this could be good. But the Democrats haven't produced that kind of ticket in years and years, much less that sort of money in a statewide coordinated campaign (as opposed to the effective coordinated efforts they've run in Dallas and Harris Counties). Which is why this one is a matter, on their part, of faith.

The $4.2 Million Question

If he jumps from the U.S. Senate contest to the Texas governor's race, Bill White's fund-raising capacity may soon enjoy an enormous boost.

The question: How much of the $4.2 million in his federal war chest could be used for the potential state bid?

Short answer: Most, but not all of it.

As a candidate for U.S. Senate, White is subject to the 1975 Federal Election Campaign Act, which limits individual donations to $2,400 per election. Political action committees, or PACs, may donate up to $5,000 to specific candidates. But since non-judicial elections in Texas are not subject to such limits, White would be able to raise much more money as a gubernatorial candidate.

White's donors contributed under the assumption that he was running for U.S. Senator. Does this fact at all hamper his use of funds for a governor's race?

A little bit. There are no restrictions at the state level. But federal law only allows him to transfer to the state account money that he could have used in a special election. Federal donors are limited to $2,400 per election, but many gave White $4,800, knowing he would set the remainder aside for another election later. The common donor practice is to go ahead and donate funds for federal candidates' primary and general elections at the same time. In White's case, that means that only the money available for the first election — the special election or primary election — can legally be "spent" by writing a check to his state campaign account.

White still has plenty of money he can transfer, even under this scenario. He raised at least $4.1 million this year for a primary election and about $1 million is designated for a general election, according to his campaign filings through Sept. 30. The latter donations would have to be refunded should White enter the governor's race. The primary donations, however, could be spent.

White says he will "consider" the governor's race — you still think there's a question? — but if he stays in the Senate race, the money stays in the federal pot and all of this is academic. It's also a subject that lawyers can, and do, argue over. Don't be surprised if White's lawyers ask for an opinion and something new comes out.

Any money that is transferred can be used for any state campaign purpose.

U.S. Sen. Kay Bailey Hutchison performed a similar maneuver last year. Her federal committee donated nearly $8 million to her state committee in three December installments. Since donations and campaign funds are much more closely scrutinized under federal campaign finance laws, this transfer was viewed as a commitment to the 2010 Texas governor's race.

White's loyal donors have been hamstrung by the FEC regulations. With no donation limits, White can return to ask them for seconds — and for larger helpings. The White campaign has collected approximately 870 individual donations of $2,400, at least 240 of which maxed out at $4,800. He can use the first $2,400 from each for the state race, and could refund the rest and ask those donors to write a check — for that or a larger amount — to the state campaign. If White's campaign requested and received only another $2,500 from these individuals, the campaign would collect another $2.2 million. And some donors, of course, will probably be even more generous with their pocketbooks.

— by Dan Leyendecker, The Texas Tribune

The Texas Tribune Index

The number-crunchers among the Republicans and the Democrats in Texas use election results to get a feel for the political environment in each legislative district. They start with statewide races and then bake in some assumptions about what might happen if they put the right candidates in place.

We and other political watchers need the same thing, without the partisan ingredients. So we cooked up the Texas Tribune Index (Texas Weekly readers know it as the Texas Weekly Index. Consider it re-branded). We start with the results in statewide races that are contested by both of the major parties (that gets rid of the 100 percent results for uncontested candidates). We use the numbers from the last two election cycles to average out the differences between gubernatorial and presidential elections. The Index is the difference between the Republican average and the Democratic average for each district.

Then we added subjective rankings (Very Republican, Very Democratic, etc.), which takes our reporting into account and attempts to explain why the numbers aren't everything. As in the case of Rep. David Farabee, D-Wichita Falls, whose seat in overwhelmingly Republican territory was relatively safe — as long as he wanted it. He's leaving after this term, though, so it reverts for our purposes back to Very Republican.

We're not trying to predict the future here — just trying to get a feel for the districts from past elections and from what politicians, officeholders, consultants and activists are telling us. By all means, argue! This is politics.

Unemployment Rises or Falls in Texas

The state's seasonally adjusted unemployment rate rose to 8.3 percent in October, up from 5.2 percent a year ago, and up slightly from the 8.2 percent recorded in September, according to the Texas Workforce Commission.

On the other hand: TWC said the state actually added 41,700 jobs in October, but the number of people looking for work was also up, which is why the rate rose.

The worst numbers in the state were in the Golden Triangle area and along the Texas-Mexico border. Unemployment in McAllen-Edinburg-Mission reached 11.2 percent on a non-seasonally adjusted basis. It was 10.8 percent in Beaumont-Port Arthur, 10.5 percent in Brownsville-Harlingen, and 9.5 percent in El Paso.

The lowest unemployment rates were recorded in Lubbock, 5.4 percent, Amarillo, 5.5 percent, Midland, 5.8 percent, and Bryan-College Station, at 6 percent.

Although it's up, the state rate is lower than the national rate of 10.2 percent.

The (Very) Skinny

Comptroller Susan Combs says the state will have $77.7 billion in general revenue for the current budget, which calls for $77.6 billion in general revenue.

With sales taxes down by double digits for five months running and the economy in the tank, it's not hard to find people who are worried about this. But Combs, in an official document called the Certification Revenue Estimate, says there will be enough. Barely.

The savants who watch this have their eyes on Christmas sales, which will tell them a lot about sales taxes for the rest of the year. There's a point after which no recovery can catch up with the slump, and so far, the numbers haven't started up (meaning they don't know where the bottom of this particular ditch lies). Once they do, the number-crunchers will know what kind of recovery it would take to make Combs' projections come true. And only then will they really know what kind of shape the budget is in.

Boomerang Workers

No snowbirds here.

A mounting number of state employees are retiring from work then getting rehired to the same jobs, padding — and in some cases nearly doubling — their state salaries with pension checks.

Since lawmakers loosened restrictions on the practice a decade ago, the number of retirees returning to state jobs has grown by more than 1,300 percent, from 400 in 1999 to 6,200 this year.

The tactic is used, albeit quietly, for employee retention. It helps agencies keep and reward experienced but underpaid workers like prison guards and nurses' aides, who might otherwise leave when they reach retirement age.

And while it's mostly employees in low-paying jobs benefitting from the practice, retirement-eligible state employees making more than a hundred thousand dollars a year are also quitting and coming right back to work. Sometimes they return to other jobs; often they're rehired for the same post they left.

"Some people feel like they're double dippers, that they're taking up a position somebody else could advance to. Others think it's a great opportunity," said Mike Gross, coordinator with the Texas State Employees Union, which has not taken a stance on return-to-work retirement. "While it's a good deal for the agencies, it's clearly a negative for the [Employees Retirement System] fund."

Under Texas' return to work policy, a state employee who retires can be rehired after a 90-day hiatus. In addition to their salary, they receive pension payouts averaging $2,000 a month, and continue to get health benefits.

Employees Retirement System (ERS) rules say retiring employees can't be given a "promise of employment" when they leave — and must certify that they don't have another job with the state lined up. But state workers say these rules are rarely followed, and that gentlemen's agreements abound.

Advocates of the practice say it's a good deal for the state. Rehiring retired employees avoids costly training. It saves the state from paying a new employee's insurance premium. And it allows agencies already struggling with recruitment to keep their tenured employees in place, without losing them to higher paying private sector jobs.

But watchdogs say employees with low pay shouldn't be forced to "retire" in order to work at a livable wage. Seventy percent of return-to-work employees make under $50,000 a year.

And they say the tactic is increasingly being used to give raises to already well-paid agency executives. Right now, 120 return-to-work retirees make more than $100,000 in base pay alone; one makes more than $200,000.

"It looks like a Mickey Mouse accounting scheme," said Andrew Wheat, a researcher with Texans for Public Justice, an organization that tracks money in state government. "It's just another way for agencies to hide the real cost of their employees' salaries, at the expense of actual state retirees."

Lawmakers have gone back and forth on "return to work" since they first instituted it in 1951. At that time, retirees who wanted their jobs back had to have their pension payments suspended first.

By 1981, retirees who returned to work received partial payments. And in 2001, the restrictions were lifted all together. In the last legislative session, lawmakers backtracked slightly, forcing retirees to take 90 days off before returning to work, and requiring the hiring agency to contribute to the ERS on behalf of the returning employee.

The changes have helped agencies struggling with retention. Currently, about 5 percent of workers at the Department of Public Safety, the Department of State Health Services and the Department of Assistive and Rehabilitative Services are state retirees.

But it's also been a boon for higher paid employees. At the Health and Human Services Commission, the agency's chief of staff and deputy executive director — both of whom make about $150,000 a year — are "return-to-work."

In general, rehiring retired employees "is a negative experience for the actuarial soundness of the retirement fund," said Rep. Vicki Truitt, R-Southlake. "But all sorts of things have been done over the years to adjust for the health of the fund, or how critical the need is to retain employees."

— By Emily Ramshaw, The Texas Tribune

Quotes of the Week

Democrat Tom Schieffer, during the press conference announcing the end of his campaign for governor: "I frankly found it difficult to raise money" ... "I just couldn't convince enough people that I could win." ... (To a question about whether he'll run for another office): "No. Never and no"... (What he'll do with the money in his political account): "I've pretty well spent it." ... "I believe someone of Mayor White's caliber can win... I am urging all those not named Bill White to get out of the race." ... (What if White doesn't get in the race?): "I'll call you back." ... (About the Fort Worth debate that featured him and a couple of others running for governor): "Let's say it didn't remind me of the G-8."

Bill White, changing his tune: "Since Friday a week ago, Texans from all backgrounds and all regions have asked me to consider running to be our next Governor of Texas. Today, I agree to consider running for Governor, and shall make a decision by Friday, December 4th."

Kinky Friedman, reacting: "There's plenty of room in the hot tub."

Farouk Shami, sticking to his plans: "We are running to serve the State of Texas. So, I'm in for sure. Definitely."

Rev. Rayford Butler, on churches helping schools in his part of town: "West Dallas is more important to Dallas than it used to be. It's all about the transformation of Dallas, and they need this part of town to make it complete ... You could say it's about politics, and be on the safe side. But it's working for us ... So I don't care how they think of it, as long as it gets done."

Baylor freshman Britney Griner, on her basketball specialty: "Sometimes I'll dunk, I get pumped up. Sometimes I really don't feel the dunk. I'm real particular on my dunks."

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Texas Weekly: Volume 26, Issue 45, 30 November 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.