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The Texas Observer An Independent-Liberal Weekly Newspaper A Window to the South Volume 52 TEXAS, AUGUST 12, 1961 15c per copy Number 19 THE MAKING OF A SALES TAX Dying Moments in Senate; Token Concessions Made Pipeline Levy Truncated; Turman Oversees Passage AUSTIN Now and then throughout Tuesday the House conference committee members would come staggering through the Senate door Eckhardt looking worried and preoccupied, Ballman grinning, Murray wearing his usual glaze, Quilliam with a puckered smile, and the rest sliding quietly over the lush carpeting, and disappearing into the conference room where the senators assigned to the tax problem were weaving their strategy. Bob Sherrill The House conferees had to pass the press table, and one newsman observed that they looked like flies heading for the spider’s trap. At one point, while the Senate sat about listlessly toying with a piece-meal calendar, Sen. Wardlow Lane came out of the conference room and called Dorsey Hardeman off the floor. They had a muffled talk near the press table, but nothing could be heard until Hardeman, turning back toward his desk, frowned, slashed with his finger as though it were a rapier, saying harshly, “. . . and that the only concession!” But hours later it turned out that there was more than one concession. Aside from Hardeman’s elimination of a $13.5 million transfer of income from the permanent school fund to the general revenue fund, the Senate conferees also removed what was in effect a tax reduction for telephone utility companies. Sen. Bill Patman, who had tried to offer an amendment to Lane’s tax bill on the floor that would have eliminated the telephone companies favoritism clause, but was defeated, interrupted Lane’s explanation of the “compromise” The state labor convention here foundered on two issues: the political integrity of the convention itself, and the insistence of forces supporting Secretary Treasurer Fred Schmidt that the old CIO unions are entitled to share in a “jointly responsible executive” in the merged Texas AFL-CIO. Ronnie Dugger GALVESTON Almost two months before the convention, state labor’s executive board, firmly controlled by supporters of acting met and gave convention votes to 12,000 union members who for various reasons would not otherwise have been qualified to vote. Such “exonerations” have been the practice since the union merger four years ago, Schmidt charges that the exonerations this year were not “re tax bill to learn if this had been done. The question clearly put Lane in a testy mood, and he replied sarcastically: “Yes. Yes, we’ve taken out that part. Under the old bill, the telephone companies would have sent in three times as much as under this bill.” Patman: “But that would have come from the people would it not ?” Lane: “Yes, just like the present amount comes from the people.” What Patman meant, as Lane well knew, was that although the telephone clause would have levied a two percent tax on phone bills, thus getting more money from the people, it would have lowered by some $4.7 million the gross receipts taxes now imposed on telephone and telegraph cornpanies by cutting their gross receipts taxes to the level of those now imposed on other utilities. As Patman pointed out, there was no question about which telephone company Lane and his tax colleagues hoped to help, because Southwestern Bell pays seveneights of all gross receipts taxes paid by telephone companies. There was a rumornot very strongthat Sen. Culp Krueger intended to filibuster the tax bill, but if he or any other senator harbored such hopes they were cut down when Sen. Crawford Martin rose immediately after Lane ended his explanation of the bill and moved that all debate be cut off at 11:35 p.m., and that was only five minutes after he made his move. To no one’s surprise, the tax measure went through the Senate with clownish ease, the vote being 23 to 8, with the ayes coming from Aikin, Baker, Calhoun, Creighton, Crump, Dies, Fuller, Hardeman, Hazlewood, Herring, tail,” as in past years, but “wholesale.” While locals from both sides of the Brown-Schmidt conflict were exonerated, Brown’s forces benefited most. Brown argued that the exonerations conformed to precedent and the organization’s constitution. The first day, the convention foundered on this question of “convention packing.” The credentials committee, through its chairman, N. E. Coward of Houston, recommended that all delegates who had registered be accredited and seated. Schmidt objected. All five members of the credentials committee were Brown partisans, he said. “We asked for a single member so we could bring in a minority report and were denied.” Accrediting all the delegates, Schmidt said, would give those who were later to be challenged “the right to vote on their own seatings.” This, he said, reminded him of Allan Shivers. “I think it puts us in a position where we How It Happened: Price Goes for It, Wilson Key Figure AUSTIN The passage of the Senate’s $354 million tax bill in the House this week, which includes almost $320 million in sales taxes and a gas pipeline tax truncated to $3.3 million from an original $18.5 million, was the product of many diverse factors operating in a tense and complex situation. Mainly, however, it was the intervention of Gov. Price Daniel in favor of the bill and the decision of Speaker James Turman to take the lead in getting a favorable vote on any tax package with a chance of passing which broke the House deadlock. “The Senate and the lieutenant governor always have an advantageous parliamentary position over the House,” one legislator said. “When the governor and the speaker threw in with the Senate, that was it.” By Monday it had become apparent that Daniel was working quietly behind the scenes for passage of the Senate version. In a caucus with key members of the House, including the speaker and several tax conferees, Daniel suggested that the entire gas portion of the Eckhardt pipeline tax be stricken to break the conference committee stalemate. \(This is precisely what happened TuesWorth liberal, threatened that if the House conference committee, of which he wat then a member, went along with the maneuver, he would take the floor on personal privilege to denounce everyone involved. No decision was made at that time. Speaker Turman, who had oscillated from one position to another in the closing days, had never again can criticize those outside of this convention who use these tactics against us,” he said. Locals had affiliated early that morning without rosters of members, signatures of the locals’ officers, or certifications of delegates, Schmidt charged. The constitution required presentation of credentials five days before the convention, but more than 140 had been presented since the deadline passed; “proxies came in yesterday by telephonenotesby word of mouth,” some of them in violation of constitutional rules, he said. Brown ruled Schmidt was free to amend the report any way he wished. Schmidt inquired whether Brown would let challenged delegates vote on their own seating. Brown refused to answer the question on grounds that it was not germane to anything pending. Schmidt said there were “some 20,000 votes challenged” and asked if all 20,000 would be cast on any one of the challenges. “What 20, AUSTIN On January 10 a coalition of liberals and moderates in the Texas Houseby a vote of 83-66 elected themselves a speaker. Almost seven months later, just before midnight of August 8, a coalition of conservatives and moderates spearheaded by the same speaker mustered 84 votes against 62 to join the Senate in enacting the state’s first general sales tax. Willie Morris Crackling tempers and brandished fists, a heavy gavel, and a maddening race against the clock embroidered the final episode ‘of Austin’s lengthy tax wars. Near the climax the chamber threatened to erupt into the busy physical activity of a modern-day Japanese Diet. This time Speaker James Turman, who had broken a deadlock to cast the deciding vote against a sales tax in the last seconds of the regular session, gaveled down liberal opposition just in time to oversee passage of the tax bill and the appropriation bill before the midnight deadline. Gov. Price Daniel, who had worked for the $354 million package, said shortly thereafter he would allow the bill to become law without his signature. He promptly called a special session to take care of the teachers’ pay raise, which had failed to pass The tax program in its essentials is the one which emerged from the Senate last week. \(Obs., total, almost $320 million will be derived from the two percent sales tax. The rest will accrue from a greatly watered-down pipeline tax, an -increase in the 000 is in question?” Brown replied. Schmidt said eight boilermakers’ locals had certified membership to the convention in “wide disparity” from their true membership. Brown parried with a charge that Schmidt had been “derelict” in failing to report this to the executive board so action could have been taken. Brown having ruled that all registered delegates could vote at that point, Schmidt’s motion to delay acting on the credentials report was tabled on a division vote, 410-192. Jim Smith of the Lone Star steelworkers pointed out that 2,775 of the exonerated votes belonged to his local, which has just emerged from a “period of trial and tribulation during which we paid no per capita tax.” After a wildcat six-week strike in 1957, he recalled, 2,700 of the local’s workers were fired, 1,500 became jobless, 27 were Indicted, and all their officers were “blacklisted throughout Texas.” Since present corporation franchise tax, an increase in drivers’ license fees, and minor bookkeeping amendments. After the House and Senate had been deadlocked for four days, a new slate of House conferees late Tuesday afternoon accepted a compromise proposal offered by the Senate. The two concessions: the Eckhardt pipeline tax, which previous House negotiators had warned was made unconstitutional by the Senate, was reduced from $18.5 million to $3.3 million; and the $4.6 million tax reduction on telephone and telegraph companies’ gross receipts taxes was stricken. The conference report was brought back to the House and passed only minutes after the upper house had given its approval. There had been five points of dispute between House and Senate conferees, but the hottest controversy centered on the pipeline tax. Proponents of the Senate concession argue it will offer a sound constitutional test in the courts. Author Eckhardt and opponents of the revised version claim the compromise “took gas out of the gas tax” and charged a “conspiracy” between Sen. Wardlow Lane and Atty. Gen. Will Wilson. Early Skirmishes The first skirmishings on the central issue came at 12:15 p.m. Tuesday when three of the five members of the first conference committee came forward with reports. Menton Murray, conservative from Harlingen, was first. “I went over there,” he told the House, “trying to do what I was supposed to doto help resolve the differences between the two houses. “Too often we think of OUT-selves, of our personal and political advancement, rather than of the people of Texas. We presented the Senate conferees .these fields of conflict: exemptions on $1 meals and clothing under $10; the House franchise tax, which we felt wouldn’t hurt any existing corporations but would hit the boys outside the state shipping into the state and competing with industries; a constitutional gas tax; and taking away the telephone reduction. “They won’t tell you anything definite,” Murray said. “You just have to pump at a conclusion. The compromise they offered us was either their version of HB 334 or HB 20. In other words, we could take either of the Senate bills we wanted. “I personally asked that if they would give on two points, we’d give on two. I personally said, if you’ll give on one, I’ll try to talk Galveston Convention: II Texas Labor’s Internecine Battle