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The End Game

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Here we are in the home stretch of the regular session, and this year, earlier than usual, the Lege is divided along chamber lines rather than party ones. Tax cuts, obviously, are the biggest point of contention between the House and the Senate. Both chambers have approved proposals that would cut the franchise tax collections by a bit more than $2bn each biennium; the rivalry there is not severe. The Senate, however, announced in February that it would seek an additional $2.1bn in “property tax relief”. The House took no interest in that scheme, and announced that it would, instead, seek $2.3bn worth of sales tax cuts.

On April 8th, Lieutenant Governor Dan Patrick launched a pre-emptive strike against Dennis Bonnen, the chair of the House Ways & Means committee, and the tax cuts he had proposed. At first, Bonnen declined to return fire, perhaps because he hadn’t even laid out either bill in the Ways and Means committee at that point. But by the beginning of this month, with both chambers having passed their bills, and Sine Die visible on the horizon, the Lege had clearly reached a impasse. Jane Nelson, the Chair of Senate Finance, sounded an optimistic note last week: “I think things are coming unstuck,” she told the Austin American-Statesman’s Kiah Collier. Meanwhile, Quorum Report noted that Patrick had made his position clear in private meetings with business groups: he had no interest in compromise. Over the weekend, Bonnen returned fire. Previously, he had been focused on advocating for his idea, on its merits; in an op-ed, he explicitly laid out why he opposes Senate’s property tax relief plan. This morning, when the Ways & Means committee took up SB1 and SJR1, he, along with the rest of the committee, politely but unmistakably eviscerated it.

This tax-cuts fight isn’t the only impasse between the chambers this year, but it is the one that has to be resolved, because the Senate’s property tax relief plan only works if the Lege passes a budget that authorizes a couple billion dollars in state money for local school districts. The House members on the budget conference committee, of course, have no reason to agree to that. Neither do the Senate conferees have much reason to insist on keeping that provision, beyond the political one: the lieutenant governor is the president of the Senate. Patrick issued a warning back in April: “Let there be no misunderstanding, I agree with Governor Abbott that I too will not support any budget that does not have franchise tax relief. I also will not support any budget that does not have property tax relief, as well.” That was an extremely ominous thing to say, because the lieutenant governor, unlike the governor, does not have veto power. But he could, perhaps, approximate the effects of a veto, by refusing to bring the conference committee’s budget up on the Senate floor if it displeases him. Three months ago, the suggestion that the lieutenant governor of Texas would consider such a ploy would have seemed absurd. Today, though? Everyone I’ve talked to, in both chambers, is apparently resigned to at least one special session, even though Abbott has given no indication that he wants to call one. That’s because the state constitution requires the Lege to pass a budget. If they fail to do so, a special session is automatic.

What’s especially insane about this possibility is that the Senate has already lost this particular fight and has no way to win it in if they insist on a rematch via a special session. I say that with no malice or schadenfreude. I’m glad that they made an effort to rein in property taxes and I commend them for having passed a significant property tax reform, in Brandon Creighton’s SB1760.  SB1/SJR1, however, is obviously a swing and a miss. If you don’t already believe that, watch the video of the Ways & Means committee meeting this morning (starting at about twenty minutes in). If you still don’t believe it, it doesn’t matter, because even if the Senate conferees prevail on the budget bill, their plan can’t be implemented without House passage of SB1 and SJR1. And after today, it’s pretty clear that SB1 and SJR1 are dead in the House. The Ways & Means committee might send those measures to the floor, to give the whole House a chance to make a clear statement. If so, we know what that statement will be. Not a single representative has declared a preference for the Senate plan, and none of them work under Patrick. There is no scenario where a majority of the House votes for SB1. There is definitely no scenario where 100 representatives vote for SJR1.

And there is no reason to think that the House will be more pliable in a special session. If anything they’ll be more annoyed. Republicans in the Texas Senate, I hope, understand that this is not a House vs Senate game of chicken, or part of a coordinated campaign to pick on Dan Patrick or the chamber he leads. The House is not going to subscribe to the Senate’s property tax relief plan because it’s not a good plan. That’s all. That’s enough. If the Senate proceeds to ruin everyone’s summer on behalf of a plan that no one other than Patrick particularly cares about, I guess, the House might start to see this as a tribal issue. But as it stands the division isn’t House vs Senate. It’s Patrick vs Texas.

As for Patrick—for goodness’ sake, there’s no shame in trying, or even in failing. A person who never stumbles is a person who’s phoning it in. But if you trip and fall into a hole, or dig yourself into a hole, or just somehow end up in a hole, the usual advice is don’t dig in any further. Far better to find a ladder, like the one Creighton provided with his property tax reform bill, or the one Bonnen offered this afternoon, when he said that he’d be willing to table the sales vs property tax drama and focus on a sizable franchise tax reform—an idea that the House, the Senate, and Abbott could all support. Either way, Patrick has two options right now: he can continue to stand his ground, or he can accept the circumstances and try again in 2017. Put differently: he can do damage, or do damage control. 

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  • El Jefe

    I think you’ve hit on the key point here, there is to road to victory for Patrick here. At this point he’s actually being spared a century club vote on his tax bill. I’m not sure if he thinks the odds get better for him in a special but hard to see how it does. He’s never really had to back away on an issue because winning the day was never really the point, at least not the whole point. But now, what does he even do?

    • Blue Dogs

      Continue ranting & raving!

  • Texas Publius

    Your comment that “the Lege is divided along chamber lines rather than party ones” with three Rs at the helm demonstrates a complete lack of leadership. And most of the blame will ultimately fall on Abbott, for being the Neville Chamberlain in this deal.

    But, as you say, Abbott dug in on business tax cuts in January. Patrick did the same on property tax relief. All before we even knew what the budget numbers are, or where the Legislators will end up. The two inexperienced guys created this problem.

    If the Phoenix guys are into hypocrisy, they should turn their cameras onto Mr. Patrick. He railed against Perry-Dewhurst-Craddick’s property tax rate cuts in 2006, saying those state appropriations counted as spending and busted the cap. Now, he’s railing for homestead exemptions of a fractional amount, and whining that those state appropriations should not count as spending. The media has given Patrick a complete pass on this 180 degree flip flop of his. He’s a divider, not a uniter. And never will be a unifying leader.

    • Blue Dogs

      Are you ready to proclaim that Patrick is campaigning for the TX Governor’s Mansion in 2018?

  • José

    It’s a hell of a state where the Democrats can’t get elected and the Republicans can’t govern. Dios mio.

    • Blue Dogs

      Dems have been elected to County Judgeships, Big-City Mayoralties, etc.,

      • donuthin2

        But it has been forever since the repubs have governed

  • WUSRPH

    Bonnen did indicate some willingness to drop the sales tax for a higher margins/franchise tax cut….but that still leaves the question of what kind of a property tax deal can the House except. It is certain that it will not buy the exemption from the spending cap…..so that would have to go…It might also not buy that high of a homestead exemption because of the high cost. Therefore, I suggest the following solution:

    Cut the margins/franchise tax by 20%; raise the homestead exemption to $75,000; cut the sales tax by 1/4 percent ….almost splitting the difference all the way around AND GO HOME!

    This would certainly be bad fiscal policy…but I think we have gotten far beyond the time when the question of wise fiscal policy was on the table. That concern was dropped when both sides committed to the size of a tax cut/tax relief that would be enacted no matter which plan was finally adopted. There is now no question of the fact that whatever is done it will create fiscal problems for future legislatures. Fortunately, however, it appears that the House will not double the Senate’s sins by adopting the tighter spending cap that Patrick tried to push thru with SB9/SJR 2 that would have produced an even worse situation in the future.

  • WUSRPH

    The House Calendar Committee has placed HB 1759—the school finance bill on the Daily Calendar for Thursday, the last possible day for a non-local, non-consent bill to pass the House on second reading….However, because there are so many bills already on the Calendar, its passage is doubtful.

    It has been placed on the Major State Calendar which may help it move faster than otherwise may be the case…since that will move it ahead of the dozens of second reading bills on the General State Calendar for Wednesday–most of whom will probably not be acted upon on that day but, instead, will be carried over until Thursday. However, putting it on Major State for second reading will NOT move it ahead of the other dozens of bills that will be pending third reading on Thursday, all of whom muse be disposed of before getting to HB 1759 and the other bills on the Major State list. Wednesday’s calendar is more than 24 pages of bills—10 to 13 bills per page. All the second reading bills, no matter on which category of the Calendar, MUST PASS the House on 2nd reading by midnight Thursday are they are DEAD. The only exception will be the bills on the separate Local & Consent Calendar. (That is barring a four-fifths vote to suspend the rule setting the deadline for passage on second reading.)

    Another factor that may stand in its way to passage is the fact that the annual “chubbing” ritual is clearly underway. (Chubbing refers to the practice in the House of drawing out the debate on bills by asking numerous questions, seeking answers to various parliamentary inquiries and raising points of order. This ritual is engaged in by members who are angry because their bills did not make the calendar and/or by members who want to demonstrate some degree of political “purity”.)

    • MeNDan are going to cut cut cut….youNJoe can chub chub chub….

      • Erica Grieder

        @johnbernardbooks:disqus Dude. as repulsive as you are, I’m starting to feel sorry for you. Name one area of state spending Patrick wants to cut. (You can’t, because there are none.)

  • What the looters don’t want you to know:

    “For example, the military’s budget is about 1.8 times higher today than it was in 1960, while legislative appropriations to higher education are more than 10 times higher.”

    http://www.nytimes.com/2015/04/05/opinion/sunday/the-real-reason-college-tuition-costs-so-much.html?WT.mc_id=2015-MAY-WCASeq-OPINION&WT.mc_ev=click&ad-keywords=WCARETARG&_r=0

    Chickens are coming home to roost for democrats…

    • John Johnson

      You are crass, JBB. You are very comfortable in this role. While others pound on you for being the total troll, they seem to overlook, or ignore, the fact that you do post compelling links to accentuate your claims on occasion…case in point here. While this is an opinion piece in the NYT’s, it is compelling, and offers lots of points to chew on.

      • Merely pointing out the hypocrisy of the looters.

      • WUSRPH

        That “compelling link” totally ignores the fact that defense spending started out as a much greater amount than spending on higher education and is still several times more. (Figures for 2013 were more than $660 billion for defense and about $180 billion for higher education. Defense spending was also up more than 45% above the level at 9-ll.) As usual with the Troll it is a case of the misuse of percentages by ignoring the question of “percentage of what?”. That is the an easy way to distort reality….

        • John Johnson

          I think the point of the piece is that education spending has considerably increased in proportion to military spending which would simply show that there seems to have been an effort to improve the system through a cash infusion. Has it worked? We better off now? I certainly don’t think so. I read a piece the other day that suggests that a disproportionate amount is going into administration. I have always tought that.

  • Another Wilco Voter

    All I can say in response to this, “Either way, Patrick has two options right now: he can continue to stand his ground, or he can accept the circumstances and try again in 2017. Put differently: he can do damage, or do damage control,” is, duh, you’ve met Dan Patrick, right??

    • Erica Grieder

      Yeah, and I don’t dislike him and I don’t like seeing anyone come to undue harm. :-/

      • WUSRPH

        When it comes to someone coming to harm, I try to follow my late father’s example. He used to say that no good Christian should want harm to come to anyone…Although he claimed not to be that good of a Christian…he said he agreed and did not want harm to fall on anyone….but, if God in his infinite wisdom, designed that harm had to fall on someone, he did have a list of names he would like Him to consider. I adopt the same viewpoint when it comes to political harm falling upon some worthy politician.

  • PrattonTexas

    “What’s especially insane about this possibility is that the Senate has
    already lost this particular fight and has no way to win it in if they
    insist on a rematch via a special session.” Maybe in a parliamentary sense but not politically.

    Voters want property tax relief but few are really aware of the fight – putting the fight directly before them in a special session focuses attention and then it is likely that district pressure could move House members.

    • John Johnson

      You know what I would stand up in front of the mic and broadcast as a Rep? It would sound something like this…”All but a few of your state senators are pushing to hand you a paltry $200, on average, property tax break while giving Big Insurance the ability to deny payment on major claims and protect themselves from your hiring an attorney and using the courts to get what is due you.” My new senator is Konni Burton. I have asked why she voted to allow the high flying, high profit, big insurance companies to have their way with us, but have received no answer. I would imagine it is because there is not one. If she was honest, she would respond that the TLR, in concert with Big Insurance, has promised her “support” in insuring she get reelected. It stinks. It really, really stinks.

    • Erica Grieder

      I agree that voters want property tax relief–I want that myself. But SB1/SJR1 are not real relief. I get that it may seem better than nothing. That’s how Democrats see Obamacare and in both cases I’d say, in addition to everything else I don’t like here, that the opportunity cost of a “better than nothing” reform is a good reform. What we have here is at best a band-aid–a dollar store band-aid that won’t stick for more than a minute and may have Ebola on it to boot. Property taxes are a big issue; let’s hit pause, everyone look at it, and go for a really serious, meaningful reform in 2017. Right?

      • donuthin2

        Property tax reform is definitely needed but I wonder if the little bit they are proposing, if passed, precludes meaningful reform later?

      • no, we reverse the trend of TaxNSpend starting today.

      • WUSRPH

        There are many ways that local property taxes can be reformed, relieved or cut…Most of which could be outlined here in just a few minutes. . The Legislature can play games—like it will with SJR 1—to make it look like something has been done…

        But, before it can “reform”, “relieve” or “cut” local property taxes by any meaningful amount the Legislature has to accept the fact that one of the primary reasons that local school property taxes have increased so much is that the State school finance system sets requirement for local districts but does not provide the funding to allow them to do so without raising local property taxes. In fact, there is a direct connection between the decision by the Legislature in the 1990s to REDUCE the state’s share of the cost of public education at the same time it was placing more obligations on the districts and higher local taxes. In the 1970s and 80s as much as 60% of the cost of public education was covered by STATE dollars. Today the amount is 40% or less. And, despite all the hype behind Rep. Aycock’s school finance bill, the reality is that IT WOULD NOT HAVE CHANGED THAT RATIO……If the Legislature is serious about reducing local property tax burdens, it must at the least reverse that ratio—restoring it to where it historically was. Doing that will allow local property taxes to be cut or at least held where they are. Anything else is just playing games.