April 12, 2004
We have the plan, now where's the session?

Now that Governor Perry has finally unveiled his long-awaited school finance reform plan, when is that long-awaited special session going to be called? He ain't saying, because he's still working on consensus.

From the Bahamas to Houston, the governor has held a series of closed-door meetings with selected members of a key constituency -- the business community -- in pursuit of consensus.

The extent of his success, if any, is unknown, even though he announced last week a package of education funding proposals, including cuts in local property taxes and an assortment of new or higher state taxes for the public schools. He has yet to say when -- or if -- he will call lawmakers back to Austin to address his proposals in a special session.

If the main purpose of Perry's private meetings was to win widespread support for a separate statewide property tax on businesses, a key part of his plan, he apparently failed. Opposition to the idea remains strong because business leaders fear they would be singled out for higher school taxes over residential taxpayers.


The select sessions had about 130 invitees, which the governor's office said included the state's top employers. A number of the governor's major political contributors were among them.

Twenty of the 29 business executives invited to a meeting with Perry last week in Houston had contributed $738,500 to the governor since May 30, 2001. Their contributions were either made individually or through their companies' political action committees.


One of the first groups to be briefed in private on Perry's proposal to tax business property separately from homes was the leadership of the Texas Association of Business, which played a major role in electing the Legislature's Republican majority.

The group is being investigated by Travis County District Attorney Ronnie Earle, a Democrat, for spending corporate money for issue ads against several Democratic legislators in 2002. The group denies any wrongdoing.

The association's executive committee was first told of the business property tax plan in January by Mike Toomey, the governor's chief of staff.

Bill Hammond, the association's president, said some of his members have attended subsequent sessions with the governor and other business people in Brownsville, Midland, El Paso, San Antonio, Dallas, Fort Worth and Houston.

"I think they (the meetings) are very important," Hammond said. "I think the governor's made a legitimate decision to sit down with some of the leading employers and get honest feedback."

Hammond joined the leaders of 15 other business groups and trade associations in signing a March 29 letter to legislators, opposing a separation of property taxes levied on businesses from those on homes. But Perry publicly proposed the so-called "split roll" approach anyway last week.

The governor, however, has been cool toward creation of a new, broad-based business activity tax, another major revenue alternative that some legislators would prefer but is opposed by some business people.

Usually when a politician bucks his biggest supporters in pursuit of some piece of legislation, that politician is given credit for courage, or maverickness, or some such. I have a hard time casting Rick Perry in that role because one, I don't believe he's actually going to buck business groups like TAB, and two, even if he does, I don't think he'll be willing or able to push his vision past the objections of TAB's other loyal customers in the Lege.

The Morning News rightly describes all this as a big risk for Perry, with the accompanying big payoff if he wins.

"Rick Perry has been on a two-year slow bleed in terms of his public support, and this is his opportunity to recoup," said Cal Jillson, a political scientist at Southern Methodist University.

Mr. Perry says he anticipates calling the Legislature into special session later this month.

School finance is the biggest public policy issue Mr. Perry has faced in his four years as governor and has been an obstacle to previous governors.

"If he can handle the central issue confronting Texas politics and that's education there would be a chance for him to recover some prestige and lost momentum," Dr. Jillson said.

To do so, the Republican governor must navigate some treacherous political waters. He faces a lieutenant governor with his own, more ambitious plan; a House speaker reportedly reluctant to tackle the task at all; a Democratic minority still seething over partisan redistricting; and two potential GOP rivals looking to challenge Mr. Perry's re-election should he stumble.


Austin political consultant Bill Miller says a special session on school finance offers Mr. Perry a political opportunity to tackle a big policy issue and "vanquish all foes."

"The governor feels like he needs to take a step on a major legislative issue," said Mr. Miller, an adviser to House Speaker Tom Craddick. "This is one where as long as he's not advocating higher taxes, he can produce something for his base suburban Republican voters. And that's a base that comes in handy at election time."


Some observers see the governor's modest proposal as the mark of a cautious politician looking to score a victory and appeal to his political base.

"He seems to be taking a small-politics approach to a big question," said Mr. Jillson of SMU. "He's not swinging for the fences. He's trying to bunt down the third base line and get to first safely."

Inability to pass a school-finance plan is the fate that befell the governor's predecessors, Democrat Ann Richards and Republican George W. Bush. Both offered ambitious proposals to fix the state's school-finance system and failed.


Mr. Perry has two problems his predecessors didn't: low approval ratings and a strained atmosphere in Austin.

According to the latest Texas Poll, 50 percent of those surveyed disapprove of the job Mr. Perry is doing his lowest approval rating as governor. Only 40 percent give him positive marks, the survey indicates.

Analysts say the governor's dwindling ratings stem in part from his decision to call three politically fractious sessions on congressional redistricting.

Democrats say the governor and Republican legislative leaders have squandered the good will of members in the minority party and will have trouble getting bipartisan support for any plan.

"The relationships in the House are anything but good," said Rep. Pete Gallego, D-Alpine. "At every opportunity, they burned bridges instead of building them. And now there are no bridges left."

Mr. Craddick, a Perry ally, has little appetite for a special session on school finance this summer and is having trouble rounding up votes, according to those familiar with the negotiations.


"I almost can see a shipwreck," said GOP strategist Royal Masset, considering the confluence of obstacles against passage of any plan.

If the Legislature deadlocks, some Democrats say they anticipate the governor will blame them. [Mike] Baselice, the [Governor's] pollster, says there will be plenty of blame to go around for anyone who blocks the governor's plan.

"How would you like to be one of those poor saps who goes home to their voters and says, 'I could have lowered your property taxes but I'm not even going to give you a chance' " to vote on a constitutional amendment, he said.

That's certainly one way to look at it. Problem is, the vast majority of Democratic legislators - who, I might remind you, are all in heavily Democratic districts thanks to the 2001 redistricting - can counter that pretty easily by saying "This plan would have done nothing to improve the schools in this district, and that's why I voted against it". On the statewide level, if Perry fails to deliver after all his promises, that'll be the message of his challengers. He can blame the Democrats all he wants, in which case a challenger could turn it back on him by charging that other governors before Perry were able to work with legislators across the aisle and it's his own fault that he burned those bridges.

Which is another reason why if Perry were serious about school finance reform, he'd have made it a higher priority than redistricting. Democrats have no reason to vote for anything that isn't a slam dunk for them and their constituents. There's no goodwill to draw on - if he needs any support from them, he's going to have to offer real legislative incentives to get it.

Meanwhile, before those affected can truly claim to support or oppose Perry's plan, they need to ensure they understand it first.

Some superintendents have asked consultants to break down the numbers, to help them determine how much more money they would get per student under Perry's plan. Others wonder whether new taxes would really work and whether their districts would benefit from new financial incentives.

Much of what's in the plan would be new to Texas: financial rewards for boosting student performance and taxes on adult entertainment, cigarettes and video lottery terminals to partly pay for those rewards.

Perry promises that his ideas would put $3.7 billion into education $2.5 billion on top of $1.2 billion lawmakers approved last year an average of $375 more per student.

Educators aren't convinced.

"I guess my question is a dual question," said Richard Middleton, superintendent of the North East School District. "Is it enough, and is there really the money to fund this reliably over the next several years?"


Some educators say they want a new, equitable system, but Perry's plan is incomplete.

Nothing specifically would help fast-growing districts pay for ongoing expansion, such as a formula that would dole out extra money when districts hit a certain percentage of growth, Middleton said.

The North East district's enrollment, now at 55,000, grows by about 1,700 students a year. Keeping up with that growth can skew a district's annual budget: Adding one portable building costs $100,000, and hiring a new teacher costs at least $36,500.

"We're not convinced yet that (the plan) is going to help fast-growth districts," Middleton said.


"I think incentives are good things, but you can't base your future funding on incentives alone," said Belinda Pustka, superintendent of the Schertz-Cibolo-Universal City School District. "That's not enough."

I do think we can throw the projected April 19 start date for a special session in the trash. I have a hard time believing at this late date that such short notice wouldn't be a hardship on a lot of legislators. That's just a guess on my part, but I really don't see it happening if there's no call by tomorrow. We'll see.

UPDATE: Perry is once again expected to call that special session, and if so it'll be for "early next week".

Posted by Charles Kuffner on April 12, 2004 to Budget ballyhoo | TrackBack