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Texas manufacturers oppose gutting franchise tax

At Weir SPM in White Settlement, machinist Martin Ramos in 2011 worked to manufacture one of the powerful pumps used in the hydraulic fracturing process of gas and oil wells. (Tom Fox/Staff photographer)

Jockeying over tax cuts intensified Wednesday when the Texas Association of Manufacturers came out against repealing the state’s franchise tax on businesses.

In its top 10 priorities list, the group said lawmakers instead should concentrate on property tax relief and spending more on infrastructure, such as roads and water supplies.

“TAM believes the Texas Franchise Tax is a fair system that provides necessary revenue while allowing all businesses to share in the cost of running our state,” the group said in a separate position paper on the franchise tax.

As I reported in this story in Wednesday’s paper, Gov.-elect Greg Abbott is interested in trimming, and perhaps eliminating, the franchise or “margins tax.”

Tony Bennett, president of the Texas Association of Manufacturers (2013 courtesy photo)

Lt. Gov.-elect Dan Patrick has stressed reducing property taxes, though in the past he has championed measures that exempt a lot of small businesses from having to pay franchise tax.

As the manufacturers group pointed out, the small businesses paid six percent of all franchise taxes collected before 2006, when a massive tax swap was passed to allow the state to escape a school finance lawsuit. Today, the smallest businesses are off the hook. And there has been other relief granted, the manufacturers group noted.

But it warns that increasing property tax bills “will soon scare away future business and industry growth.” That is in its position paper on property tax.

The old franchise tax zapped manufacturers and refineries because it taxed assets. They have lots of assets. The 2006 changes, by contrast, not only reached out to bring under the tax limited partnerships and professional associations, it shifted some of the burden away from capital-intensive industries. Some of that fell on the retail and service sectors of the Texas economy. So the manufacturers association is quite happy, thank you. Please, refrain from further nibbling around the edges of the margins tax, it all but said Wednesday.

For those following the early tax-cut posturing, there are two lessons here: 1) It’s not about personality. While at first blush the manufacturers might appear to favor Patrick’s emphasis over Abbott’s, they actually don’t like some of Patrick’s ideas, either. For instance, their paper warned of a “split tax roll,” where either homeowners or businesses are treated differently. Patrick has strongly backed tighter caps on growth in home appraisals, which industry fears would shift more of the local property tax burden on it. 2) It’s about the bottom line. That varies by sector and by individual company. Which is what makes tax fights so much fun.

“Texas is the No. 1 state to do business,” said association president Tony Bennett. “We look forward to working with Texas lawmakers to keep Texas on top.”

Of course, everyone has a different prescription on how to do that.

Top leaders endorse streamlining of Texas social services

Kyle Janek, Texas health and human services executive commissioner, speaks at Oct. 17 news conference to discuss Texas’ Ebola prevention efforts, as Gov. Rick Perry listens. (AP Photo/Eric Gay)

A key lawmaker and a top appointee of Gov. Rick Perry agree with an efficiency review recommending that Texas’ five existing social services agencies should be merged into one.

Senate Finance Committee Chairwoman Jane Nelson, who also is chairwoman of the Sunset Advisory Commission, and social services czar Kyle Janek said Wednesday that they see merit in the argument of commission staff that currently, there is too much fragmentation in programs such as Medicaid, mental health and women’s health.

Nelson appointed a work group to fine-tune the proposal to consolidate the five agencies. The sunset commission, which periodically looks at whether state agencies deserve to be continued, won’t vote on a final recommendation until Dec. 10.

Still, Nelson and Janek’s comments were a boost for the plan. As I reported in this story last month, when sunset recommendations on the Health and Human Services Commission were released, a veteran Democratic lawmaker said the streamlining proposal “lends itself to more political decisions,” because it would consolidate more power under the governor.

On Wednesday, though, Janek said the proposal would clarify lines of authority and make it easier for Texas families to find the services they need without having to approach multiple departments.

“We can move some of the barriers out of the way,” he said.

Nelson, a Flower Mound Republican, also was supportive.

“Overall, sunset [staff] has made a very good case for consolidation,” she said.

Rep. Richard Peña Raymond, D-Brownsville, asked Janek if he would be around to make things go smoothly, if lawmakers buy into the consolidation plan. As Raymond noted, that depends on Gov.-elect Greg Abbott’s keeping Janek as executive commissioner of the Health and Human Services Commission.

Janek said he hasn’t “had a conversation with Gov.-elect Abbott on this subject so far.”

But he added, “If so honored, yes, I’ll stick around in this job.”

Raymond later asked a similar question of Family and Protective Services Commissioner John Specia, whose department would be downgraded to a division if the consolidation plan is embraced.

Specia, a former Bexar County family court judge, said consolidation would reduce fragmentation — and wouldn’t run him off.

“It doesn’t matter what you call me, I’m still just called judge,” he joked.

For the new first couple of Texas, Thursday is doubly special

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Gov.-elect Greg Abbott turns 57 on Thursday.

It’s also the birthday of his wife, Cecilia, the lady in the white jacket in the photo above. She turns 55.

When a reporter on Tuesday yelled to ask Greg Abbott what he planned to do on his birthday this week, Cecilia, who was standing behind him, quipped, “I’d like to know.”

Having the same birthday as his wife does put pressure on him to make it special, Greg Abbott acknowledged.

Presumably, it’s even more pressure now, as she prepares for life in the fishbowl as Texas’ soon-to-be first lady.

“I will spend my birthday taking my wife out to some place where I will not see any of you all,” he told reporters gathered in the historic Texas Supreme Court chambers in the state Capitol.

At his just-concluded news conference in that grand room, Abbott repeated his campaign vow that he will unite a geographically and ethnically diverse state.

As governor-elect, he noted, his first huddle with lawmakers was with the legislative black caucus (on Sunday). His first trip was to the Rio Grande Valley (on Tuesday). And his first nomination was Cameron County Judge Carlos Cascos as Texas secretary of state (also Tuesday). Cascos came to this country from Mexico at age 7. He became a U.S. citizen as an adolescent and went on to a successful career as a certified public accountant and rising South Texas politico.

Abbott also fielded a reporter’s question on immigration, warning President Barack Obama not to assume “dictatorial powers” with an overreaching executive order in coming weeks. Perhaps Abbott’s most interesting comments, though, came in response to a query about whether he favors repeal or changes to the state franchise or “margins tax.”

The short answer: He’d sure like to. But the nuances are important, especially in light of Lt. Gov.-elect Dan Patrick’s apparent determination to make property tax relief his top priority.

In Wednesday’s paper, I had this story about Abbott’s tax-cut comments.

Post election analysis: The making of a governor


UPDATE 12:22 pm: Jenn Brown and Jeremy Bird, who head Battleground Texas, put out a lengthy memo to say they knew the process of rebuilding the Texas Democratic Party would take time. From the memo:

“While the losses this election were tough, we’re proud of what Team Wendy, Battleground Texas, and our partners across the state accomplished this year. Together, we showed that grassroots organizing can bring new voices into the democratic process. And together, we built the largest-ever grassroots program in Texas, uniting nearly 34,000 volunteers who reached out to voters on the phones and at the doors 7.5 million times. Our investments this year – in a cutting-edge digital program, a more effective data infrastructure, and a lasting grassroots organization – will lay the foundation for Democratic victories in the future.

INITIAL POST: Greg Abbott’s campaign gurus laid out voter diagnostics used to steer his landslide victory, including knowing what TV shows likely voters watched and using 450,000 Facebook likes to follow supporters.”

Political strategist David Carney acknowledged how micro-targeting techniques and data-mining made it pretty “scary” about how much they knew about voters.

The campaign’s target was to win 55 percent of the vote. They did it by targeting 2.5 million voters that were either sure bets – based on their GOP voting history – or were considered persuadable.

They knew the TV shows they’re likely voters watched in greatest numbers – ESPN college football, College Football Scoreboard and the Discovery Channel – and gathered information on their socio-economic status, education, income, wealth and political activism. They used computer cookies and 1,000 phone calls a night to ask voters who they might support and why.

Among the key things it told them was that Abbott’s ad featuring his Hispanic mother-in-law worked extremely well, especially among Latino voters. The campaign also devoted $3 million in Spanish-language advertising.

They also could track rival Democrat Wendy Davis’ ad-buys and how they were affecting likely voters.

Davis’ controversial ad – featuring an empty wheelchair that interposed Abbott’s own $10 million accident settlement against his record of fighting lawsuits – did not do well, Abbott operatives said.

Next to Abbott’s positive mother-in-law ad, Davis’ wheelchair spot, “was our second best advertisement,” said Chris Wilson, who tracked media for the Abbott campaign.

Wilson said the ad moved some voters towards Abbott and had a negative effect on her campaign.

The Abbott campaign staff also said their tracking of newly registered voters and turnout showed that the Davis campaign and Battleground Texas did not move the needle in terms of getting new Democrats to the polls.

“There’s no reality to what they said they were doing and what happened,” Carney said. “No empirical evidence that shows they did anything.”

He said that while voter registration did go up, it followed historical trends, did not spike after Democratic voter drives and did not keep pace with the state’s growing population.

Carney said Abbott’s lopsided victory – 59 percent to her 39 percent – does not mean Democrats could not field a candidate who could be competitive in four years.

He said the Democratic problem is that they are touting policies that don’t resonate with Texas voters.

“It’s not about Democrats. It’s about message,” Carney said. “A flawed candidate and a flawed message doesn’t work.”

Greg Abbott and Wendy Davis battle for governor

UPDATE 8:15 pm: It’s all over folks. AP has called the race and Greg Abbott is the next governor of Texas.

UPDATE 7:39 pm With almost 1.7 million early votes tallied, Abbott is leading Davis with 58 percent to her 41 percent.

INITIAL POST: Polls and expectations have Greg Abbott poised to become Texas’ next governor, replacing long-serving Rick Perry while continuing many of his policies.

Throughout the campaign, Abbott has brandished conservative credentials, promising low taxes and small government. He has played on President Obama’s deep unpopularity in Texas, painting Democrat Wendy Davis as a mere extension of the president.

Davis skyrocketed to national attention following a 13-hour filibuster last year on sweeping new abortion restrictions. Her campaign tapped support from tens of thousands of small donors and banked on strong support from women and Latinos.

Davis has urged voters to select new leadership that will represent ordinary Texans and fight for quality education, health care and opportunities. She has portrayed Abbott as an attorney general who represents business insiders.

Abbott also has promised to improve education in Texas and has emphasized investment in roads, border security and fighting federal government overreach.

Together, the candidates are expected to have spent $90 million seeking the office.

Obama holds phone conference for Wendy Davis and Texas Democrats

Wendy Davis was flanked by her father and her daughters during her 2012 victory speech in Fort Worth.

Wendy Davis was flanked by her father and her daughters during her 2012 victory speech in Fort Worth. (File 2012)

President Barack Obama participated in a tele-conference call this morning with thousands of Texas Democrats, joined by governor nominee Wendy Davis and lieutenant governor nominee Leticia Van de Putte.

The president urged participants to get out and vote, warning Democratic apathy would leave Republicans dominating statewide offices.

Republican Greg Abbott, whose campaign ads have tried to link the unpopular president directly to Davis, jumped on the connection.

“In the final hours of the election, President Obama is going all in for Sen. Davis, making a personal appeal to push their shared agenda of bigger government, more regulations, higher taxes and fewer jobs,” said Abbott spokesman Matt Hirsch.

The Abbott campaign has been running statewide TV ads for weeks that portray Obama as governor in the event Davis won the office. The two have not appeared together in public.

On the phone call, billed as a electronic town hall meeting, were also former Dallas Mayor Ron Kirk and Houston Sen. Rodney Ellis.

The phone call was a motivator for Democrats to get out and vote, said Davis spokesman Zac Petkanas.

“The goal in an election is to get more of your supporters out to the polls than the other guy’s,” said Petkanas. “That’s what this call was desigend to do and we trust it will.”

Simmons’ widow, daughter split picks for lieutenant governor

Serena Simmons Connelly, center, is a major Democratic donor, despite being the daughter of the late GOP uber donor Harold Simmons. (2008 photo by Lara Solt/Staff photographer)

The late Dallas billionaire Harold Simmons may have been a Republican mega donor but his family is splitting its political bets this fall.

In checks written on the eve of the election, Simmons’ widow, Annette, gave Republican lieutenant governor hopeful Dan Patrick $25,000, while his daughter, Serena Simmons Connelly, gave Democrat Leticia Van de Putte $10,000. For the year, that brought Serena’s financial backing of Van de Putte to $17,500, according to Texas Ethics Commission records.

In this election cycle, Annette Simons has given Republican candidates $120,000, the commission’s records show. Half went to unsuccessful attorney general candidate Dan Branch of Dallas.

Since January 2013, Serena Connelly has given more than $358,000 to state Democratic causes, according to commission records. Of that, more than $120,000 went to gubernatorial nominee Wendy Davis and the Texas Victory Committee, the Davis campaign’s joint project with voter-organizing Battleground Texas; more than $90,000 to ActBlue, the Democratic internet fundraising tool; and $25,000 each to the Planned Parenthood Texas Votes PAC and the Texas Organizing Project.

Annette Simmons, shown with her late husband Harold at a Dallas ball in 2013. (Kelly Alexander)

Her sister, Lisa Simmons, also has supported Democrats, though without as many zeroes on her checks.

Lisa Simmons, president of the Harold Simmons Foundation, has given Davis and Battleground Texas $4,000 since May. Serena Connelly is the foundation’s executive vice president.

The sometimes surprising “left turns” of the foundation and Simmons’ daughters were chronicled last year in this piece by the Center for Public Integrity. Among them was its donation of $600,000 to Planned Parenthood and its North Texas affiliate.

Serena Connelly and Lisa Simmons together control nearly 94 percent of Dallas-based Contran Corp., a closely held company with subsidiaries producing a chemical used in house paint and rayon clothing as well as manufacturing security products and recreational marine components, according to this February story by Bloomberg BusinessWeek.

Since Oct. 25, when candidates filed their last detailed reports on contributions and expenditures, Patrick has raised about $330,000 in late money, to Van de Putte’s $211,000. That’s not out of line with their overall financial effort. Though Patrick has outraised and outspent her, Van de Putte has kept it relatively close. And while Patrick aides complain she’s received major in-kind donations from Planned Parenthood, TOP and Battleground Texas, it was a major gift from one conservative PAC, $125,000 from Texans for Lawsuit Reform, that kept Patrick ahead in the “telegram” reports on last-minute contributions.

With Chuck Norris in tow, Greg Abbott makes final gubernatorial pitch to Dallas voters

Greg Abbott campaigns with Chuck Norris, left, in Dallas at Sonny Bryan's on Inwood Road on the final day of the gubernatorial campaign. (David Woo)

Greg Abbott on Monday urged Republicans voters to avoid complacency and show up in the rain, if necessary, to help him become Texas’ next governor.

“We have two challenges over the next 24 hours. One challenge is going to be rain,” Abbott said. “Do not let that dampen your spirit. We need every last vote in this election.”

Abbott is favored to win Tuesday’s election for governor against Democrat Wendy Davis. He leads the state senator from Fort Worth in every poll. No Democrat has won a statewide election in Texas since 1994, and the last Democrat to be elected governor was Ann Richards in 1990.

Davis on Monday was campaigning in Austin, San Antonio and Houston.

Abbott, the attorney general of GOP nominee for governor, said the other challenge for Republicans was standing up to the Democrats’ vaunted voter turnout machine.

He said his rivals were trying to bring President Barack Obama’s agenda to Texas, and it was up to voters to stop them.

“Barack Obama’s campaign operatives have come here with one thing in mind, and that is to destroy the values and principles that have led Texas to be the best state in the United States of America,” Abbott said.

He added that he was proud of his campaign, and would be happy if he only won by one vote.

“We need to keep up and beat that machine,” he said. “We’ve gone 99 yards. We’re at the one-yard line. We have to cross the goal line together tomorrow.”

Abbott was joined at Sonny Bryan’s Smokehouse in Dallas by actor Chuck Norris, who said he was the best choice to lead Texas.

The attorney general joked that Norris was critical to his plan to secure Texas’ southern border.

“Today I am amending that vision with a two-word platform to insure we do a better job of securing that border,” Abbott said. “Those two words are Chuck Norris…No one crosses Chuck Norris.”

Abbott, who grew up in Duncanville, said he was having fun during the final stretch of the campaign.

“There’s no better way to finish the campaign than back where I grew up,” he said. “In quintessential Texas fashion, there’s no better way to end a campaign morning than in a barbecue restaurant.”

Hillary Rodham Clinton endorses Davis, Van de Putte

Former Secretary of State Hillary Rodham Clinton campaigns for Maryland Democratic gubernatorial candidate, Lt. Gov. Anthony Brown, during a rally Thursday at the University of Maryland. (AP Photo/Patrick Semansky)

Former Secretary of State Hillary Rodham Clinton on Thursday endorsed the Democratic women running for Texas’ top two offices, gubernatorial aspirant Wendy Davis and lieutenant governor candidate Leticia Van de Putte.

Clinton, who is weighing a bid for the Democrats’ presidential nomination in 2016, applauded Davis for running a “tough, strong campaign” against Republican Greg Abbott.

“That’s no surprise, because Wendy has shown us time and time again that she never backs down, whether she’s fighting for Texas school children or working to create an economy that works for all Texans,” Clinton is quoted as saying in a Davis campaign graphic.

Clinton said Van de Putte, who is locked in a tough race with fellow state Sen. Dan Patrick, R-Houston, advocates for society’s most vulnerable.

“Leticia Van de Putte always demonstrates the courage to speak up for those who do not have a voice,” Clinton is quoted as saying in a Van de Putte campaign graphic. “She has bold ideas and initiatives that honor veterans, respect women, and value education. She leads with a sense of family and community.”

Wendy Davis gets big checks in final days

Texas gubernatorial candidate Wendy Davis (Eric Gay/Associated Press)

In the last two days, Democrat Wendy Davis has pulled in more than $800,000 from large donors.

While Davis has large donors, the surge of big checks in the last week stands in contrast to a campaign that has raised close to $35 million mostly from tens of thousands of small contributions under $100.

The big contributors are all women and earlier contributors, including plaintiff’s lawyer and long-time Democratic supporter Amber Mostyn, who gave $367,000; Houston investor Lillie Robertson, $155,000; Dallas arts patron Marguerite Hoffman, $90,000, and medical consultant Laure Woods, $40,000.

Also a late giver is billionaire William Louis-Dreyfus, father of the actress Julia Louis-Dreyfus. He gave a check for $5,000.

Campaign spokesman Zac Petkanas said the money will go for anticipated expenses and advertising buys.

Republican Greg Abbott’s campaign, which in the course of the campaign has received dozens of checks in excess of $50,000, in the last week of the campaign has thus far reported only one large contribution – $40,000 from Dallas textile manufacturer Arun Agarwal.

In all, as my colleague Wayne Slater reports here , spending by the two contenders in the governor’s race could reach $90 million.