Capitol Offense

It's the Process, Stupid

It sounded almost like a faint echo of a long-awaited consensus. Sweaty and reluctant at the front microphone on the floor of the Texas House of Representatives, Amarillo Republican John Smithee summed up the feelings of the House. “Members, I don’t like being here,” Smithee said. “I don’t think any of us likes being where we are today. If this bill were to pass in the condition it’s in today, it would be disastrous.”

With that, on May 4th, the fifteenth day of the 30-day special session, Smithee asked members to vote once again that night on a school finance bill that members had seen for the first time just that morning. The bill squeaked past, 73-70. (Final passage would come the next morning, after another round of procedural wrangling.) It was lawmaking that smelled so bad that Republicans in tight election campaigns—even members of the leadership team—got a pass to vote against Speaker Tom Craddick.

The version of school finance reform the House offered up to the Senate commits the state to at least $200 million in unconstitutional deficit spending but doesn’t end the unpopular “Robin Hood” wealth-sharing system. It provides property tax cuts so minimal for the average homeowner that the bumped-up sales tax will more than swallow them. It is a bill for which the best that can be said is that it doesn’t offer the state’s already strapped school districts—many of which balanced their budgets last year by slashing curriculum and firing staff—any less money than they’re getting today.

If and when the House sees the bill again, it will have gone through two rounds of doctoring, first in the Senate and then in a bicameral, closed-door conference committee. The House will only be able to vote it up or down. The temptation to vote yes will surely be great, even if the bill comes back loaded by the Senate with gambling provisions and higher sales taxes, or packed in conference committee with pet leadership projects like vouchers.

–Warning signs of impending disaster were evident from the outset, before the House Select Committee on Public School Finance crafted a bill that even committee supporters said they wouldn’t vote for on the House floor. You could say the process was doomed as early as the last elections, when a Republican majority swept into office promising the mathematically all but impossible: to fund the schools and end Robin Hood while slashing property taxes—the chief source of school funding.

In its broadest outlines, school finance reform is not nearly as complex as your legislators might lead you to believe. The state now pays 38 percent of the costs of running public schools (its lowest share in more than 50 years), with most of the remainder coming from local property taxes. In a state where property values vary wildly, wealthier areas will always be able to raise more money at a lower tax rate. Hence, Robin Hood—which siphons taxes from property-rich areas to give to the property-poor districts. As the state’s share of funding has shrunk, property taxes have ballooned in many areas where districts tried to balance their budgets by drawing down the dollars available to them. The simplest way for the state to do away with Robin Hood—and offer relief to property taxpayers—is to make school districts less reliant on local property taxes by putting in more money from somewhere else.

It’s the “somewhere else” that is the sticking point. An income tax is, apparently, out of the question, and any talk of expanding business taxes gets the business lobby whipped into a cell-phone-wielding frenzy. A few months ago, the GOP leadership was still claiming school finance could be rewritten for free. The school finance plan released by Governor Rick Perry just before the special session contained the governor’s first official admission that schools might need more money. Otherwise a fiscal non-starter consisting mainly of future campaign sound-bites, Perry’s plan called for $1.5 billion in new money for the schools. As it happened, $1.5 billion was exactly the amount the governor thought the state could raise by installing 40,000 electronic slot machines at the state’s racetracks and Indian reservations. It seemed Perry had finally found an industry that was tickled to be part of school finance reform. Of note: Perry has received $572,175 in campaign contributions from gambling interests since 2000, according to Texans for Public Justice.

Indeed, many components of the Governor’s plan seem to be aimed at either courting voters or repaying a handful of major campaign contributors. In this way, Capitol wags say this special session on school finance is really all about the 2006 election. The tipping point in Perry’s decision to call the session might well have come from a trip to the Bahamas that he took with his political advisor Dave Carney and San Antonio multimillionaire James Leininger, among others. Leininger—a key campaign donor to Perry since the governor’s days as ag commissioner—has poured millions of dollars into state politics over the last decade, most of it apparently aimed at securing a statewide school voucher program. Perry, who says the Bahamas trip was a “working retreat” on public school finance, has said he would support a voucher program as part of the school finance reform package.

The House’s school finance committee gave the Governor’s proposal a courtesy hearing before shelving it to consider its own plans. The slot-machine proposal drew fire, with opposition seemingly based as much on the Good Book as on the economic argument that gambling revenues are notoriously unreliable and inefficient. Instead, the House put forward a funding scheme with even less money in it. Even after redefining an “adequate” educational system as one in which 45 percent of students fail standardized tests and 25 percent drop out, the House plan could offer most districts only 2 percent more in additional funds. Even that pittance was artificially contrived, for the most part, through a massive “hold harmless” provision. The House committee initially proposed a bundle of new sales taxes that elicited such a howl from the business lobby that most were withdrawn within hours. Slot machines remained in the bill, though several members said they would vote against them on the House floor. The committee’s other major revenue-raising measure was a tax on company payrolls. The bill passed out of committee on a Saturday with a vote divided starkly along partisan lines: every Democrat except lame duck Rep. Ron Wilson (D-Houston) voted no.

On May 3rd, the day before the full House was scheduled to consider the plan called House Bill 1, there were two press conferences. From the west wing of the Capitol, two dozen hard-line social conservative members announced they had the votes to block slot machines. Meanwhile, the governor told reporters at an East Austin taqueria that he would oppose a payroll tax and, while he was at it, any other business tax. Finally, everyone knew where the money wasn’t going to come from.

That afternoon, perhaps for the first time, even the Lege’s least mathematically oriented minds grasped the impossibility of the task they had laid out for themselves. They were about to get a very public math lesson.

The morning of the House vote began with House Democrats calling a press conference to announce their alternative to the spending plan in HB 1. The Dems cheerily explained that their plan would do a number of things the House bill didn’t, couldn’t, or wouldn’t do: provide all teachers with a $1,000 pay raise, cut property taxes for the poor as well as the wealthy by exempting the first $45,000 of property value from tax, and raise overall spending a smidgen more, to about 3.5 percent. The Dems didn’t offer a new solution to the revenue dilemma, but they airily promised that one was on the way.

Neither that plan nor any other would get a hearing. At 10:53 a.m., House Speaker Tom Craddick—from the first a vocal opponent of the whole idea of the special session—announced that payroll taxes and slot machines would be withdrawn from the bill. In a gesture of pure spite, Craddick prevailed on Rep. Jim Keffer (R-Eastland), author of the payroll-tax provision, to offer the Governor’s plan up for a House vote.

“In the Texas House, we don’t give press release warnings. We just vote bills up or down,” Keffer told the House. “I don’t take credit for anything in this bill, and frankly I wouldn’t want to take credit for it.”

Then the House, in an unprecedented rebuke, voted down the Governor’s proposal, 126-0. (A handful of legislators friendliest to the governor abstained from voting.) The rest of the day saw a relentless push from Craddick and his tame Republicans to pass something—it didn’t matter what—that they could take to conference committee. At the direction of Select Committee Chairman Rep. Kent Grusendorf (R-Arlington), members of the committee ran through sections of the proposed bill like dutiful children, reciting details of reforms and additional spending that were now impossible. Then Grusendorf introduced the amendment that would gut the bill. Calling the new bill, with rare and perhaps ill-advised candor, a “shell” and a “vehicle,” he ran through its finer points: by raising the sales tax from 6.25 cents on the dollar to 7 cents–tying Texas with two other states for highest sales tax in the country–the state could make school finance come out exactly where it already was. There would be no new money for schools, and nothing extra for teachers (unless you count a $1,000 health-insurance stipend already scheduled to be restored in 2005). Despite the funding shortage, the new bill managed to give $3.1 billion in property tax relief, most of which would go to a small number of the wealthiest Texans and big-dollar political contributors.

Rep. Rene Oliveira (D-Brownsville) made a motion to remove a 7.5 percent tax on automobile sales and repair. The amendment passed by a bipartisan vote, removing $800 million from the bill and leaving it in deficit. Hundreds of other amendments on the speaker’s podium would have stripped away the rest of the bill’s capricious package of sales taxes–on billboards, newspaper inserts, and bottled water–and replace them with other revenue options, including an expanded business tax.

Immediately thereafter, Rep. Talmadge Heflin (R-Houston) moved to shut down debate on the bill. Veteran reporters and House members say they have never seen such a dramatic effort to limit debate on such a weighty topic. In the name of “moving the process forward,” Heflin asked the House to scrap the remaining 200 or so amendments still unheard and move the shell bill, as it was, to a final vote.

“If we work hard by voting a bill out today, we will have done what our governor called us here to do,” Heflin told the House. It was an odd statement, given that the bill before them did very little of what the governor had, in fact, called on them to do.

Heflin’s motion carried, however, and in a collective act of cowardice, most House members simply decided not to decide.

“They didn’t try,” said Rep. Garnet Coleman (D-Houston). “The plan all along was that they wouldn’t try.”

On final vote, however, a handful of Republicans jumped ship as Craddick’s control of the House continued to crumble. Leadership may have regained some of its far-right base when they cut slot machines out of the bill, but they lost their moderates when they moved to pass a deficit spending bill that seemed to offer little to any but the wealthiest school districts. Estimates of how the new plan would affect each district—the “runs” that generally determine the votes in school finance measures–were not made available to members. Rural Republicans such as Rep. Tommy Merritt (R-Longview) were especially skeptical that their school districts would fare as well under the new funding formulas as under the old.

“It’s a fiasco. It’s like scrambling eggs,” said Merritt, who added that the bill, as the House passed it, would be “just terrible” for schools in his district.

With an increasingly sour-looking Craddick losing control over moderate Republicans, the bill went down on its first of three final readings, 77-69.

The House’s flirtation with democracy was short-lived, however. During a 90-minute recess, Speaker Craddick stalked the floor in a parody of leadership, herding errant Republicans back across the party line and asking them to cast their ballots, on a reconsideration vote, against their districts and, essentially, against themselves. Asked if arms were being twisted, Houston Democrat Rick Noriega commented: “I can hear them cracking now.”

In an apparent nod to the political fallout that would occur from a “yes” vote on a bill this bad, Craddick let a few Republicans escape a damaging vote. Reps. Jack Stick (R-Austin), Todd Baxter (R-Austin), and Arlene Wohlgemuth (R-Burleson), all of whom face tough campaign races at home, voted no all day. A few others simply left the room on key votes.

The rest switched, handing the Republican leadership a victory, of sorts. In the end it is probably something more like a defeat. It’s now up to the Senate to broker a deal that satisfies a House and a governor united only in deep denial and the fantasy of paying for everything without charging anybody a dime.

Emily Pyle is a freelance writer based in Austin.

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Published at 12:00 am CST