May 4, 2003
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Perry Time

After spending the first sixteen weeks of the legislative session trying to shoulder his way to the front of the line, Governor Rick Perry is finally emerging as a key player in the biggest issues of the session: the budget, school finance, taxes, insurance, and tort reform. Some would say it’s about time, but compared to last session—when the first time many legislators heard from the Governor was in his veto message—Perry has activated his legislative radar early enough to make a substantial policy impact.

The first shot was fired two weeks ago when the Governor asserted himself during the debate on HB 2292, the massive Medicaid reform bill that passed the House after a bitter debate and is awaiting action in the Senate. Perry, working in close concert with Appropriations Chair Talmadge Heflin and designated HHS point person Arlene Wohlgemuth, turned away numerous amendments to the bill that would have relaxed eligibility rules for Medicaid recipients, allowed drugs for severe chronic illnesses to be prescribed without prior authorization from the state, and restore funding to the CHIP program. GOP discipline throughout a series of extremely tough votes has been remarkable all session, and Perry’s involvement in keeping everyone in line has been both overlooked and underestimated.

Perry took a second shot last week when he publicly denounced Lt. Governor David Dewhurst’s school finance plan, which cleared Senate committee on Friday and is expected to pass the Senate Tuesday or Wednesday. Perry joined Speaker Tom Craddick in calling the plan premature and ill-conceived. Craddick pre-empted Dewhurst’s official announcement of his plan by appointing an interim study committee to determine, among other things, how much the state should be spending to fund an adequate public education. This did not deter the Lt. Governor, who substituted his plan for HB 5, the House’s scheme to kill Robin Hood and tide the schools over until the 2005 session by giving them an extra $1.2 billion. Perry is thought to be considering his own school finance plan, which may include splitting the tax roll and taxing business property at a higher rate than residential property. This fact alone may drive business groups into a friendlier posture towards the Dewhurst sales tax plan, setting up something of a showdown between the Governor, backed by a friendly House, and the Senate, which will already have committed itself to a fairly radical tax bill and will have little incentive to cave in.

Now comes tort reform to the Senate floor, and Perry’s influence could be the crucial factor in collecting the 21 votes necessary to bring the bill up for debate—a difficult task given the fact that just 11 votes can block HB 4 and kill the tort reform initiative. Perry’s hole card on HB 4 is the very credible threat of a special session if the trial lawyers succeed in running out the clock on the Senate. There is little question that tort reform opponents will use every trick of the trade, first to delay a vote on the bill, and second to use the threat of a filibuster at the tail end of the session to keep it from coming up. If the bill does get 21 votes, the filibuster may then be used to slow passage long enough to put the bill into a late session conference committee. Then the prospect of a filibuster may again be used to keep the conference report off the floor, which is exactly what happened during the 1987 session. Then-Governor Bill Clements called the legislature back into session the very next day, and three days later a bill was produced. Expect this Governor to do the same, especially if HB 4 does not contain a hard $250,000 cap on noneconomic damages in medical liability cases.

Finally, a virtually unnoticed piece of legislation, HB 2, is about to burst upon the scene. This immense bill, more than 800 pages in length, restructures the executive branch of government in fundamental ways. In doing so, it gives the Governor unprecedented new powers to control state agencies and their regulatory activities. HB 2 is expected out of committee this week, and its $1 billion in savings to general revenue will mean that the Senate will have to take it seriously. Perry is in a particularly strong position to bargain with this bill, especially since the money it will add to the bottom line can be used to fund programs near and dear to the hearts of the Senate. Moreover, Perry is pushing a hesitant House hard to pass a franchise tax reform bill that will bring some partnerships and other non-corporate entities into the franchise tax for the first time (far beyond the so-called “Delaware sub” partnerships). That bill could clear committee this week, but has an uncertain future before the House as a whole.

Perry has learned a lot since last session, when he employed the veto pen rather than effective legislative horse-trading to make his mark. We will soon see just how much influence he has, especially on an independent Senate and Lt. Governor.