The Pols He Bought

John Sharp didn’t lose to Rick Perry. Nor did Paul Hobby lose to Carole Keeton Rylander. Instead, the two Democrats lost their races to James Leininger’s money. Leininger helped guarantee two loans – a $1.1 million loan to Perry on October 25 and a $950,000 loan to Rylander on October 1 – that likely made the difference in the races for lieutenant governor and comptroller, the closest races on the statewide ballot. Perry beat Sharp by 68,700 votes. Rylander beat Hobby by 20,223 votes, in one of the closest statewide races in Texas history. In each race, about 3.7 million votes were cast. Sharp lost by 1.8 percent of the vote, Hobby by 0.55 percent.Handicapping political races is an inexact science, and there is no way to prove that Leininger’s loans were the decisive factor in the two races. “It’s almost impossible to narrow down the result to a single thing,” says Bruce Buchanan, a professor of government at U.T.—Austin. “But when the races are as close as those two races, it’s reasonable to suggest that money like that may have made the difference.”

Leininger’s money certainly provided critical ammunition to both Perry and Rylander:

More than 10 percent of the $10.3 million that Perry raised before the election came from the loan guaranteed by Leininger and two other businessmen.Nearly 25 percent of the $3.85 million that Rylander raised in the year prior to the election came from the loan guaranteed by Leininger and four others.On the same day Leininger’s loan to Rylander was approved, her campaign wrote a check for $850,000 to National Media in Alexandria, Virginia, for media buys.Within five days of getting the money from Leininger, the Perry campaign spent slightly more than $1 million on media, with the bulk of that money ($966,000) going to David Weeks, Perry’s Austin-based media consultant.Leininger’s money came at critical times for both campaigns. When Rylander got the money from Leininger, she was trailing Hobby in the polls and was being outspent more than two to one. From July through September, Hobby had spent $3.7 million. Rylander had spent almost $1.7 million. In late October, when Perry got his loan, he was in a dead heat with Sharp, with polls showing both candidates with 37 percent of the vote. And Perry was being outspent by a margin of almost three to one. From July to September, Perry spent $2.3 million. Sharp spent $6.8 million.Weeks, who made the media buys for the Perry campaign, discounts the notion that Leininger’s money catapulted Perry to victory. “We stayed competitive all the way through,” said Weeks. “Even without the loan, we would have been competitive.”

But would Perry have won without Leininger’s money? “Yeah, he would have won,” said Weeks, who added that buying TV at the end of a campaign is difficult. “We did increase [TV] buys at the end of the campaign but not significantly. It was not a huge amount. We were already pretty maxed out. It’s hard to plan for because you assume it’s going to be sold out.” Weeks conceded, however, that “every dollar helps. But it’s an assumption to say [Perry and Rylander] would have lost without” Leininger’s money.

Reggie Bashur, a political consultant to Rylander (and

paid lobbyist for the city of Austin) refused to comment, saying he is not authorized to speak for the Rylander campaign. Messages left for Scott McClellan, Rylander’s campaign manager, were not returned.

Kathy Miller, deputy director of the Texas Freedom Network, has no doubt that Leininger’s loan made the difference. “When you have a race as close as the Sharp-Perry race, one or two million dollars can make one, two, or three percentage points difference,” she said. And Miller argues that Leininger’s activities “undermine the power of the electorate to see what they want done. It weakens Texas’ democracy.”

Miller’s group is one of several working to counter Leininger’s influence. Recently, much has been written about the reclusive San Antonio hospital bed magnate, whose net worth has been estimated at $340 million. And to be fair, he did not provide the loans to Perry and Rylander by himself. The Perry loan was co-signed by chemical company executive William McMinn of Houston and telecommunications executive James Mansour of Austin, who chairs Putting Children First, the pro-school-voucher group that Leininger funds. Leininger and McMinn also co-signed the note for Rylander, along with Harlan Crow of Dallas, Kenneth Banks of Schulenberg, and J. Virgil Waggoner of Houston. (Waggoner and McMinn have also worked with Leininger in a successful tort reform campaign that involved funding elections and hiring lobbyists.)

Although the other co-signers have deep pockets, none have the network of influence that Leininger has. And none have dumped as much money into political campaigns as has Leininger. In 1996, according to figures compiled by the Houston Chronicle, Leininger’s political contributions topped $550,000. His political donations and loans in 1998 may well exceed that amount. One member of the Sharp campaign estimated that Leininger, along with other advocates of school vouchers, contributed some $700,000 to Perry’s campaign. As an individual, Leininger gave Perry $56,908. In addition, three of Leininger’s brothers and his mother all gave money to Perry, with contributions ranging from $1,000 to $25,000.

Perry’s connections to Leininger also include stock and airplane deals. Perry made $38,000 trading stock in Leininger’s hospital bed company, San Antonio-based Kinetic Concepts. In 1996, Perry’s campaign bought a 10 percent interest in a 1980 Piper Cheyenne I turbo prop airplane; Leininger and his brother Peter bought the other 90 percent of the plane. In 1997, the Houston Chronicle quoted Leininger as saying that Perry convinced him to buy the plane. “Rick’s the guy who talked me into getting an airplane,” Leininger said. In July of 1997, the Perry campaign bought the Leiningers’ 90 percent interest in the plane for $346,000 – a price that Sharp loyalists claim was far below the plane’s market value. Perry’s campaign manager, Jim Arnold, defended the price to the Houston Chronicle, saying the plane was worth less than planes of similar vintage because of the high number of hours on the engines.

The Leiningers also financed Perry’s purchase of the plane. According to Perry’s latest expense report, on December 1 the campaign paid Covenant Aircraft Investment Inc., a company run by Daniel Leininger, $3,040 for “airplane expenses.” Perry’s spokesman Ray Sullivan said the Perry campaign has “approximately $300,000 outstanding on the airplane loan” that was made to the campaign by Covenant. Sullivan said the Perry campaign makes regular payments to the Leiningers’ company to pay off the debt on the airplane. Despite Leininger’s close ties to Perry, Sullivan said that Perry “owes one group of people in Texas, and that’s the citizens who put him in office and entrusted him with that office. He owes nothing to any of our donors and contributors. He owes everything to the citizens of the state.”

The citizens may find reason to doubt Perry’s reassurances, as Perry and Rylander are already working to stay in the good graces of the Texas Public Policy Foundation, a conservative, pro-school-voucher think tank that gets most of its financial backing from Leininger. On January 26, all the statewide elected officials including Governor Bush attended the T.P.P.F.’s tenth anniversary dinner at the Four Seasons Hotel in Austin. And on February 3, perhaps as a payback to Leininger, Rylander will deliver the keynote speech at the foundation’s “1999 Legislative Conference,” also at the Four Seasons. Topics for discussion at the conference include “government downsizing” and “school choice.”

T.P.P.F. is working hard to shape this year’s legislative agenda. It is also hoping to get conservative operatives into state jobs. The Foundation recently formed a “job bank placement service.” Its agenda, according to its web site, is “to help place conservatives with public policy oriented employers.” Toward that end, T.P.P.F. has posted a long questionnaire on its web site (www.tppf.org), asking applicants, among other things, to indicate how much they agree or disagree with a list of statements including: “Communism has been sent to the trash can of history. There is no chance it will resurface as a serious threat to world peace.” And, “Busing of school children to achieve racial balance is wrong.” The application also asks applicants to rank their feelings toward individuals from a wide political spectrum, including Austin Democratic Congressman Lloyd Doggett, former Democratic Governor Ann Richards, and Nobel Prize winner Alexander Solzhenitsyn. Others listed – presumably those more appealing to T.P.P.F. – include Governor George W. Bush, Senator Jesse Helms, Rush Limbaugh – and surprise! – Rick Perry and Carole Keeton Rylander.

In a January 8 column in the San Antonio Express-News, political columnist Rick Casey quoted T.P.P.F. president Jeff Judson saying that Rylander had given the group “strong encouragement” for its job-bank effort. Speaking of the comptroller’s office, Judson told Casey: “That is the one institution that will probably use this more than anybody. Over time, there will be a shift of the focus of that agency. They’ll need the people who are consistent with that policy.”

Two weeks after Casey’s column appeared, Rylander’s spokesman, Keith Elkins, wrote a letter to the paper, saying that Rylander was “informed in passing of the job bank, but at no time did she support, endorse, or make any commitments about the service.”

For his part, Perry made certain that he repaid Leininger’s loan. Records show that his campaign paid off the $1.1 million loan on December 17, an amazingly quick turnaround. How did he do it? In part, by pressuring lobbyists. After the election, several lobbyists who had supported Sharp were contacted by Perry’s campaign and told that they were expected to help retire Perry’s campaign debt. In some cases, they were given specific amounts of money to raise and/or contribute, with amounts ranging up to $50,000. Said one lobbyist who asked not to be identified, “There was no direct mention of the Leininger loan, but you don’t have to do any high math to put two and two together. Most of the people who were contacted understood where that debt came from.” Republican Party political director Royal Masset even circulated a memo, advising Republican statewide elected officials to tell lobbyists who supported Democratic candidates that it was now going to cost them a premium to get on the “late train” with the Republican winners.

Sullivan insists no fundraising quotas were given and dismisses the complaints as “sour grapes from lobbyists whose guy lost the election.” Perhaps so. But questions about Leininger’s influence over Perry and Rylander will undoubtedly continue, particularly as the issue of school vouchers becomes more prominent. Sharp, an opponent of vouchers, says he has no choice but to admire Leininger’s effectiveness. “I congratulate Leininger,” he said. “He wanted to buy the reins of state government. And by God, he got them.”

Robert Bryce is a contributing editor at the Austin Chronicle, where a version of this story first appeared.