Floor Pass

Patrick Michels

Things aren't so sunny these days between House Appropriations vice chair Sylvester Turner (D-Houston) and House Appropriations chair Jim Pitts (R-Waxahachie).

Until recently, this session’s budget negotiations seemed to be sailing along smoothly, but sudden pressure from Gov. Rick Perry has put negotiations on the rocks as lawmakers argue over $700 million for schools.

School funding has become a major sticking point for lawmakers on the budget conference committee, as they reconcile differences between the Senate and House versions of the budget bill. The Senate added $1.5 billion to current public education spending, and the House set aside $2.5 billion more, a partial restoration of the $5.4 billion the Legislature cut from schools in 2011.

After a Democratic caucus meeting today, Rep. Sylvester Turner (D-Houston), vice chair of the House Appropriations committee, said Democrats were united in supporting a plan the conference committee reached last Friday. That deal would dedicate $2.5 billion from General Revenue to education and $1.4 billion in new property taxes that would flow back into school funding formulas, for a total of $3.9 billion in new education funding, Turner said.

Democrats would have appeased Republicans, Turner said, by staying under the spending cap and even allowing $500 million originally intended for schools under House Bill 1025 to go toward other needs like fixing roads damaged by fracking equipment.

Turner said House Appropriations Chair Jim Pitts (R-Waxahachie) met with him Tuesday night to reiterate the plan. Wednesday morning, though, the House Speaker’s office relayed a message from Perry, Turner said, that the deal would spend too much money on education.

“I think it’s important for the Republicans to decide what position they want to hold,” Turner said. “You cannot blame Democrats, and run away from blaming those groups in the Republican party, when they cannot agree themselves.”

Turner said Democrats were 55 strong in favor of the previous agreement, but now will not vote to tap the Rainy Day Fund for water and transportation unless the old deal is back on the table.

Turner said education funding is the only part of the budget Republicans want to cut in order to remain under the spending cap, so Perry is asking Republican members to only accept $3.2 billion for formula funding, along with another $300 million for the Teacher Retirement System. Republicans now want $700 million of the $1.4 billion in new property tax money to go elsewhere, possibly toward tax relief.

“The educational fund is being used as the slush fund for people to fund all their other projects,” Turner said.

We’ll have updated information after a budget meeting at the Capitol scheduled for 3 p.m.

Update at 3:28 p.m.: Reporters have just been told “the meeting has been postponed until further notice.” We’ll update as soon as there’s more.

Update at 4 p.m.: After signing the Michael Morton Act this afternoon, Perry spoke briefly about the budget negotiations. Texas has put a significant amount into public education in the last decade, he said.

While he didn’t respond to Turner’s claims, he disputed the idea that he was encouraging lawmakers to sacrifice one piece of the budget for another.

“I’m sure that there are people that would like to blow up the session with this bill,” he said. “Pitting one article against another article is not particularly productive, and I’m not going to participate in that.”

Perry reiterated that he wants $1.8 billion in tax relief, and a budget under the spending cap with adequate funding for water and transportation, but he shut down further questions.

“I’m not going to craft a budget here with you all today,” Perry told reporters.

Courtesy the Texas Comptroller's Website.

Texas Comptroller Susan Combs and Lt. Governor David Dewhurst at a Feb. 7 press conference.

Texas Comptroller Susan Combs has approved $1.2 billion in tax breaks to her campaign contributors since 2006, according to the Austin-based nonprofit Texans for Public Justice.

According to a report TPJ released Wednesday Combs has received $238,500 from companies getting the tax breaks, under a statewide economic incentive program since her first run for comptroller in 2006. Most of the 37 projects are energy and chemical plants along the Gulf Coast or wind projects in West Texas.

Under 2001′s Economic Development Act, school districts can offer businesses up to 90 percent relief from property taxes, and then make the state cover the gap in funding. The comptroller’s office reports that as of January, 128 tax credit contracts are in effect throughout Texas, and that companies are returning 58 percent of their tax benefits to the school districts.

A bill that would further extend the program until 2024 is waiting for a vote in the Senate after passing through the House. The program’s supporters say it brings new employers to the state, but critics say the big tax breaks don’t justify the number of jobs it creates.

TPJ Research Director Andrew Wheat told the Observer that there’s no regulation ensuring the program really helps fund projects that create new jobs.

“There’s just a sense that these things are being handed out relatively willy-nilly because the school districts don’t have to pay the costs. There hasn’t been any apparent close oversight coming out of the comptroller’s office on these projects,” Wheat says.

Wheat points to Valero, which kept nearly $33 million in tax credits for projects tied to Texas shale gas, which, he says, “makes it a bit of a stretch to argue that these companies might have taken these projects to other states.”

As TPJ reported in 2007, property-rich districts give out most of the tax breaks. And not only are schools giving corporations a break, some districts are reportedly taking cash rewards from the companies in return, then pocketing the money to pad their own budgets.

“I guess that’s in the eye of the beholder to what extent that’s a bribe or not,” Wheat says.

There is no cost to school districts to give the tax credits, especially since any loss in revenue is compensated through the state’s formula funding for public education. So schools get their regular funding from the state, and get bonuses from companies on the side.

But the TPJ report says there’s a “fatal flaw” in the program: it costs Texas taxpayers $200 million a year.

Dick Lavine with the Center for Public Policy Priorities says that money is all under the table.

“Most of these districts are getting $100 per student per year,” Lavine says. “The agreements are on file, but it’s not reported. … It doesn’t show up in school finance calculations, it’s just free money for the schools.”

“This is a hugely expensive program that has not been monitored closely at all,” Lavine says. “Texas would be growing fast and we’d have the extra hundreds of millions of dollars a year that’s been wasted through this program if we could just abolish it.”

Meanwhile, the program looks like it’s been helping out the comptroller as she gears up for next year’s race for lieutenant governor.

“There is absolutely no overlap between the campaign and any agency functions conducted by the comptroller’s office,” Combs’ spokesman R.J. told the Observer.

But Wheat says it isn’t so simple.

“There’s something unseemly about the public official who with one hand signed off on these tax breaks and with the other hand is taking money from the beneficiaries of this program to run her campaign,” he says. “We think there’s a problem with it and that the people involved with handing out these tax breaks shouldn’t be taking money from the companies that are getting the tax breaks.”

Patrick Michels

The Lead:

Lawmakers negotiated late into the night in an attempt to finalize the 2014-2015 state budget. Conference committee members have agreed on a number of spending issues, including how much money to put into public education ($3.2 billion) and water infrastructure projects ($2 billion).

But as the Texas Tribune reports, Medicaid expansion remains a problem. The budget doesn’t include money to expand Medicaid for working poor families under Obamacare (don’t be silly). But conference committee members have included a rider that would set up a framework under which Texas would expand Medicaid if it chose to. That’s apparently too much for some House Republicans. The House GOP caucus voted earlier in the session against Medicaid expansion. And some Republicans are threatening to vote against the budget if it includes the Medicaid provision. Now’s the time for deal-making. Once the conference committee sends the budget back to House and Senate, the bill can’t be changed.

Yesterday’s Headlines:

1. Yesterday, the House voted down a proposal to impose term limits on elected officials. SJR 13 would have limited the governor, lieutenant governor and four other statewide officials to two consecutive terms in office. So much for that.

2. The House did approve an amendment by Rep. Matt Krause that would allow university student groups to discriminate against prospective members. We had termed this proposal a “bad bill.” As the Observer‘s Patrick Michels reports, Krause’s bill had died, but he brought it back as an amendment to the Higher Ed Coordinating Board sunset bill.

3. The Senate gave final approval to SB 15, a bill that would place stricter limits on university regents’ power to fire campus presidents, the Associated Press reports. The subtext of this bill has been the fight between the UT Regents and President Bill Powers.

4. The story of the day came from the Texas Tribune‘s Emily Ramshaw, who reported that doctor and GOP activist Steve Hotze has recorded songs (yes, you read that correctly) about his opposition to Obamacare. The Trib story includes a sampling of Hotze’s heavily autotuned tracks.

5. And congratulations to Quorum Report, which turned 30 yesterday.

Line of the Day:

“Let’s say there’s a red hat club. Anybody who wants to come in and subvert that, ‘I don’t like red hats.’” —Rep. Matt Krause, torturing an analogy during House floor debate trying to explain why university student groups should be allowed to discriminate against who can join.

What We’re Watching Today:

1. The House is scheduled to debate Sen. Dan Patrick’s charter school bill today. SB 2 would increase the number of open-enrollment charter schools in Texas.

2. The Senate Finance Subcommittee on Fiscal Matters will hear HB 500 this morning. The bill reforms the franchise tax, including hundreds of millions in tax exemptions for businesses. The franchise tax’s less-than-expected collections have contributed to the state’s budget woes since its creation in 2006.

3. Gov. Rick Perry will ceremonially sign SB 1611—the Michal Morton Act—this afternoon. Sens. Robert Duncan (R-Lubbock) and Rodney Ellis (D-Houston) and Reps. Senfronia Thompson (D-Houston) and Tryon Lewis (R-Odessa) will be present for the ceremony. So will Michael Morton, who was wrongfully convicted of murder in 1987 and exonerated with DNA evidence in 2011. The bill aims to improve Texas’ criminal justice system by ensuring that defense attorneys have access to all key evidence.

Want to know why Devo really broke up?

We featured Rep. Matt Krause’s House Bill 360 back in February as a “bad bill,” because it would let student groups discriminate among its membership, kicking out students who don’t fall in line with the principles the group was founded on. It’s especially easy to imagine groups kicking out gay members in the name of their founding principles.

Rebecca Robertson, legal and policy director for the ACLU of Texas, put it simply: “It’s not legitimate to use public funds for discriminatory conduct.”

But the Fort Worth Republican said it’s a free speech guarantee, a protection against “subversive” members hoping to hijack a group. He offered what seemed like a hilarious off-hand example at the time: the Red Hat Society, a ladies’ social organization promoting fun, friendship, freedom, fulfillment and fitness. And wearing red hats, probably. “You would exclude the blue hats,” Krause explained.

His bill died at last week’s deadline, but he brought it back today as an amendment to the Higher Education Coordinating Board’s sunset bill. With it, he also resuscitated his old analogy.

“Let’s say there’s a red hat club,” Krause suggested on the House floor today. “Anybody who wants to come in and subvert that, ‘I don’t like red hats’,” well, he suggested they just start their own club.

“Are we opening this up to the Ku Klux Klan?” Krause asked rhetorically. “A school is not going to allow the Ku Klux Klan,” he said answering his own question.

“It doesn’t apply to race, it doesn’t apply to gender, it doesn’t apply to sexual orientation. It only applies to those which would seek to purposefully come in and subvert and undermine the purpose for which the club was in the first place.”

Dallas Democrat Eric Johnson tweeted that it was a “mean-spirited amendment,” and the Texas Freedom Network and LGBT groups were working all day to rally opposition to Krause’s amendment, which had been pre-filed.

Krause’s original bill is exactly the sort of ultra-contentious legislation that’s been kept off the House floor so far this session. Lawmakers have even been pulling down many amendments that might spark bitter partisan battles.

But in a lengthy debate over the amendment, nobody challenged Krause on its implications for gay students, or students of a particular race who could be excluded from a club. Opponents mostly played along with his vague “red hat” scenario—Rep. Senfronia Thompson did suggest replacing it with “The Islamic Club”—and worried it was simply impractical.

Krause batted away suggestions that his plan would run afoul of a 2009 U.S. Supreme Court ruling that discrimination in student groups is unconstitutional. He sidestepped the suggestion that his bill would take away local control, or that kicking students out of clubs would create needless paperwork for universities.

Rep. Marisa Marquez (D-El Paso) did press him about what his bill would mean in the long term. ”Things change. They evolve,” she said. “The mission changes, sometimes the demographics change. What you’re saying here is that you have to keep these parameters in place for these clubs.”

“Let’s go back to the red hat club,” Krause suggested. “Let’s say everybody want to wear a red hat so it’s a big club. All of a sudden everybody wants to wear a yellow hat. Eventually it’ll atrophy, it’ll get smaller and it’ll be nonexistent.”

Rep. Harold Dutton (D-Houston) suggested an alternate possibility: “I think the red hats ought to accept the blue hats, and the blue hat doesn’t look blue to me cause it’s now purple.”

The majority of House members disagreed, passing Krause’s amendment 78-67. The bill passed minutes later. Whether Krause’s plan sticks is up to a few House and Senate members who’ll take on the bill in conference committee next.

First Baptist Pflugerville Pastor Steve Washburn

A conservative faction trying to gain control of the Pflugerville ISD board lost in last weekend’s election, despite a local pastor’s best efforts to get out the vote in his congregation. The challenge was a response to the district’s decision to extend health insurance benefits to employees’ domestic partners.

Though only about five people are taking advantage of the extended benefits, it sparked a controversy that’s reached to the State Capitol and Attorney General Greg Abbott.

After district administrators decided to make the change last fall—making it the first district in the state to do so—Pflugerville ISD trustees voted 5-1 to support the decision in December. Mario Acosta and Carol Fletcher, who both voted yes, were up for reelection last Saturday.

Tony Hanson, senior internal auditor for the Texas General Land Office and minister of Saint Mary Missionary Baptist Church, challenged Acosta; Lance Sandlin, an e-business adviser at Dell and a First Baptist Church member, challenged Fletcher.

First Baptist Pflugerville Pastor Steve Washburn vehemently objected to the district’s decision early on, and emailed hundreds of his congregants demanding that they vote for “the candidates in Place #3 and Place #5 who will oppose this decision” to extend benefits to “immoral sexual partners (heterosexual and homosexual).” He went on:

In any election, there is only one question we need to answer: “For which candidates does GOD want me to vote?” As followers of Jesus, we vote for HIS priorities, not our priorities. That means we are always, first and foremost – “Christian Moral Values Voters.” We vote for the candidates who best represent and defend the Lord’s moral values as He reveals them in Scripture. … For followers of Jesus, not voting is NOT an option.

Dan Quinn, communications director of the Texas Freedom Network, said nonprofits, including churches, can’t endorse political candidates and maintain their nonprofit status under the federal tax code. Quinn said there’d be some question if First Baptist Pflugerville violated that law, but Washburn came close to the line.

“I mean, no one’s fooled here,” Quinn said about Washburn’s email. “We’re seeing faith as a political weapon to divide people. … No one is required to leave their religion outside the polling booth, but to suggest that God demands that you vote the way I want you to vote or you’re immoral is just wrong.”

Washburn testified at a House Education Committee hearing earlier this legislative session, in favor of a bill by Rep. Drew Springer (R-Muenster), which would withhold some state funding from any district, like Pflugerville ISD, offering domestic partner benefits.

“The effect that this has had on our community is difficult to measure,” Washburn said at the hearing in April. “It’s been a very negative effect on the Pflugerville community. … It has pitted the administration and the school board against the conservative Protestant Christians, and there are quite a few of us.”

Washburn said that the few employees taking advantage of the extended benefits “have been the source of all of this terrible division in our school district” and lamented that he’d been called a “hate-monger” at a school board meeting. Though that bill died last week, Springer told Observer that there are other ways to keep it moving, like tacking it onto another bill as an amendment.

Carol Fletcher, who won her election Saturday, said no one called Washburn a hate-monger and said she’s offended that he’s tried to play the victim. The only things hurting the community, she said, are Washburn’s agitating for the bill and meddling in the election.

“I feel like the majority of people in our community very much support our strong stance against bullying and discrimination in our schools,” Fletcher said.