Perry Talks Water, Tax Relief in State of the State

Twelve years after first becoming governor and one year after a failed bid for president, Rick Perry delivered a State of the State speech Tuesday that was long on large-scale spending proposals and short on red meat for his conservative base.

“Our bank balance is healthy. Our economy is growing. Our future is limitless,” Perry told a joint session of the Legislature from the floor of the Texas House.

Over 35 minutes, Perry laid out an ambitious agenda for the remaining four months of the legislative session. He avoided hot-topic issues like abortion, immigration and gun control and focused instead on infrastructure, budget reform and education.

After a presidential campaign in which he touted the notion of getting the government out of the way of families and businesses, Perry spent a large portion of Tuesday's speech touting the ability of government programs and spending to transform its people’s lives for the better. He spoke about the power of better roads and a reliable water supply in boosting economic development. He raved about how recent public expenditures have transformed South Texas. He criticized the federal government only briefly, when he vowed to not expand Medicaid under federal health reform.

“From these great chambers to the governor’s office, to local offices in small towns across our state, we are all privileged to do our part to make a better Texas for all,” Perry said.

Perry called for budget writers to tap more than $3.7 billion from the Rainy Day Fund for onetime infrastructure projects. Lawmakers have recently proposed tapping as much as $2 billion from the fund for water projects and an additional amount for road projects. The fund is projected to have $11.8 billion by the end of the next biennium.

Additionally, on transportation, Perry proposed ending $1.3 billion in diversions of the state’s highway fund away from road construction and maintenance, much of which currently goes to fund the Department of Public Safety.

“It’s the decisions made here, in this chamber, in this building, that will determine what Texas will look like 50 years from now,” Perry said solemnly near the end of his address.

The governor also proposed $1.8 billion in tax relief but said he wanted a discussion on what form that relief would take, asking Texans to have their say on a new page on his website. Lawmakers have recently discussed providing relief from either the property tax or the state’s business tax. Perry urged lawmakers to make the franchise tax exemption for small businesses permanent.

Perry devoted most of the second half of his speech to education, where he called for creating more public charter schools, launching a scholarship program that gives students in low-performing schools the option to attend a different one, and giving students more flexibility in the classes they take to prepare for adulthood.

On higher education, Perry pushed lawmakers to implement a four-year tuition freeze for incoming freshmen and to tie at least 10 percent of state funding to the number of degrees and certificates colleges and universities award. He also urged both chambers to muster the two-thirds vote necessary to amend the state’s Constitution to allow South Texas access to the state’s Permanent University Fund

Two years earlier in the same speech, Perry challenged Texas colleges to develop $10,000 degree programs. On Tuesday, he bragged that such programs are now available in 13 schools and noted with a smile that “Florida is developing its own $10,000 degree program, and even California — yes, that California — is taking a stab at making these programs commonplace.”

One of Perry’s most expensive proposals may also be the ones that Texans will have the most trouble grasping: making the state budget more transparent.

“We’re in a position today to put our financial house in order, and it’s time to do so,” Perry said.

He called for the Legislature to “true up our budget” — unwinding a litany of accounting gimmicks used in the past to bypass shortfalls without finding more revenue. States routinely employ such gimmicks during recessions and undo them when the economy rebounds. Some gimmicks, such as billions of dollars sitting in dedicated accounts that aren’t being used for their intended purpose, have been part of the Texas budget process for more than a decade.

Perry appeared to be proposing a measure that would make it tougher for future legislatures to use such budgetary sleights of hand.

“If we don’t need taxpayer money for that purpose, let’s not collect it at all,” Perry said.

Perry also called for a constitutional amendment that gives lawmakers a direct way to return tax money to Texans if the state collects more than it needs.

The speech was briefly interrupted by about a dozen protesters in the House galley from the Texas Organizing Project, a group focused on the needs of low-income Texans. As the group chanted in protest of the number of uninsured Texans, lawmakers on the House floor applauded to drown them out and then cheered as security escorted them out.

“I didn’t know there would be that much excitement about tax relief,” Perry quipped.

The governor briefly played defense during his address when he chose to tackle a common criticism of the state’s recent economic prowess: the notion that most of the state’s employment gains have been in low-paying jobs.

“The truth is that we are creating all kinds of jobs — low-paying jobs, medium-paying jobs and high-paying jobs,” Perry said. “We’ve created jobs in all three categories faster than the national rate over the last 10 years.”

Responding to Perry’s State of the State address, the Democratic Caucus accused the Republican governor of veiled language to obscure the financial needs of public education and health care. 

“The governor used the word ‘scholarship’; who can be against scholarships? But I guess that’s the new word for vouchers,” said Rep. Joe Deshotel, D-Beaumont. “‘Choice’ is a bad word when it comes to women’s health care, but it’s a good word when it comes to charter schools. We must not let nomenclature and fancy words mislead what is actually being done.”

Democrats said they were encouraged by Perry’s newfound willingness to dip into the Rainy Day Fund, but disappointed that the money would only go to infrastructure.

“I was actually surprised that he is willing to invest in our state, but the thing that kind of bothered me [was] ... I heard a lot about infrastructure, roads, water, but not nearly enough about investing in our people,” said Rep. Gene Wu, D-Houston. “If we expect great things, we need to invest in our people.”

Perry delivered his speech just hours after the release of a poll that suggested his standing in the state is still reeling from his disastrous presidential bid. North Carolina-based Public Policy Polling’s latest automated telephone poll of Texas voters shows Perry struggling if he were to run for re-election in 2014. Among Republican primary voters, the poll found Attorney General Greg Abbott beating Perry 41 percent to 38 percent, within the 4.9 percent margin of error for that portion of the poll. Abbott performs better than Perry in head-to-head matchups against four prominent Democrats: former Houston Mayor Bill White, current Houston Mayor Annise Parker, San Antonio Mayor Julián Castro and state Sen. Wendy Davis, D-Fort Worth. Perry actually trails White by 3 points.