ustxtxb_obs_1987_06_26_50_00004-00000_000.pdf

which grew out of revelations that the governor had lied about improper recruiting of football players at Southern Methodist University, practices he approved while he was the head of SMU’s leadership board. Forging ahead, Clements and his budget director Bob Davis produced a proposal for state spending that was shot full of holes as soon as it got to the legislature. Having started in the first place with budget figures most state leaders did not agree with, the governor’s document had no constructive effect on the central issue of the session. But it was weirder than just that. Clements had memory lapses in his press conferences once he couldn’t name the responsibilities of his top staffers, then he couldn’t remember firing the chairman of the board of health. And he was disposed to making off-the-cuff proposals that made even his staffers gulp. One day he surprised reporters by saying, apropos of the debate over the election of judges, that he favored consolidating the state’s Court of Criminal Appeals with the Texas Supreme Court. The idea probably occurred to him because he is dissatisfied with the election of liberal judges to the Supreme Court, but it was unclear how consolidation would improve the already overloaded dockets of both courts. Late in the session, after endless diatribes against higher government spending, the governor announced on a television call-in show that he favored a two percent pay increase for state employees. Jaws dropped open. The governor’s insistence that any extension of the sales taxes to cover service industries be done in a “revenue neutral” manner didn’t win him admiration for incisive thinking; everyone knew the legislature wouldn’t stand up to the heat from service groups if they weren’t even going to gain any revenue for their trouble. This point briefly got through to Clements and for a day in May he was willing to agree to an expanded sales tax base that would bring in more money. His change in stance recalled earlier days in the session when he decided to support the “temporary” sales tax hikes passed under former Gov. Mark White. “I can’t be in granite in a changing panorama,” Clements said then. But maybe he could. After dogmatic Republicans in the House chided him for his one-day flirtation with the sales tax expansion, he stood rock-solid for the rest of the session against new tax revenue. One day toward the end of the session, when reporters were crowding around Clements, one of them accidently bumped him. The governor threw an elbow and demanded “Quit pushing me.” More people were beginning to realize that not only was Clements a hard man to follow, he might be just a bit dangerous. TWO WEEKS AFTER the session’s big fizzle, Lt. Gov. Bill Hobby called a closed-door meeting to discuss the budget conundrums with about 50 of the state’s top business leaders, most of them Democrats. Attending were the likes of Walter Mischer, Sr., the Houston developer; Jess Hay, the mortgage banker from Dallas; Robert Lanier, the Houston businessman and highway commissioner; H.B. Zachry, , the San Antonio builder; Ron Kessler of the Dallas Chamber of Commerce; as well as Republican chums of Bill Clements such as Secretary of State Jack Rains and Dallas investor Peter O’Donnell. In Hobby’s prepared remarks made available to the press, he spoke mostly about the importance of educational spending and of luring industry. As an example of his vision of development, he described the economic benefits if the government’s 52-mile atom smasher the Superconducting Supercollider were to be located in Texas. The project would generate “up to 15,000 jobs and as much as $2.7 billion a year” for the state’s economy, Hobby said. But the contest for the Supercollider will only be won, according to Hobby, 4 JUNE 26, 1987 “if Texas can offer infrastructure, support facilities and a quality of life superior to other contenders. It must demonstrate that its climate for research and innovation is second to none.” The lieutenant governor added that “More and more, decisions about locating and relocating businesses are based on the quality of education and the quality of life.” Hobby also spoke of the increased burdens on the state’s “very conservative human service system.” He said programs such as Aid to Families with Dependent Children, unemployment compensation and state aid for nursing home care are expected to add $300 million in social spending over the next two years and concluded that “we cannot afford to balance our budget at the expense of human services and public and higher education.” Though he was advocating a budget that would cost roughly $6 billion more than the state has available to spend, Hobby used the word “tax” only once in his speech. In the discussion that followed, business leaders discussed various tax alternatives. According to several who emerged from the meeting, Frank McBee, head of Tracor, Inc. of Austin, suggested the eventual need to move to an income tax system. Jess Hay agreed that personal and corporate income taxes “ought to be considered. ” Republican Jack Rains, seeming a little scandalized by Hobby’s talk of needing an extra $6 billion, said of Hobby: “I don’t know if he used the word `inevitable,’ but he said an income tax is coming. ” At a press conference afterward, Hobby said it was clear that the state had to seek other means than the sales tax for raising revenue. Asked about income taxes, he said, “It’s something that increasingly comes up at these meetings.” The lieutenant governor was not suggesting that sweeping tax changes would be enacted in this summer’s special session. Hobby, Clements, and Speaker of the House Gib Lewis all seem to expect the tax restructuring decisions to be postponed until after a Select Committee on Tax Equity created this session begins to make recommendations. The committee is made up of appointees of the three top state leaders and is charged with making a four-year study of the tax system. What kind of solutions can the 13-member committee be expected to bring forth? Chaired by Dan W. Cook, III of Goldman, Sachs & Co. in Dallas, the group can be expected to be receptive to business interests. In addition to seven businessmen, there will be two House members \(Rep. Dan and two Senators \(Bob Glasgow, D-Stephenville, and Grant Clements’s budget director Bob Davis. One of the lieutenant governor’s appointees is Frank McBee, the business leader who brought up the income tax discussion at Hobby’s meeting. Rep. Stan Schlueter, who this session carried a constitutional amendment to ban income taxes, and most other members, can be expected to frown on an income tax. In public hearings around the state the committee will undoubtedly hear from the vocal anti-tax groups and characters such as San Antonio’s C.A. Stubbs, who repeatedly urged Schlueter’s Ways and Means Committee to ban the income tax. “Hang in there and God Bless,” Stubbs told the committee in February when it created the tax equity committee. “If we can do anything to help, well, we’re available” and you can bet they will be. Late in May, when the Senate was debating the only tax bill to come to life this session \(the continuation of the Senators noted that more sweeping solutions will be discussed two years from now when the next regular session begins. Senator Eddie Bernice Johnson, D-Dallas, asked her colleagues