Updating the Numbers

Amid the hubbub of yesterday's school finance meltdown in the House, we goofed on two numbers. The proposal by Rep. Scott Hochberg (D-Houston) that amended House Bill 2, the school finance plan, didn't quite triple the homestead exemption, as we stated in a previous post. Past incarnations of Hochberg's plan tripled the current $15,000 homestead exemption, but this time it proposed increasing the exemption to $32,500. That would still provide much more help to lower- and middle-income families on their property taxes than the leadership's version of HB 2. The rich folks wouldn't benefit quite as much, though. (Exempting $32,500 in value from property taxes helps a lot more when your home costs $150,000, than it does if you live in a $3 million mansion). Hochberg's plan also would provide more money for schools, which we thought was the whole point of this exercise (call us crazy).

Also, we miscounted by one the number of Republicans who broke ranks with the Speaker to vote for Hochberg's amendment. The total was 14.

The House and Senate are both adjourned until Thursday. The telecom, judicial pay raise, and tuition revenue bond bills are all still out there. With school finance foundering, though, those bills are in some limbo. For one, leadership in both chambers has been using those issues to leverage votes on school finance. But more than that, we're thinking it wouldn't be the best PR move to kill school finance and then pass a bill that aids big corporations like SBC (telecom) or that boosts legislators' own retirement benefits (judicial pay raise). If that happens, some lawmakers might find themselves tapping into those retirement benefits a little earlier than they expected.

Craddick's Reaction to the Meltdown

Speaker Tom Craddick (R-Midland) spoke with reporters this afternoon after the House melted down debating school finance. Craddick said the votes weren't there to pass House Bill 3, the property tax cut bill, last night and this afternoon. And once Scott Hochberg got his amendment on the school finance legislation, House Bill 2, "It [was] like a mushroom cloud," Craddick said. The Speaker said Hochberg's amendment succeeded because four Republicans were absent, though it should be noted that the amendment received 76 votes, which constitutes a majority of the House even if all members are present.

"I think the members are worn out," Craddick said. "They've taken this vote numerous times. The school superintendents and the school people have been real strong...It makes it hard on the [House] members." Indeed, one House Republican, explaining a vote against HB 2, said that no one from the district has called to support HB 2 or HB 3, while numerous school officials have phoned to urge a 'no' vote. After a regular session and two special sessions, that opposition seems to be taking a toll.

It seems highly unlikely that this special session can be saved. The speculation on the House floor this afternoon was that Craddick wanted to end the circus and tried to do so by offering up HB 3 for a vote when everyone knew it would fail. Since tax bills must start in the House, the Senate can't take up HB 3.

Why did Craddick do it? Capitol wags today said the maneuver gets Craddick out of a increasingly tumultuous special session in which the House is revolting against him, protects House Republicans from another vote to raise the sales tax, and sticks it to Gov. Rick Perry.

If this session collapses, as now seems quite likely, and the Lege adjourns, will Perry call another special session as he's promised on several occasions? The sessions are getting increasingly ugly.

A Surreal Day in the Texas House

It took all of four legislative days for the second special session on school finance to implode. This time it happened in the Texas House--and in spectacular fashion this afternoon. It was a marvelous few hours of legislative theater that ended with the sponsors of both the school finance bill and the property tax cut bill voting against their own legislation.

How did it come to that?

The House convened this morning planning to take up the school finance bill, House Bill 2--followed by the property tax cut bill, House Bill 3. But the House stood at ease for most of the morning and afternoon while Speaker Tom Craddick tried to scare up enough votes to pass at least HB 2.

When debate finally started on HB 2, the House rebelled against leadership, voting 76-67 in favor of Scott Hochberg's amendment to lower the proposed property tax cut and triple the homestead exemption. Hochberg, a Houston Democrat and high priest of school finance policy, contends that the increased homestead exemption will ease the tax burden on lower and middle income families. The plan narrowly failed in the first special session.

With Hochberg's amendment in the bill, Craddick was in a tight spot. The House stood at ease for half an hour while leadership tried to peel off some of the 13 Republicans who had backed the Hochberg plan. There was a palpable sense of unease among Democrats on the House floor as they waited for Craddick's next move. And when Craddick sprung it on them, it turned the House upside down. Unable to turn enough votes to take out the Hochberg amendment, Craddick decided to scuttle the ship. HB 2 sponsor Kent Grusendorf (R-Arlington) went to the front mic and accepted all the pending amendments, which moved the House right to a vote on HB 2. Grusendorf then raised two fingers to signal a vote against his own bill. A slew of Republicans and some stunned Dems killed HB 2 by 79-62.

Craddick then told Rep. Jim Keffer (R-Eastland) to move ahead as planned with HB 3, even though everyone on the House floor knew the bill didn't have the votes to pass. With HB 2 dead, there was still some hope for the special session, because the Senate could send its school finance plan over to the House. But not so with HB 3, because tax bills must originate in the House. So when Craddick rolled out HB 3 for a sacrificial killing, the Speaker essentially blew up the special session.

In his closing remarks on HB 3, Keffer summed it up perfectly, "It's been sort of a surreal day." He then stunned the House. He said he was committed to cutting property taxes but that "this is not the bill. This was the governor's plan. We worked on it as much as we could...we didn't get there. Mr. Speaker, show me voting 'no' on HB 3." The House floor erupted in cheering and whooping. The tax bill died by a final vote of 124-8. At which point, Rep. Paul Moreno (D-El Paso), as he does after legislative victories, yelled, "It's Miller time."

Ready for Your Car Insurance to Go Up?

In order to give minimal property tax reductions to homeowners and help reelect Governor Rick Perry, House Bill 3 will raise the sales tax and add new taxes to a host of services. According to recent proposals, these services will include (among others) connecting to the Internet (so much for closing the digital divide) and car repair.

This is what will be taxed according to the conference report on House Bill 3:

"MOTOR VEHICLE REPAIR SERVICES." (a)
"Motor vehicle repair services" means the repair, remodeling,
maintenance, or restoration of a motor vehicle, including testing
or diagnostic services, body repair and painting, engine repair,
transmission repair, exhaust system repair, brake repair, and air
conditioning repair.

Of course, it's possible that insurance companies eager to do their part for public education and homeowners will absorb the increased costs of repairing vehicles rather than pass it on to customers as increased rates.

Possible...BUT NOT LIKELY.

According to insurance watchdog, Texas Watch, insurance companies overcharged Texas policyholders $4 billion in 2004. Texas Watch calculated that for Texas drivers the average overcharge per vehicle insured worked out to $205.26. Oh, and btw, in 2002 Texas had some of the highest insurance rates in the nation for homeowners. Wonder how much those have gone down since then...

The more than $700,000 the insurance industry spent to elect a friendly Lege in 2002 sure paid off, didn't it?

Groundhog or Turkey?

The folks at the Lege were back at it today, trying to solve school finance for the fifth time. The big move in the latest version of this chess game appears to be in the Senate where a 2/3rds vote in order to suspend the regular order of business is required to take up House Bill 2. Many Senators are rightly concerned that whatever they approve, no matter the quality, will be radically changed for the worse in conference committee with the House. The bill that comes back will only need a majority vote to pass. Thus everybody understands that the first vote is the most important one. It was supposed to occur today but instead the Senate adjourned until tomorrow. Looks like Dewhurst doesn't have the votes he needs to get the bill off the floor.

Meanwhile in the House, the rumor is that Craddick will, by hook or by crook, force his members to pass both House Bill 2 and it's taxing cousin House Bill 3, perhaps as soon as tomorrow. After that he will release his members to vote their districts. The idea here is to avoid having the bill die in the House, so if failure ensues the Senate gets the blame.

Deja Vu All Over Again on School Finance

Well, the Legislature is nothing if not consistent on this one.

Quorum Report documents what had become increasingly clear last night and today--the Lege has failed, for the second time in six weeks and fourth time in two years, to come up with a school finance reform. Even though the conference committee reached a deal on House Bill 2, the education package, that legislation remains linked to the tax package (House Bill 3)--one can't pass without the other. Even if House-Senate negotiators and the governor's office had compromised on a version of the tax bill, it's questionable whether the legislation could have passed the House or Senate on a final vote. There were rumors of 85-87 votes against HB 3 in the House.

So what now? It's up to the governor, who's made a lot of noise this week about calling another special session, starting on Thursday. A special session in August (talk about a misnomer) would make a lot of people unhappy, us included.

Masters of their Domain?

The Lege's crusade against eminent domain has hit a serious snag, and may be dead, at least for this month's special session. Lawmakers' hasty effort to restrict local government's power under eminent domain to grab private property for development seems to have melted down amid--what else?--bickering between the House and Senate.

The House had agreed to go with the Senate's statutory approach rather than a constitutional amendment. The House passed Senate Bill 62 a few days ago, but not before stacking on a series of its own amendments. The Senate didn't take kindly to those and asked for a rush-job conference committee in the final two days of the special session.

Earlier this afternoon, the House voted 91-40 to deny the Senate's request for conference and hand the House version back to the Upper Chamber--the legislative equivalent of a "take it or leave it" demand. Rep. Frank Corte (R-San Antonio) argued that going to a conference committee would be letting the Senate "run over" the House. There were rumors that a conference committee planned to dump the House amendments in favor of the Senate version.

The House vote today likely dooms the bill. Of course, if nothing gets done before Wednesday night's deadline, eminent domain legislation will likely come back if Gov. Rick Perry calls a second consecutive special session on school finance.

His Eminence's Domain

The Texas Legislature has taken a swift and decisive stand on the issue of eminent domain (in light of the recent controversial Supreme Court ruling). The Senate and House are moving quickly to curtail the government's power to seize property unless:

1. A local government needs to build a much-needed road or utility line

or

2. A multimillionaire sports team owner wants a new stadium with more luxury suites.

The Senate exempted the Dallas Cowboys' planned new stadium in Arlington from SB 62, its version of the eminent domain restrictions. If that sounds familiar, it should. In the early 1990s, George W. Bush and his Texas Rangers ownership group used Arlington's eminent domain power to seize land for the Ballpark at Arlington--a project that made Bush a millionaire. It also launched Bush's career in politics as a small-government, pro-property-rights conservative. Rich, ain't it? If you've forgotten the details of this ploy (that Jerry Jones would do well to read up on), check out Robert Bryce's Observer story from 1997.

With that in mind, perhaps Sen. Kyle Janek was saying more than he intended during Wednesday's Senate floor debate when he commented, "We are changing this because this can be abused and has been abused."

The Poodle Bites, The Poodle Chews It

Perhaps Rep. Pete Gallego (D-Alpine), as quoted in The Dallas Morning News, said it best:

"In a contest of wills, the House has an iron will, and the Senate ranges anywhere from frozen butter to melted butter. But it's still butter."

Last night, Lite Gov David Dewhurst cemented his reputation as the Tony Blair of Texas politics---just another poodle with Gov. Rick Perry and Speaker Tom Craddick holding the leash. The Senate passed out its version of House Bill 3 that looks surprisingly like the version being pushed by Perry and the House. So much for the tough talk.




Gone is the business tax that Dewhurst and Senate Finance Chairman Sen. Steve Ogden (R-Bryan) have long asserted would make the tax bill fair. The tax on business partnerships they promoted was stripped out of the bill in a dramatic Tom DeLay-style vote. When it became clear the amendment would fail, Dewhurst left the vote open while it appears he convinced Sen. Mike Jackson (R-La Porte) to switch his vote, which rendered it a tie. Then Dewhurst promptly broke the tie with his first personal vote as Lite Gov.

The amendment by Sen. Kyle Janek (R-Houston) and Sen. Kim Brimer (R-Fort Worth) also sunsets the state's franchise tax on business in 2008 at a potential cost to the state of $1.8 billion a year. Like the House version, the Senate pays for the property tax reduction in HB 3 by increasing consumption and sales taxes. It also sets up a 15-member commission to look at business taxes in the interim to deal with the sunset provision. The "blue ribbon" commission has subpoena power essentially to do tax audits of businesses. This expansion of government power received nary a mention during the debate in the Republican-dominated Senate.

So basically, the Senate, led by its poodle-in-chief, defunded the government to give tax breaks to their big business buddies and wealthy suburban constituents and then left it to a future legislature to figure a way out of the mess its actions will create.

The First Step Off the Cliff

House Bill 3, the "finance" part of school finance, passed on third reading this afternoon 70 to 69. If the bill had failed, it would have probably ended the special session. Oh well.

The bill barely passed on second reading last night. Most of the brave Republicans who voted against this stinker of a bill the first time around held fast. HB 3 currently does next to nothing to increase funding for education while raising taxes on 80 percent of Texans. There were two Republicans who flipped: Rep. Brian McCall (R-Plano) and Rep. Jodie Laubenberg (R-Parker). If they had voted against the bill, it would have been all over but the shouting.

Now HB 3 goes on to the Senate. As noted in today's Dallas Morning News, back in March when the House passed a similar bill (that ultimately died) to raise the sales tax by a penny and shift the tax burden onto the middle class, Dewhurst said: "People would march in the streets with signs if we did that and I would join them."

One of Those Nights

House Bill 3 passed on second reading in a squeaker tonight. At first, opponents of the "finance" part of the school finance package had the upper hand on a vote of 74-73, but someone called for a verification of names. The subsequent roll call revealed that Rep. Trey Martinez-Fisher (D-San Antonio) and Rep. Craig Eiland (D-Galveston) were absent. The bill then passed 73-72.

By the end of the nearly eight hours of debate and amendments on the bill, some Republicans succumbed to a frenzy of taxation like foxes let loose in a hen house. Even many of his colleagues were sickened by Stephenville Republican Rep. Syd Miller's attempt to raise the sales tax on electricity. That amendment went down by more than 100 votes.

Still, as Rick Caseynotes in today's Chronicle you have to earn more than $100,593 to get a tax cut out of HB 3. If you earn about $52,000, you'll end up paying 3 percent more in taxes. The bill as it stands now is inequitable and ineffective. Shifting the burden to sales tax and other regressive taxes will shaft the middle class, the poor, and particularly renters. It could do damage to both the economy and the future of the state. What's worse, the bill does jack for education.

In the best tradition of Texas independence, there were a number of Republicans who balked at supporting their leadership's Frankenstein. They were Rep. Toby Goodman (R-Arlington), Rep. Bob Griggs (R-North Richland Hills), Rep. Pat Haggerty (R-El Paso), Rep. Glen Hegar (R-Katy), Rep. Harvey Hilderbran (R-Kerrville), Rep. Bob Hunter (R-Abilene), Rep. Jodie Laubenberg (R-Parker), Rep. Brian McCall (R-Plano), Rep. Tommy Merritt (R-Longview), Rep. Elvira Reyna (R-Mesquite), Rep. Burt Solomons (R-Carrollton), Rep. Joe Straus (R-San Antonio), and Rep. Vicki Truitt (R-Keller).

The House, under Craddick's hard hand, then relatively quickly passed House Bill 1, the appropriations bill, and adjourned, but not before they killed an amendment by Rep. Senfronia Thompson (D-Houston) to pay for textbooks.