How a bad bill became a terrible law
The Dallas Morning News headline said it all: “House OKs bills to lure industry, protect animals.” The biggest boondoggle of the session, given equal footing with a bill enhancing the penalty for killing your neighbor’s cat. Animal cruelty is a serious issue, but it’s never been at the top of the list for the Morning News editorial board. One might think a bill draining up to $1.6 billion from the state treasury over the next decade would draw more attention, both in the press and on the floor of the Legislature. How can you slide $1.6 billion under the radar?
House Bill 1200, by Kim Brimer (R-Fort Worth) allows school districts to offer property tax abatements to companies building new facilities that employ as few as 10 people. Brimer has been pushing this “economic development” bill for years, blaming Intel’s decision to build in Arizona rather than Fort Worth and Boeing’s recent choice of Chicago over Dallas on our “inflexible tax environment.” What’s new about this version is that the state picks up the tab, reimbursing the districts for lost revenue, which according to the comptroller’s estimates, could total $1.6 billion–yes, billion–through 2011. (The comptroller also predicted that the bill would bring Texas no more that $100 million in revenue from new economic development–not a bargain by any definition.) So while the state budget writers were dickering over whether, for example, the cash-strapped budget could accommodate the full $175 million needed for nursing homes in the next biennium, or just $150 million, Brimer and his Senate co-sponsor Chris Harris (R-Arlington) were busy giving away the store for the next decade.
How did they do it? First, they crafted the bill so that the big financial hit didn’t come due until 2007-2011, allowing Brimer to say the bill had a “positive fiscal note,” which was true, but only in the short term. Using this logic, plus the endorsement of several dozen corporate backers, Brimer lined up over 100 House sponsors for the bill to forestall any open debate on the floor of the House. The bill slipped into the Senate with virtually no discussion of the fiscal impact and no notice from the capitol news corps. In 1999, the measure died in the Senate, but this time Brimer had an ace in the hole: Chris Harris, the Senate sponsor. In an apparent vote-swap that has sparked more than a little muttering around the capitol, Senate Finance Chair Rodney Ellis (D-Houston) scheduled H.B. 1200 for a hearing just hours after Harris helped get Ellis’ hate crimes bill finally passed in the Senate.
The ensuing “hearing” in Senate Finance was a classic, even by Texas legislative standards. Harris was at his obfuscating best. His introduction of the bill consisted of perhaps four sentences, at least three of them false. He incorrectly told committee members that the bill would sunset in 2005, though at that point the bill’s termination date was still 2007. He then intimated that, because the program would end in 2005, before the first compensatory payouts were to be made from the state to the school districts (in 2006), there would consequently be no fiscal impact to the state. The sunset provision was a devious stroke of brilliance–while it is true that under this bill no new abatement deals can be made after 2005, any abatement agreements cut between now and then will be ten year deals. Sunset or no, the state will be paying right through 2011. Speaking in his trademark authoritative mutter, Harris then told committee members that the bill had a positive fiscal impact on the school districts themselves, also untrue. Five minutes later, with virtually no discussion, the committee approved the bill.
By the time a version of the bill reached the Senate floor, with at that point a fiscal note of “only” $800 million, a few senators, including Democrats Elliot Shapleigh, Carlos Truan, and Republican Steve Ogden had gotten wind of just how egregious this giveaway was. Truan railed admirably but in vain against corporate welfare, and Shapleigh proposed an amendment that he thought was a poison pill: It vastly expanded the number of counties that could participate–a move that doubled the potential tax giveaway, according to an internal comptroller’s document obtained by Rep. Glen Maxey. Harris, with Brimer coaching at this side, accepted the amendment. At the time, it was generally assumed that Brimer would strip that extra $800 million out in conference committee. Instead, after the Senate passed the bill (with only five nays)–Surprise!–Brimer moved to concur in the amendments. No conference committee, no further discussion. It fell to Rep. Sylvester Turner to point out to his fellow House members that the bill had come back from the Senate with double the tax giveaway it left with, a fact Brimer denied–there having conveniently been no time to properly calculate and disseminate a new official fiscal note showing the impact of Shapleigh’s amendment. (To date, there has still been no official acknowledgement of the true cost of the bill.) Turner eventually sat down, and the bill sailed to the governor’s desk, where he is widely expected to sign it.
Lost in the shuffle was a May 22 report from the State Journal Register in Springfield, Illinois, tacked onto the last page of the Legislative Clipping Service, where most legislators read their daily news. Boeing executives had announced that the tax incentive package offered by the Illinois legislature had no impact on their decision to choose Chicago–though they would, of course, keep the money–and the irate Illinois House Speaker wanted some answers. Don’t we all. –N.B.