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January 24th, 2011:

Senate budget pretty much the same as the House budget

There had been some talk that the initial Senate budget would be a little less harsh than the initial House budget, on the grounds that the Senate budget would at least use some of the Rainy Day fund, but that was not the case in the end.

The Senate’s version of a starting state budget is, at $158.7 billion, $2.3 billion bigger than the House’s, but still would chop overall state spending by $28.8 billion, or 15.4 percent, from current levels.

The upper chamber’s initial budget proposal includes a total of $69.8 billion for public and higher education; the House version provides $67.7 billion for education. Their overall spending on health and human services is about the same (though some details differ). If you’re looking only at state money — general revenue funding — the Senate would spend $79.7 billion, compared to the $79.3 billion in the House plan presented last week.

The big difference in state spending, as with the overall budget, is in education. The Senate would leave public schools $9.3 billion short of what they’re due under current education funding formulas, about $500 million better off than the schools would do under the House plan. In either case, the Legislature would have to change its school funding formulas, and until they do that, there’s no way to know which school districts lose how much money. Technology allotment and pre-kindergarten early start grants aren’t funded.

Like the House, the Senate would cut more than $254 million from special item funding for state colleges and universities and $431 million from student financial aid programs (if the money becomes available, they’d add back $50 million of that financial aid, for a total cut of $381 million).

They do similar things in health and human services, cutting provider reimbursement rates by another 10 percent on top of cuts already made and without taking into account federal stimulus funds used in the current budget that won’t be available for the next budget.

No rainy day fund, or anything else to increase revenue. On the plus side, those four community colleges that would be shut down under the House budget have been spared. See, whining works if you’re a Republican.

As with the Pitts budget, the Ogden budget is also being called a “starting point”, from which we might consider using the Rainy Day fund to make the impact a little less terrible. I’m linking to that story specifically for the purpose of mocking someone who richly deserves it:

Advocates of limited government applauded a bare-bones approach as an initial step in the discussion.

“You shouldn’t start the discussion of your family budget with how much of the family savings account can we tap this month,” said Michael Quinn Sullivan, of Texans for Fiscal Responsibility.

Someone should inform Michael Quinn Sullivan about how actual American families have been living recently:

Over the two years ending September 2010, Americans withdrew a net $311 billion — or about 1.4% of their disposable income — from their savings and investment accounts, according to the Federal Reserve. That’s a sharp divergence from the previous 57 years, during which they never made a net quarterly withdrawal. Rather, they added an average of 12% of disposable income to their holdings of financial assets — including bank accounts, money-market funds, stocks, bonds and other investments — each year.

See, if it’s a choice between eating out or having premium cable or stuff like that, people will cut back in tough times. But if the alternative is to not eat two days a week, or to turn off the electricity on weekends, or otherwise cut out actual necessities for living, most people will do whatever they can to find the money to pay for them, whether that means taking another job, selling off prized possessions, dipping into savings, or going into debt. Somehow, that never makes it into conservative narratives about budget shortfalls.

Yeah, it is too early to be polling for 2012

But that won’t stop anyone from doing them.

2012 could be the year Democrats are finally competitive for President in Texas…but only if the Republicans nominate Sarah Palin.

There are vast differences in how the various different potential GOP contenders fare against Barack Obama in Texas. Mike Huckabee is very popular in the state and would defeat Obama by 16 points, a more lopsided victory than John McCain had there in 2008. Mitt Romney is also pretty well liked and has a 7 point advantage over the President in an early hypothetical contest, a closer margin than the state had last time around but still a pretty healthy lead. A plurality of voters have an unfavorable opinion of Newt Gingrich but he would lead Obama by a 5 point margin nonetheless. It’s a whole different story with Palin though. A majority of Texas voters have an unfavorable opinion of her and she leads the President by just a single point in a hypothetical contest.

Part of the reason Obama looks like he could be competitive against the right Republican opponent is that his position in the state has improved. 42% of voters approve of the job he’s doing to 55% who disapprove. His average approval rating in 4 surveys conducted in PPP over the course of 2010 was 38% so he’s seeing the same sort of uptick in his numbers there that he’s seeing nationally right now.

The other reason for Obama’s closeness is the weakness of the Republican candidate field. He’d have no shot against a GOP nominee that voters in the state like. Huckabee’s favorability rating is a 51/30 spread and he blows Obama out of the water. But none of the other GOP hopefuls come close to matching that appeal. Romney’s favorability is narrowly in positive territory at 40/37, but Gingrich’s is negative at 38/44, and Palin’s is even worse at 42/53. Texas voters certainly don’t like Obama but for the most part they don’t see the current Republican front runners as particularly great alternatives.

What’s maybe most striking about Obama’s competitiveness in these numbers is that they’re from the same sample that showed Democrats had virtually no chance of picking up Kay Bailey Hutchison’s Senate seat earlier this week, trailing all 12 match ups we tested by double digit margins.

The previous poll results are here. I’m going to disagree with the analysis in that I think it really is all about name recognition. In the end, Obama may or may not perform better than whoever the Democratic candidate for Senate is – I’ll take the over if it’s Gene Kelly, the under if it’s John Sharp, and would consider it a tossup otherwise – but he isn’t about to perform 10 to 15 points better than any of them. The level of support Obama gets is roughly going to be the base Democratic performance level.

Yeah, sure, candidates and campaigns and fundraising matter, but only so much in a Presidential year. John Cornyn had Senate incumbency, several terms as a statewide officeholder, and something like a 3-1 financial advantage over Rick Noriega, yet he finished behind John McCain in both total votes and vote percentage, and did only one to three points better than downballot Republicans. Barring a Gene Kelly situation, I expect all the Democratic statewide candidates in 2012 to be within a few points of each other.

The question is what is the ceiling for Democrats in 2012. About a million more people voted in Texas in 2004 than in 2000, and at both the Presidential level and downballot, the Republicans got about 70% of those votes. About 900,000 more people voted in 2008 than in 2004, and again at all levels the Democrats got about 90% of those votes. There are a number of reasons for this, but one factor I’d point to is Latino support. Obama did more than ten points better among Latino voters than John Kerry did, and that was a big part of it. Call me crazy, but I don’t think any Republican Presidential candidate is going to appeal to Latinos like George W. Bush did in 2004. Given that our state, and our electorate, isn’t getting any whiter, I like those odds.

I’ll say this much, if Team Obama actually spends some money in Texas, it would make a difference. If they consider the 2010 results in a vacuum, they’ll run screaming in the other direction, but this was a tough year all over, and one presumes they’re smart enough to realize that the 2012 electorate will be very different, here and elsewhere. Even if they (quite reasonably) think our electoral votes are out of reach, there’s still an excellent reason to play here, and that’s for the Congressional races. Two Republicans won in 2010 with less than 50% – Blake Farenthold and Quico Canseco – and of course there will be four new seats to fight over. Winning back CDs 23 and 27, and taking two of the four new seats, would mean a net +2 for Dems in Texas. If Obama hopes to start his second term with a Democratic (or at least a more Democratic) Congress, that sure would help.

All right, I don’t really plan to talk about this much between now and the end of the year, so file this away for later. We’ve seen how quickly and significantly the winds can change over a few months, so we’ll see where things stand once the Republicans begin to coalesce around a single contender.

Tax expenditures

According to a legislative report prepared by the Ways and Means Committee, Texas is losing over $4 billion per biennium to various tax exemptions and expenditures.

One of the largest carve-outs was for the natural gas tax, which totaled about $1 billion a year in exemptions, according to the report. An exemption for bottled water sales amounted to a loss of about $250 million a year for the state, while an exemption for corporations with business interest in solar energy devices cost more than $1 million over the last two years.

The committee prepared the report to address Republican House Speaker Joe Straus’ charge to examine the exemptions and determine “how the current costs and benefits compare with the original legislative objectives,” according to the report, which did not make recommendations about which tax exemptions should be repealed.

Rep. Rene Oliveira, chairman of the tax-writing committee, also did not say which exemptions he would favor for repeal, but said the report contains as much as $2 billion in “low hanging fruit.”

“We should be looking at exemptions that should be repealed – whether it’s a corporate welfare exemption . or whether it’s a personal one – that the public policy that was the basis for it 10, 15, 20, 30 years ago no longer exists,” Oliveira told the AP.

[…]

Exemptions in the state business tax – which include a break for small businesses – also included a carve-out for certain insurance companies that pay another levy on premiums. That exemption cost the state about $1 billion in the last two years.

The report also examined sales tax exemptions for aircraft sales, internet service, coin-operated machine sales and billboard advertising. It raised the possibility of taxing cosmetic surgeries and automotive repair and maintenance services.

I’m not going to argue for or against any of these items right now. I guarantee, every single one of them has a constituency from which we will hear in loud and anguished terms if their particular piece of the pie comes under real scrutiny. I simply want to make the point that as the government is always being urged to examine its expenditures to ensure they are justified and useful, so should we at least periodically examine the breaks, loopholes, exemptions, and other instances of special treatment that we build into the tax code to see as Chairman Oliveira says if they are still fulfilling a valid policy role. To once again cite my favorite example of this, purchases made via the Internet were initially shielded from sales taxes in order to give these fledgling “online” businesses a fighting chance for survival. I think we can all agree that this business model has proven successful, yet the tax exemption exists. What purpose is it serving now? Regardless of what we decide, we should be having the debate.

One more thing: In the comments to an earlier post, I was asked what the “progressive solution” to the current budget situation would be. The full answer to that is complex and broad – there’s no one “progressive” answer but a range of ideas that we’d love to bring to the table – but consider this: If we used the Rainy Day Fund, adjusted the business margins tax and/or the 2006 property tax cut to eliminate the structural deficit that was created at that time, and at least grabbed the “low hanging fruit” that Chairman Oliveira referenced, we’d shave about $15 billion off the shortfall. That’s before you get to the LBB recommendations, many of which I find meritorious, or to cuts that progressives should gladly support like the closing of the Sugar Land prison, or to expanded gambling and whatever it may or may not have to offer. Sure, even if you do all that you’re still eleven or twelve billion dollars away from where the CPPP thinks we need to be, and from there you really can’t avoid making cuts to stuff we like (given that nobody will listen to our tax ideas, that is), but at this point the task becomes a lot smaller and a hell of a lot less painful. Doesn’t that sound better than laying off 100,000 teachers?

Legislative beer news

There’s a new player on the beer legislation scene this session.

The owner of one of San Antonio’s largest brewpubs, Freetail Brewing Co., is spearheading an effort to change state law to allow it and other brewpubs to distribute their beer anywhere in Texas.

If successful, beer aficionados no longer would need to travel to San Antonio to sip on Blue Star beverages, or to Austin for Uncle Billy’s or Dallas for Gordon Biersch. The brewpubs would be able to self-distribute up to 10,000 barrels of their brew per year or sell it to licensed distributors.

And under the proposed legislation, brewpubs could increase their total production from the existing limit of 5,000 barrels per year to 75,000 barrels.

Freetail owner Scott Metzger helped draft House Bill 660, which would change the state’s beer distribution laws. State Rep. Mike Villarreal, D-San Antonio, filed the bill last week.

The San Antonio Current, the Chron’s Beer, TX blog, and the Austin Chronicle have all written about HB 660. Far as I know, this is the first time that brewpubs have gotten involved in this.

If you’ve read this blog for any length of time, you know that I’m a fan of Saint Arnold beer and of microbreweries in general, and I’ve been a supporter of legislation to give them more freedom to sell their product. Past legislative efforts to allow microbreweries to sell their wares at their base of operations, which is something that Texas wineries have been able to do for some years now, have fallen short. The microbreweries are trying again, but theirs is a separate effort, as noted in that Beer, TX post:

Our own Jessica Farrar, D-Houston, has indeed introduced a bill that would let brewers distribute a limited amount of beer directly to consumers. HB 602 would allow Texas breweries to charge for tours and then give tour participants up to 48 12-ounce beers at the conclusion.

By charging varying amounts, depending on how much beer a tourist wanted to receive, consumers could get the beer they want while maintaining the status quo for the state’s powerful distributors. According to the wording of Farrar’s bill:

This section does not authorize the holder of a brewer’s permit to sell ale to an ultimate consumer.

So instead of allowing people to buy a case of beer after touring the brewery, you can offer differently-priced tours that may or may not include a free case or two of the product to take home with you afterward. If you’re thinking that’s a subtle change from the previous bills, you’re correct. If you’re wondering why such a subtle change would make this bill more likely to pass, all I can say is welcome to the world of sausage-making.

Anyway. Freetail owner Scott Metzger has started a blog to document his journey through this process, and he describes the differences between HBs 660 and 602 in this post, summing up as follows:

Obviously, I support HB 660. I also believe that the activities that would be permitted by HB 602 should be legal. If a brewery wants to give you a couple of cases of beer, I believe they should be allowed to. It should be noted, however, that HB 602 has a very narrow focus that affects only a handful of breweries: A-B in Houston, MillerCoors in Ft. Worth, Spoetzel in Shiner, St. Arnold in Houston, Real Ale in Blanco, Rahr in Ft. Worth, and Independence in Austin (in other words, only the breweries that package beer in 12-ounce bottles).

I support this bill and the efforts of the breweries who would be helped by its passage. I would however, point to HB 660 as a more comprehensive piece of reform legislation that has a greater reach. And with the exception of A-B, MillerCoors and Shiner who all exceed HB 660′s size restriction, the Brewpub bill allows the activities that HB 602 seeks to allow, should a brewery decide to change to a brewpub license. A brewpub is legally allowed to sell you packaged product for off-premise consumption, so long as they have packaged product to sell (most don’t).

You will never find me campaigning against HB 602, as I think it’s a bill that should pass. However, I believe our state is in need of greater reform that benefits our craft beer industry.

I was curious about what the microbrewery perspective was on HB 660, so I placed a call to Saint Arnold’s and had a chat with Brock Wagner. He told me they’re focused on their own efforts and that he wishes Metzger and his supporters the best of luck. As do I, to all of them. There’s a Facebook page for HB 660 to like if you’re into that sort of thing. You know I’ll be keeping an eye on this.

Some day, we will do something about the Astrodome

So says Harris County Judge Ed Emmett.

“We on the Commissioners’ Court are going to have to make a decision, and I think it needs to be made this year, as to what we are going to propose to the voters,” he said. “It is a challenge, because every time we take a poll and ask people in public gatherings, ‘Do you want to tear down the Dome?’ 80 percent say no. When I ask what they want to do with it, that’s when it gets to be tricky.”

The Harris County Sports and Convention Corp., which operates the county-owned Reliant Park complex, last year offered three scenarios. One option, totaling about $88 million, would demolish the Dome and use the land for a fountain and public space. It also would include about $300 million to add convention space at Reliant Park and replace Reliant Arena. Other options would retain and redesign the Dome and update Reliant Park’s convention facilities at a cost ranging up to $1.35 billion in private and public funds.

Willie Loston, executive director of the Sports and Convention Corp., said the agency hopes to ask commissioners for money this year to fund feasibility studies on future uses for the Dome.

Emmett said it could be a year, or more, before significant steps are taken on the Dome’s future step.

“That would be OK, as long as people know what is going to happen and where we want to go, even if we can’t start it,” he said. “But I do think it’s time to make a decision on where we want to go with it.”

Can you believe it’s been over six months since we first heard about the three options for the Dome, none of which were particularly well liked? My interpretation of Judge Emmett’s remarks is basically “Look, when the economy improves to the point that someone can finally get financing for one of these hairbrained schemes for the Dome, we’ll do something about it. In the meantime, just deal with it.” He might phrase it a bit more delicately than that, but you get the idea.