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Legislative Budget Board

The Lege sure thinks a lot of companies need to be coddled

Aug 29th, 2022
by Charles Kuffner.
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It’s kind of amazing, actually.

Texas banned 10 financial firms from doing business with the state after Comptroller Glenn Hegar said Wednesday that they did not support the oil and gas industry.

Hegar, a Republican running for reelection in November, banned BlackRock Inc., and other banks and investment firms — as well as some investment funds within large banks such as Goldman Sachs and JP Morgan — from entering into most contracts with state and local entities after Hegar’s office said the firms “boycott” the fossil fuel sector.

Hegar sent inquiries to hundreds of financial companies earlier this year requesting information about whether they were avoiding investments in the oil and gas industry in favor of renewable energy companies. The survey was a result of a new Texas law that went into effect in September and prohibits most state agencies, as well as local governments, from contracting with firms that have cut ties with carbon-emitting energy companies.

State pension funds and local governments issuing municipal bonds will have to divest from the companies on the list, though there are some exemptions, Hegar said.

“The environmental, social and corporate governance (ESG) movement has produced an opaque and perverse system in which some financial companies no longer make decisions in the best interest of their shareholders or their clients, but instead use their financial clout to push a social and political agenda shrouded in secrecy,” Hegar said in a written statement on Wednesday.

New York-based BlackRock, which has publicly embraced investing more in renewable energy, criticized Hegar’s decision.

“This is not a fact-based judgment,” a spokesperson for the company said in a written statement. “BlackRock does not boycott fossil fuels — investing over $100 billion in Texas energy companies on behalf of our clients proves that.

“Elected and appointed public officials have a duty to act in the best interests of the people they serve,” the spokesperson added. “Politicizing state pension funds, restricting access to investments, and impacting the financial returns of retirees, is not consistent with that duty.”

The other nine companies banned completely are: BNP Paribas SA, a French international banking group; Swiss-based Credit Suisse Group AG and UBS Group AG; Danske Bank A/S, a Danish multinational banking and financial services corporation; London-based Jupiter Fund Management PLC, a fund management group; Nordea Bank ABP, a European financial services group based in Finland; Schroders PLC, a British multinational asset management company; and Swedish banks Svenska Handelsbanken AB and Swedbank AB.

[…]

Texas energy experts said the intent of the law, and Wednesday’s announcement, was to punish financial firms that don’t want to invest in the backbone of Texas’ economy — oil and gas.

“But at the end of the day, it’s all about a rate of return,” said Ed Hirs, an energy economist at the University of Houston. “Quite honestly, fossil fuel companies, in particular oil and gas companies, have not been great performers in the (stock market) prior to this year.”

The Lone Star Chapter of the environmental group Sierra Club said Hegar’s “climate-denying publicity stunt will be costly for taxpayers.”

​​“Major financial institutions like the ones on this list are beginning to recognize that investments in fossil fuels bring significant risk in the face of an inevitable clean energy transition, and that addressing the financial risks of the climate crisis is essential to good business,” said Sierra Club Fossil-Free Finance Campaign Manager Ben Cushing. “The fact that the Texas Comptroller has arbitrarily picked a handful of companies that, despite their climate commitments, continue to have massive fossil fuel investments, shows that this is nothing more than a political stunt at Texas taxpayers’ expense.”

We’ve already determined that Comptroller Hegar is math-challenged, so this shouldn’t come as a surprise. We’ve also seen the Lege make similar laws to protect gun manufacturers and the country of Israel, about which more in a minute. I suppose one could make a protectionist case for this kind of legislative cherry-picking, and as someone old enough to remember the efforts to divest from South Africa in order to pressure it to abandon apartheid, there is certainly a moral case for this kind of law, if not for these specific ones. But if you’re going to go that route, you need to be clear about what you’re aiming at.

The firms on Hegar’s list are BlackRock, UBS Group, BNP Paribas, Credit Suisse Group, Danske Bank, Jupiter Fund Management, Nordea Bank, Schroders, Svenska Handelsbanken, Swedbank, and UBS Group.

Of the six firms that responded to the Houston Chronicle’s inquiries by press time, four deny that they are “boycotting” the oil and gas industry, even if they admittedly have some investments that reflect the growing influence of — and consumer and investor interest in — the environmental, social and governance (ESG) movement.

“As we noted in our response to the Texas Comptroller, Credit Suisse is not boycotting the energy sector as the bank has ongoing partnerships and strong client relationships in the energy sector,” said a spokesperson for Credit Suisse, based in Zurich. Spokespeople for BlackRock, UBS Group, and Schroders made similar points in disputing the comptroller’s “boycotting” label.

[…]

This is a different approach than the one taken by BlackRock, for example, which had $287 billion in assets invested in energy companies globally as of June, $108 billion of which is invested in Texas energy companies, a spokesperson said.

There are “many similarities” between BlackRock’s approach to investing in the fossil fuel industry and that of other major firms, such as JP Morgan, didn’t make the list, said Andrew Poreda, senior vice president and senior ESG Research Analyst at Sage Advisory Services, an investment firm based in Austin.

A “frequently asked questions” document prepared by Hegar’s office, raises questions itself about the state’s methodology, Poreda said. For example, the comptroller’s initial criteria included whether a firm had made public pledges to the Net Zero Banking Alliance or Net Zero Asset Managers Initiative, which call for net-zero greenhouse gas emissions by 2050, nearly three decades from now.

That’s not exactly radical territory. Oil and gas companies are openly talking about plans for the energy transition — including getting to net-zero emissions.

“Envisioning a different world in three decades hardly classifies as a boycott, and at this point is so far away that it is largely aspirational,” Poreda argues.

It doesn’t have to make sense, it just has to make the base think they’re owning the libs. That’s Republican policy in a nutshell these days.

To bring it back to the Israel example for a minute, that law has been mostly blocked by a federal judge, who ruled that an engineering firm that couldn’t get a contract with the city of Houston had its free speech rights violated by the Texas law. I Am Not A Lawyer, but it sure looks to me like the laws banning “boycotts” of fossil fuels and gun manufacturers are at least in the same neighborhood as the anti-Israel boycott law is. Credit Suisse and Blackrock probably don’t need the state of Texas’ business, but other red states are adopting similar laws, and at some point it does start to cost them real money. When that happens, the lawyers usually get involved. I don’t know what happens from there, but I won’t be surprised if that’s where it goes. The Chron has more.

Protecting those poor, discriminated against gun manufacturers

Jul 23rd, 2022
by Charles Kuffner.
1 comment

I have three things to say about this.

Texas lawmakers, frustrated with what they viewed as liberal political activism from some of the titans of American industry, banned banks last year from doing business with Texas municipalities unless they could certify to the state attorney general they don’t “discriminate” against the gun industry.

The Legislative Budget Board, which estimates the costs of proposed legislation, predicted no significant financial impact on the state or on local governments.

But in the first eight months since the law was enacted, local governments seeking to finance building projects through bonds — for instance school districts trying to build new football stadiums, cities looking to upgrade their airports — have already paid between $300 million and $500 million more in increased interest payments, according to a study from a University of Pennsylvania professor and a Federal Reserve economist based in Washington.

And the paper estimates the annual cost in higher interest payments will be around $445 million per year going forward, if nothing changes.

“There’s a cost to making this political statement. We can say that cost for Texas is between $300 million and $500 million dollars,” said Daniel Garrett, the professor.

The bill, SB19, was aimed at large banks that reconsidered their investment in the gun industry in the wake of the 2018 Stoneman Douglas High School shooting that left 17 dead. For instance, Bank of America refuses to fund companies that build military style rifles for civilian use. JP Morgan Chase won’t fund companies that sell guns to people under the age of 21. And Citigroup won’t fund those that don’t background-check all buyers.

Citigroup announced its updated policy on guns in a blog post one month after the Parkland massacre, with an executive vice president calling for “our grief to turn into action” and for the U.S. to “adopt common-sense measures that would help prevent firearms from getting into the wrong hands.”

The gun industry and its allies say the policies amounted to attempts from the banks to coerce customers to endorse their politics.

“Texas’ law has become probably the blueprint for other states considering similar legislation, and similar legislation has been introduced in congress,” said Mark Oliva, spokesman for the National Shooting Sports Foundation, which lobbied for SB19. Other states such as Georgia, Wyoming and Oklahoma have passed similar laws, Oliva said, and there are more to come.

[…]

The paper analyzed interest rates before and after five banks backed away from the state last fall — JP Morgan, Citi, Bank of America, Fidelity and Goldman Sachs — to estimate the effect of their departure. Those banks have traditionally financed about 15 percent of the total number of loans taken out by Texas governments, but the average size of those projects is about $120 million.

As a result, the effects are particularly concentrated among large school districts and cities that frequently borrow money to finance those larger projects, Garrett said.

“The way it would manifest is when they reach out to their banker to see how much it’s going to cost to, say, refinance the bonds they borrowed back in 2019, or something. Their banker is gonna say, Hey, I’m not in Texas anymore. And then when they call someone else, they’re gonna get a bid that looks really high,” Garrett said.

1. My first instinct was to be outraged at this story, but on reflection I see it as a sign of decline for the gun industry. They’ve entered a place similar to where the tobacco industry was in the 80s, which is to say where mainstream public opinion was turning decisively against them. And much like the tobacco industry at that time, the gun industry needs to be propped up by its hardcore political supporters, to try to slow down that decline. This is a long-term decline – it took 20-30 years for cigarettes to basically disappear from most people’s lives, and the gun industry has some powerful friends and deep pockets, with a lot of people still willing to buy their products – but I believe it’s there. When staid and status quo-oriented firms like those five banks would rather not do business with you, you’re on the way out whether you like it or not.

2. That said, in the short term things can get worse in various ways, and the price that cities and school districts will have to pay for this fit of pique is one of those ways. While rural and Republican areas will also feel some of this pain, the fact that it is cities and school districts on the sharp end of the stick here is very much a feature and not a bug as far as the law’s authors are concerned. They will feel no pressure to do anything about it.

3. Man, the list of laws we’re going to have to repeal or completely rewrite in order to undo the damage of 20+ years of Republican dominance in this state just keeps on getting longer. I hope someone better organized than I am is keeping track of this.

Meet the new special session

Aug 7th, 2021
by Charles Kuffner.
3 comments

Same as the old special session, at least at first.

It appears likely that not enough Democrats will show up for the Texas House to conduct business when a second special legislative session convenes Saturday.

Some of the more than 50 Democratic representatives who fled Texas to foil the first special session began trickling out of their Washington, D.C., hotel and heading home Friday. But 27 members have committed to staying in the nation’s capital. At the same time, Democrats were working to confirm that at least 50 members will pledge to not return to the House floor on Saturday even if they are back in Texas.

If that happens, the chamber would again be deprived of a quorum to conduct business for at least a few days. And it could set up a showdown over whether House Speaker Dade Phelan has the authority, and political will, to compel Democratic representatives in Texas to show up at the Capitol.

The ongoing absences would further delay any consideration of the 17-item agenda Gov. Greg Abbott has set for the 30-day special session, including a contentious voting bill, which Republicans have vowed to pass into law, that motivated Democrats to leave the state last month. Two-thirds of the 150 member chamber must be present to conduct business. One seat is currently vacant.

“If you’re looking for us to telegraph exactly what we’re going to do over the next couple days, we’re not going to do that at this time,” state Rep. Chris Turner, the Democratic caucus chair, said earlier in the day. “The governor would love us to do that, but we’re not going to.”

The House Democratic caucus would not confirm any details about its next move as of Friday evening after marking the last day of the first special session that was derailed after 57 members broke quorum.

The number of Democrats actually in Washington had appeared to dwindle to about 40 members over the last few days. But with 27 Democrats planning to stay behind, even some of the Democrats seen departing from their hotel in Washington on Friday indicated the House floor may not be their destination.

[…]

“If Congress is in session, we’re in session,” state Rep. Trey Martinez Fischer, D-San Antonio, said earlier in the day. “Our job is here, and we will have a significant number of members staying here and waiting day by day, engaging day by day, finishing the fight.”

Well, we’ll see. We ought to know early on what the head count is. In one of the earlier stories I saw, it was noted that the Republicans are also not quite at full strength, as some are on vacation or otherwise not available – Jake Ellzey is now in Congress, so right there they’re down one – and that means they need that many more Dems to show up to get to 100. We don’t know if Speaker Dade Phelan is going to follow through on the threat to use DPS to hunt down wayward Dems in the state and drag them to Austin. We may eventually get a quorum, but it won’t happen right away.

Later on Friday, this happened.

Twenty-two Texas House Democrats sued some of the state’s top Republican leaders in federal court in Austin late Friday, alleging that GOP officials’ efforts to bring them home for a special legislative session infringed on their constitutional rights to free speech and to petition the government for redress of grievances.

The lawsuit was filed on the final day of the first special session called by Gov. Greg Abbott — and on the eve of a second specially called legislative session — and names as defendants Abbott, House Speaker Dade Phelan and State Rep. James White.

[…]

It’s unclear why White was listed as a defendant. White said Friday night he was not aware he’d been sued or why he was named as a defendant. The lawsuit also did not use Phelan’s legal name, which is Matthew McDade Phelan.

Abbott and Phelan did not immediately have a statement on the lawsuit.

The Democrats’ attorney, Craig Anthony Washington, a former Democratic lawmaker, did not respond to a request for comment. Washington is practicing law under a probationally suspended license, according to the State Bar of Texas.

The lawsuit alleges that some Democrats are being targeted because of their race and skin color, but then provides no evidence.

It also claims the three Republican lawmakers acted together under the “color of law” to cause the harm alleged in the suit, but then points no specific harmful actions other than “public statements.” The lawsuit also says some individual plaintiffs experienced “retaliatory attacks, threats and attempts at coercion relating to the exercise of their First Amendment rights” but again does not provide specifics.

The plaintiffs listed in the case are state Reps. Senfronia Thompson, Trey Martinez Fischer, Gene Wu, Vikki Goodwin, Ron Reynolds, Eddie Rodriguez, Jon Rosenthal, Jasmine Crockett, Mary Ann Perez, Alma Allen, Christina Morales, Nicole Collier, Celia Israel, Ana-Maria Ramos, Barbara Gervin-Hawkins, Terry Meza, Donna Howard, Jarvis Johnson, Ray Lopez, Shawn Thierry, Elizabeth Campos and Gina Hinojosa.

The lawsuit alleges that the three Republican lawmakers have attempted “by public statements and otherwise, to attempt to deny, coerce, threaten, intimidate, and prevent” the Democrats and their constituents from voting in all elections, petitioning the government for redress of grievances, speaking publicly about their constitutional rights, exercising their right of association and their right to not being arrested without probable cause. The Democrats allege that in acting together, the defendants engaged in a conspiracy to deprive them of their constitutional rights.

Because of the defendant’s actions, the complaint alleges, the plaintiffs have been “deprived of liberty for substantial periods of time, suffered much anxiety and distress over separation from their families, and much discomfort and embarrassment.” They also have suffered damages to their reputations and have had to spend time traveling to Washington to lobby Congress to pass laws that would protect voting rights.

That sounds pretty unlikely to me, even without the issues noted for attorney Craig Washington. You can read a copy of the lawsuit and come to your own conclusions, but this seems like an extreme longshot. And as to why Rep. White was named as a defendant, my guess is it stemmed from his request for an AG opinion suggesting that the quorum-breaking Dems had “vacated” their seats. Even if you could count on Ken Paxton’s office to give an honest answer, that seems like a big escalation of the stakes.

And in other desperation moves, there’s this.

Texas Republican leaders said Friday they were extending “an additional month of funding” for the Legislature as a deadline to reinstate those dollars vetoed by Gov. Greg Abbott nears, which could cost some 2,100 state workers their salaries and benefits.

The announcement Friday by Abbott, Lt. Gov. Dan Patrick and House Speaker Dade Phelan comes a day ahead of the beginning of a second special session, where it’s still unknown whether enough state lawmakers in the lower chamber will convene in time to restore the funding long term.

[…]

Citing an emergency, the Legislative Budget Board requested the transfer of funds, according to a memo dated Aug. 6 from Abbott responding to the LBB’s proposal. Funds amounting to at least $12.6 million will be transferred from the Texas Department of Criminal Justice to the Senate, the House, and legislative agencies such as the LBB, the Legislative Council and the Legislative Reference Library.

Abbott referenced his veto in that memo, reiterating his position that “funding should not be provided for those who quit their jobs early and leave the state with unfinished business, exposing taxpayers to higher costs for additional legislative sessions.”

“However, in order to ensure the Legislature is fully resourced to do the work of the next special session,” he wrote, “I recognize that the partial restoration the Legislative Budget Board had proposed is necessary.”

The extension announced Friday means that those legislative employees and legislative agencies will have funding intact through Sept. 30 instead of Sept. 1, when the next two-year state budget takes effect.

I thought the LBB could only meet when the Lege was not in session, which is certainly was on Friday. If this is all it took, then why not act sooner? And why not free up more money? This has the feel of something half-baked, though I suppose if no one challenges it in court there’s nothing to stop it. And hey, even if someone does challenge it in court, the Supreme Court will just sit on it until the matter becomes moot anyway, so what difference does it make? We’re off to a roaring start here, that’s for sure.

Special session 2.0 coming right up

Aug 6th, 2021
by Charles Kuffner.
1 comment

Here we go again.

Gov. Greg Abbott announced Thursday that the second special legislative session will begin at noon Saturday — and with an expanded agenda.

The 17-item agenda still includes well-known Abbott priorities like the election bill that caused House Democrats to flee the state at the start of the first special session, which ends Friday. But it also features six additions, including the spending of federal COVID-19 relief funds and potentially changing the legislative rules regarding quorums.

[…]

The start of the second special session is approaching amid continued uncertainty over the fate of paychecks for over 2,100 legislative staffers. Abbott vetoed their pay after House Democrats staged a walkout over the elections bill in the regular session that ended in May, and the funding was set to start Sept. 1.

The reinstatement of that funding remains on the agenda for the second special session.

The new items on the call also include legislation to protect Texans from radioactive waste and to change the timeline for the 2022 primary elections. The latter item is likely a nod to the fact that the primaries will have to be pushed back due to delays in the redistricting process.

The item on changing the rules around quorums comes after Lt. Gov. Dan Patrick called on Abbott to add something like it to the agenda for the second special session. The lieutenant governor wants to lower the threshold for each chamber to conduct business from two-thirds of members to a simple majority. That would require a state constitutional amendment and thus a two-thirds vote in each chamber.

As for education during the pandemic, Abbott is asking lawmakers to pass legislation that “in-person learning is available for any student whose parent wants it.” He also wants legislation that ensures that masks and vaccinations are not mandatory in schools, which he has already ordered through executive action.

Not anything here that would make it more enticing for the Dems to come back, that’s for sure. The item about changing quorum rules is cute, but if it needs a 2/3 vote to pass as a constitutional amendment, I would not expect it to go anywhere, for all the obvious reasons.

What will the Dems do? They haven’t said yet, and as before I don’t know. Looking back, they didn’t get a voting rights bill passed, not that anyone could have expected that, though it’s fair to say there’s a lot more pressure being applied on President Biden and the Senate Dems to make that happen. Perhaps the new “Right to Vote” bill by Sen. Ossoff has a chance – it wouldn’t address everything – redistricting reform would be a key omission – but it would help. As expected, between the infrastructure bill and the January 6 committee hearing and our national fruit fly-level attention span, they’re getting maybe one percent of the press coverage they got when they first left, but again, I don’t know what could have changed that. They successfully killed off the first session, and for the most part the Republicans have been able to do little but sputter and post the occasional juvenile photo on Instagram, so I’d call this a draw. A draw that still inevitably ends with them back in Texas and the odious bills they have been able to stop so far getting passed anyway. Again, it was always going to be this way, barring a miracle from Sens. Manchin and Sinema.

Two other points: One is that redistricting data is soon to arrive.

Ideally for the Republicans, they breeze through this session, finish up all the business they want to get done, then get a short break before embarking on this much more involved task. They want to get to this quickly to foreclose even the minimal possibility of a federal voting rights bill that includes preclearance and redistricting reform being enacted. The ideal scenario for Dems is less clear to me, but running more time off the clock so that the original special session items have to take a back seat to this is probably better than what I just laid out as being best for the GOP. In short, the best outcome is still bad unless there’s some federal action to mitigate the damage.

As for restoring legislative funding, the Quorum Report posted an item just before the new special session was announced that suggested the possibility of the Legislative Budget Board moving some money around to fix that problem. Unfortunately, the LBB can only meet when the Lege is not in session – the QR report speculated that they would have this weekend to do that, with Special Session 2.0 being called for Tuesday – so that is off the table. That means that either the Dems show up and the Lege fixes it, the Supreme Court rules that Abbott’s veto was unconstitutional (AS THEY SHOULD ANYWAY), Abbott himself uses his emergency powers to plug the hold he dug, or the funding runs out and who knows what happens to redistricting. You know that sequence from “Animal House” where the Deltas have sabotaged the marching band and the parade they were in has devolved into chaos? That’s the energy I’m getting from all this now. I’ll leave it to you to decide who Bluto and Niedermeyer are in this analogy. The Chron has more.

UPDATE: More here from the Trib, reiterating that House Dems have not committed to a specific action just yet.

The LBB report on HISD

Nov 13th, 2019
by Charles Kuffner.
3 comments

There’s less here than you might think.

Houston ISD’s inefficient, poorly organized and unwieldy bureaucracy is shortchanging the district’s 209,000 students and city taxpayers, requiring structural changes across virtually all corners of the district, the Texas Legislative Budget Board said in a blistering report issued Friday.

A 325-page performance review of HISD by the LBB, a permanent joint committee of the Texas Legislature, identified extensive operational shortcomings and issued 94 recommendations aimed at improving operations in the state’s largest public school district.

The report took particular aim at the HISD’s prized decentralized power structure, finding the model delivers inconsistent resources to students and poor monitoring of spending, while also piling on the much-maligned school board for eroding public trust and district morale.

The board also proposed several potentially controversial measures, including the formation of a “campus closure and boundary advisory committee” and suggested the district could save $26 million by shuttering as many as 40 underutilized schools. The report also called for various consolidations that could cost hundreds of jobs.

LBB officials said their recommendations could save the district $237 million over the next five years and streamline the delivery of academic services. HISD leaders are not legally required to follow any of the board’s recommendations.

In a statement Friday, the HISD administration said it is evaluating the report.

“We will seek to implement new practices and continue proven methods that maximize student achievement and promote productive and efficient operations,” the statement read.

[…]

The LBB issued several politically palatable recommendations that some community leaders, educators and board members long have sought. They include reducing administrative positions, staffing more campuses with counselors and crafting stronger budget practices.

Most recommendations involve anodyne changes to oversight and structure of the district’s many behind-the-scenes departments, including technology, contract management and transportation.

Other recommendations likely would face immediate backlash, including the suggestion that the district consider shuttering underutilized campuses. School closures have proven particularly fraught in Houston, as lower-enrollment campuses typically serve lower-income children of color.

One of the bigger shifts recommended by the LBB involves centralizing more district operations to ensure consistent, uniform practices. Currently, HISD delegates extensive autonomy over campus-level finances, staffing and programming to principals, a rarity among the nation’s largest public school districts.

Supporters of the decentralized system argue campus leaders are best positioned to know their students’ needs and craft innovative plans for raising student achievement. Opponents claim the setup leads to inconsistent student outcomes, particularly for children in the city’s most impoverished neighborhoods. The LBB largely sided with critics of the structure.

“Independent campus decisions result in a student experience that differs across the district, and students may not be served consistently,” the report’s authors wrote.

Jodi Moon, who studied HISD’s decentralized model as a researcher with Rice University’s Houston Education Research Consortium, said the district’s system creates “a greater continuum of successes and failures” between schools. She questioned, though, whether a district as large as HISD would see significantly different results under a centralized setup, noting that principal experience, school choice participation and myriad other factors contribute to campus-level outcomes.

“I just find it hard to believe that you’re going to find any of the larger, urban districts where there’s a lot of uniformity,” Moon said.

Please note first of all that this was a report the HISD board asked for. The LBB doesn’t do this sort of thing on their own, they have to be invited in. This report is the result of the Board seeking ways to improve.

Anyone who has paid any attention to HISD in recent years knows that there have been multiple efforts to close “underutilized” schools, and they have all foundered in the face of fierce pushback from parents, alumni, and other stakeholders. Closing smaller schools can look good on paper, but it has real effects on people’s lives and on the neighborhoods where those schools are. The Board has consistently responded to the voice of the people they were elected to represent. Whether the appointed board of managers that the TEA is about to install will take a crack at this, since they don’t have any voters to answer to, is a big and looming question as we enter the takeover era.

The centralization issue is one where I think you could very reasonably argue that any savings that might be achieved is more than offset by giving principals, who know their schools and students best, the autonomy to respond to their own individual needs. It’s far from clear to me that emulating this particular practice of HISD’s peer institutions – New York, LA, Chicago, Philadelphia, etc – is a desirable goal. Putting it another way, do you want to make the bureaucracy that much bigger? I get what the LBB is talking about, but this isn’t a simple matter, and it’s far from clear to me that the savings involved is real.

Anyway. There are good ideas in this report, and there will be opportunities to implement them. It all starts with that appointed board, which will be able to operate in a different manner than the elected board. How much of a good thing that is very much remains to be seen.

Dan Patrick’s budget destruction

Nov 4th, 2019
by Charles Kuffner.
Comments are off for this post

It’s not what you think it is, but it’s still bad.

Tucked away in a quiet corner of Texas state government, an arcane team of 100 or so budget nerds has led a private, if stressful, life — running financial models, ensuring state government and its private contractors aren’t spending beyond their means, and keeping lawmakers informed about each line item in the state’s 1,000-page, $250 billion two-year budget.

But these days, interviews with current and former budget agency staff indicate the emptying halls of their downtown Austin office feel more like the setting of an Agatha Christie novel.

The Texas Legislative Budget Board, created in 1949 to support full-time experts who track fiscal issues for the state’s part-time Legislature, provides the analysis on which the state bases its budget calculations — for example, how much money it costs to pay public school teachers or to fund hospital beds for people in mental health crisis.

It’s up to state lawmakers to set spending priorities, but legislators say their ability to make funding decisions is only as good as the information they receive from the experts.

“The LBB provided invaluable, unbiased information, which is critical to the development of the state budget,” former state Rep. John Zerwas, a Richmond Republican who chaired the House Appropriations Committee, said in a statement.

The quality of that information may be in jeopardy; the agency is moldering as a quiet war erupts between its two masters.

State law names the lieutenant governor and House speaker as co-chairs of the 10-member board, which is supposed to jointly appoint an executive director to lead the agency. Last year, for the first time in nearly 70 years, that failed to happen; by Halloween, the agency will have been headless for a year.

Veteran employees have departed in droves with no one to replace them, leaving behind a trail of vacant offices and a dearth of institutional knowledge. Staff size has fallen 26% since 2015 — from 146 to 108 employees — and four of the agency’s five executive leadership positions will soon be unfilled. The agency’s lone remaining executive told a tearful staff last week that he, too, intends to resign.

Now, with House Speaker Dennis Bonnen announcing he will not run for reelection next year amid a scandal that has shaken the entire lower chamber, the board finds itself in its most precarious position yet.

Interviews with more than a dozen budget agency staff, Capitol staff and state lawmakers — who requested anonymity to discuss private board deliberations — indicate that the Senate’s presiding officer, Lt. Gov. Dan Patrick, has wielded a kind of veto power over the board to keep the agency undermanned and under fire.

They contend that his motive is to remake the agency to give the Senate more direct control over the number-crunchers; the current group of nonpartisan bureaucrats has produced analyses that at times conflicted with the lieutenant governor’s political messaging.

Basically, this is an attack on expertise and data. Dan Patrick doesn’t want accurate and objective facts about revenue and fiscal notes and what have you. They don’t serve his purposes. He wants minions who will tell him what he wants to hear so he can use it as a cudgel. If he can starve the LBB to death, maybe the end result (as the story suggests) would be two separate budget agencies, one for the House and one for the Senate, which would be under the control of the Lite Governor. Patrick is on the leading edge here – Senate Finance Chair Jane Nelson had similarly nice things to say about the LBB as outgoing House Appropriations Chair John Zerwas did – but where Dan Patrick goes, other Republicans tend to follow. The longer he gets to press this attack, the greater the odds he’ll eventually get what he wants. Do I need to add that this is yet another reason why we need a Democratic House and a Democratic Speaker in 2021?

We’re going to vote on making an income tax double secret illegal

May 23rd, 2019
by Charles Kuffner.
9 comments

It’s definitely time for sine die.

Sen. Pat Fallon

Texas voters will decide in November if they want to bar the imposition of an income tax, following approval of the constitutional amendment by the state Senate on Monday.

The Texas House had approved House Joint Resolution 38, which prohibits the imposition of an individual income tax, earlier this month.

The seemingly anodyne proposal ran into pushback Monday from some Senate Democrats who suggested the bill could cut business taxes, a major source of state money.

There appears to be no threat of an income tax currently — no such bill appears to have been filed, let alone have reached the floor of either chamber, where it would be political kryptonite. And a 1993 constitutional amendment already holds that Texas can adopt a state income tax only if voters approve and that the money would go for the “support of education.”

But Senate Democrats on Monday sparred with Republicans over a seemingly arcane bit of language that could carry big budget implications.

The resolution says that the Legislature may not impose a net income tax on “individuals.”

Democrats, pointing to an analysis by the state’s nonpartisan Legislative Budget Board, said that could be interpreted by courts to apply to businesses, especially because the measure’s language uses that term rather than “natural persons,” which is often used in statutes.

The business levy, long a target of Republicans eager to shave taxes, brings in about $8 billion per biennium, helping to fund public schools.

“The term ‘individuals’ is not defined and could be interpreted to include entities that are currently subject to the state’s franchise tax,” the Legislative Budget Board analysis reads. “To the extent the joint resolution might exempt some entities from the franchise tax, there could be a loss to state revenue.”

[…]

Earlier during the debate, [author Sen. Pat] Fallon said the constitutional amendment would firm up the state’s opposition to income tax.

“I’m always in fear of an income tax,” he said. “Every day I wake up, the thought of Texas having an income tax makes me shudder. Physically shudder, not metaphorically.”

Seriously? Mere words cannot adequately express my reaction to Sen. Fallon’s delicate sensibilities, so mark me down as being somewhere between here and here. I do hope you sleep better tonight, Senator, and if not I recommend warm milk and a bedtime story, preferably one with a happy ending. As for my reaction, here it is:

“Why would pesky LBB fiscal facts be any help when discussing a major source of state revenue for schools?” Eva DeLuna Castro, a budget analyst with the left-leaning Center for Public Policy Priorities, wrote on Twitter. “I mean, it’s not as if major business conglomerates have highly paid tax lawyers waiting in the wings to explain why they are ‘individuals’ too.”

What could possibly go wrong? The Trib and the DMN have more.

Cable franchise fees

May 11th, 2019
by Charles Kuffner.
2 comments

Hey, remember how the city of Houston had to lay off a bunch of workers to to close a $179 million budget deficit? Well, there’s more where that came from.

The Texas House on Thursday approved legislation that would limit fees telecommunication and cable companies pay cities to use their rights of way, likely opening up a new spending gap of at least $12 million two days after Mayor Sylvester Turner laid out his proposed budget for the upcoming fiscal year.

Senate Bill 1152, authored by state Sen. Kelly Hancock, R-North Richland Hills, passed the House on a 92-50 vote on the third and final reading Thursday. The legislation, which had received Senate approval early last month, heads back to the upper chamber, where lawmakers will decide whether to approve the House version.

The measure would eliminate what cable companies and some lawmakers say is an outdated double tax levied on companies that transmit cable and phone services over the same lines. The bill would eliminate the lesser of the two charges, starting next January.

Opponents say the bill amounts to a gift for large telecom firms, which would not be required to pass the savings on to consumers because the state is barred from regulating cable rates. Turner had urged lawmakers to oppose the measure, saying it would deliver a financial hit to Houston.

Those who back the bill say companies still would pay millions for the remaining charge, arguing that cities would lose only a small portion of their revenue. The House companion bill’s author, state Rep. Dade Phelan, noted Wednesday that only one other state — Oregon — still charges both fees.

Turner blasted lawmakers in a statement Thursday, accusing them of attempting to “unconstitutionally take the value of Houston’s right-of-way” through the bill. He also lauded state Rep. Harold Dutton, D-Houston, for attempting to stop the legislation through a procedural maneuver.

[…]

A Legislative Budget Board analysis determined that Houston would take in $17.1 million to $27.5 million less revenue under the bill. Estimates for other cities include $9.2 million in Dallas, $7.9 million in San Antonio and $6.3 million in Austin.

An updated estimate provided by the city Thursday projected it would receive $12.6 million to $24.4 million less revenue during the 2020 fiscal year, which begins July 1.

It sure has been a great session for cities, hasn’t it? Here’s that earlier story, which I confess I never got around to blogging about. You know who else has had nothing to say about it? Bill King and Tony Buzbee. Way to be looking out for the city’s financial interests, y’all.

As for the fee itself, I can see the argument for getting rid of it, but let’s be clear about two things. One, if you believe this will result in a reduction in your cable or internet bill, I have some oceanfront property in Lubbock you might be interested in. And two, given the financial hit this will impose on cities, would it have killed anyone to phase this in after a year or two, so cities – all of which are required to have balanced budgets – could have had some time to adjust? What exactly was the rush here? Look at the roll call vote, and if you’re in one of those cities – especially Houston – and your Rep supported this, please call their office and ask them that question.

Where goes the tax swap plan from here?

May 7th, 2019
by Charles Kuffner.
2 comments

We start with the double down.

Showing their usual united front, the state’s “Big Three” political leaders on Friday tried to remake their case for why the Texas Legislature should deliver on long-term, ongoing property tax relief before the session wraps up this month.

They also expressed confidence that they would get the work done — even as House Democrats said they appeared to have the votes to block the lower chamber’s current main vehicle to provide the biggest property tax cut.

“Our goal is really simple: We’re going beyond the point of hoping to reform property taxes to the point where we’re hoping to to deliver true property tax relief through property tax reductions,” Gov. Greg Abbott said at a Capitol press conference Friday afternoon, flanked by Lt. Gov. Dan Patrick and House Speaker Dennis Bonnen, the Republican leaders of the Senate and House, respectively.

The three reaffirmed their commitment to a proposal that would increase the state sales tax one percentage point, raising about $5 billion per year to lower school district tax rates — which many have seen as a long shot from the start, with lawmakers from both parties skeptical about a sales tax hike.

The proposal has been moving through the Capitol so far in the form of a joint resolution, which needs two-thirds of each chamber to pass — at least 100 votes to pass the House and 21 votes to pass the Senate. If it passed both chambers, the proposal would then land on the November ballot for voters to decide, which leaders in support of the resolution have framed as a more democratic process.

House Joint Resolution 3 — which would ask voters to approve the sales tax swap for property tax relief — and its enabling legislation, House Bill 4621, passed out of the House Ways and Means Committee on Wednesday. The tax swap is expected to head to the lower chamber for a debate Tuesday.

The original version of the bill would have used 20% of the increased sales tax revenue to fund schools and 80% for property tax relief. That changed earlier this week, when state Rep. Dan Huberty, a Houston Republican who authored the legislation, tweaked the proposal to instead funnel all new sales tax dollars into property tax relief.

The move seemed to be an effort to bring on some of the Legislature’s more conservative members who had signaled they could be on board with a proposal if the new revenue was entirely dedicated to property tax relief. But it also seemed to solidify Democrats’ opposition to it, especially since the sales tax is regressive, meaning it takes a higher percentage of income from poorer people than richer people. A sales tax swap would raise taxes overall for Texas households earning less than $100,000 and would bring tax relief for households above $100,000.

State Rep. Chris Turner, who chairs his House Democratic Caucus, told The Texas Tribune that there are more than 60 “hard no” votes from Democrats against the proposal. If that opposition sticks for Tuesday’s expected vote on House Joint Resolution 3, its chances of passing the lower chamber would seem unlikely.

Patrick said he hoped both chambers would be able to get the needed two-thirds approval for the joint resolution from each chamber, but indicated he was open to getting it passed in different ways, exclaiming, “If it doesn’t, we’ll make it happen anyway!”

Sure, Dan. If you want to know why some of us are so skeptical of this, while plutocrats like Dan Patrick love it, consider this.

The state-run Legislative Budget Board estimated that the top 40% of wealthiest Texas households would see enough property tax savings to offset their increased sales tax payments in fiscal 2021. The bottom 60% of Texas households would pay more in taxes overall.

Households that make less than $99,619 would pay a total of $171 million more in taxes under the tax swap. Households that make more than that would pay a total of $424 million less in taxes, according to the analysis.

The disparity is because poor Texans tend to spend a greater portion of their money on taxable items.

The bottom fifth of Texas household incomes — those with incomes less than $37,630 — spend about 7.3% of their income on state sales tax while households in the top fifth of incomes — those with incomes of $149,453 and more — spend 1.6% of their income on state sales tax, according to the Texas Comptroller of Public Accounts.

Of course, we’ve known this forever, but the same bad idea crops up every few years and gets beaten down by the club of the same evidence. So we go through the motions. You can catch up on reading about this at various locations – the DMN, the Chron, Better Texas Blog with a handy chart – but be sure to read the analyses of the politics of this by Ross Ramsey and Scott Braddock. The reason the Big Three are putting on such a show of bravado is because they’re holding an eight-high hand in a game of five card stud, and they know it. And as Braddock notes on Twitter, so do members of the Lege.

Which may be why in the end, we got this.

The Texas Senate on Monday approved a bill to massively overhaul public school finance, but did so while backing away from a proposal to use an increased sales tax to lower school district property taxes.

After an hours-long debate on dozens of proposed changes, the Senate voted 26-2 on House Bill 3, which under the version passed by the upper chamber would increase student funding, give teachers and librarians a $5,000 pay raise, fund full-day pre-K for low-income students, and lower tax bills.

The House and Senate will have to negotiate their significant differences over the bill — including how to offer teacher pay raises and property tax relief — in a conference committee before it can be signed into law.

“When you’re doing something as complex as this, there’s going to be something you don’t like,” said state Sen. Larry Taylor, R-Friendswood, the bill’s author, anticipating tension throughout the day’s debate.

[…]

Taylor stripped the [sales tax] increase from HB 3 and offloaded some of the more expensive property tax relief provisions in the bill. The bill no longer includes an expansion in the homestead exemption from school district taxes. It lowers property tax rates by 10 cents per $100 valuation, instead of 15 cents, saving the owner of a $250,000 home $250 instead of $375.

The legislation would still limit the growth in school districts’ revenue due to rising property values, a proposal pitched before session began by the governor. School districts that see their property values significantly increase would have their tax rates automatically reduced to keep tax revenue growth in line. That would now start next year, instead of in 2023.

“The bill before us today has no linkage to the sales tax and is not contingent upon a sales tax,” Taylor said.

Instead, the bill creates a separate “Tax Reduction and Excellence in Education Fund” to fund school district tax relief. State Sen. Kirk Watson, D-Austin, said a working group came up with a plan to get $3 billion from several sources, including the severance tax on oil and gas extraction and an online sales tax.

“This does not increase any taxes of any kind,” he said.

So does this mean that the tax swap is dead? Well…

In for a penny, in for a million pounds, I guess. Have fun taking that vote, Republicans.

Failing upward

Apr 8th, 2019
by Charles Kuffner.
Comments are off for this post

Must be nice.

Still the only voter ID anyone should need

The day after David Whitley took office as Texas secretary of state on Dec. 17, he received a 49 percent pay raise thanks to his friend and political patron, Gov. Greg Abbott.

In a Dec. 18 letter to the Legislative Budget Board, the governor’s chief of staff said Abbott was using his authority to immediately raise Whitley’s annual salary to $197,415.

That’s almost $64,500 more than the $132,924 paid to Rolando Pablos, the Abbott appointee who was secretary of state before Whitley.

The raise, revealed in a footnote in a Legislative Budget Board document as part of the current budget process, meant Whitley still took a pay cut from his $205,000 salary as the governor’s deputy chief of staff — although the footnote said the letter was sent Dec. 8 instead of Dec. 18.

Whitley began working for Abbott in 2004 and spent almost four years as the then-attorney general’s travel aide, driving Abbott across Texas and helping him move from automobile to wheelchair. Abbott and his wife, Cecilia, grew to consider Whitley as almost part of their family, according to a recent Dallas Morning News profile of the secretary of state.

A priori, I don’t have an issue with bumping up the SOS salary so as to not give a guy a big pay cut. The problem is with the sheer incompetence. I mean, in a way I’m glad Whitley has been so bad at his job, because that has prevented him from doing any real damage so far. But the SOS has responsibilities beyond voter registrations, and I don’t see any reason to believe David Whitley will be good at any of them, either.

I’ll say this for Whitley, he’s staying positive in the face of all that pushback.

In his first public comments on the matter, acting Texas Secretary of State David Whitley last week pledged to cooperate with Congress, which has opened an investigation into his error-laden voter roll review that has Democrats howling voter suppression and has threatened his confirmation as the state’s top election officer. Whitley, on a visit to a school in the Rio Grande Valley, also expressed his confidence that he will ultimately be confirmed by the Texas Senate despite opposition by every Democrat in the chamber.

“I’m not worried about that. Those senators are my friends,” Whitley told reporters after speaking to several hundred students at Edinburg North High School about the importance of voting. Whitley added that he has worked with each state senator over the last four years during his previous job overseeing the governor’s appointments across the state. But now, “all I can do is do the best job I can as secretary of state.”

While fulfilling his duties as the state’s top elections official, Whitley said he will also “fully comply” with the U.S. House Oversight and Reform Committee investigation that was announced a day earlier. “We will fully comply. We have absolutely nothing to hide,” Whitley said. “We’ll read it thoroughly and make sure we turn everything over as required by law. Absolutely.”

See here for the background. I have no idea why Whitley thinks Senate Dems will change their minds about him, but hey, keep hope alive. In the meantime, those Congressional Dems have set a date for those documents they want.

“We want to get to the bottom of what happened in Texas,” Rep. Jamie Raskin, D-Md., chairman of the Oversight Subcommittee on Civil Rights and Civil Liberties, said in an interview.

The powerful committee, under Democratic control for the first time since 2011, gave acting Secretary of State David Whitley until April 11 to produce a host of documents related to his assertion in January that nearly 100,000 registered voters in Texas may not be citizens.

[…]

Raskin stopped short of threatening a subpoena if the many documents requested – including emails with Gov. Greg Abbott and Trump administration officials – aren’t turned over.

“We have the authority to order these documents to be produced and we have subpoena power if we need to use it. We’re very serious about this,” he said.

I have a hard time believing that Greg Abbott and Ken Paxton will just blithely hand over all their files to a bunch of Democrats. It’s just not consistent with everything we know about them. I think they will hand over as little as they think they can get away with, and will feel free to redact and claim executive privilege as it suits them. If this all goes off without subpoenas or a court fight, I will be surprised. We’ll know soon enough.

Rideshare for Medicaid?

Mar 25th, 2019
by Charles Kuffner.
1 comment

This could make sense.

Rep. Dade Phelan

Texas would soon start relying on Uber, Lyft and other ridesharing services to shuttle Medicaid patients to and from the doctor, if a new House bill becomes law.

The state is one of several eyeing rideshare as a way to save money and ensure Medicaid patients make it to their health care appointments. Each year an estimated 3.6 million people delay or forgo care due to lack of transportation, studies have found, leaving providers with cancellations and patients with potentially more costly medical issues in the future.

“It’s about better outcomes for patients, health care providers and, at the end of the day, much better outcomes for the taxpayers,” said state Rep. Dade Phelan, R-Beaumont, who authored the bill, HB1576.

The proposal, which has wide support in the Texas House, comes roughly a year after Uber and Lyft broke into the health care market with services that let hospitals order rides for patients. With some 4.3 million low-income residents on Medicaid, most of them children, the bill could dramatically expand the business in Texas.

The state already pays several transportation firms roughly $160 million a year to arrange free rides for Medicaid patients to visit the doctor, dentist and pharmacy. But the trips must be scheduled at least two days in advance, Phelan said.

His bill would let Medicaid managed care companies order a ride for patients who can’t give advanced notice, including those who come down with a sudden illness or are discharged from the hospital early. The legislation would also let the existing transportation firms use rideshare, in addition to their own vehicles.

[…]

Under the bill, Medicaid managed care companies would take on the responsibility of ordering rideshares for patients. The Texas Association of Health Plans, which represents many of the managed care companies, didn’t return a request for comment.

Hannah Mehta, with the group Protect TX Fragile Kids, said there’s no question the Medicaid transportation system needs improvement. A 2017 report by the Legislative Budget Board found the shifting of rides to private firms increased costs and client complaints, while decreasing access.

But Mehta is worried about handing the coordination of rideshares over to Medicaid managed care companies, which a recent Dallas Morning News series found have denied patients critical care. Mehta, whose son is covered by Medicaid, also questioned which patients would qualify and how that would be determined.

“Accessibility is a great goal,” she said. “But the devil’s in the details.”

Here’s HB1576, which as you can see has a slew of co-authors. The story notes that ensuring accessible rides for people with disabilities would be necessary; having the managed care companies in charge of arranging the rides, which would include the existing transportation companies as options, should handle that. The basic idea here is to make transportation to medical services for people who need it easier to arrange, which is something Uber and Lyft are good at, and presumably also to reduce costs. This at least sounds good in theory, but we’ll see how it develops.

State House mulls big increase in school funding

Jan 16th, 2019
by Charles Kuffner.
Comments are off for this post

That’s a good start.

As Texas’ Republican leadership calls for property tax cuts and a school finance overhaul, the Texas House on Monday pitched a bold proposal: Pump roughly $7 billion more state funds into public schools — but only if lawmakers can satisfactorily overhaul the school finance system to slow the growth of property taxes.

Budget documents published Monday evening show the House has offered up a whopping 17 percent increase in K-12 public education funding so long as lawmakers achieve a few lofty goals in reforming how the state pays for public schools: Reduce the state’s reliance on property taxes, decrease the need for the unpopular Robin Hood system that requires property-wealthy school districts to subsidize poorer ones, and maintain an equitable system of school finance, as required by the state Constitution.

Counting all sources of funding — including local property taxes, state revenue and federal dollars — the state’s public education budget would grow to about $70.6 billion in the two-year cycle from 2020 to 2021, according to a Legislative Budget Board summary of the proposed House budget. That’s an increase of 16.7 percent from the previous two-year budget cycle, when the state spent about $60.5 billion on public schools.

[…]

The state is forecasted to have about 8.1 percent more funding available to spend over the next, two-year budget cycle. The House’s proposed budget would also withdraw $633 million out of the state savings account, called the Economic Stabilization Fund, to pay for retired teachers’ pensions, school safety improvements and disaster-relief programs.

That account, also known as the rainy day fund, has grown to a record level thanks to booming oil and gas production. Even after the House’s proposed $633 million withdrawal, the fund’s balance is projected to reach $14.7 billion in 2021.

The budget recommends spending $109 million on school safety, which lawmakers have discussed as a priority item since the 2018 Santa Fe High School shooting near Houston left 10 dead. Included in school safety funding would be about $12 million for children’s mental health programs.

Notably, the House budget decreases state funding for health care and human services by about 3.2 percent. Education and health care make up the vast majority of state spending.

Medicaid, the federal-state insurance program for the poor and disabled, would see a decrease of $1.4 billion in state funds, for example.

There are a lot of details to be filled in here. Making this contingent on property tax reform can be dicey, as the last time the Lege “fixed” school finance by way of tax reform they screwed over the revenue stream for years to come. Cutting Medicaid payments is a serious no-go. All of this has to actually be written into the budget and then approved by both chambers and not line-item-vetoed by Abbott. Lots of things can go wrong or turn out bad. But all that said, this is a great starting point, and hugely refreshing after too many sessions of cuts.

Meanwhile, in the Senate:

Leaders of the Texas Senate are proposing giving schools $3.7 billion to provide $5,000 pay raises to all full-time classroom teachers — on the heels of a House budget proposal that includes $7 billion more for public education.

Sen. Jane Nelson, R-Flower Mound, filed Senate Bill 3 Tuesday morning, which would mandate that schools use the billions in additional funding specifically for teacher pay raises. Speaking at his inauguration Tuesday morning, Lt. Gov. Dan Patrick, who presides over the Senate, lauded the proposal as one of his main priorities this legislative session and said the funding would be permanent.

[…]

Nelson’s proposal appears to build a new formula into the school finance system that would distribute state funding to schools based on the number of full-time classroom teachers they employ, and require they use that money for raises over the previous year.

Here’s SB3. We now know that while the Senate is also proposing more money overall for school finance, it’s not as much as what the House is proposing. This is what I mean when I say there’s a long way to go to get to a finished product. Be that as it may, this too is a good start.

The case for calling a Harvey special session

Sep 5th, 2017
by Charles Kuffner.
4 comments

Rep. Gene Wu disagrees with Greg Abbott’s decision.

Rep. Gene Wu

The historic level of damage and suffering caused by Harvey requires that we tap into our state’s Rainy Day Fund. Gov. Greg Abbott’s decision to not call a special session of the Texas Legislature to access emergency funding will worsen the long-term economic effects of one of the most powerful storms to ever land on our shores.

Abbott has stated that there is no need for a special session, implicitly saying that there is no need to tap into the Economic Stabilization Fund — our state’s savings account, commonly known as the Rainy Day Fund — and that existing resources are sufficient to deal with the widespread devastation caused by Harvey.

However, if there has been one lesson that I’ve learned in my three terms in the Legislature, it’s that existing resources are never adequate in Texas. Our schools continue to be some of the worst funded in the nation, half of our rural hospitals are on the verge of closing, and we barely maintain our existing infrastructure. Texas mostly skates by on a combination of luck and creative accounting. But more importantly, what we have budgeted for are common occurrences and normal disasters. The historic level of damage from Harvey is anything but common.

[…]

The Rainy Day Fund is available right now. The Texas Legislature needs to only meet for a few days and send a bill to the governor to access the funds. There is strong bipartisan support because members understand the desperate need for a quick response. In this past legislative session, conservative members argued that the fund should not be used for “reoccurring” expenses because we needed to save it for one-time emergencies. This is that emergency.

The state could provide immediate, low-interest or no-interest small loans to help businesses rebuild quickly. The money could go to help Houston ISD to repair the more than 200 schools that suffered flood damage, including 53 with critical damage. Harris County could use the funds to expedite repairs so that courts and the jury assembly center are not closed for the next three months. Outside of the Houston area, entire cities need to be rebuilt. Simply leaving local counties and municipalities on their own to rebuild means a slower recovery — possibly causing businesses to close or leave our state, and taking jobs with them.

See here for the background. I guess I’m not fully clear on what the Legislative Budget Board can and cannot do, and what gaps there would be if only the LBB gets to act. I do think Rep. Wu is right on about appropriating money to the schools and school districts that have been heavily damaged by Harvey. I can’t think of a better use of Rainy Day Fund money than to make schools safe and available for students again. Again, if the LBB can do this, great. It will be a lot less messy that way – I mean, if you think the jackasses of the Freedom Caucus won’t try to screw with an emergency appropriations bill for school repairs, I have to ask what Legislature you’ve been watching – but if the LBB can’t do that, then a special session it needs to be.

No special session needed to address Harvey flooding

Sep 2nd, 2017
by Charles Kuffner.
2 comments

So says Greg Abbott.

Gov. Greg Abbott said Friday another special session of the Texas Legislature won’t be necessary to deal with the response to Hurricane Harvey.

“We won’t need a special session for this,” Abbott told reporters, noting that the state has enough resources to “address the needs between now and the next session.”

[…]

In recent days, some members of the Texas Legislature have speculated that a special session to address the recovery seemed likely. They included state Sen. Paul Bettencourt, R-Houston, an ally of Lt. Gov. Dan Patrick and the chairman of the Senate GOP caucus.

“My personal assumption right now is that we will probably be back in Austin at work no later than January,” Bettencourt told the Houston Chronicle on Thursday.

Here’s that Chron story. A few details from it to help clarify:

“My personal assumption right now is that we will probably be back in Austin at work no later than January,” said Senate Republican Caucus Chair Paul Bettencourt, R-Houston, echoing the sentiments of other House and Senate members.

“The governor and the Legislative Budget Board have the ability to move around quite a bit of money in current appropriations, but it probably won’t be enough when all the bills come in. This storm is going to cost more than (hurricanes) Katrina and Sandy put together, and I’m thinking we’ll be breaking the $200 billion mark before this over.”

While the state would be liable for only a fraction of that amount, after insurance and federal payments come in, but whatever that (remaining) amount is will be something the Legislature will probably have to address.”

That, say other lawmakers, will most likely involve a politically charged debate over tapping the state’s so-called Rainy Day Fund — a $10 billion account officially known as the Economic Stabilization Fund — to pay for some of the storm-damage tab.

[…]

In a Thursday letter to House members, House Speaker Joe Straus said he will be issuing selective interim charges — directives for legislative recommendations — “in the near future to address these challenges” resulting from the massive destruction caused by Harvey, especially to schools.

“The House Appropriations Committee will identify state resources that can be applied toward the recovery and relief efforts being incurred today, as well as long-term investments the state can make to minimize future storms,” the San Antonio Republican said in his letter. “When the appropriate time comes, other committees will review the state’s response and delivery of services.”

The Legislative Budget Board, jointly headed by Lt. Gov. Dan Patrick and Straus, can make key decisions on reallocating state funds to meet emergency needs — up to a point, officials said. Half of its members — three senators and two House members — represent areas devastated by Harvey.

My guess is that Abbott is probably right and the LBB can cover this for now. Tapping the Rainy Day Fund, which I will point out again was created for the purpose of helping to cover budget shortfalls in times of economic downturn before being bizarrely recast as in-case-of-disaster savings by Rick Perry in 2011, may require the Lege, but that may be done in a way as to defer that action until 2019. My wonk skillz are limited in this particular area. Point being, if Congress can manage to allocate relief funding without tripping over their ideologies, there shouldn’t be that much for the state to have to pick up. We’ll see.

How the Legislature is raising your property taxes

Feb 19th, 2017
by Charles Kuffner.
Comments are off for this post

RG Ratcliffe explains it all to you:

Just how much money does the increased appraisal on property in your school district and elsewhere save the state budget writers? The projection is $1.5 billion for the next two-year budget. And where does this money go? In its initial budget, the Senate plans to use the savings on other state expenditures. The Straus starting-point budget includes giving the money to the public schools, but only if a school finance reform passes. But even if the $1.5 billion is put back into the school system, the state’s share of funding the public schools will decline to 39 percent by 2019 without a major boost in state spending.

That figure does not include the $3.8 billion that the state will recapture from property-wealthy school districts over the next two years to redistribute to low-wealth school districts. (That amount is about equal to what the state collected in oil-and-gas severance taxes in the current two-year state budget, or to the taxes collected on alcohol and tobacco combined, or about twice the tax motorists paid to fill the tanks of their cars and trucks.)

In the meantime, a program that was meant to keep school districts from losing money because of 2006 property tax cuts is set to expire. A decade ago, state legislators wanted to make certain that no school district had its budget cut because of state-mandated tax cuts, so they set up a program called Additional State Aid for Tax Reduction. Originally, they intended the program to phase out as property values rose. But faced with a budget crunch in 2011, the Legislature put an expiration date on the program: September 1, 2017. When the program expires, it will leave 175 school districts faced with having to raise taxes or cut budgets to make up for $225 million in lost state funding. For the 55,000-student Frisco school district near Dallas, that means a $30 million budget cut, while the 100-student Webb Consolidated on the border will lose $4.3 million in state funding – 66 percent of its total operating budget. Losing the state tax-relief funding is a hardship for the districts; for the state’s budget writers, it’s just another $225 million they won’t have to finance.

“Even though the state is working to say, ‘We want to provide property tax relief,’ they benefit from higher tax rates and higher tax efforts made by the locals,” Christy Rome, executive director of the Texas School Coalition, told me.

[…]

Plano ISD last year sent Governor Greg Abbott a letter explaining, how as a property-wealthy district, rising values did not increase funding for local schools even though local property owners were paying higher taxes. In the 2015-16 school year, the PISD collected $470 million from local taxpayers, sent $52.6 million to the state for redistribution, and kept $417.6 million to pay for local education. If the district did not change its tax rate, rising values would push tax collections up by almost $40 million, but the state would now take an additional $43.6 million in recapture and leave the district with $5 million less to pay for schools.

The district could cut the tax rate so that total tax collections stayed the same, but the formulas would still take an additional $25.6 million because of rising property values and leave Plano with $392 million to run its schools—a $25.6 million cut from the previous year.

The other idea was to give taxpayers some relief by adopting a $10,000 local option homestead exemption while leaving the tax rate unchanged. But even this proved problematic for PISD: the district would raise another $30.2 million in total property tax collections and boost the transfer of funds to the state by $43.6 million, all while leaving the district with $13.4 million less to pay for schools.

No matter how it was calculated, Plano taxpayers paid more, the state reaped cash that lawmakers could use to reduce how much they had to spend on public education, and the schoolchildren of Plano were left with less money to pay for their education.

Read the whole thing. And as RG says, when you hear Greg Abbott say that he wants to cut the business franchise tax even more, understand that he’s really saying he wants to put a bigger share of the burden of paying for schools on you.

Turns out a little budget flexibility is a good thing

Feb 15th, 2017
by Charles Kuffner.
1 comment

Some lessons have to be learned the hard way.

More than a year after Texas voters approved routing billions in state sales taxes to roads and bridges, some lawmakers are questioning whether the first payment of $5 billion should move forward as planned.

Texans voted in 2015 to boost funding for state’s public roadways and bridges, which have strained under the state’s growing population. Proposition 7 — loudly cheered by top Texas leaders and supported by 83 percent of voters — changed the constitution to route some taxes collected on car sales to the State Highway Fund.

But in an unusually tightfisted legislative session, some Texas lawmakers are raising the prospect of reducing that initial cash infusion to the State Highway Fund scheduled for this year to free up money for other state programs.

No one has publicly backed such a move, but key budget writers have privately discussed the option. And at a Senate Finance Committee hearing Monday, Sens. Kirk Watson of Austin and Charles Schwertner of Georgetown asked Legislative Budget Board staffers about how it might work.

It turns out that the enabling legislation for that referendum included an escape hatch, in which a two-thirds vote can be used to divert some of that $5 billion for other purposes. That probably won’t happen, though I presume it’s no less likely than a vote to tap the Rainy Day Fund to get through this session and hope that things will be better in 2019. We can certainly debate whether it should happen or not, but my reason for highlighting this is that it’s yet another example of why artificial budget constraints are so often a bad idea, whose main effect is to force budget writers to come up with creative ways around said constraints. I say it’s more honest to just let them have the flexibility to figure it out rather than be forced into certain choices, but that’s not how we do things.

Who is paying for public education

Dec 17th, 2016
by Charles Kuffner.
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The state is paying less, while local districts are paying more.

The state of Texas will spend a projected $40.5 billion on public education during the current 2016-17 budget period, and when state officials tell you they’re spending more on education, they’re telling the truth.

Not all of the truth, but some of it. Their spending increases haven’t kept up with the burgeoning number of students. In the 2017 fiscal year, the state is planning to spend $19.6 billion, according to the Legislative Budget Board, up 7.4 percent from the amount they spent 10 years earlier.

The average daily attendance in 2017, one way to measure the number of students in public schools, will reach 5.04 million, an increase of 16.8 percent over the 4.3 million in Texas classrooms 10 years earlier.

This isn’t a brainteaser: The population has been rising faster than state spending. Texas is spending more, but not keeping pace.

Local and federal spending increases have covered the difference. Public school districts are on track to spend $26.2 billion in 2017, up 44.2 percent from 2008. Federal spending rose 22.2 percent to $5.1 billion.

On a per-student basis, local spending rose $990.21 over those 10 years, state spending fell $339 and federal spending rose $45.06.

The state is spending more than it was overall, but it’s spending less per pupil.

[…]

Try this exercise. Don’t fool with the overall cost of public education in each of those 10 years — leave that number alone — but keep the state’s overall share of 44.9 percent in place the whole time. State government would have spent $18.6 billion more than it did on public education over the past 10 years. Local school districts paid 44.8 percent of the total in 2008 and are on track to carry 51.5 percent in 2017. Had the burdens remained constant, local school districts would have spent $11.6 billion less over that decade.

For the second session in a row, state Rep. Donna Howard, D-Austin, has pre-filed a proposed constitutional amendment that would require the state to keep its share of public school spending at 50 percent or higher.

Pinch yourself — that would cut $10.3 billion from what the school districts and their property taxpayers are spending in the current budget, but it would cost the state government — fueled by sales and other taxes — the same amount. That’s back-of-the-envelope math, but you get the idea.

If the state agreed, as Howard has proposed, to cover even more of the cost of public education local schools could spend less. They’d be able to lower property taxes by a sizeable, politically significant amount. Legislators would be on the hook for education support they have been foisting off on local school boards.

Wouldn’t that be something? I’m sure you can guess what its odds of passage are, but it’s still worth the effort. This highlights perhaps the main reason why so many people called for the defeat of the recapture referendum last month. The money HISD will have to send to the state won’t go towards education elsewhere, which at least would be a good moral reason for supporting it. It’s an accounting maneuver that gives the state credit for spending on education when it really isn’t doing anything more. And remember, the Supreme Court said this was all fine. Meanwhile, Dan Patrick wants to divert money away from public education to the private school vouchers that he doesn’t want you to call vouchers because that’s an unpopular name. I’ve said it before and I’ll say it again: Nothing will change until we have different people in charge of these things. In the meantime, spare a bit of pity for your school board trustee, and tell your Rep and your Senator to support Rep. Howard’s bill.

AG’s office upholds Abbott’s line item vetos

Dec 23rd, 2015
by Charles Kuffner.
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Of course it does.

NO

Gov. Greg Abbott was well within his powers when he vetoed more than $200 million in funds approved by the Texas Legislature this year, Texas Attorney General Ken Paxton’s office wrote in an opinion issued Monday.

[…]

The nonbinding opinion, written by First Assistant Attorney General Chip Roy, has the potential to shore up the governor’s power over the budget-writing process if Roy’s interpretation ultimately held up in a court of law.

“The provisions vetoed by the Governor each designate a specific purpose and the amount to be used therefor, and they are items of appropriations subject to the Governor’s veto” Roy wrote.

Abbott’s office praised the opinion Monday evening.

“The Attorney General’s opinion upholds the governor’s constitutional authority to limit unnecessary spending and ensure fiscal solvency,” spokesman John Wittman said.

The Budget Board is co-chaired by Lt. Gov. Dan Patrick and House Speaker Joe Straus, and its members include the chairs of the House Appropriations and Senate Finance committees who write the budget. Like Abbott, Patrick also publicly criticized the board’s argument — so much so that he wanted a special committee to review the budget board and other legislative agencies. Email traffic between his office, the board and the House speaker’s office made it clear that a top Patrick aide had seen the board document in advance and approved sending it to Hegar.

The vetoes covered funding for projects at several state agencies and higher education institutions.

The largest funding item at issue was for $132 million from the Texas Facilities Commission’s budget to build a state office building in San Antonio to replace the G.J. Sutton State Complex. State Rep. Trey Martinez Fischer, D-San Antonio, has previously urged the city of San Antonio to consider legally challenging Abbott’s veto, noting that the new building is expected to play a key role in the revitalization of the city’s East Side area.

See here, here, and here for the background, and here for the AG opinion. I’m not qualified to address the legal points of this, but it’s hard to escape the feeling that the fix was in. I said before that this probably needs to be resolved by the Supreme Court, so I hope the city of San Antonio takes up TMF’s call to sue over this. Perhaps a better question to ask, especially of Republicans, is if it’s such a good idea to expand the Governor’s powers in this way. It’s certainly open to debate whether this is a good idea or not, but shouldn’t we at least have that debate? I’m just saying. The Chron and Trail Blazers have more.

Hegar punts LBB veto issue to Paxton

Aug 29th, 2015
by Charles Kuffner.
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Duck!

NO

Describing the debate as one that “goes to the heart of separation of powers within Texas government,” Comptroller Glenn Hegar announced Wednesday that he will not authorize more than $200 million in funds approved by the Texas Legislature but vetoed by Gov. Greg Abbott as the comptroller waits for the attorney general to settle the issue.

“There are complex questions related to the governor’s vetoes, so I am seeking clarity and requesting guidance from the attorney general’s Office,” Hegar said in a statement.

[…]

For several weeks, the issue was awaiting a decision by Hegar, the state’s chief financial officer. The governor’s office strongly disagreed with the budget board, sending a 29-page memo to Hegar decrying the Legislature’s attempt to use “magic words” to block the governor’s authority.

On Wednesday, Hegar said he would not dole out the funds at issue for the time being.

“I am lapsing the funds for all items objected to by the Governor and will treat the items in question as vetoed,” Hegar said. “However, if advised otherwise, those appropriations can be made available immediately.”

[…]

Hegar’s decision comes less than a week before the start of the fiscal year on Sept 1, when the budget approved by lawmakers this year goes into effect. His 15-page request to Paxton demonstrates the complexity of the dispute. Because Abbott’s vetoes targeted budget riders rather than appropriations, Hegar seeks clarity on not only the validity of the vetoes but also what to do about the impacted agencies’ budgets if the vetoes are upheld. Should Hegar reduce each agency’s budget by the vetoed amount? And if those agencies can still get the funding, can those agencies then choose to spend some of their budgets on the projects Abbott vetoed anyway?

“This is a constitutional issue that goes to the heart of separation of powers within Texas government,” Hegar said. “I have a fiduciary duty to Texas taxpayers to ensure their hard earned dollars are spent in a manner that is consistent with the constitution of the state of Texas.”

See here and here for the background, and here for the AG opinion request. Putting aside my lack of confidence in Ken Paxton, I kind of think this one needs to be settled by the Supreme Court. The Lege can then take a crack at clarifying what the Constitution says if it wants. We’ll see how it goes.

Still reviewing the video on the line item vetoes

Aug 3rd, 2015
by Charles Kuffner.
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Any day now.

NO

With varying degrees of concern, a smattering of government offices and higher education institutions around the state are waiting to learn the fate of more than $200 million in funds that the governor might — or might not — have excised from the state budget.

The Legislative Budget Board is challenging several of Gov. Greg Abbott’s line-item vetoes, arguing in a July 21 letter to Comptroller Glenn Hegar the governor has no authority to veto some of the items because they were included in budget riders. The challenged vetoes include funds for public projects and money for research at colleges and universities.

“The Comptroller’s Office is reviewing the documents provided and working to determine next steps,” spokeswoman Lauren Willis said Thursday.

Abbott is pushing back against the challenge, even encouraging potential political donors to help.

“Unelected bureaucrats want to strip Governor Abbott of his line-item veto authority in order to grow government and increase spending and debt. Join our fight with a contribution!” his campaign wrote in an email Wednesday that linked to his donation page.

Abbott has repeatedly boasted he cut off $386,000 meant for the Southern Regional Education Board, a nonprofit that helps states develop education policies, that would have been used “to finance the promotion of Common Core,” a charge the Board has denied.

The largest item vetoed would have provided $132 million to build a new state office building in San Antonio to replace the G.J. Sutton State Complex.

“The renovation project was intended to play a major role in the revitalization of the East Side and would have been an enormous boon to the City of San Antonio,” state Rep. Trey Martinez Fischer, D-San Antonio, wrote in an email to the San Antonio mayor and city council last week. “I find Governor Abbott’s unprecedented and possibly unconstitutional actions deeply worrisome.”

Martinez Fischer encouraged the city to consider legally challenging Abbott’s veto if necessary.

See here for the background. It’s hilarious to see Abbott fight this by appealing to donors decrying his battle against “unelected” enemies – you know, like Joe Straus and Dan Patrick, who has been his typically weaselly self in all this – but that’s your modern Republican Party for you. In the end, the amount of money involved is a pittance, though the project in San Antonio sounds like a fairly big deal, but the spectacle is what it’s all about. It’s just a matter of posturing and trying to be the most macho, as that’s what they care about the most. See this Trib story and Burkablog for more.

Vetoes: You’re doing it wrong

Jul 23rd, 2015
by Charles Kuffner.
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Oops.

NO

Some of Gov. Greg Abbott’s line-item vetoes in the state budget might be invalid, the state’s Legislative Budget Board said in a 14-page letter sent Tuesday to Texas Comptroller Glenn Hegar.

The director of the LBB said the governor’s veto proclamation, listing line items he chose to excise from the new budget, doesn’t have the effect Abbott apparently intended.

“The Proclamation from June 20, 2015 seeks to veto the appropriation for a number of purposes and programs contained in House Bill 1,” LBB Director Ursula Parks wrote. “However, in nearly all instances the Proclamation does not veto the actual appropriation but rather seeks either to veto non-appropriating rider language or informational items. As it is the case that the Governor may only veto items of appropriation, for the reasons outlined below I believe that many of the items in HB 1 referenced in the Proclamation remain valid provisions.”

That letter amounts to a rebuke of sorts from the leaders of the Legislature to the new governor. The LBB is co-chaired by Lt. Gov. Dan Patrick and House Speaker Joe Straus, and its members include the chairs of the House Appropriations and Senate Finance committees who write the budget, along with six other legislative leaders from both chambers.

“In our analysis, most of the actions in the Proclamation have the effect neither of actually reducing agency or institution appropriations, nor indeed of eliminating legislative direction on the use of funds,” Parks wrote. “The Proclamation seeks to go beyond what is authorized in the Texas Constitution, is in many respects unprecedented, and is contrary to both practice and expectation since adoption of the Texas Constitution in 1876.”

Abbott’s office received the letter Tuesday afternoon and did not have an immediate comment, but argued in a memo last month that the governor’s vetoes were within the law. Lauren Willis, a spokeswoman for Hegar, said the comptroller’s office is still reviewing the LBB letter.

It says, in effect, that the governor vetoed items in the budget that he doesn’t have the power to veto, an assertion Parks sourced back to Abbott himself. In his proposed budget earlier this year, Abbott said that he wanted to expand the governor’s line-item veto authority and suggested amending the state constitution to take care of that. The Legislature made no such amendment.

“The implication in this statement supports the analysis that the Constitution currently provides limited and specific authority in this area; authority that the Proclamation seeks to extend,” Parks wrote.

The LBB letter is here, and the Abbott memo on which it was based is here. Nothing like having your own words used against you, is there? This isn’t a LePage level of failure, but it would be pretty embarrassing if it holds up. On the plus side for Abbott, his buddy Dan Patrick is there for him, even though he is also on the LBB. Intrigue! Ross Ramsay has more.

Reforming property tax appraisal protests

Mar 12th, 2015
by Charles Kuffner.
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From the inbox:

Sen. Rodney Ellis

Sen. Rodney Ellis

Senator Rodney Ellis (D-Houston) releases the following statement regarding Senate Bill 1084, his bill to create a fairer property tax appraisal system in Texas:

“Homeowners and local communities across Texas are shouldering an unfair burden when large commercial property owners manipulate the property tax system to drive down their property values and property tax bills,” said Senator Ellis. “While most homeowners pay taxes on the real value of their property, many large commercial property owners routinely use appeals and lawsuits to avoid paying their fair share. When large commercial property owners shirk their responsibility, ordinary homeowners pay more property taxes to make up the difference. That’s not fair, it’s bad public policy, and it needs to change.”

SB 1084 closes the loophole related to how owners of business properties worth more than $1 million present their cases in court. No longer can lawyers for these property owners game the system, “cherry-pick” properties, or make adjustments that do not follow generally accepted appraisal techniques just to drive down their appraised value. Instead, they must select a reasonable and representative sample of comparable properties located within the county and based on similarities in location, square footage, age, and other conditions.

Relief can only be granted by a court if the appraisal ratio of the property exceeds the median appraised level of the comparable properties by 10 percent.

The bill also requires the Comptroller to adopt rules that establish standards for the equal and uniform appraisal of industrial, petrochemical refining and processing, and utility properties. Lastly, the bill allows courts to award attorney’s fees to appraisal districts that establish that the property in litigation was appraised in an equal and uniform manner.

The Legislative Budget Board examined the issue in the agency’s January 2015 Texas State Government Effectiveness and Efficiency Report. SB 1084 is based on LBB recommendations, as well as numerous meetings with homeowners, appraisers, counties, and cities around the state.

Photos from today’s press conference can be viewed and downloaded here. Video of the press conference can be viewed here.

As you know, this subject has been a minor obsession of mine lately; see here and here for examples. The game is rigged, with a small number of high end properties essentially dictating what their taxes are, while appraisal districts and the vast majority of homeowners are left holding the bag. I don’t know what the odds are of this bill – the Houston Business Journal reports that there are several similar bills out there, including a couple by Republican Senators, though I can’t say how any of them compare to SB1084 – but any step in the direction of fairness and equity is long overdue. Better Texas Blog has more.

Appraisal caps back on the agenda

Dec 5th, 2014
by Charles Kuffner.
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The idea will never die, unfortunately. No matter what the effects are.

BagOfMoney

Local officials in the Houston area say they are concerned that incoming state leaders will push for tax relief measures that could limit their ability to meet the needs of fast-growing urban and suburban areas.

Gov.-elect Greg Abbott has spoken of “looking at ways that we can try to provide some level of tax relief,” and it was also a key platform of the incoming lieutenant governor, Dan Patrick. With rising assessments driving up tax bills in many suburban counties, some lawmakers have proposed reining in such increases. Proposals include making it easier for residents to call a tax rate election when property tax revenue comes in high to lowering the cap on taxable home values.

Harris County Judge Ed Emmett said he is concerned about state lawmakers potentially tying the hands of county officials to set tax policy and provide adequate services.

“If you lower property taxes, someone is going to have to tell counties like Harris what services you don’t want anymore, because we’re barely funding our mandated duties as is,” Emmett said.

[…]

Other proposals submitted so far in early bill filings for 2015 include hiring county-level tax experts, lowering the appraisal cap from 10 percent, expanding exemptions, capping revenue growth based on a formula that considers population and inflation, and abolishing property taxes altogether, replacing them with a modified sales tax.

“The devil is in the details,” said Fort Bend County Judge Bob Hebert. “Depending on how they cap it, it could shut down how Fort Bend serves the county. I think there’s a reasonable solution to it if we get everyone to be reasonable.”

Bennett Sandlin, executive director of the Texas Municipal League, agreed that some of the proposals could provide taxpayers with relief without crippling the budgets and autonomy of local leaders.

“We’re always open to the idea of appraisal reform, but we’re not fans of the revenue-capping idea,” Sandlin said. “The revenue cap takes discretion away from the governments closest to the people. It’s the state saying, ‘We know what’s best.’ ”

If the Legislature actually cared about making the appraisal system better and fairer and more equitable, there’s lots they could do to make that happen. That’s not what they’re interested in, of course. It’s the usual wingnut wish list of cutting taxes for the wealthy and limiting spending for no good reason. You’d think these legislative Republicans would be leery about making Texas be like California, but irony died a long time ago and left no successor.

Besides, it’s not like there aren’t other ways to arbitrarily limit spending.

The Legislative Budget Board voted unanimously Monday to set the state’s growth rate at 11.68 percent for its 2016-17 budget, about 1 percent higher than the spending cap for the current budget.

The decision comes as state officials expect to enter the next legislative session in January with a multibillion-dollar surplus and competing factions push to ramp spending growth both down and up.

The budget board — made up of Lt. Gov. David Dewhurst, House Speaker Joe Straus, and four members each of the state House and Senate — selected the rate with little discussion, though the decision could have a big impact on next year’s legislative session.

The growth rate guides how far the next budget can exceed the current one in spending on “nondedicated revenue,” which are the parts of the budget that are funded by state taxes but not required to go to specific programs. In practice, the growth rate puts a spending cap on less than half of the state’s two-year budget. State leaders have indicated they have no plans to attempt to “bust the spending cap” next year, a move that would require the support of a majority of lawmakers.

That 11.68 percent growth rate was the low end of the range. Moody’s pegged the state’s growth rate at over 15 percent. Ah, but what do those private sector yahoos know about anything, am I right?

From the “Simple answers to simple questions” department

Oct 19th, 2014
by Charles Kuffner.
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The Statesman asks “Would Dan Patrick’s tax plan lower your taxes?”

Efforts to shift toward sales tax in lieu of property and income taxes have in recent years gained momentum in Republican-led states — even as economists warn that this sort of tax reform is likely to harm the majority of taxpayers.

Economists point out that sales tax is highly regressive, meaning its net result is savings for wealthy people, who enjoy a lower tax rate overall; poor and middle class taxpayers, however, pay more tax as a proportion of their income and thus bear a heavier burden for funding government services.

Texas’ tax system is already considered regressive because it doesn’t levy a personal income tax and instead relies heavily on sales tax, the state’s single biggest source of nonfederal income, $27.4 billion in fiscal 2014.

Counting both sales and property taxes, Texans who earn less than $19,000 a year are taxed an average of 12.6 percent of their income, according to a 2013 study by the Institute on Taxation and Economic Policy, a nonpartisan think tank in Washington.

The institute found that a family earning $32,000 to $52,000 — the middle 20 percent — will be taxed an average of 8.8 percent of their income. The top 1 percent of earners, those earning $437,000 or more, are taxed a much lower average of 3.6 percent.

Matt Gardner, executive director of the nonprofit institute, says this disparity will likely worsen if sales tax is increased to buy down local property taxes, as Patrick has proposed.

“Unless you have some way to offset the increase in sales tax, it’s pretty clear that this is going to hurt low-income people,” Gardner said.

[…]

The Lone Star Card piece of Patrick’s plan appears similar to a failed 2005 proposal, which was nixed from tax reform legislation that cut property taxes paid to school districts and swapped that funding with state sales taxes. This is the measure that allowed the state to cut $5 billion to public schools in later years and spurred a protracted court battle between school districts and the state (a state district judge, citing several reasons, ruled for the second time in August that this financing scheme unconstitutional).

The nixed piece of that plan was a proviso to raise the sales tax rate from 6.25 percent to 6.75 percent, along with a package of other excise taxes and tweaks that would have replaced $4.3 billion in property taxes with $4.8 billion in other taxes.

In the same way that Patrick touts his tax plan would either result in a net neutral or net reduction in total taxes paid by Texans, the Legislative Budget Board in 2005 calculated the fiscal impact of that swap would result in a “net reduction to individuals.”

But beneath that neutrality — the total amount of taxes paid wouldn’t increase — is a stark disparity in distribution. Those with annual incomes in the low $10,000s, the board calculated, would have paid $8.1 million more in taxes by 2007. Middle-income taxpayers, those earning from the $40,000s to low $50,000s, would have paid $151 million more.

Those at the highest income level, $140,000 a year and up? They would have seen a $212 million decrease in their tax liability.

Remember the Legislative Budget Board analysis of that 2005 tax swap plan? It has the answer to the question posed above: Unless you’re in the top five percent, your taxes will be going up. There’s nothing complicated about this. In any “revenue neutral” tax plan, some people win and some people lose. Is anyone surprised at who the winners and losers are in Dan Patrick’s world? I guarantee, this will still be the case when he inevitably comes up with a plan that gets scored as a net tax cut. It will be a big cut for a small number of people, and at best a wash if not an outright increase for everyone else. It doesn’t matter that he hasn’t specified any details yet. They don’t really matter to him anyway – it’s the big picture that counts. This is who he is, and this is what he wants. It’s right there in plain sight.

We really should have expanded Medicaid

Apr 13th, 2014
by Charles Kuffner.
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We know it would have done a lot of good, at a very reasonable cost. Turns out that cost was even less than what we had been told.

It's constitutional - deal with it

It’s constitutional – deal with it

News reports and state officials have commonly stated that expanding the Medicaid program in this fashion would cost the state about $15 billion over 10 years. Except, that figure, provided by the state Health and Human Services Commission, is actually an estimated total cost for all aspects of the Affordable Care Act, many of which the state is going to have to pay for even though state leaders have remained steadfastly opposed to almost all aspects of the law.

“What?!?,” you say?

In a presentation given to lawmakers in March 2013, state Health and Human Services Executive Commissioner Kyle Janek estimated that because of the publicity and outreach involved with the Affordable Care Act, more people who are eligible for Medicaid but not currently part of the program would likely enroll. The estimated price tag? About $6 billion over 10 years, or approximately 40 percent of the total Affordable Care Act implementation cost.

According to that presentation, the estimated cost for expanding Medicaid eligibility to all adults who make less than the 138 percent of the poverty level was about $8.8 billion over 10 years. However, the Legislative Budget Board, the Legislature’s budget arm, came up with a far lower cost estimate of about $4 billion over 10 years. The differences can be attributed to two factors, HHSC spokeswoman Stephanie Goodman said. First, HHSC projects that more people will join the Medicaid program than the LBB does; and second, HHSC projected it would cost more to provide the coverage than the LBB does.

Secondly, assume that $1.5 billion figure is correct and that adding it to the state budget would cause taxes to skyrocket and the state’s economy to crumble. However, it begs the question why that hasn’t already happened. Taxpayers in the five major urban counties in Texas — Harris (Houston), Dallas, Tarrant (Fort Worth), Bexar (San Antonio) and Travis (Austin) — already shell out more than $1.5 billion a year in hospital district taxes to provide care and facilities for their largely indigent populations. A study commissioned by Methodist Healthcare Ministries and Texas Impact estimated total local government spending on providing health care at roughly $2.5 billion a year.

Thirdly, expanding Medicaid would produce additional revenue for hospital districts, potentially allowing county governments to cut their tax rate. In Bexar County, hospital district officials estimate that expanding Medicaid would save them $52 million a year, roughly 20 percent of the amount of revenue they get from the hospital district tax, and County Judge Nelson Wolff said he would cut property taxes to pass on the savings if it were approved. In Harris County, hospital district officials say the expansion of Medicaid would mean they would receive an additional $77.5 million in reimbursements, or roughly 15 percent of their tax revenue, based on 2013 financials.

Sure would have been nice to get that extra revenue to help pay for what we’re already paying for, wouldn’t it? We can still take advantage of it if we want to. All it takes is a different set of leaders in our state government.

On a side note, remember that the 7.1 million figure you’ve been hearing for Obamacare signups is just for people going through the healthcare.gov webpage. It doesn’t count state exchanges, Medicaid enrollments, or people who got ACA-compliant policies outside of the exchange. Those first two numbers would surely have been a lot higher nationally had it not been for the cruel and mulish refusal by governors like Rick Perry to create state exchanges and expand Medicaid. There was an increase in Medicaid enrollments across the country, as people who had been eligible all along but didn’t know it or hadn’t gone through it did so thanks to the publicity push from Obamacare. Of course, the total enrollment count was much higher in states that expanded Medicaid, but Texas saw new enrollments as well. That 7.1 million number will likely be higher as well when all is said and done, thanks to some lag in the system. I’ll say it again – just imagine how many more people this law could have helped if only everyone agreed that providing coverage to as many people as possible was a worthy goal and not something to fight against. EoW has more.

Collier hammers Hegar for property tax idiocy

Mar 26th, 2014
by Charles Kuffner.
3 comments

Good.

Mike Collier

Mike Collier

During the recent Republican primary for state comptroller, state Sen. Glenn Hegar repeatedly endorsed eliminating local property taxes in Texas.

Borrowing from GOP opponent Debra Medina’s 2010 playbook, Hegar urged a shift to sales taxes to make up the more than $40 billion a year of revenue that cities, counties, school districts and other local governmental entities would lose.

Hegar, R-Katy, even suggested a very rapid transition to the new tax system. At a Longview tea party gathering in January, he told a man in the audience, “You just do it.”

This week, though, the governing implications of so massive a shift seem to have cooled Hegar’s jets.

Burying the property tax, after all, would require leaders to more than double the current rates of all state and local sales taxes.

See Exhibit 1 on page 1 (or page 5 of the PDF) of this comptroller’s report. You can readily see that state and local sales taxes, combined, yield about 32 percent of all state and local tax revenues in Texas. That compares with a whopping 47 percent raised by local property taxes. You get the picture.

On Thursday, Hegar campaign manager David White said Hegar “has been clear that we are many years away from being able to implement such” a shift from property tax to sales tax.

White repeated a response he gave The Dallas Morning News on Tuesday, saying “Glenn will review all options to reduce the burden on taxpayers.”

Democratic comptroller nominee Mike Collier, though, has blasted Hegar’s happy talk on property tax during the primary. Collier, a Houston businessman, called it an “unimpeachably bad” policy idea that would produce a monster increase in sales tax, shift power away from localities to the Legislature and “put our schools at unnecessary risk.”

He warned Hegar’s “promise” to eliminate the property tax would require sales tax “to be at least 20 percent — and possibly as high as 25 percent.” In most Texas cities today, the combined state-local sales tax rate is 8.25 percent. Collier even created an online petition drive so voters can protest “Senator Hegar’s sales tax.”

However, in a Thursday email blast that urged people to sign the petition, Collier incorrectly called Hegar’s proposal a “massive tax increase.” In recent years, Republicans have only advocated tax swaps, which presumably would be revenue neutral.

Still, Hegar seems to be switching gears on property tax abolition, pivoting from a “just do it” battle cry to a chin-stroking, “many years away” proposition. The rhetorical shift has given Collier an opening to start the general election battle — in March, not September.

Actually, Hegar’s idiotic idea would be a “massive tax increase” for a large majority of Texans. The whole idea of a tax swap is that some people wind up paying more, while others wind up paying less. The Republicans have floated various tax swaps in the past, and I’m sure you’ll be shocked to learn that a wealthy minority benefits greatly from them, while everyone else pays more. It’s true, as some people note in the comments to that story and on Collier’s Facebook page, that renters pay property taxes as part of their rent. Let me ask you a question: Which do you think is the more likely outcome of a Hegar-style tax swap – a massive, statewide reduction in rents, or a massive, statewide increase in profits for landlords? Take all the time you need before answering.

Anyway. Whether someone finally explained the math to Hegar or he realized that he might need to do more of a campaign than just pandering to fanatics, he has shifted from “we can do this right now!” to “this idea is many years away from implementation”. And in doing so, he earned a bit of media for Mike Collier. More like this, please. BOR and EoW have more.

There are no new ideas, but there are plenty of bad ideas

Nov 1st, 2013
by Charles Kuffner.
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There’s so much wrong with what Greg Abbott wants for Texas that it’s hard to know where to begin.

BagOfMoney

In his first major policy address as a gubernatorial candidate, Attorney General Greg Abbott proposed tighter constitutional limits on state spending and increased constraints on the multibillion-dollar Rainy Day Fund.

Abbott laid out his “Working Texans” plan, which is based on fiscal reform to reduce the scope of government, during a campaign stop Monday in Brownsville.

Abbott said that if he were elected governor, he would propose two constitutional amendments to keep state spending tied to population growth and inflation and to safeguard the Rainy Day Fund, the state’s savings account, from “being raided” by the Legislature.

Additionally, Abbott said the governor should be given “expanded line-item veto authority” to reduce excessive spending. He will face former Texas Workforce Commission Chairman Tom Pauken in the 2014 Republican primary.

“I am willing to take on the task of making difficult decisions to reduce government spending when at times the Legislature may not be able to do so,” Abbott said, according to prepared remarks, adding that the state has seen “a troubling trend” of using the Rainy Day Fund to cover “what should be core government operations and expenses. “

Instead, Abbott wants to limit the excessive spending of the fund by only allowing it to be used to meet unforeseen revenue shortfalls, to reduce existing debt, to pay for state disaster relief and to address one-time infrastructure payments.

[…]

In his proposal, Abbott also emphasized the importance of finding a permanent source for additional transportation infrastructure, including a proposal to constitutionally divert a portion of the motor vehicle sales tax to road construction and maintenance.

“We need to stop diverting transportation funding away from building roads,” Abbott said. “Money raised for roads should be spent on roads.”

Texas Politics has this in bullet point form. Let me open with what Burka has to say:

Abbott’s ideas will have the effect of constricting the state’s economy rather than expanding it. He says next-to-nothing about public education, for example, nor does he address health care; in other words, he ignores the two biggest and costliest areas of state services. The only solace one can take in Abbott’s vision for the future of the state is that it resolves the question of whether he would be better or worse than Rick Perry. Astonishing as it may seem, I think he is worse than Perry.

The question must be asked: Is Abbott’s vision what Texans want for their government — or their families? Is this really a state whose leaders have no interest in improving the lives of its citizens? Is Texas really going the way of Arkansas and other backward states where all that matters is guns?

Well, there’s also hating on gays and “illegal immigrants”, plus suing the federal government, but you get the idea. I guess it hasn’t occurred to Abbott that the reason we’re dipping into the Rainy Day Fund for a water infrastructure bank is because we have a vast unmet need for water infrastructure projects and no other politically acceptable way to pay for them. He’s also probably not noticed the gaping hole in Texas’ transportation funding, and the fierce resistance to any way of paying for some of it. Oh, and there’s also the judgment against the school finance system – the suit is being relitigated, but I don’t expect a substantially different outcome – and the millions of uninsured Texans that he and his cronies try not to acknowledge. Clearly what we need is a rigid and restrictive spending cap, because that will solve all these problems with the magic of the free market, or something like that.

The Observer shows the degree of Abbott’s ignorance on the subject.

The idea of tying spending to inflation and population growth is not a new one. It’s been popular among elements of the right for years. The Texas Public Policy Foundation, uber-activist Michael Quinn Sullivan and even Perry have flogged the proposal for years. But it’s never gone anywhere for two main reasons—one, there is little appetite in the Texas Legislature for tying their own hands; two, it’s a bad idea.

Texas is already a (relatively) low tax, minimal services, small government state. Indeed, as Nate Blakeslee pointed out in a January Texas Monthly profile of Sullivan, state spending as a share of both the state’s gross domestic product and personal income has been trending downward for two decades. For personal income, which is what the Comptroller uses to set a spending limit, the share of spending has decreased from around 5.2 percent in the early ’90s to just over 4 percent today. Even using the population-plus-inflation spending limit, Texas’ budget has stayed under that limit for the last decade, according to an analysis by the Legislative Budget Board.

In other words, there’s just not a spending problem in Texas. Which is not the same thing as saying there’s an inequity problem when it comes to how revenues are collected (not having a state income tax, for example, means the poor and middle class take it on the nose with regressive sales and property taxes).

Still, tying the state’s budget to inflation and population growth could further constrain state government. You could pretty much forget about ever investing more in public schools, higher education or infrastructure, at least during non-flush times.

In April, the Legislative Budget Board crunched the numbers. The growth in personal income used to set the spending cap for 2014-2015 was 10.71 percent. In other words, the state could spend almost 11 percent more than it had the previous biennium. Using population growth plus inflation instead would limit spending growth to 6.82 percent. That would mean $2.7 billion less for state leaders to work with. That’s not a huge number given that the 2014-2015 state budget includes $95 billion in general revenue. But lowering the spending limit now would have a compounding effect over time.

That’s probably the point—force future generations to subscribe to the current model of low-ish taxes and minimal services. Abbott more or less admitted as much during a press confab after his Brownsville speech.

“By imposing these standards by constitutional provision it means that for generations there will be limits in the growth of spending in this state,” he said, according to the Associated Press.

However, the Legislature has shown little appetite for any of the proposals Abbott is touting. A bill tying the spending limit to population-plus-inflation is filed every session… and goes nowhere.

The Lone Star Project points out that much of what Abbott is proposing is constitutionally redundant as well. The good news is that by going the constitutional amendment route, Abbott starts from a position of not having enough votes for his ideas, and being unlikely to get any more support for them. But the best way to prevent bad ideas from gaining a foothold is to beat them back at the ballot box.

Turner seeks a way to get around Public Integrity Unit de-funding

Jun 18th, 2013
by Charles Kuffner.
3 comments

Rep. Sylvester Turner takes aim at one of Perry’s vetoes.

State Rep. Sylvester Turner

State Rep. Sylvester Turner

Rep. Sylvester Turner, D-Houston, said he would propose a House Concurrent Resolution advocating restoration of funding for the Public Integrity Unit of the Travis County district attorney’s office, which was vetoed by Gov. Rick Perry last week.

[…]

This morning on the floor of the Texas House, Turner raised what options lawmakers have in responding to the veto. Afterwards he told reporters he would seek the resolution for restoring the funding.

“Over the last 10 years, there have been attempts to eliminate, weaken, move the public integrity unit from Travis County to the AG’s (attorney general’s) office and over the last 10 years the Legislature has said no,” Turner noted. “We are entitled to know where the funding will come from or what the plan is. Is it the intent of the state to say no to the Public Integrity Unit, to significantly weaken it?”

Turner questioned Perry’s use of his veto power to influence who holds a particular office.

“I am just not comfortable with vetoing funding because some people here have problems with one person,” he said

A concurrent resolution is basically just a “sense of the chamber” vote, so even if such a thing passed (which I doubt) it wouldn’t compel anyone to do anything. This is about sending a message. The politics of this situation are increasingly complex, but there’s a good case to be made that whatever you think of Rosemary Lehmberg and her sins, it’s not up to Rick Perry to force the issue. There’s a process in place that is already in motion, and Perry’s involvement is a conflict of interest.

More on this in the Statesman:

From the back microphone of the Texas House, Turner asked Speaker Joe Straus if any options exist to fund the unit.

Straus said after Monday’s meeting of the House that his office would do some research for Turner.

“With the questions from Mr. Turner and others, it’s certainly something that we should explore with the governor and with the Public Integrity Unit personnel. I’m assuming that the governor’s office has considered this,” Straus said in an interview. “We just have to assess where we are, and what the implications are as we go forward.”

[…]

Also Monday, state Rep. Steve Toth, R-The Woodlands, asked from the House floor if funding could be revived if Lehmberg resigns.

House leaders didn’t have an immediate response.

But Dale Craymer, president of Texas Taxpayers and Research Association, had a thought. The former top budget official for Govs. Ann Richards and George W. Bush said it is possible to restore funding through budget execution action, which involves the governor and the Legislative Budget Board agreeing on moving money from other parts of the budget.

I can’t claim to be optimistic about anything happening to counter Perry’s veto, but clearly we are in uncharted territory. Rep. Turner in particular got a lot done in the budget deal, so I would not discount his efforts.

On a related note, Travis County Commissioners Court is exploring its options as well.

Travis County commissioners will discuss the legislation and the governor’s actions on their agenda around 11 a.m. Tuesday.

“We likely will not take action tomorrow, rather just discuss this issue,” County Judge Sam Biscoe told KVUE. “There are a lot of unanswered questions. I have sent a list of questions to the county attorney to understand our authority and limitations on this matter. I also want to know whether the governor’s decision can be reversed by himself or the Legislature before September 1, 2013.”

Biscoe says the commissioners will address the item and then go into executive session. They will likely take action on June 25.

“From my understanding, the revenue from that unit goes to residents of Texas as well as the state and federal government. I personally don’t see the benefit of fully funding the unit if the money goes to outside agencies. We will explore the issue,” said Biscoe.

The main thing I’d be concerned about is that if Commissioners Court picks up the slack, what incentive does the Lege have to fund the PIU in a future session, post-Lehmberg? This is the same dilemma school districts that had room to raise their tax rates faced after the massive cuts to public education in 2011. A one-time fix can quickly be seen as the new normal.

Texas Lottery Commission dies and is reborn

Apr 24th, 2013
by Charles Kuffner.
1 comment

And we have our first curveball of the legislative session.

Is this the end?

The House voted Tuesday to defeat a must-pass bill reauthorizing the Texas Lottery Commission, a stunning move that casts doubt on the lottery as a whole and may potentially cost the state billions in revenue.

House Bill 2197 began as a seemingly routine proposal to continue the operations of the commission that oversees the lottery until September 2025. But opposition mounted after one lawmaker called it a tax on the poor, and the House eventually voted 82-64 to defeat the measure.

A short time after the vote, the House called an abrupt lunch recess and could reconsider the measure if any lawmaker who voted against it offers such a motion. Unless lawmakers reconsider, the commission would begin a one-year wind down, and cease to exist by Sept. 1, 2014.

“There are more members than I thought who are against the lottery and just have a psychological aversion of it,” said Rep. Rafael Anchia, D-Dallas, who sponsored the failed bill.

The state Senate has yet to consider the matter, but it can’t because the so-called “sunset bill” on the Lottery Commission initiated in the House.

For now, there’s no one to operate the lottery, which means a potential loss of $1.04 billion in annual revenue for the Permanent School Fund and $27.3 million to cities and counties from charitable bingo.

The state budget already under consideration in the Legislature has factored in the $1.04 billion — and losing the lottery proceeds would create a deficit lawmakers would need to fill.

Here’s HB2197. I think it’s fair to say no one saw this coming. Here’s more from the Trib:

During a spirited debate on the bill, state Rep. Scott Sanford, R-McKinney, got a round of applause in the House as he spoke against the bill, calling the lottery a “predatory tax” and “a tax on poor people.”

As soon as the vote was over, House leaders were already discussing possible workarounds to keep the programs going. Anchia said the House may reconsider the vote.

Texans spent $3.8 billion on lottery tickets in the 2011 fiscal year, according to the Legislative Budget Board. The majority of that was paid out to players and retailers, with $963 million transferred to the Foundation School Account. Another $8.1 million was transferred to the Texas Veterans Commission.

Anchia warned that charity groups around the state would be outraged at learning they could no longer host bingo games.

“VFW Bingo’s dead now,” Anchia said. “They’re going to have to go back to their constituents and explain why bingo is illegal.”

I don’t disagree with what Rep. Sanford says, though I wonder if he will feel the same way when the payday lending bill comes to the House floor. In the end, however, everyone sobered up after taking a lunch break.

In a 91-53 vote Tuesday afternoon, the Texas House passed House Bill 2197, continuing the the Texas Lottery Commission. An earlier vote Tuesday had failed to continue the commission.

Bill supporters spent the hour after the first vote impressing on those who voted against it the impact of cutting $2.2 billion from schools. The House Republican Caucus hastily assembled to discuss the situation.

“I think when people took a sober look at the budget dilemma that would ensue, they voted different,” said state Rep. Rafael Anchia, D-Dallas, the bill’s author.

Several lottery critics in the House saw the day’s drama as a victory, setting the stage for a more thorough debate on the lottery in the future. Public Education Chairman Jimmie Don Aycock, R-Killeen, said he originally voted “no” largely to make clear his opposition to gambling. Once that statement was made, it made more sense to back the Lottery Commission for now.

“I don’t like gambling, but I do like school funding,” Aycock said. ‘It was, for me, at least, a signal vote. I sort of anticipated I would switch that vote when I made it.”

State Rep. Lon Burnam, D-Fort Worth, said school funding was also the primary motivator for his switch.

“When you weigh principle vs a billion dollars in public ed, I set aside my principle for a billion dollars in public ed,” Burnam said. “I still hate the lottery.”

I had always wondered why they vote on bills three times in the Lege. Now I understand. Having had their fun and having made their statements of principle, if the Lege is serious about wanting to eliminate the Lottery, let’s go about it in the next session by filing a bill and letting it go through the usual committee process, mmkay? Thanks. BOR, who notes that failure to pass this bill could have led to a special session, and Texpatriate have more.

Bad ideas never die

Apr 19th, 2013
by Charles Kuffner.
1 comment

And so we find ourselves once again talking about tax breaks for yacht buyers.

Just think how much you would save on this baby

From capping the sales tax on yachts to phasing out the state business levy, some lawmakers are pushing for tax breaks even as others say the system is already riddled with too many special-interest exemptions.

The breaks are most often cast as a driver for economic development, and a Monday hearing on the yacht tax break was no exception.

Senate Bill 862 “is not about giving tax breaks to the rich. It is all about jobs and protecting our Texas economy,” said Sen. Larry Taylor, R-Friendswood, who pitched it before the Senate subcommittee on fiscal matters as necessary for the state to compete for boat business.

The subcommittee, which left the bill pending, is trying to have hearings on at least a representative sampling of the tax breaks that have been proposed, said its chairman, Sen. Glenn Hegar, R-Katy. “Obviously, the question always becomes do they, at the end of the day, provide a benefit to the taxpayers overall?” said Hegar.

[…]

A similar measure sank two years ago. Backers emphasized then, as they are now, a decision by Florida to cap its sales and use tax at $18,000. They said that has prompted buyers to purchase and keep their boats in Florida.

As filed, the legislation would cap the amount of boat tax at $15,625 per retail sale, the amount typically paid for a $250,000 yacht. Taylor has a substitute to change that to $25,000.

The subcommittee left the bill pending while it awaits a new fiscal note on the change.

As noted, a similar bill was introduced last session, but it did not pass. The fiscal note for SB862 says it would cost $2,893,000 for the upcoming biennium, which is slightly more than the fiscal note of the previous bill. Perhaps the Legislative Budget Board is forecasting more yacht purchases for this biennium, or maybe it’s just that yachts are more expensive these days. In either case, I doubt that Taylor’s substitute bill will make that much difference in this department.

I expended all the snark I have on this two years ago. There’s only so much time available in a legislative session, and it really says something about John Davis and Larry Taylor that they think this particular issue, which would greatly benefit a very small number of people at the expense of the general revenue fund, is worth their limited time and energy. I haven’t even seen a bogus “economic benefit” report on behalf of the yachters, making the usual dubious claims about how much more money this would actually mean for Texas despite the fiscal note, which is telling in itself. As Rodney Ellis says in the story, our tax code is already an unmanageable jumble of bizarre, obscure, and often needless tax breaks that cost billions for no clear reason. We don’t need to add to that.

Senate committee restores some money to public education

Mar 2nd, 2013
by Charles Kuffner.
Comments are off for this post

Emphasis on the “some”.

Texas public schools would get back a chunk of the $5.4 billion in state funding they lost two years ago under a budget proposal adopted by the Senate Finance Committee on Thursday.

But they probably should not expect much more than the $1.5 billion the committee added to the 2014-15 state budget, said Chairman Tommy Williams, R-The Woodlands.

“It is going to be very difficult given the other demands we have in the budget to add any more,” said Williams.

Williams plans to pay for all the demands, including water projects, highways and some form of tax relief, without exceeding the constitutional spending cap. That would leave about $1 billion of projected state revenue over the next two years unspent. Lawmakers could exceed the cap with a simple majority vote in both the House and the Senate, but there is little appetite within the GOP to do so.

Many Republicans are also reluctant to increase education spending until the Texas Supreme Court rules in the pending school finance litigation. A district court judge found the school finance system unconstitutional earlier this month.

“Based on the politics of the state, we will not see the $5.4 billion that was cut last time go back into” education, said state Sen. Royce West, D-Dallas.

More from the Trib:

The money would come on top of the proposed $35.1 billion in general revenue for public education, which unlike the 2011 budget did, accounts for new students expected to enroll in the state’s public schools. The additional funding approved Thursday would also restore some of the $5.4 billion reduction in state funding that lawmakers passed during the last legislative session. The full Senate must still approve the Finance Committee’s recommendation.

During Thursday’s hearing, lawmakers on the committee suggested they might fight for more education funding, including money for measures like early college high school programs and the Student Success Initiative, which provides remedial help for students who fall behind.

The $40 million for pre-kindergarten — which Sen. Tommy Williams, R-The Woodlands and chairman of the committee, referred to as a “down payment” — would replace a fraction of the $200 million in competitive grants the Legislature eliminated in 2011 for full-day programs for low-income children. The funds would be distributed proportionally to school districts based on eligible student populations.

Again, note the partial and incomplete nature of this. The Observer highlights one salient feature.

Finance chair Tommy Williams (R-The Woodlands) said the new amount would mean “no net revenue losses for any school district for 2014.

You may recall that HISD was talking about raising their tax rate to make up for an operational shortfall next year, which was caused by the 2011 budget cuts. If this extra funding, which keep in mind only represents 28% of the $5.4 billion that had been cut in the first place, prevents the need for that, it would at least be something. That question hasn’t been answered yet.

Anna Eastman, president of the Houston Independent School District’s board, called the Senate panel’s decision a step in the right direction.

“It’s good news and I’m glad to see the state making this effort, but I still think it doesn’t come close to restoring the large cuts made two years ago,” Eastman said. “We’re at a place right now where we have a big gap to fill to maintain what we’re doing.”

Until that gap is closed, Eastman said, HISD cannot consider hiring new teachers or taking on additional costs.

Texas State Teachers Association President Rita Haecker said lawmakers can restore all $5.4 billion cut from school spending in 2011 “and meet other important state needs without raising anyone’s taxes.”

Education Committee Chairman Dan Patrick, who also serves on Finance, disagreed, citing other pressing needs, finite dollars and a constitutional spending cap. The $1.5 billion increase is recommended on top of the committee’s starting-point budget, which accounted for student enrollment growth.

“We don’t have those dollars. It’s not a choice,” said Patrick, R-Houston. Asked whether it may be an option to exceed the spending cap, which would require a majority legislative vote, Patrick said, “Not in my world.”

So yes, it is a choice, just not one that Dan Patrick wants to make. But it’s very much a choice, and don’t let anyone mislead you about that.

Assuming this survives the full Senate and the House, this is good in the sense that it’s not bad, but it’s not good in a quantitative sense. How can it be, when schools are still down almost three quarters of the original total? I’ve been trying to come up with a snappy analogy for this, but really, what it comes down to is simply the fact that the Lege cut a bunch of money last time, and has now restored just enough of it to keep things from getting worse, but not enough to make anything better. We’re stuck with this until the Supreme Court rules on the school finance appeal. Just take a look at that chart I embedded above of inflation-adjusted dollars per student, provided by the office of Rep. Gene Wu, and you’ll see how little that $1.5 billion will do.

On a side note:

The committee left just one piece of the education budget in limbo: funding for a new charter school authorizer that would be created under Sen. Dan Patrick’s Senate Bill 2—a seven-member appointed board to oversee the state’s charter schools.

It was a telling diversion in an otherwise agreeable budget meeting to watch a pair of Democratic senators try to make Patrick, the usually tight-fisted tea party favorite, defend the extra cost of his school reform plans.

Dallas Democrat Royce West began by saying he wasn’t convinced Texas should create a separate board for authorizing charter schools. That’s already the State Board of Education’s job, West said. He worried about putting charter school approvals in the hands of an unelected board and questioned how they’d be held accountable.

The move clearly irritated Patrick, who said he wished West had told him about his reservations sooner. (West said he already voted against it once in their workgroup, which should have been sufficient notice.) Members of the charter school authorizing board, Patrick said, would probably need Senate confirmation, and might answer to the State Board of Education—though those details aren’t final yet.

SB 2 is still pending in Patrick’s education committee after a hearing last week. The Legislative Budget Board has estimated Patrick’s bill would carry other huge costs to the state, growing every year—from $24 million in 2014, up to $55 million in 2018. Those costs include students coming from private or home-schooling into a charter school, new funding for charter school buildings, and state employees to oversee all the new schools.

Today’s argument focused on what the new Charter School Authorizing Authority would cost.

“Why would we turn to more government as a solution?” Houston Democrat John Whitmire asked Patrick. “Because I know that’s not your philosophy; I do listen to you closely.”

“Instead of fixing the agency that is in charge of this responsibility, you want to turn and create a new bureaucracy, more state employees, and I promise you this [charter school authorizer] budget will not remain where it is,” Whitmire said.

“I will bet you, whoever evaluates us,” Whitmire said, “this will be a measurement by the folks that advocate less government, that we’re creating another governmental entity. It is what it is.”

I wouldn’t take that bet.

LBB calls for expanding Medicaid

Feb 18th, 2013
by Charles Kuffner.
Comments are off for this post

From the Quorum Report:

LBB CALLS FOR FUNDING MEDICAID EXPANSION AS PART OF ITS ADDITIONAL BUDGET PRIORITIES

It’s constitutional – deal with it

The recommendation given to the Article II Senate Finance workgroup notes that $50.4 million in state funding would draw down $4 billion in federal match for the next budget cycle

The Legislative Budget Board has included funding to extend Medicaid coverage to low-income adults as part of its list of priorities for additional funding to SB 1, the Senate budget bill.

The state’s political leadership has balked so far at endorsing the program’s expansion, which is a central component of the federal Affordable Care Act. The LBB recommendation, though, stems directly from the size of the federal match and the resultant outsized return on investment for the state.

Or to put it another way, the LBB is acknowledging just how much cash would be left on the table should the state’s leadership ultimately decide against the expansion. Also, the added coverage is expected to drive down governmental health care costs at the local level as fewer people seek care in hospital emergency rooms. Uncompensated care at hospitals amounted to $3.1 billion in 2011, according to LBB figures.

The federal government would cover 100 percent of the cost of coverage for the 2014-15 state budget cycle. Meanwhile, the cost to the state would be $50.4 million to cover half of the administrative costs of the expansion. In turn, the federal aid over the next two fiscal years for the expansion is expected to be $4 billion, according to the LBB. In other words, the state in its next budget would bear 1.2 percent of the total cost of the expansion.

The state’s share could actually be less than that. The LBB earlier recommended allowing the local taxing authorities that bear the biggest burden of paying for uncompensated care provided by hospitals to cover the match.

Burka thinks that freshman Republicans will be happy to hear this, because it means they won’t have to “[tell] their hometown doctors, hospitals, nursing homes, and other healthcare providers to go fly a kite”. I don’t know where he derives that conclusion, as it seems completely out of character for them. Take a look at this Tribune overview of the new legislators and tell me if you see any inclination towards that finding any kind of solution for Texas’ shameful lack of health care access. It’s one statement after another about what they oppose – abortion, “big government”, regulations, and taxes – and the only mentions of health care at all are in the context of opposing Obamacare. I really don’t understand what he’s thinking. Be that as it may, the bottom line continues to be that by any rational evaluation, this is a no-brainer. The only reasons Rick Perry and his legislative cronies have to oppose Medicaid expansion are political zealotry and a deep indifference to the needs of millions of people. EoW has more.

This time it’s different

Feb 7th, 2013
by Charles Kuffner.
3 comments

Why is this school finance ruling different from all other school finance rulings? For one thing, it was way more comprehensive.

The changes needed to correct the constitutional violations [Judge John] Dietz identified could comprise the most far-reaching overhaul of education policy the state has enacted in more than 40 years, said Lynn Moak, a school finance veteran who has testified in all six of the school finance lawsuits dating back to 1987.

“I don’t think it’s an understatement to say that the bill that resolves yesterday’s decision is going to be one of the most comprehensive and far-reaching pieces of legislation that we have seen in the education system certainly over my lifetime,” Moak said.

[…]

Dietz’s decision Monday looked much like the court order he issued in 2004, when he heard the previous legal challenge to the school finance system.

At that time, the Texas Supreme Court agreed with Dietz’s finding that the Legislature had effectively imposed a statewide property tax in violation of the constitution. The high court rejected his conclusion that the Legislature had failed to provide adequate resources to meet the state’s academic standards.

This time around, Dietz also declared that the funding differences between school districts are now constitutionally inequitable. He had turned aside that claim from property-poor school districts in 2004.

The funding gap between property-rich and property-poor school districts has grown since the previous case from $965 per student to nearly $1,600, according to data from the Texas Education Agency.

“The facts scream out that there is an equity violation,” said Richard Gray, a lawyer who represented more than 600 property-poor school districts.

The court has said that districts that tax the same must have access to essentially the same amount of funding. It is the state’s constitutional obligation to even out the differences among property-poor districts and their wealthier peers.

The fix implemented after the last lawsuit, which involved freezing the amount of per-student funding each district got, contributed to the inequity problem that Dietz ruled was unconstitutional. If the Supreme Court upholds this, it’s going to be a big effing deal.

On a side note, please read this. The key takeaway:

Bottom line: While the claim that the state has increased spending on public education is technically correct, data from the Legislative Budget Board, which accounts for inflation, shows that state spending has largely flat-lined — even before accounting for the roughly 70,000 students who enter the school system each year.

That was a key aspect of Judge Dietz’s ruling as well. The budget cuts of 2011 exacerbated the problem, but it was a problem even before that. Assuming the Supreme Court doesn’t gut Judge Dietz’s ruling, it will finally be time to fix this.

Finally, the Chron prints an excerpt of Judge Dietz’s remarks from his ruling.

Finally, I would point out the simple truth: We are in competition with 195 other nations and their economies. If I ask the 20 million Texans who are not in school right now whether they agree that we should have more rigorous and challenging standards for our education systems, what would their answer be? I believe a vast majority of Texas would say “Yes” and that for our students to successfully compete in the future, we must have tougher, higher standards now.

So with this vast majority of Texans in support of higher standards, I now say, “Great, we’re going to have to develop a new curriculum, we have to substantially upgrade our technology in schools, we have to increase training for teachers, we have to hire some new teachers in complex content areas that we will be teaching and we have to provide more tutoring and remediation to our challenging population. We need to have evaluation and accountability to make sure we are meeting our goals concerning these increased standards. Finally, we need some public outreach to make sure the parents buy into this new program. I think we can do all of that for an additional $2,000 per student, or in other words, an additional $10 billion to $11 billion. You support this tax increase, don’t you?”

Suddenly, my vast majority becomes a minority. Now, what I begin to hear from my vast majority is, “You can’t solve the problems of education by throwing money at it.”

As the economists put it, there is no free lunch. We either want the increased standards and are willing to pay the price, or we don’t. However, as the economists point out, there is a cost to acting, namely the tax increase, and there is a cost to not acting, namely loss of competitive position. So, we as a state and as a nation are wrestling with this question of priorities, and our leaders are looking for direction from you, the public.

The full decision will be released later this month. Given the price tag suggested, you can see why most Republicans are eager to appeal this, and not so eager to do anything until the Supreme Court has ruled.

From the “Anyone can call themselves an expert” department

Jan 27th, 2013
by Charles Kuffner.
Comments are off for this post

Now see, this is what happens when you go soliciting expert witnesses on Craigslist

Bloom County was awesome

Joseph Bast, president and CEO of the Chicago-based Heartland Institute, is a witness for Texans for Real Efficiency and Equity in Education, or TREE, a group led by former state Rep. Kent Grusendorf that is not a plaintiff but was permitted by state District Judge John Dietz to present testimony.

Bast said a taxpayer savings grant program similar to education vouchers would benefit low-income families who could put grant money toward paying for private school tuition.

“If you’re low-income, you’re pretty much trapped in the public school that’s in your direct area,” he said.

Bast estimated that such a grant program would spur about 6 percent of students in Texas public schools to move to private schools, a number he arrived at by evaluating similar programs, including the now-defunct CEO Horizon voucher program in San Antonio’s Edgewood Independent School District.

He said the state saves $7,750 each time a child leaves the public system and, therefore, “the program actually benefits the public schools.” He estimated the annual savings would be about $2 billion.

The state’s previous failure to act on such a proposal “is evidence of the inefficiency of public schools,” Bast said.

[…]

Questioned by Maribel Hernández Rivera, an attorney for one of the plaintiff groups represented by the Mexican American Legal Defense and Educational Fund, Bast acknowledged that he has not graduated from college and holds no degrees in economics, though he considers himself an economist.

He also said neither of two reports he co-authored, which were entered into evidence, had been peer-reviewed.

David Thompson, attorney for another group of school districts, later pointed out that the Legislative Budget Board concluded that the taxpayer savings grant proposal would cost the state money in its first two years of operation. Bast acknowledged that he and the budget board arrived at different conclusions on this point.

“To your knowledge, no government entity in the state of Texas has ever agreed with your analysis of savings, is that correct?” Thompson asked.

“Apparently,” Bast replied.

I figure civil litigators live for these sort of “Perry Mason” moments. I really don’t think I can add anything else to that.

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