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Rene Oliveira

2018 primary runoff results: Congress and Legislature

All results are here. I began drafting this around 9:30 when there were still a bunch of precincts out, but with the exception of the tossup in CD25, all of the Congressional races were pretty clear by then:

CD03: Lorie Burch
CD06: Jana Sanchez
CD07: Lizzie Fletcher
CD10: Mike Siegel
CD21: Joseph Kopser
CD22: Sri Kulkarni
CD23: Gina Ortiz Jones
CD27: Eric Holguin
CD31: MJ Hegar
CD32: Colin Allred

At the time I started writing this, Julie Oliver led in CD25 by 70 votes out of almost 18,000 cast and about three quarters of precincts reporting. Later on, she had pulled out to a five point lead, so add her to the winners’ list as well.

On the legislative side, Rita Lucido was leading in SD17, Sheryl Cole had a modest lead in HD46 with most precincts reporting, Carl Sherman had a much bigger lead in HD109, and longtime Rep. Rene Oliveira had been shown the door.

As for the Republicans, Dan Crenshaw won big in CD02, Lance Gooden won in CD05, so no more Republican women in Congress, Chip Roy and Michael Cloud led in CDs 21 and 27, respectively. The wingnuts in HDs 08 and 121 lost, and incumbent Rep. Scott Cosper lost.

Congratulations to all the winners. I’ll have some more coherent thoughts on all these races in the next day or so.

Runoff races, part 2: Legislative

There’s one Democratic primary runoff for SBOE, one for Senate, and seven for the House. Here’s a brief look at them.

SBOE12

Suzanne Smith
Laura Malone-Miller

Smith led with 48.12% in March to Malone-Miller’s 26.31%. Smith has the DMN endorsement, while Malone-Miller doesn’t have a website. This is a Republican open seat – Geraldine “Tincy” Miller won with 61% in 2014 but is not running for re-election. This district went for Trump by a small margin in 2016, 50.1%to 44.4%, so it’s a dark horse contender to be flipped.

SD17

Rita Lucido
Fran Watson

Lucido, the 2014 candidate in SD17, nearly won this outright in March, finishing with 48.96% to Watson’s 35.09%. My interview with Lucido is here and with Watson is here. They’re both good candidates and good people.

HD37

Rep. Rene Oliveira
Alex Dominguez

Rep. Oliveira picked a lousy time to get busted on a DUI charge. That’s the sort of thing that tends to held usher Democratic incumbents out of office. Dominguez is a Cameron County Commissioner, so he’s a real threat to Oliveira, who led 48.48% to 36.40% in March.

HD45

Rebecca Bell-Metereau
Erin Zwiener

HD46

Jose “Chito” Vela
Sheryl Cole

HD47

Vikki Goodwin
Elaina Fowler

HD45 used to be a mostly rural district that elected a Democrat from 2002 through 2008 when rural Democrats were common enough, then went Republican in 2010 and has stayed that way as the district has become more suburban as San Marcos and the northern parts of Hays County have grown like gangbusters. Bell-Metereau, who led Zwiener 45.49% to 30.63% in March, is a three-time SBOE candidate, while Zwiener is a children’s author and Jeopardy! winner half her age. This is the kind of district Dems need to win to really make gains in the House, and there’s more focus and optimism on that score than we’ve seen this decade.

HD46 is the seat now held by Rep. Dawnna Dukes, who lost in the primary. The winner of this runoff will be the next Rep; there is a Republican, not that it matters, and an independent candidate who was going to be in a special election to succeed Dukes that never happened dropped out after the March result, citing the fact that both Vela and Cole are fine by him and more importantly to him not Dukes. Thanks to Dukes’ high profile and the fact that a win by Vela could mean there are no African-American legislators from Travis County (see below for HD47), this is probably the hottest House runoff on the ballot. The Trib, the Statesman, and the AusChron all have recent coverage. The score in March was 39.52% for Vela and 38.23% for Cole.

HD47 is the one Travis County district held by a Republican; Rep. Paul Workman rode the 2010 wave and got a friendlier map in 2011, but the district is not deep red and if there’s a year he could be in trouble, this is it. I really haven’t followed this one and only learned about these candidates while writing this post, but there’s coverage in the Statesman and AusChron if you want to catch up. The AusChron endorsed Fowler and Vela; Fowler is African-American so if she makes it all the way then Travis County would still have African-American representation at the Capitol.

HD64

Mat Pruneda
Andrew Morris

Another race I haven’t followed. HD64 is in Denton County, where incumbent Rep. Lynn Stucky is a ParentPAC endorsee. The district is in Denton County and it is red but not super duper red, though it is redder than neighboring HD65. The latter will flip before this one does, but it will be worth keeping an eye on it to measure progress.

HD109

Deshaundra Lockhart Jones
Carl Sherman

This is the seat being vacated by the retiring Rep. Helen Giddings. The runoff winner will be sworn in next January. Both candidates exceeded 40% in March, with Jones leading by four points. Sherman is the former Mayor of DeSoto, and he has the DMN endorsement. Jones is also from DeSoto and has served a couple of terms on its City Council. This race, along with the one in HD46, are rare instances this year where a female incumbent could be succeeded by a male candidate. (I overlooked the HD109 race when I wrote about the gender of primary challengers in January.) Sheryl Cole is an Annie’s List candidate but Deshaundra Lockhart Jones is not; I don’t know if that means something or not. Just wanted to mention it.

HD133

Sandra Moore
Marty Schexnayder

Moore missed hitting the 50% mark by four – count ’em four – votes in March, though I should note that Schexnayder topped forty percent as well. They’re both good candidates and good people, running in a tough district, and I interviewed them both in March – Moore here, Schexnayder here. Moore has the Houston GLBT Political Caucus endorsement, Schexnayder has the Chron. Like I said, they’re both good, so pick who you like and you can’t go wrong.

2018 primary results: Legislative

Rep. Sarah Davis

Statewide Dem totals
Statewide GOP totals

Harris County Dem totals
Harris County GOP totals

(Please note that all results were coming in very slowly. I expect there will still be some precincts not yet reported by the time this publishes. So, I’m going to be less specific than usual, and may have to make a correction or two by Thursday.)

I’m gonna lead with the Republicans this time. Sarah Davis and Lyle Larson, both viciously targeted by Greg Abbott, won their races easily. Sarah, here’s that picture I mentioned before. Also, too, the anti-vaxxers can suck it (in this race; they unfortunately appear to have claimed a scalp elsewhere). Abbott did manage to unseat the mediocre Wayne Faircloth, who was the most conservative of his three targets. Party on, Greg!

Back to the good side: Rita Lucido was leading Fran Watson in SD17, but was short of a majority. Beverly Powell won in SD10, Wendy Davis’ old district. Mark Phariss was leading in SD08, but it was too close to call. On the Republican side, Rep. Pat Fallon destroyed Sen. Craig Estes in SD30, but Sen. Kel Seliger beat back the wingnuts again in SD31. Sen. John Whitmire won easily. Joan Huffman easily held off Kristin Tassin on her side of SD17. And Angela Paxton won in SD08 over the lesser Huffines brother. Apparently, two Paxtons are better than one, and also better than two Huffineses.

Other incumbents in both parties had more trouble. On the D side, longtime Rep. Robert Alonzo lost to Jessica Gonzalez in HD104; her election increases the number of LGBT members of the Lege by one. First term Rep. Diana Arevalo lost to former Rep. Trey Martinez-Fischer in HD116, and first-term Rep. Tomas Uresti, no doubt damaged by his brother’s legal problems, lost to Leo Pacheco. And Dawnna Dukes’ odyssey came to an end as challengers Sheryl Cole and Chito Vela both ran way ahead of her. Other Dems, including (sigh) Ron Reynolds hung on, though Rep. Rene Oliveira was headed to a runoff with Alex Dominguez in HD37. For the Rs, Rep. Jason Villalba was going down in HD114 – he was an anti-vaxxer target, though there were other factors in that race, so it sure would be nice for Dems to pick that one off in November. Rep. Scott Cosper was headed to a runoff in HD54. Other incumbents, including those targeted by the extreme wingnut coalition, made it through.

For Harris County, the following challengers won: Natali Hurtado (HD126; she celebrated by going into labor, so double congratulations to her), Gina Calanni (HD132), Adam Milasincic (HD138). Sandra Moore was briefly above 50% in HD133, but ultimately fell back below it to wind up in a runoff with Marty Schexnayder. Allison Lami Sawyer had a slightly easier time of it, collecting over 90% of the vote against the idiot Lloyd Oliver. Maybe, just maybe, this will be enough to convince Oliver that his run-for-office marketing strategy has come to the end of its usefulness. Sam Harless was on the knife’s edge of a majority in HD126 on the R side; if he falls short, Kevin Fulton was in second place.

There will be a few runoffs in other races around the state. I’ll get back to that another day.

The women challenging Democratic men

One more point of interest from The Cut:

And Democratic women aren’t leaving the men of their own party undisturbed. In Minnesota, former FBI analyst Leah Phifer is challenging incumbent Democratic representative Rick Nolan; Sameena Mustafa, a tenant advocate and founder of the comedy troupe Simmer Brown, is primarying Democrat Mike Quigley in Illinois’s Fifth District. And Chelsea Manning, former Army intelligence analyst and whistle-blower, announced recently that she’s going after Ben Cardin, the 74-year-old who has held one of Maryland’s Senate seats for 11 years and served in the House for 20 years before that.

While the vision of women storming the ramparts of government is radical from one vantage point, from others it’s as American as the idea of representative democracy laid out by our forefathers (like Great-great-great-great-grandpa Frelinghuysen!). “Representative citizens coming from all parts of the nation, cobblers and farmers — that was what was intended by the founders,” says Marie Newman, a former small-business owner and anti-bullying advocate who is challenging Illinois Democrat Dan Lipinski in a primary. “You come to the House for a while and bring your ideas and then you probably go back to your life.” Not only has her opponent been in office for 13 years, Newman notes, but his father held the same seat for 20 years before that. “It’s a family that has reigned supreme, like a monarchy, for over 30 years,” she says.

In the wake of Donald Trump’s defeat of Hillary Clinton, Newman and the rest of this girl gang are eyeing the aging cast of men (and a few women) who’ve hogged the political stage forever and trying to replace them. Replacement. It’s an alluring concept, striking fear in the hearts of the guys who’ve been running the place — recall that the white supremacists in Charlottesville this summer chanted “You will not replace us” — and stirring hope in the rest of us that a redistribution of power might be possible.

So naturally that made me wonder about what the situation was in Texas. For Congress, there are eleven Democrats from Texas, nine men and two women. Two men are not running for re-election, and in each case the most likely successor is a woman. Of the seven men running for re-election, only one (Marc Veasey) has a primary opponent, another man. Both female members of Congress have primary opponents – Sheila Jackson Lee has a male challenger, Eddie Bernice Johnson has a man and a woman running against her. That woman is Barbara Mallory Caroway, who is on something like her third campaign against EBJ. Basically, nothing much of interest here.

Where it is interesting is at the legislative level. Here are all the Democratic incumbents who face primary challengers, sorted into appropriate groups.

Women challenging men:

HD31 (Rep. Ryan Guillen) – Ana Lisa Garza
HD100 (Rep. Eric Johnson) – Sandra Crenshaw
HD104 (Rep. Robert Alonzo) – Jessica Gonzalez
HD117 (Rep. Phillip Cortez) – Terisha DeDeaux

Guillen’s opponent Garza is a district court judge. He was one of the Dems who voted for the anti-gay marriage constitutional amendment back in 2005. I’d like to know both of their positions on LGBT equality. Speaking of which, Jessica Gonzalez is among the many LGBT candidates on the ballot this year. Note that Alonzo was on the right side of that vote in 2005, FWIW. Crenshaw appears to be a former member of Dallas City Council who ran for HD110 in 2014. There’s an interesting story to go along with that, which I’ll let you discover on your own. Cortez was first elected in 2012, winning the nomination over a candidate who had been backed by Annie’s List, and he drew some ire from female activists for some of his activity during that campaign. I have no idea how things stand with him today, but I figured I’d mention that bit of backstory.

And elsewhere…

Women challenging women:

HD75 (Rep. Mary Gonzalez) – MarySue Fernath

Men challenging men:

HD27 (Rep. Ron Reynolds) – Wilvin Carter
HD37 (Rep. Rene Oliveira) – Alex Dominguez and Arturo Alonzo
HD41 (Rep. Bobby Guerra) – Michael L. Pinkard, Jr
HD118 (Rep. Tomas Uresti) – Leo Pacheco
HD139 (Rep. Jarvis Johnson) – Randy Bates
HD142 (Rep. Harold Dutton) – Richard Bonton
HD147 (Rep. Garnet Coleman) – Daniel Espinoza

Men challenging women:

HD116 (Rep. Diana Arevalo) – Trey Martinez Fischer
HD124 (Rep. Ina Minjarez) – Robert Escobedo
HD146 (Rep. Shawn Thierry) – Roy Owens

Special case:

HD46 (Rep. Dawnna Dukes) – Five opponents

We know about Reps. Reynolds and Dukes. Bates and Owens represent rematches – Bates was in the 2016 primary, while Owens competed unsuccessfully in the precinct chair process for HD146, then ran as a write-in that November, getting a bit less than 3% of the vote. Alonzo and Bonton look like interesting candidates, but by far the hottest race here is in HD116, where TMF is seeking a return engagement to the Lege, and a lot of his former colleagues are there for him. I imagine things could be a bit awkward if Rep. Arevalo hangs on. Anyway, I don’t know that there are any lessons to be learned from this, I just wanted to document it.

“Sanctuary cities” bill modified by House committee

It’s less bad than the Senate version, but it’s still not good.

A Texas House committee on Wednesday began debate on the lower chamber’s version of the controversial proposal to outlaw “sanctuary” jurisdictions, making few but significant changes to the bill the Senate passed out last month.

Outlawing “sanctuary” entities, the common term for state and local governments and college campuses that don’t enforce federal immigration laws, has been deemed must-pass legislation by Gov. Greg Abbott. It’s likely a bill will make it to his desk before lawmakers gavel out in late May.

But members of the House State Affairs Committee also told witnesses and other lawmakers that Senate Bill 4 by state Sen. Charles Perry, R-Lubbock, will likely be revised several more times before it’s presented to the full House for a vote.

“It’s not perfect, it’s not complete and we will continue to work on it,” Fort Worth Republican state Rep. Charlie Geren, the bill’s House sponsor, said during the hearing.

One major change to the proposal is that the House version makes inquiring into the status of an undocumented immigrant allowable only if that person is arrested. The Senate version is broader in that it applies to immigrants that are arrested or detained. Perry said during the Senate debate that meant a police officer could question a person’s status during even routine traffic stops.

Rep. René Oliveira, D-Brownsville, said he appreciated Geren listening to his concerns and working with the members, but added that a person could still be turned over to Immigration and Customs Enforcement agents for a class C misdemeanor, which normally would only require them to pay a fine.

[…]

After a suggestion by state Rep. Oscar Longoria, D-Mission, the House committee is also working on a change that would prevent bail bond agents from charging a large amount of cash up front to bond out an undocumented immigrant. Geren said that currently, bondsmen can take advantage of an arrested person by knowingly accepting their money up front even though that person will likely be transferred to ICE agents for subsequent deportation.

See here and here for the background. A lot of people showed up to testify against this bill.

As the lawmakers debated the language, hundreds pleaded with them to scrap the proposal altogether.

In all, 638 people registered to speak about the bill. Of those, 619 registered to voice opposition to the legislation, while just 11 registered in support. Eight were neutral.

The opponents included the Houston Police Department, which called the plan “short-sighted” and Harris County Sheriff Ed Gonzalez, who said it would strain relations with immigrant communities and make minorities less likely to report crimes. Despite the fierce opposition, neither Houston nor Harris County has adopted “sanctuary city” policies.

Others spoke of the impact on the lives of immigrants.

Sergio Govea, a 9-year-old, choked back tears as he told a reporter before the hearing about the constant fear that plagued him that his parents won’t return “every time they leave the house.”

“I haven’t lost my parents physically but they are not the same as they were before this,” he said. “They are scared to go to H-E-B to get food, a basic necessity. … I don’t even know if they will be there today when I get back home.”

The bill was left pending in committee, but it will come back (possibly with more changes) and when it gets voted on it will get sent to the full House. How long that will take is unclear at this time.

Rep. Byron Cook, R-Corsicana, the chairman of the House State Affairs committee, said he is in no hurry to rush through the process.

“We’ve got a long ways to go to get this right,” Cook said at the Capitol the morning after a marathon hearing on the current measure, Senate bill 4 by state Sen. Charles Perry, R-Lubbock. The legislative session ends on May 29.

[…]

Abbott called banning sanctuary jurisdictions a priority after Travis County Sheriff Sally Hernandez, a Democrat, announced following her 2016 election victory that she would only honor detainer requests on a very limited basis. As punishment, Abbott yanked state-grant funding for all county programs.

Cook said Thursday he thinks the bill could be consolidated to only include the detainer provision. Testimony from hundreds of witnesses at Wednesday’s hearing reflected a sentiment that allowing officers to question a person’s immigration status without arresting them would create a chilling effect that would erode the public’s confidence in law enforcement.

Cook took note of those concerns, he said.

“If you look at this on the big picture [level], all we’re really needing to do, all that’s really been said is that local jurisdictions need to honor federal detainer requests,” he said, noting Hernandez was the only outlier. “And what the testimony indicated once again last night is that though one sheriff deviated for a short period of time, all our law enforcement agencies across the state are in fact honoring detainer requests, as they’re supposed to.”

Rep. Cook also indicated that the state should pay for detainer costs, not the counties. I appreciate the effort that Cook has made to make the bill less bad, but it’s still a bad bill that serves no good purpose.

State Rep. Eddie Rodriguez, D-Austin, said he’s on board with Cook’s desire to limit the scope of the bill and said the issue has become a political football more than anything else.

“If it was just dealing with detainers in the jails, it addresses [the Republicans’] issue, which is really just to get a vote on an immigration issue,” he said. “Because this is all politics, as far as I’m concerned. We’ll still vote against it but at least it’s not as bad as it can be.”

Indeed. The danger here is that when the House version passes, the modifications made by the House could get gutted by the conference committee, with something close to the original Senate version passing. The only right answer is to keep opposing this bill.

First rideshare legislative hearing

There will be a lot more where this came from.

Uber

Representatives from Uber and Lyft urged lawmakers to adopt statewide regulations for the ride-hailing industry during a Texas Capitol hearing on Wednesday, citing what they called burdensome local ordinances that have driven them to leave Austin and other Texas cities.

The companies fielded pointed questions from members of the House Committee on Business and Industry about safety concerns and how local regulations, like those in Austin, impact their operations.

“I think we first need to recognize the obvious – technology is changing our lives,” said Committee Chairman René Oliveira, D- Brownsville, at the start of the hearing. “These changes are going to be very profound; you’ve already seen that in Austin … but this is not just an Austin, Travis County issue.”

Currently, regulations for ride-hailing companies are handled on a city-by-city basis. The Legislature discussed potential regulations during the 2015 session, but those bills failed to gain any traction. Now, several months ahead of the next session, lawmakers are revisiting the issue after Austin citizens voted in May to keep in place a requirement for ride-hailing drivers to undergo fingerprint-based background checks.

[…]

Lyft

Oliveira said while he tends to favor local control, “there are some issues that demand state intervention.”

“I am neutral on this issue,” he said. “What I am concerned about is finding out the necessary facts to determine – is this an issue that the state of Texas should get involved in or is it an issue of local control?”

During the hearing, he asked both [Rena Davis, a public policy manager for Lyft] and Sarfraz Maredia, the general manager for Uber in Texas, if they had data to support claims that they offer safer rides than taxis. Neither Davis nor Maredia provided specific numbers, to the frustration of the committee.

“I can’t believe [Lyft] or Uber doesn’t have data that we could look at that involves drivers and what the incident rate is,” Oliveira said, referring to the number of violent encounters between drivers and riders.

Both Maredia and Davis assured the panel they would provide lawmakers more information.

So let’s talk about regulations and transparency. After that post was publushed, Uber pointed me to this safety report on their website that goes over their criteria for background checks and what causes a potential driver to be eliminated. I appreciate the feedback and commend them for making that public. I also have this memo from Sarfraz Maredia on Uber’s safety procedures, as well as Maredia’s written testimony to the committee. A lot of what’s in those documents are things we have heard before from Uber, though perhaps not as much lately as the argument has largely defaulted to “do it our way or we’ll leave and then you’ll be sorry”. The thing is, I think Uber and Lyft could have done a lot better in Austin if they had focused on the things they do for customer safety instead of bludgeoning everyone to death with nonstop misleading ads and automated text messages. They could still gain some ground, in Houston and in Austin if they want to, by going back to that emphasis on their methodology and by being forthcoming with their data to back up their claims. Show us the numbers, on how many drivers they reject and for what reasons, compared to the cities, and how many incidents per capita there are in cities that do it their way versus cities that impose “unnecessary” regs on them, however they want to define that. If the cities in question can’t or won’t provide adequate data to allow them to make the comparisons, then so much the better for them and their argument that the cities are making them jump through hoops for no good cause. And if some of the numbers don’t show them in as positive a light as they’d like, be honest about it and see what can be done to improve. These guys say they’re bold innovators leading the way to a better future, well then do the math and show us the analytics to prove it. I promise to keep an open mind.

Since the Austin election and Uber and Lyft’s departure, startups and smaller ride-hailing companies have swarmed the city and its newly open market.

One company that has seen success in the capital city is getme, which has offered rides since December. The company’s founder, Michael Gaubert, told lawmakers Wednesday the company opposes statewide regulation of fingerprint background checks .

“The notion that there should be a state law ban on fingerprinting is not the correct way to go on this,” said Gaubert, who was joined at the hearing by former Dallas Cowboys player Michael Irvin, who he described as a close friend.

But lawmakers seemed committed to pursuing some sort of regulation next session, particularly Rep. Jason Villalba, R-Dallas, who cited concerns with the “patchwork quilt” of regulations across the state.

“It may not get to the governor,” he said of potential legislation, “but we’re going to try something.”

It would be nice to think that the Lege will look at the data and put forth reasonable proposals to address what can be done while allowing cities to take the steps they need to get the service they want. I doubt that’s what will happen, but it would be nice to think. Trail Blazers has more.

The budget is still broken

What was true at the beginning of the regular legislative session is still true as the special session winds down: The budget is still broken.

Instead of revamping the business tax structure or taking aim at tax exemptions, lawmakers cut billions of dollars in spending and cobbled together accounting maneuvers and spending delays to meet a massive shortfall and tide them over until 2013. They took a limited amount of money from the state’s rainy day fund, but leaders expect to dip into it again in a big way when they return in regular session in 2013.

Legislators also pushed back a looming gap in transportation funding by allowing issuance of the last of voter-approved bonds. They made some cost-saving changes in Medicaid, but will need federal approval to realize more savings.

On school finance, they are working in a special session to pass a bill to allow $4 billion less through the next two years than required under current funding formulas.

“The governor and the tea party deserve the credit or the blame, depending on one’s point of view,” for the lack of reform, said Rep. Rene Oli­veira, D-Brownsville, a former Ways and Means chairman. “I believe the majority of Texans know we have a very serious tax code problem, and they want and expect us to address it.”

We started with a structural deficit, and we’re finishing with a structural deficit. Nearly $5 billion of the Rainy Day fund will be needed by the next legislature just to cover the hot check written for Medicaid. The Republicans made billions in devastating cuts to vital services, especially public education, but did nothing to solve the underlying problems. The Democrats need to pound that theme every day between now and November of 2012. Nothing will change until the Legislature changes.

“Sanctuary cities” bill passes out of House committee

And another so-called legislative emergency gets voted on.

Legislation banning “sanctuary city” policies in Texas was voted out of the House State Affairs Committee today, sending the bill to the full House for consideration.

HB12 by Rep. Burt Solomons would prevent cities, counties and other governmental entities from adopting policies that prohibit law enforcement from asking a person legally detained or arrested their immigration status. The legislation was labeled an emergency item by Gov. Rick Perry in January. Under the bill, entities refusing to comply risk losing state funds.

Solomons presented the committee, with its nine Republicans and four Democrats, a substitute bill he said would address concerns raised about how the original bill would affect school districts. State Rep. Rene Oliveira, D-Brownsville, originally objected to their inclusion, alleging that allowing school district employees to inquire about a student’s status would violate federal law. A U.S. Supreme Court decision in 1982’s Plyler V. Doe ruled that a school district could not deny funding to a school that educated undocumented immigrants. Oliveira said denying education to any student also contradicts the Texas Constitution. Solomons removed school district employees in his substitute, but the bill would still apply to campus police officers. Oliveira tried but failed to amend the bill to remove school districts altogether.

Here’s HB12, a bill that solves no problems but causes plenty, and contains that great legislative fiction, a fiscal note that claims “no impact” on the state budget. What impact it will have on city and county budgets, the Lege isn’t required to say and for sure Gov. Perry doesn’t care. It’s all about the optics. There’s absolutely no reason for any Democrat to support this bill, so by all rights it ought to wither and die in the Senate. I sure hope it does.

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?

The entitlement argument against removing a sales tax exemption

The House Ways and Means Committee, chaired by State Rep. Rene Oliveira, continues to examine tax expenditures such as sales tax exemptions, and the whining coming from some of the potentially targeted businesses is really starting to annoy me.

The $30 billion value of 2009 sales-tax exemptions is bigger than the $21 billion in sales tax collections that year. Of the exemptions, $8.1 billion are on items taxed by other laws. Another $10.1 billion is for materials used in manufacturing. Various services have exclusions estimated at more than $5.3 billion.

[…]

“Other states also have sales tax exemptions for materials purchased for manufacturing research and development. Texas needs its existing manufacturing sales tax exemption just to stay competitive,” said Luke Bellsnyder, of the Texas Association of Manufacturers.

Ronnie Volkening, of the Texas Retailers Association, said his group wants to preserve the tax exemption for bottled water, which it views as a food product. Extending the sales tax to such services as accounting could drive some businesses to seek providers outside Texas.

“It does affect the bottom line of any business,” he said.

Imposing the state sales tax on tattoos, tanning and body-piercing would mean an estimated $4.8 million a year, according to the state comptroller’s office. Tattoo artists and their studios do not like being singled out any more than would the largest industry with the priciest lobbyists pounding the Capitol hallways.

“That’s going to really upset me, actually. That will affect me financially,” said Antone Pham, a tattoo artist at the Texas Tattoo Emporium in Houston. “People already complain about how much tattoos cost sometimes. I’m going to tack a tax on to that? That’s going to make it harder for me to even make money.”

I’m okay with exempting materials used in manufacturing and R&D. But bottled water? Tattoos and tanning salons? Please. Bottled water is basically a luxury item that also has a role in hurricane preparedness, and I’ve already said I’d be fine with suspending sales tax collections on bottled water during hurricane season for affected areas. I can only marvel at the idea that tattoo parlors and tanning salons got exempted from the sales tax in the first place. That must have been an oversight on someone’s part, for which it is high time to be corrected.

Those things won’t bring in much money. Frankly, taking away all the remotely viable exemptions, leaving things like food, manufacturing items, medical and legal services untaxed, will only make a small dent in the deficit. But it needs to be done. Everyone else is sacrificing, and the public policy arguments against these exemptions are far more persuasive than the ones in favor of them. The end result may not be much, but it will reduce the need for more draconian cuts, and combined with a reduction in tax expenditures will go a little way towards making the overall system fairer.

Which is no doubt why some people want to hinder that effort:

Senate Finance Committee Chairman Steve Ogden, R-Bryan, said any change in exemptions should be part of an overall tax reform effort and should be revenue-neutral, meaning any additional money raised would be used for something such as lowering the tax rate. While that could bring in more money long-term by virtue of a broader base and more efficient collections, it would not help the looming budget problem.

“The best way to mess this up is to start talking about specific exemptions right now. It’s got to be put together in some sort of coherent package, where there’s give and take. You can’t just pick ’em off like they’re targets in a shooting range,” Ogden said. “Almost surely going into next session, any kind of sales tax reform, at least initially, would probably have to be revenue neutral, or it won’t pass. Nobody’s out there, Republican or Democrat, campaigning and getting elected on the notion that our problem in Texas is our taxes aren’t high enough.”

Are you kidding me? We’re $18 billion in the hole, thanks in large part to that ginormous non-revenue-neutral property tax cut of 2006. Steve Ogden knows this, and he knows fully well that Texas is among the lowest-taxed states in the country. This is tremendously irresponsible thinking, the kind that will ensure we have deficits every biennium. What exactly does Ogden think the appropriate level of state government services should be? Who does he think should be bearing the costs of the budget, and who does he think should get away with paying less? Who does he think is getting shafted now?

What constitutes a tax increase is open to debate, Oliveira said.

“Taking away an exemption from someone who no longer deserves it isn’t a tax increase.” he said. “I just don’t see how we can, at this point, bind ourselves to being revenue-neutral, when we have not seen the drastic cuts that are going to be required to deal with an $18 billion deficit. I couldn’t agree to that now.”

How can we solve a problem if we can’t even agree we have a problem? How can we hope to meet the needs of a growing and increasingly needy population if we can’t ever look for new sources of revenues? The only way that Ogden’s position makes sense is if you think limiting revenue is more important than providing some minimal set of services. I don’t support that. I don’t even understand that. But if you’ve ever wondered why Texas has gotten sued so many times over things like school funding and health care for prisoners, now you know.

The untouchable tax breaks

You know how some Republicans like to say that there’s no such thing as temporary spending, because once something is in the budget it tends to stay there forever? Clearly, the same is true for tax expenditures, more commonly known as tax breaks. This is from a hearing by Ways and Means committee Chair Rep. Rene Oliveira, one of several he has held to examine the sacred cows of the state’s tax code.

Oliveira, a 26-year House veteran, opened the proceedings with updates on the state’s finances. He said they support a recent prediction by the House’s top budget writer, Waxahachie Republican Rep. Jim Pitts, that the deficit for the next two-year cycle will be $18 billion.

To Democrats, scrounging for more revenue is critical to protect education and safety-net programs. They are quick to note that Texas, as it enters the next round of cuts, already trails all 49 other states in state government spending per capita.

Republicans, either gratified or alarmed by the rise of the tea party movement nationally, are thinking a lot about their no-new-taxes pledges, Oliveira said.

Rep. Ken Paxton, R-McKinney, said it’s the wrong time to propose revoking tax exemptions. “Just trying to camouflage it” as a fairness question, as the Democrats prefer, is a non-starter, he said.

“When people are struggling to keep their jobs and make ends meet, I’m not about to raise taxes on them,” Paxton said.

But is closing a loophole the same as raising taxes?

To some people it is. So if there’s some tax expenditure in the code that was intended to be temporary and to be revoked after a set number of years, Rep. Paxton – and you know he’s not alone in this – wants to keep it. If there’s a tax expenditure whose justification is no longer viable or relevant, Rep. Paxton wants to keep it. If there’s a tax expenditure that unfairly favors one business or industry over another, Rep. Paxton wants to keep it. Tax expenditures are forever, no matter what the budget situation is. If your funding has to be cut to pay for someone else’s tax break, that’s just too bad. We cannot look for new answers, only the same answers as before, whether they work or not.

Where there’s a sacred cow, there’s a lobbyist protecting it

The Star-Telegram reminds us that while legislators may be hunting for sacred cows to help fill the budget gap, actually bagging them will be hard to do.

The renewed look at tax breaks has generated a widespread case of jitters among lobbyists and interest groups, who are scrambling to build a case for their particular exemptions before next year’s legislative session. Many of the exemptions have powerful constituencies that would strongly resist any change.

“Any business or industry that benefits from such exemptions or exclusions would be well-advised to watch the interim hearings and be very involved in the session, because there won’t be many exclusions or exemptions that won’t be on the table,” said Gaylord Armstrong, a senior partner at the law firm of McGinnis, Lochridge & Kilgore and a veteran lobbyist who represents a variety of business, industries and trade associations.

[…]

[House Ways and Means Committee Chairman Rene Oliveira, D-Brownsville]’s hearings constitute the first broad-based review of sales tax exemptions in years and have generated a buzz about which items are likely targets. Bottled water, which currently isn’t taxed, is mentioned as a possible new revenue source, but retailers are gearing up to defend those exemptions.

“We are watching those hearings very closely,” said Ronnie Volkening, president of the Texas Retailers Association, saying that bottled water should be considered in the same category as food. “Water is essential to life,” he said. “Any time there is a natural disaster, one of the greatest needs is to get bottled water to people.”

[…]

The state’s medical community is prepared to fend off a possible tax on cosmetic surgery. “Medical practices are really not traditional businesses, and we don’t think the patients of Texas should be taxed for their healthcare,” said Dr. Susan Bailey, a Fort Worth allergist who will become president of the Texas Medical Association on May 1.

In many instances, she said, cosmetic surgery is often used for reconstructive purposes, such as for patients who have undergone surgery for breast cancer. “It’s difficult to take any one medical procedure and say that it’s not medically necessary,” she said.

But it is easy to say what’s generally covered by insurance and what isn’t, and I daresay the latter would include an awful lot of truly elective surgical procedures. Why shouldn’t they be subject to the sales tax? As for the bottled water exemption, give me a break. If the total amount of bottled water bought as part of hurricane preparation is more than two percent of all sales, I’ll be shocked. If we’re that concerned about it, a provision can be written in to allow for the suspension of the tax any time an area is under a hurricane watch.

This is just special interest politics at its most basic. Everything that has an exemption from the sales tax has been deemed to be different somehow than everything else. Some of these things, like child care and basic medical services, have a clear justification for being singled out. Many of these things do not, and should not be treated any differently no matter how much their lobbyists or trade associations squeal. We would do well to tune all of that out and evaluate these claims on their merits. EoW has more.

Hunting sacred cows

If there’s one item on the budget fix to-do list for which there is fairly broad agreement, at least in principle, it’s the idea that the existing tax code ought to be examined to see what things are being exempted from it that maybe shouldn’t be. That includes some things – mostly services, but some goods – for which the sales tax does not apply.

At mid morning, Rep. Rene Oliveira, D-Brownsville, held up a palm to plastic and reconstructive surgeon Bryan Pruitt of Dallas, who was about to tell the House Ways and Means Committee how applying sales tax to cosmetic surgery is just a completely, absolutely unworkable and privacy-smashing idea.

Among other things, the panel today is on its third round of looking at tax exemptions, as directed by Speaker Joe Straus, R-San Antonio.

Pointing to 24 categories of services excluded from the sales tax that are being discussed today, Oliveira cautioned audience members not to read too much into that.

“Just because your particular exemption or exclusion is on the list doesn’t mean that myself or staff or any member of this committee has decided anything one way or another,” he said.

There’s a lot of interesting data in that post, so check it out. Broadly speaking, while I strongly oppose any sales tax increase, which is an incredibly regressive way method of taxation, I am okay with an expansion of the sales tax to some of the items on Rep. Oliveira’s list. That would include elective surgery and tanning salon services (!), whose exception can only be explained by having a really good lobbyist. These things will not be remotely enough to close the looming budget gap, or even to make a serious dent in the structural deficit, but they’re worth doing and would help make some other choices a little less painful. I’ll be very interested to see what this committee recommends.

Oliveira admitted to me, though, that he’s seriously considering filing a bill next session that would close some exemptions and “put some people in a box” — presumably meaning some of his colleagues who complain about spending but never about a sort of spending no one talks about, tax breaks for special interests. The prissy word for that is “tax expenditures.”

All I can say to that is “Go for it!”

Doing the easy part

Sen. Dan Patrick gets his day in the sun.

Wednesday is the deadline for paying federal income taxes, but it’s also when state lawmakers will consider cutting franchise taxes for 132,000 small businesses in Texas including 24,000 in Harris County.

“This is Texas stimulus. This is a Texas tax cut,” said state Sen. Dan Patrick, R-Houston, who is sponsoring the proposed tax cut in the Senate along with a bipartisan crowd of 24 co-sponsors.

Both Patrick’s bill in the Senate and one by House Ways and Means Committee Chairman Rene Oliveira, D-Brownsville, would exempt small businesses from paying the new franchise tax that was adopted in 2006 to help cover the cost of public school property taxes.

Only businesses with more than $1 million a year in gross receipts would have to pay the tax under their legislation. Patrick’s bill would make the cut permanent. Oliveira’s bill would have the tax cut expire Jan. 1, 2012.

[…]

The new franchise tax had brought in $1.3 billion more in 2008 than the $3 billion that was collected under the old tax in 2007. But it still was nearly $1.4 billion less than had been expected from the new tax.

The fallout from that shortage would have put a crimp on the state budget for the next two years, but the federal stimulus bill passed and sent $17 billion to the state’s coffers.

Now, House and Senate budget writers have put enough contingency funds into their proposed spending plans to cover the expected losses of up to $500 million.

House Appropriations Chairman Jim Pitts said nothing will be certain until the budget is finalized but the small business tax cut “is one we hope to have the funds for.”

Small businesses were justifiably upset at the new business margins tax because they were made to pay a disproportionate amount of it. There needed to be an adjustment to this tax to rectify that, but Patrick’s bill (SB19; Rep. Oliveira appears to have two bills relevant to this, HBs 4766 and 4765) only does the easy half. Without addressing the other, more difficult part of that, this tax will be even more inadequate to the task of paying for the huge property tax cuts that were implemented at the same time. When are we going to deal with that?

But hey, at least we’re trying to pay for this tax cut for this biennium. I’m sure Sen. Patrick will send a nice thank-you note to President Obama and the Democrats in Congress for passing the stimulus bill that made this tax cut possible. And I know we’ll get cracking on fixing the now-greater revenue shortfalls this cut will cause for the margins tax. Right?

“I’d like to talk about abolishing it (the tax), but there are not the votes to do that,” Patrick said.

Yeah, I didn’t really think so, either.