Guv’nor Crunch


It has not been a good legislative session for the Governor. The school voucher bill he backed is dying in the Senate, tort reform has flopped, and parental notification for teenage abortions is in trouble. A Texas Poll conducted in early May found that forty-five percent of Texans could not name a major policy achievement associated with George W. Bush. Comparing his record with that of his brother Jeb, who pushed a voucher bill and a billion-dollar tax cut through the Florida Legislature in his first term as Governor, the Wall Street Journal observed, “Maybe Republicans need a Bush primary to make sure they’re running the right sibling.”

While the Journal is looking at Florida’s Governor Bush, his brother in Texas is finally getting some negative press at home. The Houston Chronicle surveyed his appointment records and found that the Governor had scheduled less than half as many meetings with legislators this session as he did in the 1997 session. Meanwhile, the Chronicle found, the Governor has spent almost twice as much time in “private” appointments – that is, time dedicated to presidential politics – as he has on scheduled meetings with Texas legislators.

Which is not to say that the Governor’s presence has not been felt on the floor of the House and Senate. Back in January, when Comptroller Carol Keeton Rylander announced a revenue surplus of $5.6 billion for the next biennium, the Governor called for $2 billion in property tax cuts, plus another $600 million in sales and business tax cuts and credits. What surplus money remained, he said, should be applied to a pay raise for teachers. But as the appropriations process revealed over the weeks and months to follow, the initial budget prepared by the Legislative Budget Board didn’t allocate enough money to maintain current service levels; $3 billion of the “surplus” was not really surplus. Thus began the crunch, as $5.6 billion was reduced to $2.6 billion.

Yet the Governor held fast to his original tax break, even as the Republican Senate delivered a school finance bill that included less than half of what he had called for in property tax cuts. Teacher pay raises, meanwhile were slowly whittled from $6,000 to $5,000, then $4,000, and finally $3,000.

The Governor had one more card to play. The budget process begins with a preliminary revenue estimate from the state comptroller’s office (above which the Legislature cannot spend). But the budget cannot be completed without a revised estimate, traditionally delivered at the beginning of May. As May 1 came and went, Chairman Paul Sadler held the school finance bill in the House Public Education Committee, waiting for the final revenue estimate so that he could settle on an amount for teacher pay raises.

May 5 came and went, then May 10, and still no comptroller’s estimate. With only twenty days left in the session, House Democrats began to lose patience with Republican Comptroller Carole Keeton Rylander, who claimed she still needed one more set of mid-April receipts, in order to make an accurate two-year projection.

The longer Rylander sat on her final revenue certification, Houston Democrat Sylvester Turner complained, the less likely the extra money could be used for anything but tax cuts. It is far easier to vote on property taxes than to move money through the intricate mathematical equations of school finance. And faced with the Legislature’s May 31 conclusion, Sadler would be forced to show his hand, determine an amount for pay raises, hold hearings, and move his bill to the floor before the final week of the session. Asked if he thought Rylander was acting on behalf of the Governor, Turner said, “I don’t want to think that, but every day that goes by I get closer and closer to that conclusion.”

The Bush-Rylander budget crunch had been further exacerbated by the Republicans’ May 6 tax revolt on the House floor. Tom Craddick led the charge, adding additional tax breaks to a bill intended to eliminate sales taxes on diapers and over-the-counter medicine for children and the elderly. During the floor debate, House Ways and Means Chairman Rene Oliveira (who said he had a “clear understanding” with the Governor and his legislative deputy director, Terral Smith, that the combined total of sales and business tax cuts would not exceed $600 million), called Sadler and Appropriations Chairman Rob Junell to the front mike to remind Republicans of the deal with the Governor – and to warn them that larger business tax cuts still in committee might be jeopardized by turning the sales tax legislation into a “Christmas tree.” When a motion to table Craddick’s amendment failed by ten votes in a House where Democrats still hold a six-seat majority, the rout was on. Craddick succeeded in broadening the sales tax on over-the-counter drugs. Next, Carl Isett’s amendment doubling the franchise tax cut was adopted, and the giveaway continued to grow. “The package that came out that day went from being about $185 million to $455 million,” Oliveira said. “They’re [the Governor’s office] now denying that we had a deal, which is unfortunate.”

Bush, who still wants a quarter-cent cut in the sales tax, also has one more big-ticket item still in Oliveira’s committee: a research and development tax cut, which has a $613 million price tag and major corporate support. After the May 6 floor fight, Oliveira described the status of that bill as uncertain.

On May 11 the four Democratic legislative caucuses held a joint press conference to call for Rylander to release her numbers and to return the Legislature’s focus to education spending. Citing a poll that found the top priority among Texans to be funds for education, Turner attacked the Governor’s budget priorities. “Teacher pay is around thirty-eighth in the nation,” he said, “and Texans are saying that is unacceptable.…

“We began this session with oil and gas tax credits,” he continued. “That’s not how it should end…. Whether the Comptroller delivers the numbers on May 30th or May 35th, that money needs to be spent on education.” Oliveira said that the Democrats support tax cuts – especially on the sales tax – but only up to a point. “We are in the waning days of the session, and yet the focus has not been on the teacher pay raise. We will stand for reasonable tax relief, and reasonable tax cuts, but we will not stand for those if they come at the expense of our teachers and our public education system.”

But House and Senate Democrats knew that more cuts would be coming. With only two weeks left in the session, the House had passed roughly twice as much in consumer tax cuts as it had in business tax cuts; and business, in this Legislature, always has the final word. So before the Legislature adjourns, there will be a research and development tax credit, an internet sales tax cut, and more relief for business – plus a property tax cut that will carry a big price tag, return very little money to homeowners, and devour much of the surplus. As the Center for Public Policy Priorities points out, that’s a “surplus” in a state where basic, documented needs – as a matter of policy – are left unmet. That same “surplus” billion, the C.P.P.P. reports, could fund a statewide, full-day kindergarten program, job training for 100,000 workers, and childcare for 41,000 children of working parents the Governor wants off the welfare roles.

None of those investments in people will win any primary votes in New Hampshire, where nothing sells quite as well as a two-billion-dollar tax cut. On May 13, Rylander released her report and pushed the recertified surplus up to $6.4 billion. Enough, she said, for “really significant” tax cuts.