May, 2006:

It’s nothing I haven’t written before, but I like it when folks such as Harvey Kronberg agree with me, in this case about the real outcome of the special session.

First, [the West Orange-Cove plaintiffs] correctly said that the recently passed legislation was more about reducing school property taxes than it was about creating a stable funding source for public education.

Second, the Legislature permitted school boards a maximum of four cents per $100 they could raise their property taxes. After that, any tax increase would have to be approved by the voters.

That may make some political constituencies happy, but it is an expensive proposition to conduct an election and may be an insurmountable obstacle for many small- and medium-sized school districts.

Finally, the school districts said the state is already telling them how to spend up to 97 cents of each dollar. Additional mandates from the state will eat up the rest.

Trust me. The Legislature can’t help itself. There will be more mandates

The plaintiffs correctly point out the state is treating locally raised property tax dollars as if it were its own money which deprives local school boards of any meaningful spending decisions.

When that three to four cent cushion evaporates over the next few years, school districts will be right back in court fighting the back door statewide property tax the Legislature just passed.

Chris Bell is out there talking about this, too. He’s also right that the expanded reliance on TAKS testing as the one true measurement of all things scholastic is misguided at best and counterproductive at worst. Standardized testing certainly has its place, but no single metric can do it all.

Previously, I noted that US Rep. Charlie Gonzalez (D, San Antonio) and three of his colleagues sent a letter to Governor Perry expressing their concerns over the manifest failures of the THHSC privatization effort. At the time, I could not determine who the other signers of that letter were, so I sent an inquiry to Rep. Gonzalez’s office. I got a response today, so here for your reading pleasure is the letter in question:

Page one

Page two

The three other signers were Reps. Al Green, Lloyd Doggett, and Chet Edwards. Now we just need to find out if Governor Perry has a response.

The Accenture/Texas Health and Human Services outsourcing debacle is getting some attention from Congress.

Declaring it a failed experiment that is harming the neediest in the state, a group of Texas congressmen including Rep. Charlie Gonzalez, a San Antonio Democrat, urged state leaders Wednesday to immediately cease a plan to privatize the screening of welfare applications.

The story does not mention the names of the other Congressmen, and some Google News searching on my part came up dry. So, I called Rep. Gonzalez’s office and left a message with his media guy. I will post the letter when I get it.

Gov. Rick Perry’s spokeswoman, Kathy Walt, did not directly address the congressional request, but noted that Perry has confidence in the privatizing effort and in Health and Human Services Commissioner Albert Hawkins, the point man for the outsourcing plan.

“The governor certainly believes that privatization is an appropriate cost-saving approach,” Walt said.

You wanna own this loser, Mister Governor, you go right ahead. Please tell me how much money we’ve saved so far and how much of that phony $646 million projection is still on track. Be sure to show all your work.

Actually, I can see one place where we may save a few bucks, now that you mention it:

Texas signed an $899 million contract with Bermuda-based Accenture LLP last year to have the company develop an “integrated eligibility system” that would quickly and accurately determine the social services for which applicants qualify.

But the program has been beset with problems. The HHSC has twice postponed expanding the system outside of a small pilot project in Austin. The contractor’s employee training program has been criticized, and a massive computer foul-up has resulted from an inability of various software programs to communicate with each other.

The program’s critics say the foul-ups have led to people not receiving benefits they were entitled to. Others, they say, have been improperly denied benefits because of misinformation provided by poorly trained Accenture employees.

Not paying the rest of the contract would lead to savings, I must admit. Assuming we don’t get sued, that is. If that’s the basis of Governor Perry’s faith in this program, well, I’ve underestimated the man.

The strongly worded letter was signed by four Texas Democratic congressmen and delivered late Wednesday to Perry, Hawkins and Comptroller Carole Keeton Strayhorn.

Hawkins’ spokeswoman said the commission planned to push ahead.

Strayhorn, a Republican running against Perry as an independent in November’s gubernatorial election, applauded the congressmen “for getting involved in this Accenture mess.”

“The governor implemented this plan in haste,” Strayhorn said, terming the privatizing effort a “perfect story of wasted tax dollars, reduced access to services and profiteering at taxpayers’ expense.”

She has undertaken an audit and review of the Accenture contract and promised to provide answers to questions raised by state Democratic lawmakers who oppose privatization.

As you know, I’m no fan of Strayhorn, but that audit of Accenture is the sort of thing for which she was put on this Earth. I daresay she will leave no stone unturned.

Meanwhile, THHSC is also ganging up on Accenture.

A host of computer problems and poor training of contractor employees, resulting in misinformation to applicants and improperly filled out forms, has caused Health and Human Services Commissioner Albert Hawkins to indefinitely postpone the [privatization rollout].

In addition, Hawkins has canceled the planned furlough of thousands of state workers and relieved the contractor of some of its duties.

It is not clear how much the state is considering penalizing Bermuda-based Accenture LLP, with which it signed a five-year, $889 million contract last summer.

It marks the first time the state has said publicly that its dissatisfaction with the contractor’s performance may draw sanctions.

[…]

Anne Heiligenstein, deputy executive commissioner for social services, said the agency is reviewing options for recovering unexpected costs and delays in its Integrated Eligibility system, which determines who qualifies for food stamps and the Children’s Health Insurance Program, among others.

But if the commission decides to impose financial sanctions, it could be months before a specific dollar figure is negotiated.

[…]

The rollout delay will likely negate some of the $646 million the commission told the Legislature it expected to save by outsourcing to the company.

That’s assuming there ever was $646 million in savings to be had. I will not concede that point.

Meanwhile, you need to read this email to Anne Heiligenstein from Annie Landmann, the Chief Clerk of the House Committee on Human Services. I agree with HHSC Employee, it’s an insult to the people who are still working there. There’s more from HHSC Survivalist, who reprints a letter from the USDA to Albert Hawkins denying the state retroactive funding “from the Food and Nutrition Service (FNS) for costs incurred by the Texas Integrated Eligibility Redesign System (TIERS)/Intergrated Eligibility and Enrollment Services (IEES) Project” because “the State chose to move forward without prior approval despite knowledge of the associated requirement and the risk of losing federal financial participation without prior approvals.” And finally, Father John finds common ground with Molly Ivins.

Via Eye on Williamson, Lt. Gov. David Dewhurst has admitted that there’s still a few bugs in the school finance system.

In a visit with the Chronicle editorial board this week, Texas Lt. Gov. David Dewhurst devoted much of his presentation to touting the improvements to public education to be funded by the new state school finance plan, which includes an expanded business tax and reductions in school property taxes.

Dewhurst acknowledged the predictions of Comptroller Carole Keeton Strayhorn and the Legislative Budget Board that the revamped business tax and one-dollar hike in the levy on cigarettes may leave the state confronting shortfalls of nearly $25 billion over five years. According to the lieutenant governor, the plan will consume the current state surplus of $8 billion.

I got a robocall from Dewhurst yesterday in which he breathlessly told me about how the Lege just cut my property taxes by a third, gave teachers a pay raise, and instituted more accountability in schools. Funnily enough, the subject of looming budget shortfalls never came up. Still, as EoW notes, it’s nice to see that the Lite Guv has settled the fuzzy math question.

Over at Kuff’s World, I’ve got the news that the injunction against the state that forced it to deal with the West Orange-Cove school finance lawsuit by June 1 of this year has been lifted. All the relevant documents are posted for your perusal.

The one you really need to look at is the plaintiffs’ response, which does not oppose the state’s motion but which lays out their continuing concerns. Like I said on Wednesday, this is not over yet.

UPDATE: Here’s the Chron story.

Didn’t get to this one yesterday, but Governor Perry signed HB2, the most starkly partisan of the five tax bills from the special session, into law.

Gov. Rick Perry signed a law Tuesday assuring that revenue from new, higher state taxes will help pay for school property tax reductions and, he said, promote “greater tax fairness.”

But Democratic challenger Chris Bell said the measure was misdirected and should be repealed.

House Bill 2 is the second of five tax and education-related bills approved during the recent special session to get Perry’s signature. It would spend all the revenue from a new, expanded business tax, a $1 per pack increase in the cigarette tax and tightened sales tax collections on used cars to help recoup the revenue lost from cutting school operating taxes in most districts by about one-third over the next two years.

After that, two-thirds of the revenue generated by those taxes will pay for further property tax cuts and one-third will be spent on the public schools.

[…]

Bell said he generally supports the new business tax. But repeating concerns expressed by Democratic legislators and some educators, he said some of the additional money should be spent to boost school funding, not just to lower property taxes.

“I think that (House Bill 2) is one of the measures that’s going to need to be undone, if we’re going to be able to realize any new revenue to face the problems that we have here in Texas,” he said.

I don’t think there’s any question that HB2 as is will cause problems in the near future. As I said in my post on what the West Orange-Cove plaintiffs will do next, I see only three possible outcomes: Less property tax relief, more taxes somewhere else, or further cuts in spending beyond even the draconian, to-the-bone cuts from 2003. If I were a betting man, I’d put my chips on an increase and/or expansion of the sales tax, because there’s already support for it in the Republican caucus. Watch those straws in the wind carefully next January, because we ought to know fairly early on what changes will be proposed.

Some time before close of business on June 1, the state of Texas will file a motion to lift the injunction imposed by the State Supreme Court ruling in November that declared the property tax system unconstitutional. The plaintiffs in that case will not oppose the motion, meaning that it will be lifted as a matter of course.

That will not be the end of the story, not by a longshot. I talked with one of the attorneys for the West Orange-Cove plaintiffs this week and asked him what they will do from here. The answer is over at Kuff’s World.

Both the Chron and Express News political blogs note that Governor Perry is rolling out an ad campaign to tout property tax relief. In doing so, he’s playing quite a bit fast and loose with the math. From the E-N blog Strange Bedfellows:

Higher home values will produce larger school property tax cuts, which may explain why the governor’s campaign used home sales prices to come up with an average $2,000 tax savings that Gov. Rick Perry touts in new TV and radio spots.

Homes sales prices are much higher than what homes are assessed at for tax purposes.
Perry campaign spokesman Robert Black says Perry used homes sales prices compiled by the Texas A&M Real Estate Center as a way to determine “the average value of the home.”

“If you want to know the best barometer of what homes are worth in the state, it’s what they are selling for,” Black says. “That’s the best number we can come up with.”

But home sales prices have little to do with property taxes – and the average San Antonian should not count on a $2,000 tax cut – not even over the next three years as the small print disclaimer says in the ad.

The average home sales price in San Antonio has ranged between $155,000 and $163,000 during the first three months of 2006, according to A&M’s Real Estate Center.

But Bexar County’s average home value is $117,300, according to the Bexar County Central Appraisal District.
The difference between home sales prices and their value for taxes “is precisely the reason why the governor has been calling for sales price disclosure,” Black says.

Sales price disclosures would produce more accurate information for tax assessments.

That $117K figure is almost identical to the average assessed value for HISD as cited in the Chron post. Let’s review what the Perry camp is up to:

1. They start with a figure – sales price – that is not the basis of how property taxes are assessed, meaning they’re overestimating to begin with.

2. They do not take into account increases in assessed values, which even with tighter appraisal caps in place would reduce their figure further.

3. Property taxes and school taxes are two different beasts. The former may be going down, but the latter very likely isn’t for most people. Those increases are not taken into effect.

4. They assume that the budget math will be in place to allow the full reduction to $1 per of $100 value in 2007, which is probable but by no means assured.

5. They overlook the other tax increases, which will hit smokers the hardest.

6. To top it all off, they round up from their already inflated calculation of $1936 to $2000.

Pretty darned impressive, if you ask me. Gotta give it up for the Governor – he’s never been one to let such muddlesome details get in the way of his story.

Oh, and did you notice the irony in Perry’s call for sales price disclosure? Given the gap between average actual sales price in Bexar County and average tax assessment, requiring the sales price on houses to be disclosed will almost certainly have the effect of causing the initial assessment after a sale to be higher than it would have been otherwise. If you think new home buyers should start out paying more property taxes than they currently do, that’s exactly what you’d want.