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June 5th, 2006:

School finance: The more you look, the less you like

I have written before about how the changes to the school finance funding formula enacted in the last special session have been received by the plaintiffs in the West Orange-Cove lawsuit. Their contention that the requirement of a referendum to raise school taxes beyond a certain level may wind up turning into another de facto unconstitutional statewide property tax is echoed in this Express News story.

A new provision requiring school tax elections could widen the gap between rich and poor schools, critics say.

“It’s one of the worst things in this bill,” said Austin-based school finance lawyer Buck Wood. “It’s a disaster for education. Tax referendums tear school districts apart.”


Wood and others envision voters in rich school districts – such as Alamo Heights in San Antonio, Eanes west of Austin and Highland Park in north Dallas – supporting school tax increases. That’s because most of them are college educated, they value education and they are wealthy enough to afford tax increases to enhance their children’s education.

But families in working-class districts who struggle to make it from week to week may be less inclined to vote themselves tax increases.

“The priority is not taxes to improve education, so it’s going to be harder to talk voters into voting for increasing their taxes,” said Guillermo Zavala Jr., superintendent of the property-poor Harlandale Independent School District.

The school funding bill is designed to cut school property taxes by as much as a third after two years. But districts will have limited opportunity to increase local property taxes.

“You have just given them relief from taxes, and now you want to come back and tax them again? I don’t think that’s going to happen,” Zavala said.


The Alamo Heights Independent School District will be allowed to keep all revenue generated by the first 4-cent tax increase in the new enrichment plan. But it would have to send the state about $1 for every $2 it may raise from additional tax increases because Alamo Heights is a property-wealthy district and must share some of its property wealth.

Property-poor schools can tell their voters that every $1 of additional taxes would generate $2 total, because the state has to help equalize their taxing effort, said Jerry Christian, superintendent of the Alamo Heights ISD.

“I think that sell would be a little easier than to say, ‘For every $2 that we’re going to raise in this tax, we’re only going to benefit a dollar,'” he said.

“I think on both sides, it’s going to be difficult to raise taxes with a populace vote,” he said.

That will be especially true for fast-growing districts such as San Antonio’s Northside and North East districts, said school finance consultant Dan Casey of Austin-based Moak, Casey and Associates. “A number of school districts are very concerned about their ability to sell those tax-rate increases in the future for maintenance and operation,” he said.

The Northside and North East school districts must frequently appeal to voters for bond issues to build new schools to accommodate growth.

“And then having to ask for money for operations, too, causes great concern,” he said.

I post all this stuff now so that four or five years down the line when another lawsuit is filed, I can dig these entries out of my archives and say “See? It’s just like we said from the beginning.” And if it turns out I’m wrong and the system works great without any major changes, you can do the digging and point to these entries to say “See? You’ve been full of hot air for years.” If that’s not a win-win situation, I don’t know what is.

Evidence of actual dissension found

On Saturday at Kuff’s World, I noted that an effort to insert a plank in the State GOP’s platform calling for the repeal of the new business tax failed by a 28-3 vote. That was not the end of the fight over the new tax, however.

Republican grass-roots anger with Perry and the Legislature was on display Saturday, though, as Houston delegates pressed for a platform plank to repeal the business tax.

The effort was led by Steve and Bruce Hotze and Norman Adams.

Steve Hotze told the convention that the party since 1991 has had a plank calling for the repeal of the state franchise tax that many think is an income tax. He said the new business tax just made matters worse by taxing companies whether or not they are profitable.

“Even the federal government doesn’t do that,” Hotze said.

Adams likened the expanded business tax to spreading fire ants from one yard to another.

When state Sen. Tommy Williams, R-The Woodlands, tried to explain the new tax to delegates, many tried to boo him down.

Williams said all the revenue from the new tax is dedicated to lowering property taxes.

Former state Republican Chairman Tom Pauken told the convention that the new tax goes a long way toward ending the so-called Robin Hood school finance system that redistributes money from property-rich districts to property-poor ones.

The convention first voted on the amendment with a standing vote, but it appeared so close that a roll call vote was held, and the measure failed.

The platform adopted by the convention called for a “timely review” of the new business tax.

The Morning News has more.

Throughout the week, Perry forces had characterized the tax opposition as small, and the governor sought to turn a convention-floor scare into an asset.

“The Texas Legislature had a vigorous debate and passed historic property tax relief and meaningful school finance reform with bipartisan support,” Mr. Perry said. “The Republican Party has now had a vigorous debate and formally endorsed the Legislature’s actions. I am honored to have the continued trust and support of grass-roots Republicans.”

Houston talk-radio host and state Senate candidate Dan Patrick, a critic of the tax, interpreted the vote differently.

“If you’re the governor in a contested, four-way race coming out of the convention with only a 55-45 victory over the centerpiece of your campaign, that’s a very shallow victory,” he said.

Mr. Patrick and other conservative activists, mainly from Houston, predicted a tax backlash by small-business owners and disillusionment among precinct workers.

Delegate Charlotte Lampe of Houston said Mr. Perry had slighted grassroots activists in the state’s biggest urban area.

She noted that Platform Committee Chairman Kirk Overbey of Austin had called them a “small, disgruntled group.”

“How could the second largest county in the nation be a ‘small, disgruntled group,’ ” said Ms. Lampe, 52, an interior decorator. “No Republican has won statewide office without carrying Harris County. How does Rick Perry figure?”

That’s a much more impressive showing by the Hotze-ites – I’d go so far as to say it’s their first really impressive show of force against Governor Perry. What it isn’t, however, is any kind of clear indication that Rick Perry and/or any other Republican incumbent who supported HB3 will suffer an actual loss of support at the polls in November, up to and including a sufficient loss of support to threaten his or her re-election.

I mean, look. As long as anti-business tax ringleader Norman Adams is saying stuff like this, I can’t take the his group’s threats seriously.

Even Norman Adams, a GOP activist from Houston who wants the party platform to include language condemning the new business tax, said, “I don’t want anybody but Perry being re-elected. But I want to scare the pants off of him.”

It’s very simple. When a politician you support does something that you absolutely cannot abide, there are a few things you can do to try to either get him to change his ways or punish him for the transgression:

1. Figure out a way to abide what he did and give him the same support as always.

2. Withhold support (endorsements, donations, volunteerism, etc) but still vote for the guy in the end.

3. Support another candidate.

Adams appears to be somewhere between #1 and #2 – perhaps he has specifically ruled out doing anything for Rick Perry beyond voting for him, but if so I haven’t read about it. Steven Hotze is (so far at least) keeping option #3 open, but as you know I have my doubts about that – I suspect he’ll wind up wherever Adams lands. Sure, if this is still an issue in 2010 and Rick Perry wants to be on the ticket somewhere in Texas then, they can throw their support behind some other Republican in a primary as payback. That sound you hear is Rick Perry quaking in his tassled loafers at the prospect.

The point here is that if you decide against sucking it up and figuring out how to love the bastard that just betrayed you, you have to be willing to see him lose. You can do that passively, by choosing option #2 and hoping that the donation/elbow grease/endorsement you didn’t give makes a difference, or you can do it actively by stumping for a replacement. Even if Adams really does ultimately withhold all forms of support for Perry other than his trip to the voting booth, how can you believe he’s willing to see Perry lose? There’s no risk involved in what he’s doing, and without it, there’s no power to what he says. What exactly does Rick Perry have to fear from him?

You may say well, if there were still a GOP primary to be run this year, Adams and Hotze could really go all out against Perry. Since it’s just the general, their only other candidate choices are worse for them in other regards. Too bad. One way or another, their principles are going to take a blow. They just get to pick which ones.

Convention delegate Lee Roy Petersen, a retired computer systems designer from Plantersville, near Houston, said he wanted the Legislature to lower property taxes with a sales tax expansion instead of an expanded business tax. He said he plans to vote for Comptroller Carole Keeton Strayhorn, running as an independent for governor, who says she would repeal the new business tax.

“I’m trying to send a message to these people that betrayed our platform,” Petersen said. “If they don’t want to abide by our Republican Party platform, they need to go.”

There’s someone who’s willing to put principle ahead of party. Call me back when Adams, Hotze, and Patrick are ready to do that. I’ll be more than ready to hear about it.

Split verdicts in the Enron Broadband retrials

Last year, the Enron federal task force failed to secure any convictions in the first trial of executives of the former Enron Broadband Services. Even though that case was considered stronger than some of the others they had to try, they got a mixture of acquittals and hung verdicts. Last week, the prosecutors did a little better, convicting one out of two defendants on all charges.

Kevin Howard, former Enron Broadband Services chief financial officer, was found guilty on all five counts in the indictment that accused both men of pushing through a bogus transaction in late 2000 strictly to help the division meet earnings goals.

Michael Krautz, a leading accountant in the division, was acquitted of all charges, making him only the second ex-Enron employee to be found not guilty by a jury.


The clean-cut Howard, dressed in a business suit and tie, left the courtroom stonefaced, declining through his attorneys to comment.

His attorneys vowed to appeal.

“We are surprised, we are disappointed – we don’t think the evidence supported a guilty verdict,” Howard’s attorney Jim Lavine said. “We’ll look to our next steps to appeal.”

Howard faces up to 30 years in federal prison for his conviction on a single count of conspiracy, three counts of wire fraud, and for falsifying books and records.

Krautz was acquitted of the same charges.

Howard, a Houston resident, is free on $500,000 bail pending sentencing scheduled for Sept. 11, at 9:30 a.m., only hours before the sentencing of former Enron executives Jeff Skilling and Ken Lay in a courtroom next door before a different judge.


Some legal experts believe the acquittal of Krautz may actually take some of the steam out of a possible appeal by Lay and Skilling. Namely, it will make it tougher for them to argue they couldn’t get a fair trial in Houston.

“I think it pulls the rug out from under any argument Lay or Skilling make about a change of venue,” said Philip Hilder, a former prosecutor who represented government witness Sherron Watkins.

I never doubted that Skilling and Lay would get a fair trial. If this does undercut that argument, fine by me.

The government last year failed to win convictions against Howard, Krautz and three other former executives in the division in a trial that ended with a jumble of acquittals and nondecisions. The judge then separated the case into three trials to simplify it for jurors.

Former EBS executives Joe Hirko, Rex Shelby and Scott Yeager are awaiting retrial. Yeager’s trial was scheduled for this week but has been put off indefinitely because of an appeal issue; Shelby and Hirko are scheduled to return to the courtroom in September.


Even with the acquittal of Krautz, some legal observers believe the conviction of Howard is enough to keep up the prosecution’s momentum for trying the remaining defendants.

“Had the government bought the bagel on this one, they may have well have walked away from other broadband trials in the wake of the Lay and Skilling success,” said Jacob Frenkel, the former senior counsel at the Securities and Exchange Commission’s enforcement division, who has followed the cases.

“The fact that they won a conviction against the CFO, not withstanding the acquittal, will help the government maintain its vigor and resolve to prosecute the remaining broadband defendants.”

So it’s not over yet, though I daresay that pretty much everything else beyond return court dates by Skilling and Lay will be non-headline news most places. Also fine by me.

As usual, for an alternate view of the events, check out Tom Kirkendall.

Get ready to call your Congressperson again on Net Neutrality

Net Neutrality will come up in Congress again this week. Here’s the latest email on the subject from MoveOn:

Dear Charles,

It’s time. Next week, the full House of Representatives votes on whether to protect Internet freedom. Your representative, Sheila Jackson-Lee, needs to hear solid constituent support for protecting Net Neutrality—the Internet’s First Amendment.

Here’s an important detail. Next week, House members will be voting on a larger law governing our nation’s communications policy – and the current version of this bill guts Net Neutrality. So every representative needs to hear in no uncertain terms that they should vote against this proposed law if it is not changed to protect Net Neutrality.

Can you call Rep. Jackson-Lee to say vote “no” on the COPE telecommunications law if it doesn’t protect Net Neutrality?

Here are the numbers – it’s best to call the Washington, D.C. office and then your local office:

Congresswoman Sheila Jackson-Lee
Phone: 202-225-3816
District Offices:
Houston: 713-691-4882
Houston: 713-655-0050
Houston: 713-861-4070

Please click here to let us know you called and to share how it went:

Some tips when calling:

1) If the staffer is making a tally of constituent calls, make sure they have a category specifically for “Vote no on the COPE telecom law if it doesn’t protect Net Neutrality.” Otherwise, your representative may get a diluted message and miss the point.

2) If they ask for more details, you can urge your representative to support the bipartisan Sensenbrenner-Conyers Net Neutrality amendment (HR 5417) which passed the House Judiciary Committee last week with a powerful 20-13 biparttisan majority. And if that fails, they should vote against the entire bill.

3) If you get a voicemail option, leave a message. They will get it.

Thanks for helping to save the Internet.

–Eli Pariser, Adam Green, Noah T. Winer, and the Civic Action team
Friday, June 2nd, 2006

P.S. Here are two informative videos about this Net Neutrality issue:

YouTube video -tollbooths on the information super-highway

Moby speaks out on Net Neutrality in Washington, DC

P.P.S. Can you support this member-driven campaign today? As companies like AT&T spend millions lobbying Congress to gut Internet freedom, we will win this fight because of the power of regular people. A donation of $5, $10, or $20 would go a long way. You can donate here:

Fill in the name of your Congressperson as needed. You can search for your representative by ZIP code here.

John Carter’s priorities

You may have heard that Fort Hood is having some financial difficulties.

A “severe budget crunch” has hit Fort Hood, one of the nation’s largest military posts and home to a U.S. Army division serving in Iraq, officials said Thursday.

The funding squeeze forced the Central Texas installation to impose an immediate hiring freeze and dramatic cuts in contracts with local providers of support services, officials said.

The move announced Thursday follows “significant internal steps to help manage existing funds through the end of the fiscal year,” an announcement from base headquarters said.

“Additional measures are necessary and will be implemented beginning (Thursday),” the statement said.

In addition to the “100 percent civilian hiring freeze,” other cutbacks will reduce custodial contracts, on-post housing referrals, grounds maintenance contracts and government vehicle contracts, officials said.

Additionally, pest management contracts were “severely” cut and other services were “significantly” reduced, officials said.

I sure hope this isn’t a bad summer for mosquitoes in Central Texas, because there’s nothing Fort Hood can do about it now.

So what is Fort Hood’s Congressman, John Carter, doing about this? Well, nothing, actually. He’s got other things to do.

As U.S. House and Senate conferees try to hammer out a compromise immigration reform measure, Rep. John Carter, R-Georgetown will join other House members on the tour of the border Friday in El Paso.

“This tour will allow members to see firsthand the challenges at the border and learn more about the practical implementation of having National Guard members patrolling the border,” Carter’s office said.

Way to be there for your constituents, Rep. Carter. Link via Eye on Williamson.

Protecting veterans’ identities

You may recall last week that an employee of the Veterans Administration had a laptop that contained a database with more than 26 million personal records in it stolen. This led to Sen. Tom Harkin (D, Iowa) to introduce a bill called the Veterans Identity Protection Act of 2006.

The legislation would require the VA to provide one year of credit monitoring to each affected person. This will immediately alert an individual to any changes made on their credit report. After that first year, the VA would be required to provide one free credit report to each individual – that’s in addition to the free credit report each year already provided by the Fair Credit Reporting Act. This means that, after the first year of credit monitoring, eligible individuals will have access to four free credit reports over the course of two additional years.

The bill also provides $1.25 billion to fund these actions. While I expect this legislation will be very popular among Congressional Dems in general, it’s nice to see a candidate like John Courage, who is himself a veteran, endorse this bill. Will Lamar Smith follow suit, or is this not an issue that attracts his attention? We’ll find out if it’s ever allowed to come up for a vote.

In other Courage news, Vince reports from a conference call that touched on Net Neutrality and Lamar Smith’s bizarre ideas about where Homeland Security funds ought to go. Check it out.