Running on Empty
While Bush and his staff were pushing the oil-and-gas tax bill through the legislature, they were also fighting to hold the line on health insurance for children whose families earn too much to qualify for Medicaid but too little to purchase private health insurance. There are 1.4 million children in Texas who have no health insurance. If eligibility were set at 200 percent of the federal poverty level, more than 500,000 of them would qualify to purchase low-cost insurance policies. Bush insisted, however, that the line be set at 150 percent, eliminating 200,000 children in a state second to California in the number of uninsured children and second to Arizona in the percentage of uninsured children. "It shouldn't even be a fight," said Austin Democratic Representative Glen Maxey, adding that Republican governors in Michigan, California, Florida and New Jersey all agreed to their states' participation in the program. "Christine Whitman is even going to 300 percent," he noted.
That is how the 76th Legislature began in Texas, with the governor flogging a tax break for oil-well owners while limiting a children's health insurance program that brings the state a three-to-one match in federal funds. The two bills illustrate Bush's dual welfare policies: expanding benefits for clients of the corporate welfare state while imposing harsh restrictions on people in need of help. They are also consistent with most of what Bush has set out to achieve since he was elected in 1994.
Asked about his accomplishments, Bush inevitably begins with, "Well, there's tort reform..." Tort reform was roaring to a conclusion here when Bush took office in 1995. He immediately embraced the program as his own, designating as emergency legislation a package of bills that placed caps on actual and punitive damages for injured parties, raised standards of proof for plaintiffs and established a hometown advantage for defendants. In Texas, tort reform achieved two important objectives: Not only did it insulate the Republican Party's corporate clients from the consequences of their behavior, it dried up the single most important source of Democrats' funding in a state where plaintiffs' lawyers were the last source of big money for Democrats--and where unlimited campaign contributions can mean half-million-dollar races in rural House districts.
By his second legislative session in 1997, Bush had developed his own agenda, and its centerpiece was clearly his first real use of the legislature as an extension of his presidential campaign. Bush seized on a $1 billion surplus in his initial proposal to help fund a $2.8 billion property-tax cut: Texas has no personal income tax and depends instead on a mix of sales taxes, corporate franchise taxes, severance taxes on minerals and property taxes. In that mix, the sales tax is the most regressive while the property tax, based on the assessed value of real estate, is the most progressive. To reduce the annual bill on a $60,000 home by $333, Bush proposed increasing one of the highest sales taxes in the nation--from 6.25 to 6.75 cents on the dollar. In cities such as Houston, where the local sales tax already pushed the level up to 8.25 cents, Bush's proposal would have meant 8.75 cents of every dollar spent would be taken as sales tax. Meanwhile, the greater the value of your home--or vacation home or weekend ranch or refinery--the greater your property-tax relief. And the 40 percent of Texas residents who rent homes or apartments would have got nothing.
Republican legislators bolted in droves as their governor proposed raising one tax and capturing untaxed wealth by creating a new Texas business tax. In the end it was Democrats who passed Bush's tax bill, which bore little resemblance to what he had originally proposed. It did return a more modest $1 billion to homeowners, who quickly saw their tax break disappear as school districts raised rates to make up for revenue lost in Bush's property-tax reduction. Never mind that the very late interim committee that Bush sent out in search of a property-tax rebellion found none. He produced a bill anyway. And he managed to give away a budget surplus in a state that is forty-seventh in the delivery of social services and thirty-eighth in teacher salaries. "As long as he's in office," one Democratic legislator complained, "we're going to have to tax people high enough to have a surplus while we fail to provide them with basic services."
During the same session, Bush instructed his commissioner of Health and Human Services to move ahead with the privatization of the state's $8 billion welfare system, offering a $3 billion, five-year contract to bidders such as Lockheed Martin, IBM and Electronic Data Systems to certify clients, deliver services and lower costs [see William D. Hartung and Jennifer Washburn, "Lockheed Martin: From Warfare to Welfare," March 2, 1998]. It was obviously the second component of a campaign intended to attract voters to a presidential candidate who could say he returned money to taxpayers while privatizing his state's welfare system. And Bill Clinton and Donna Shalala almost bought it. "The White House didn't seem to understand the political implications," said the legislator who led a small group of House Democrats who prevailed upon the Clinton Administration to deny a needed welfare waiver. (Bush even got tough with Secretary Shalala when she didn't respond to his request for the waiver. "You promised an answer last Monday. In my state, we take people at their word," he wrote in a two-paragraph letter.)
This session Bush has proposed adding $1 billion to the state's public education budget, to which the Texas House Appropriations Committee has added an additional $2 billion. "We have $12 billion in needs and will have to be the wise Solomons that can divide that $3 billion among $12 billion in very legitimate needs," the vice chair of the state's House Public Education Committee said. There are other factors that erode even the $1 billion increase. The state's peculiar fiscal process does not factor in growth and inflation, and the governor's proposed $2 billiongiveback in property-tax relief increases state funding of schools while lowering local funding. "It's a wash," said a member of the appropriations committee. When you run the numbers on what the governor's voucher program does to school funding at the local level, the wash becomes a loss.