SIX BILLION DOLLARS’ WORTH OF SURPLUS. Six billion. Being rich beats being poor any day, but for states, as for individuals, three things are still true: The money is never enough, it doesn’t solve all your problems, and all the relatives want a piece of it. So the 76th Legislature, which begins meeting this month, will find plenty to fight over.
The budget will overshadow all the other issues this session, including such hardy biennials as school vouchers, parental notification of abortions, tort reform (to limit Y2K lawsuits), a turf fight between local and long distance telephone companies, and electric restructuring, which used to be called electric deregulation until some pollster found that the public liked the same idea better if it was called restructuring. The only thing that matters is money, money, money, and the claimants are everywhere: tax cutters, big spenders, universities, highway builders, and children’s health advocates, to name a few. Just about everybody can make a good case. The state parks system is broke. Nursing homes are pleading for more state money, and so are mental health professionals who want the state to pay for expensive new drugs. Schoolteachers could use a pay raise, as always. Somehow Governor George W. Bush, Lieutenant Governor Rick Perry, and Speaker of the House Pete Laney must make the tough decisions at a time when Bush is thinking about running for president, Perry is trying to learn the ropes, and Laney is clinging to the narrowest of margins over Republicans that a Democratic Speaker has had in the two-party era.
We were trying to sort all this out when, wonder of wonders, we stumbled upon what appear to be confidential memos to the state’s three top officials from their political consultants. For your eyes only.
To: George W. Bush
From: Graham O. Partie, Republican consultant
THE FIRST THING YOU HAVE TO DO IS MAKE UP YOUR MIND whether you’re running for president. You’d like to get through the session without tipping your hand—the longer you wait, the less time the media and your Republican rivals will have to shower abuse on you. But you can’t delay much longer, because you can’t settle on a legislative program until you know where you’re headed. This means that your priorities will reveal your intentions. If you come out with a program designed to satisfy national Republican litmus tests—tax cuts and school vouchers—everyone will know that your hat is in the ring. But if you’re planning to stick around Texas for the next four years, you can spend some of the political capital you amassed in getting almost 70 percent of the vote last November to make Texas a better place. You can continue your battle for tax reform, look for more ways to strengthen public education, throw your weight behind the constitutional revision proposed by two leading legislators, Senator Bill Ratliff (Republican, Mount Pleasant) and Representative Rob Junell (Democrat, San Angelo), and help determine which causes are the most worthy to share in the $6 billion windfall.
Which will it be? Your closest political adviser, Austin consultant Karl Rove, let the cat out of the bag at an October forum when he was asked how your race against Democrat Garry Mauro was faring. “The governor’s race is over,” Rove said. “This is all about 2000 now.” What Rove meant was that with victory certain, it was time to concentrate on the size of your margin and your percentage of the Hispanic vote, two elements that are vital to your national image as an inclusive politician who can attract Democratic voters.
As a presidential candidate, tax cuts must be at the top of your list. It is the most important credential for a GOP governor. You should have little trouble winning approval of giving businesses a franchise-tax exemption of the first $100,000 in sales and a franchise-tax credit for high-tech research and development. But your proposal for property-tax relief of up to $2 billion is going to be a tough sell. The Democratic Speaker of the House, Pete Laney, has been your ally in past sessions because he believed you were motivated by doing what is best for Texas. If he thinks your tax cut is motivated by presidential politics, he won’t help you.
Another problem is that the surplus is not as big as it looks. The Texas constitution limits spending increases to the rate of growth of the state’s economy, so although there will be an extra $6.3 billion available to spend in the next budget cycle, the rate-of-growth formula limits the budget increase to $5.3 billion. Much of the remaining billion will go into the state’s rainy-day fund as a hedge against a future tax increase in case our economy nose-dives. Enrollment growth in public schools and the cost of maintaining the current level of state services to a growing population takes up another $3 billion. (The opening of new prisons, for example, will cost $250 million.) Now you’re down to $2 billion, you still haven’t gotten your property-tax cut, and you’re competing against all those interest groups for the balance. And there is always the possibility—if rumor is to be believed—that the new state comptroller, Carole Rylander, might slash the estimate of available revenue, just to be on the prudent side. Poof! The surplus would be gone.
You also have some spending plans of your own. Your proposal to end the social promotion of students who can’t pass the TAAS test carries a $200 million price tag for summer schools and other remedial programs, and your idea of refurbishing Texas courthouses isn’t cheap either. The cost of your own proposals, including tax cuts, is more than the $2 billion that is thought to be available. It looks as if you are headed for a repeat of 1997, when you settled for a face-saving increase in the homestead exemption that was worth $1 billion instead of the property-tax overhaul you really wanted.
Your status as the front-runner for the presidential nomination,