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Broken by Design

from the magazine

Broken by Design

Texas’s part-time legislature has helped restrain state government; but it has a downside, too. Texas Rising 2016
Texas
Politics and law

Texas is “wide open for business.” That’s the pitch that Rick Perry made around the country during his three terms as governor of the Lone Star State. It fit with the popular image of Texas: low tax, low regulation, business-friendly, superconservative—the state so antigovernment that it elects a legislature and sends it right back home. Texas’s part-time legislature—it meets in 140-day sessions every other year—has been a key factor in its economic success. A 2000 study by Stephanie Owings of the U.S. Naval Academy and Rainald Borck of Berlin’s Humboldt University found that states with part-time legislatures spend 12 percent less, on average, than states with full-time or hybrid legislatures. Lawmakers who don’t see themselves as the center of the universe, it seems, are less likely to want to pay for everyone’s health care, fret about fracking, or declare half the state environmentally protected. Texas’s biennial legislature kills most big, economy-wrecking ideas before they gain momentum.

The system is not without its shortcomings. Cronyism is pervasive. Texas has fewer regulations than other states, but what regulations do exist often protect moneyed interests. Without reform, local debt and pension debt could one day swamp the state economy.

Despite these problems, Texas is thriving, in part because of the small-government ideals that its founders put at the heart of the state constitution and the political institutions that it established. The early Texans fully expected government to fail, so they did everything they could to limit the scope of that failure. Texas government is, in a sense, broken by design—leaving civil society free to flourish.

Texas is a one-party state, but for most of its history, the Democrats were in charge. From 1873 to 1978, no Republican was elected governor, but the Democratic governors from the 1940s through the 1970s were all fairly conservative. Factionalism has always dominated the legislature—with urban interests facing off against rural interests, and commerce against agriculture—but party membership has usually been an afterthought, with Democrats rarely vying with Republicans. Since the election of George W. Bush as governor in 1994, the GOP has come to dominate Texas politics. Bush won reelection in 1998, and he handed off power to fellow Republican Perry after winning the 2000 presidential race. Perry won election in his own right in 2002, and again in 2006 and 2010. Republican Greg Abbott took office in January 2015. The GOP won a majority in the state senate in 1996 and in the house in 2002.

For all his visibility on the national level, though, Texas’s governor isn’t the most powerful figure in state politics. That distinction belongs jointly to the lieutenant governor and the speaker of the Texas House of Representatives. As presiding officer of the state senate, the lieutenant governor appoints committee chairs and directs legislation and budgeting, just like the speaker of the house. The governor can veto legislation and use the bully pulpit, but that’s about it. His “cabinet” is made up of elected officials with their own constituencies, and he has no real authority over them. More than 200 independent state agencies and commissions exist in Texas, and while the governor gets to appoint people to most of them, he generally can’t remove them without senate consent, much less direct them, so they tend to do as they please.

Even as Texas has become overwhelmingly Republican, conservatives haven’t held all the levers of power. From 2003 to 2009, the house was governed by a strict conservative, Tom Craddick, nicknamed “auto-Craddick” by Democrats, who chafed under opposition rule. This clean-living, solitary, authoritarian figure presiding over a chamber full of good ol’ boys became vulnerable to a leadership coup when a cohort of Democrats swept into office on President Obama’s coattails in 2008. With the GOP majority cut to just two seats, a group of centrist Republicans called the “Gang of 11” joined with Democrats to put Republican two-termer Joe Straus, whom critics called a RINO (Republican in name only), in the speaker’s chair. Straus then doled out committee chairmanships to the Gang of 11 and several key Democrats. The senate was governed during the Perry years by Lieutenant Governor David Dewhurst, a moderate who deferred to senate traditions—a two-thirds rule, in particular—that allowed Democrats to block legislation. Talk-radio host Dan Patrick jettisoned the rule when he was elected lieutenant governor in 2014, establishing a new dynamic: a senate governed by Patrick, a Tea Party favorite, and a house run by Straus.

Patrick and Straus are the de facto heads of the Texas government, but they have just 80 calendar days to get their work done. The state constitution forbids the legislature from passing any bills, or even holding floor debates, during the first 60 days of the session, which are reserved for filing bills. By Day 120, any House bills still stuck in committee are dead. The House then faces a series of deadlines for floor approval of various bills. The Senate’s rules are more flexible, but it still needs to get bills over to the House by Day 130 or so for any hope of passage. Unless the governor calls a special session to deal with a particular issue, the legislature adjourns on Day 140, known as sine die, and traditionally marked by drunkenness. Then the governor gets another three weeks to exercise vetoes. The legislature has formal authority to override a veto, but this power is meaningless after sine die. Everybody has gone home.

Texas’s abbreviated legislative calendar affects the state’s power dynamics in many ways. Individual members rarely challenge the decisions of the lieutenant governor or the House speaker about which bills to bring out of committee. Both officials have broad authority to appoint committee chairs, assign bills to committee, interpret rules, and otherwise direct proceedings. Straus and Patrick have mastered all the usual tricks for making undesirable legislation disappear without embarrassing votes. For example, a 2015 measure known as “campus carry,” letting university students bring guns to class, could have generated just the sort of political theater that the House leadership didn’t want. So they buried debate on the bill on the final night of the session, and it cleared the floor a half-hour before a midnight deadline. Governor Abbott signed it into law on June 1 of that year.

The Texas Legislature passes a surprising number of bills in its short sessions. In 2015, it sent 1,322 bills to Governor Abbott’s desk. California, by comparison, passed 807 bills all year. In Roll Call’s state-by-state comparison of bills and resolutions passed during the 2013–14 Congress, Texas was far and away the numerical leader. With this volume of legislation flowing past lawmakers, insiders can slip things through fairly easily. Yet the great majority of these bills are trifling, since there isn’t much taxpayer money to play with. The state constitution requires that the two-year budget fit under the state comptroller’s revenue projections, and since the popularly elected comptroller is invariably a Republican, those projections are usually quite conservative.

Not everything about Texas’s minimalist government is praiseworthy. Short bursts of lawmaking produce the occasional embarrassing accident. In 2011, for example, lawmakers erroneously removed penalties for driving without license plates, and had to wait two years to reinstate them.

The part-time legislature is dominated by full-time lobbyists. Contribution limits are nonexistent. From about 1952 onward, you could call the factions Left, Right—and money. Money backed the Democrats until the 1990s, when it went Republican. The reason for the shift was the greed of a key Democratic constituency: trial lawyers. In the 1980s, trial lawyers had succeeded in getting several of their candidates elected to the state supreme court, which resulted in major rulings that opened the door to some astronomical court judgments over the next decade. In 1993, a few major homebuilders and other wealthy businessmen formed Texans for Lawsuit Reform, and started raising money to help elect Bush and other Republican reformers, who made the issue a priority. Over the next decade, Texas tort law was completely rewritten. Medical-malpractice suits, for one, have all but vanished. Texas’s system of elected judges, however, virtually guarantees that the plaintiffs’ bar will always have a friendly court somewhere in the state.

Political donations often correlate closely with government contracts. The owner of the state’s biggest highway construction company wrote Straus a $100,000 check for his reelection during the last cycle. Not surprisingly, the speaker has shown a fondness for highway and water projects. Supermarket magnate Charles C. Butt opposes school choice; he donated $50,000 to Straus and millions more to others, so the legislature with the GOP supermajority has avoided the issue. The most influential contributor remains Texans for Lawsuit Reform, with more than $34 million in contributions over the years. The group spends much of its time now on keeping the trial lawyers from getting plaintiff-friendly Republicans elected to the bench.

All the influence-peddling has resulted in more corporate welfare and cronyism than one would imagine, given Texas’s image as a free-market haven. A New York Times investigation three years ago tallied up $80 billion in tax abatements, subsidies, and other crony-capitalist goodies handed out each year. Texas gives away $19 billion in such deals annually, roughly as much as Michigan, Pennsylvania, New York, and California combined.

Texas also regulates more than one might think. Counterproductive policies such as price controls ensure that residents wind up paying some of the highest costs in the country for car and home insurance, not to mention closing costs on home purchases. Texas is famous for resisting Obamacare, but state law had already imposed expansive and expensive coverage minimums. Mercantilist regulatory schemes frustrate competition in several large industries, including alcohol and car sales, and occupational licensing does the same to small businesses. A part-time legislature rarely gets around to pruning the weeds of administrative law. It’s been 20 years since lawmakers tried to ax a bureaucracy.

Texas’s founders wanted a legislature run by citizen-statesmen—but these days, we’ve also got lawyers, lobbyists, bond salesmen, and assorted fixers as part-time solons, and they’ve formed an establishment culture that rewards insiders. Lawmakers once got elected and came to Austin for a session or two before returning to private life and handing their seats over to others. In the nineteenth century, two-thirds of each class would be freshmen. Up until the 1950s, it was half or more. Now it’s about 20 percent.

Serving in the Texas legislature isn’t a realistic job option for most working professionals. It only pays $600 per month, plus $150 per diem for expenses, but it’s too time-consuming to be a side job. Some CEOs and a few small-business owners—accountants, salesmen, consultants—can adjust their schedules to accommodate service in Austin, but their ranks are thin. According to the National Conference of State Legislators, 26 percent of Texas legislators are lawyers—twice the national average. Most are the sort of attorneys who never see the inside of a courtroom. They work in “government affairs” for their firms. Or they collect whopping fees for underwriting billions of dollars in bonds for state-funded government agencies (the practice is illegal for members of Congress). Or they take advantage of a privilege that they’ve written into Texas law that gets any lawsuit involving a legislator postponed during session. They can make six figures employing the tactic for a client who needs to stall. One study found that Texas had the busiest revolving door in the nation, with more lawmakers-turned-lobbyists than any other state. Conflicts of interest are often blatant.

The Texas legislature is responsible, at least in part, for two big threats to the state economy. One is local debt, particularly school debt; the other is pension debt. The Constitution of 1876 dedicated some of Texas’s wide-open spaces—and the rights to the minerals beneath—for the support of schools, and created the Permanent School Fund to guarantee school bonds. The result of guaranteeing so much cheap money is that Texas has the highest school debt per capita in the country, tied with South Carolina. The schools owe $72.4 billion in principal that will cost $117.1 billion to repay, according to the state Bond Review Board. That’s Puerto Rico–size debt, just for schools (though, to be fair, the Texas economy is 15 times bigger than Puerto Rico’s). Local debts in some areas are driving property-tax rates that push 4 percent. Texas now has the sixth-highest property-tax rates in the nation.

The legislature also funds teachers’ pensions statewide, and it has seized control of some local police and fire pension funds. Here, Straus’s alliance with the Democrats comes into play, but Patrick is also well funded by public-safety unions (who may, of course, write giant checks like anyone else). In a right-to-work state that bans almost all public-sector collective bargaining, nobody fears the unions. Even the far-right guys will take union checks.

No state’s lawmakers are eager to tackle the unfunded pension problem, but Texas’s lawmakers have an extra incentive to ignore it. They earn an annual salary of just $7,200, with the understanding that they’ll eventually collect a decent state pension. Lawmakers with at least eight years of service can begin collecting their pensions at age 60; those with 12 years of service can begin collecting at 50. The pension amount gets calculated according to a formula that lawmakers devised themselves in 1981: every year of service is worth 2.3 percent of a district judge’s salary—currently $125,000. A lawmaker who serves for 20 years is eligible for an annual pension of $57,500. The average state-employee pension, by contrast, is just $17,000 per year.

In 2012, federal election rules required Perry to disclose a $90,000 pension that he had already begun collecting as governor. Voters were outraged, but lawmakers have changed nothing since. They’re keeping their pensions.

Those are some of the problems: the good news is that the benefits of the Texas model, overseen by its part-time legislature, are impossible to ignore. From 2000 to 2014, Texas created some 2.5 million nonfarm jobs, more than a quarter of the U.S. total for the period. In 2015, amid free-falling oil prices, Texas still managed to finish third among states in job growth, thanks to booming health care, education, professional services, manufacturing, hospitality, warehousing, and light industrial sectors. Construction is doing well, too. Wondrously cheap housing and pro-growth land-use policies draw people and business to the state. None of this diversification was centrally planned. It’s the product of an economy that’s wide open to foreign trade and immigration. Immigration has boosted native Texans’ income by an aggregate $3.4 billion to $6.6 billion a year. Income inequality is up, too—but that’s just another way of saying that high-paying jobs are growing fastest.

To a large degree, the Texas model has worked because the Austin governing establishment is penned in, limited in the damage that it can inflict by a state constitution that not only keeps lawmakers from enacting new laws for one out of every two years but also severely restricts taxation and imposes budget caps. Texas has no state income tax, and instituting one would require voter approval. The legislature makes do with a sales tax, a handful of excise taxes, and an onerous gross-receipts tax that penalizes high-volume businesses. The Texas state government simply never has the money for bold new expansions of government. So it stays small, just as the original Texans wanted it. It’s not perfect and never will be, but the state is flourishing.

Photo: The Texas constitution sharply limits the powers of the governor and invests considerable authority in the legislature. Here, Governor Greg Abbott (right) meets with Speaker of the House Joe Straus. (Jay Janner/Austin American-Statesman/AP Photo)

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