Posts Tagged ‘Dallas Morning News’

Interview with TPPF’s James Quintero on the Texas Municipal Pension Debt Crisis

Monday, January 2nd, 2017

James Quintero, the Director of the Center for Local Governance at the Texas Public Policy Foundation, was kind enough to provide some detailed answers to questions I sent him about the municipal pension crisis in Dallas and other large Texas cities. My questions are in italics.


The Dallas police/fireman’s pension fund issue is generally described as stemming from the fund manager’s risky real estate speculation. Are there any additional structural problems that helped hasten that fund’s crisis?

When it comes to Texas’ public retirement systems, one of my greatest concerns is that there are other ticking time-bombs, like the DPFP, out there getting ready to explode. It’s not just Dallas’ pension plan that’s taken on excessive risk to chase high yield in a low-yield environment.

Setting aside the issue of risk for a moment, the DPFP, like most other public retirement systems around the state, suffers from a fundamental design flaw. That is, it’s based on the defined benefit (DB) system, which guarantees retirees a lifetime of monthly income irrespective of whether the pension fund has the money to make good on its promises or not. This kind of system is akin to an entitlement program, warts and all, and is very much at the heart of pension crises brewing in Texas and across the country.

One of the biggest problems with DB plans is that they rely on a lot of fuzzy math to make them work, or at least give the appearance of working. Take the issue of investment returns, for example. Many systems assume an overly optimistic rate of return when estimating a fund’s future earnings. Baking in these rosy projections is, among other things, a way to understate a plan’s pension debt. In an October 2016 study that I co-authored with the Mercatus Center’s Marc Joffe, I wrote the following to illustrate this very point:

For example, the Houston Firefighters’ Relief and Retirement Fund (HFRRF) calculates its pension liability using a long-term expected rate of return on pension plan investments of 8.5%. During fiscal year 2015, the plan’s investments returned just 1.53%. Over a 7- and 10-year period the rates of return were 6.4% and 7.9%, respectively. Not achieving these investment returns year-after-year can have a dramatic fiscal impact.

Even a small change in the actuarial assumptions can have major consequences for the fiscal health of a pension fund. According the HFRRF’s 2015 Comprehensive Annual Financial Report, a 1% decrease in the current assumed rate of return (8.5%) would almost double the fund’s pension liabilities, from $577.7 million to $989.5 million.

So while risky real estate deals were certainly a catalyst in the current unraveling of the DPFP, I suspect that its refusal to move away from the defined benefit model and into a more sustainable alternative—much like the private sector has already done—would have ultimately led us to this same point of fiscal crisis.

To what legal extent (if any) is Dallas police/fireman’s pension fund backstopped by the City of Dallas and/or Dallas County?

Let me preface this by saying that I’m not a lawyer nor do I ever intend to be one. However, Article XVI, Section 66 of the Texas Constitution plainly states that non-statewide retirement systems, like DPFP, and political subdivisions, like the city of Dallas, “are jointly responsible for ensuring that benefits under this section are not reduced or otherwise impaired” for vested employees. Given that, it’s hard to see how the city of Dallas—or better yet, the Dallas taxpayer—isn’t obligated in some major way when their local retirement system reaches the point of no return, which may be a lot closer than people think given all the lump-sum withdrawals of late.

Likewise, does the state of Texas have any statutory backstop to the Dallas police/fireman’s pension fund, or any other local pension funds?

For non-statewide plans, I don’t believe so. Again, I’m not a lawyer, but the Texas Attorney General wrote something fairly interesting recently touching on aspects of this question.

In September 2016, House Chairman Jim Murphy asked the AG to opine on “whether the State is required to assume liability when a local retirement system created pursuant to title 109 of the Texas Civil Statutes is unable to meet its financial obligations.” Title 109 refers to 13 local retirement systems in 7 major metropolitans that are a small-but-important group of plans that have embedded some of their provisions in state law (i.e. benefits, contribution rates, and composition of their boards) I’ve written a lot about this problem in the past (read more about it here).

In response to Chairman Murphy’s question, the AG had this to say:

In no instance does the constitution or the Legislature make the State liable for any shortfalls of a municipal retirement system regarding the system’s financial obligations under title 109. The Texas Constitution would in fact prohibit the State from assuming such liability without express authorization.

…a court would likely conclude that the State is not required to assume liability when a municipal retirement system created under title 109 is unable to meet its financial obligations.

So at least in the AG’s opinion, state taxpayers wouldn’t be required by law to bail out this subset of local retirement systems. But of course, the political calculus may be different than what’s required by law.

Compared to the Dallas situation, how badly off are the Houston, Austin and San Antonio public employee pension funds?

If you’re a taxpayer or property owner in one of Texas’ major cities, I’d be concerned. Moody’s, one of the largest credit rating agencies in the U.S., recently found that: “Rapid growth in unfunded liabilities over the past 10 years has transformed local governments’ balance sheet burdens to historically high levels,” and that Austin, Dallas, Houston, and San Antonio had a combined $22.6 billion in pension debt—and it’s growing worse!

Using the Pension Review Board’s latest Actuarial Valuations Report for November 2016, we can parse the systems within each municipality to get a little bit better sense of where the trouble lies. Pension debt for the retirement systems in the big 4 looks like this:

  • Austin Employees’ Retirement System: $1.1 billion, Austin Police Retirement System: $346 M, and Austin Fire Fighters Relief and Retirement Fund: $93 M;
  • Dallas Employees’ Retirement Fund: $809 M, Dallas Police and Fire Pension System—Combined Plan: $3.3 B, and Dallas Police and Fire Pension System—Supplemental: $23 M;
  • Houston Municipal Employees Pension System: $2.2 B, Houston Firefighters’ Relief and Retirement Fund: $467 M, and Houston Police Officer’s Pension System: $1.2 B; and
  • San Antonio Fire and Police Pension Fund: $360 M.
  • Of course, it’s important to keep in mind that the figures use some of the same fuzzy math as described above, so the actual extent of the problem may be worse than the PRB’s latest figures indicate.

    What similarities, if any, are there to current Texas municipal pension issues and those that forced California cities like San Bernardino, Stockton and Vallejo into bankruptcy? What differences?

    The common element in most, if not all, of these systemic failures is the defined benefit pension plan. Because of the political element as well as the inclusion of inaccurate investment assumptions in the DB model, these plans are almost destined to fail, threatening the taxpayers who support it and the retirees who rely on it. And sadly, that’s what we’re witnessing now across the nation.

    As far as the differences go, California’s municipal bankruptcies as well as Detroit’s were preceded by decades of poor fiscal policy and gross mismanagement. I don’t see that same thing here in Texas, but it’s also important that we don’t let it happen too.

    California pensions were notoriously generous (20 years and out, spiking, etc.). Do any Texas state or local pensions strike you as unrealistically generous?

    Any plan that’s making pension promises but has no plan on how to make good on those promises is being unrealistically generous. And unfortunately for taxpayers and retirees alike, a fair number of plans can be categorized as such.

    The Pension Review Board’s Actuarial Valuations Report for November 2016 reveals that of Texas’ 92 state and local retirement system, only 4 of them are fully-funded. At the other extreme, a whopping 19 of the 92 plans have amortization periods of more than 40 years. Six of those 19 plans have infinite amortization periods, which effectively means that they have no plan to keep their promises but are instead planning to fail.

    As far as specific plans go, there’s no question that the Dallas Police and Fire Pension System is the posterchild for the overly generous. The Dallas Morning News recently covered the surreal levels of deferred compensation offered, finding that:

    The lump-sum withdrawals come from the Deferred Retirement Option Plan, known as DROP. The plan allows veteran officers and firefighters to essentially retire in the eyes of the system and stay on the job.

    Their benefit checks then accrue in DROP accounts. For years, the fund guaranteed interest rates of at least 8 percent. DROP made hundreds of retired officers and firefighters millionaires. And once they stopped deferring the money, they received their monthly benefit checks in addition to their DROP balance. [emphasis mine]

    It’s probably fair to say that any public program that makes millionaires out of its participants is probably being too generous with its benefits.

    There seem to be only two recent local government bankruptcies in Texas, neither of which were by cities: Hardeman County Hospital District Bankruptcy and Grimes County MUD #1. Did either of these involve pension debt issues?

    I’m not familiar with those instances, but when it comes to the issue of soaring pension obligations, I can tell you that the system as a whole is moving in bad direction.

    In November 2016, Texas’ 92 state and local retirement systems had racked up over $63 billion dollars of unfunded liabilities, with more than half owed by the Teacher Retirement System. That’s a staggering amount of pension debt that’s not only big but growing fast. And worse yet, that’s in addition to Texas’ already supersized local government debt-load.

    How we’re going to make good on all of these unfunded pension promises is anyone’s guess. But I imagine that it’ll involve some combination of much higher taxes, benefit reductions, and fewer city services.

    What limits or constraints does Texas place on Chapter 9 bankruptcy?

    The Pew Charitable Trusts’ Stateline has some good information on this, at least as far as municipal bankruptcy is concerned. A November 2011 report, Municipal Bankruptcy Explained: What it Means to File for Chapter 9, had this to say about the process:

    Who can file for Chapter 9? Only municipalities — not states — can file for Chapter 9. To be legally eligible, municipalities must be insolvent, have made a good-faith attempt to negotiate a settlement with their creditors and be willing to devise a plan to resolve their debts. 

They also need permission from their state government. Fifteen states have laws granting their municipalities the right to file for Chapter 9 protection on their own, according to James Spiotto, a bankruptcy specialist with the Chicago law firm of Chapman and Cutler. Those states are Alabama, Arizona, Arkansas, California, Idaho, Kentucky, Minnesota, Missouri, Montana, Nebraska, New York, Oklahoma, South Carolina, Texas and Washington. 

    Hopefully this is a process that can be avoided entirely, but given the fiscal condition of the DPFP and potentially a few other systems, I’m not sure that’ll be the case.

    Next to Dallas, which municipal pensions would you say are in the worst shape?

    I’m most concerned about the local retirement systems in Title 109. The reason, again, is that these 13 local retirement systems are effectively locked into state law and there’s little that taxpayers or retirees in those communities can do to affect good government changes without first going to Austin. These systems have basically taken a bad situation and made it worse by fossilizing everything that counts.

    In the Texas Public Policy Foundation’s 2017-18 Legislator’s Guide to the Issues, I cover this issue in a little more detail. In the article (see pgs. 122 – 124), I write of these plans’ fiscal issues which can be seen below, albeit with slightly older data.

    texaspensiondebtchart

    (Funded ratios marked in red denote systems that are below the 80% threshold, signifying a plan that may be considered actuarially unsound. Source: Texas Bond Review Board.)

    The fact that these systems either are in or are headed for fiscal muck is a big reason why the Texas Public Policy Foundation is helping to educate and engage on legislation that would restore local control of these state-governed pension plans. People on the ground-level should have some say over their local plans, and that’s what we’ll be fighting for next session. Encouragingly, a bill’s already been filed in the Senate (see SB 152) and there should be legislation filed shortly in the House to do just that.

    Should Texas government agencies switched over to defined contribution (i.e. 401K) plans over standard pension plan, and if so, how might this realistically be accomplished without endangering existing retirees?

    ABSOLUTELY. Ending the defined benefit model and transitioning new employees into something more sustainable and affordable, like a defined contribution system, is one of the best things that the state legislature can do. This is something I’ve long been an advocate of.

    In fact, in early 2011, I played a very minor role in the publication of some major research spearheaded by Dr. Arthur Laffer, President Ronald Reagan’s chief economist, that advanced this same reform idea (see Reforming Texas’ State & Local Pension Systems for the 21st Century). I’ve also written a lot about the need to make the DC-switch, making the case recently in Forbes that:

    DC-style plans resemble 401(k)s in the private sector and the optional retirement programs (ORP) available for higher education employees in Texas. These DC-style plans put the power of an individual’s future in their own hands instead of depending on the good fortune of government-directed DB-style plans. DC-style plans are portable and sustainable over the long term as they are based on the contributions of retirees and a defined government match.

    With DC-style plans, retirees will finally have the opportunity to determine how much risk they are willing to take. They also reduce the risk that the government will default on their retirement or fund those losses with dollars from taxpayers who never intended to use these pensions. By giving retirees more freedom on how to best provide for their family, they will be in a much better position to prosper.

    Because of their efficiency, simplicity and fully funded nature, the private sector moved primarily to DC-style plans long ago. For the sake of taxpayers and retirees dependent on government pensions, it’s time for all governments to move to these types of plans as well.

    As far as dealing with transition costs, some much smarter people than I have written on this issue and found that it’s not as big of a challenge as it’s made out to be. Dr. Josh McGee, a vice president with the Laura and John Arnold Foundation, a senior fellow with the Manhattan Institute, and Chairman of the Pension Review Board, had this to say about the matter:

    Moving to a new system would have little to no effect on the current system. State and local pensions are pre-funded systems, and unlike Social Security, the contributions of workers today do not subsidize today’s retirees. Future normal cost contributions are used to fund new benefit accruals that workers earn on a go-forward basis and are not used to close funding gaps. Therefore, it matters little whether the normal cost payments are used to fund new benefits under the current system or a new system.

    (Source: The transition cost mirage—false arguments distract from real pension reform debates.)

    Another pension expert, Dr. Andrew Biggs with the American Enterprise Institute, published research that found that:

    In this study, I show that if a pension plan were closed to new hires, over time the duration of liabilities would shorten, and the portfolio used to fund those liabilities would become more conservative. However, the effects of these transition costs are so small as to be barely perceptible.

    (Source: Are there transition costs to closing a public-employee retirement plan?)

    I’m confident that with the right plan in place, Texas’ state and local retirement systems can make the switch to defined contribution and we’ll be all the better for it.


    Thanks to James Quintero for providing such a detailed analysis!

    And since we’re on the topic, here’s a roundup of news on the Dallas Police and Fireman’s pension fund crisis:

  • The Texas Rangers have launched a criminal probe into the shortfall.
  • City Journal offers details on the unreasonable generosity of the Dallas plan (which covers some of the same DROP issues Quintero mentions):

    Dallas created the police and fire plan in 1916. The system’s trustees eventually persuaded the state legislature to allow employees and pensioners to run the plan. Not surprisingly, the members have done so for their own benefit and sent the tab for unfunded promises—now estimated at perhaps $5 billion—to taxpayers. Among the features of the system is an annual, 4 percent cost-of-living adjustment that far exceeds the actual increase in inflation since 1989, when it was instituted. A Dallas employee with a $2,000 monthly pension in 1989 would receive $3,900 today if the system’s annual increases were pegged to the consumer price index. Under the generous Dallas formula, however, that same monthly pension could be worth more than $5,000. No wonder the ship is sinking.

    The system also features a lavish deferment option that lets employees collect pensions even as they continue to work and earn a salary. Moreover, the retirement money gets deposited into an account that earns guaranteed interest. Governments originally began creating these so-called DROP plans as an incentive to encourage experienced employees to keep working past retirement age, which in job categories like public safety can be as young as 50. In Dallas, the pension system gives workers in the DROP plan an 8 percent interest rate on their cash, at a time when yields on ten-year U.S. Treasury notes, a standard for guaranteed returns, are stuck at less than 2 percent. According to the city, some 500 employees working past retirement age have accumulated more than $1 million in these accounts—on top of the pensions that they will receive once they officially stop working.

  • The Dallas Morning News says that there’s plenty of blame to go around:

    Over the years, the Dallas Police and Fire Pension System fund has amassed $2 billion to $5 billion in unfunded liabilities, the result of bad real estate investments and blatant self-enrichment from prior management. Coupled with a possible setback in ongoing litigation over public safety salaries, Dallas is in the most financially precarious position in its history.

    City officials are openly uttering the word bankruptcy, not just of the pension fund but the city itself. As Mayor Mike Rawlings told the Texas Pension Review Board this month, “the city is potentially walking into the fan blades that might look like bankruptcy.”

    The state Legislature created this mess by not giving the city a meaningful voice in the fund’s operation and allowing the former board of the pension fund to unilaterally sweeten its membership’s promised benefits without concern to the overall fiscal damage being done. Now it must help the city clean up the mess.

    Dallas already provides nearly 60 percent of its budget to support public safety services and recently contributed $4.6 million to increase its share of pension contributions to 28.5 percent — the maximum allowed under state statute. However, if Dallas loses the lawsuit over salaries and no changes are made to the pension fund, the city could take an $8 billion hit. That is roughly equal to eight years of the city’s general fund budget.

  • That said, the bond market doesn’t seem to think Dallas is near bankruptcy.
  • And it’s not just Dallas:

    Austin, Dallas, Houston and San Antonio collectively face $22.6 billion worth of pension fund shortfalls, according to a new report from credit rating and financial analysis firm Moody’s. That company analyzed the nation’s most debt-burdened local governments and ranked them based on how big the looming pension shortfalls are compared to the annual revenues on which each entity operates.

    “Rapid growth in unfunded pension liabilities over the past 10 years has transformed local governments’ balance sheet burdens to historically high levels,” the report says.

    Chicago had the most dire ratio on the national list. Dallas came in second. According to the report, the North Texas city has unfunded pension liabilities totaling $7.6 billion. That’s more than five times the size of the city’s 2015 operating revenues.

    Both those cities may turn to the public to partially shore up their shortfalls. Houston Mayor Sylvester Turner wants to use $1 billion in bonds to infuse that city’s funds. Dallas police officer and firefighter pension officials also want $1 billion from City Hall, an amount officials there say is too high.

    Meanwhile, Austin ranked 14th on the Moody’s list with unfunded pension liabilities of $2.7 billion. San Antonio ranked 22nd with a $2.3 billion shortfall.

  • Wallace Hall Followup: Dan Patrick Win = Witchhunt End?

    Monday, June 2nd, 2014

    The witchhunt against UT regent Wallace Hall for uncovering cronyism and favoritism in UT admissions may be coming to an an end, thanks to Dan Patrick’s decisive win the Lt. Governor runoff. Patrick has constantly supported Hall in his investigative efforts and condemned the attempt to impeach him.

    The effect of Patrick’s statement was immediate. The next day, a legislative committee that had met to draft articles of impeachment against Hall failed to do so. Several members of the committee were quoted saying that it would take a while. Others expressed hope that the Travis County District Attorney would, basically, take the case off their hands.

    The piece goes on to note that it is unlikely for Texas House Speaker Joe Straus (who is up to his eyeballs in the scandal) to call a special session just to consider the impeachment of a regent who earns no salary. That would put off a House vote to send the formal charges of impeachment to the senate until next year, when then Lt. Governor Patrick, who controls the Senate agenda, would have numerous tools to delay or kill consideration of the impeachment charges.

    In other Wallace Hall/UT Scandal news, the Dallas Morning News published an editorial by Joe Straus ally Charles Matthews in which he tut-tuts the scandal, saying “nothing to see here.”

    Says Matthews: “A review has already been conducted by the UT system. After a nine-month inquiry, the report released to the public ‘did not uncover any evidence of a systematic, structured or centralized process of reviewing and admitting applicants recommended by influential individuals.'”

    Translation: We’ve investigated ourselves and found ourselves innocent! At least in “the report released to the public,” which seems and awfully specific formulation. (And how about non-“systematic, structured or centralized” abuse?)

    The biographical blurb on Matthews states that “Charles Matthews, a Dallas resident, is former vice president and general counsel of the Exxon Mobil Corp.” But the editorial fails to note that Matthews was the University system chancellor from 2005-2010 (i.e., at least some of the scandal presumably occurred on his watch), which would seem to be fairly important information for readers to judge his impartiality.

    Also, Hall has threatened to sue one of his legislative critics for making false statements about him…

    Your Obligatory “Wendy Davis is a Damn Liar” Post

    Tuesday, January 21st, 2014

    Everyone and their dog has already chimed in on Wendy Davis’ serial prevarications by now, but hey, it is my state.

    WendyDavisSadDog

    In the Dallas Morning News, political reporter Wayne Slater brought up examples of Davis’ campaign biography that don’t match up with the facts:

    It is her biography — a divorced teenage mother living in a trailer who earned her way to Harvard and political achievement — that her team is using to attract voters and boost fundraising.

    The basic elements of the narrative are true, but the full story of Davis’ life is more complicated, as often happens when public figures aim to define themselves. In the shorthand version that has developed, some facts have been blurred.

    Davis was 21, not 19, when she was divorced. She lived only a few months in the family mobile home while separated from her husband before moving into an apartment with her daughter.

    A single mother working two jobs, she met Jeff Davis, a lawyer 13 years older than her, married him and had a second daughter. He paid for her last two years at Texas Christian University and her time at Harvard Law School, and kept their two daughters while she was in Boston. When they divorced in 2005, he was granted parental custody, and the girls stayed with him. Wendy Davis was directed to pay child support.

    In an extensive interview last week, Davis acknowledged some chronological errors and incomplete details in what she and her aides have said about her life.

    “My language should be tighter,” she said. “I’m learning about using broader, looser language. I need to be more focused on the detail.”

    Just try that “my language should be tighter” line if you ever get audited by the IRS.

    Wendy Davis’ campaign biography leans heavily on her time as a single teenage mom. She was indeed all of those things, just not at the same time.

    Other tidbits: When she ran for the Ft. Worth city council in 1996, she did it as a Republican and voted in GOP primaries.

    Also, there’s that little bit about Davis leaving her husband the day after he paid off her Harvard loan. As one Twitter wag put it:

    There are a few other tiny wrinkles to Davis’ life story. The fact her ex sought a restraining order to keep her from using illegal drugs while visiting her children is one. Another is the fact that she lied about some of the details of her life story under oath.

    A few more Twitter observations on the latest Wendy Davis revelations:

    It also doesn’t say much about her intelligence that she thought she could get away with these lies in the Internet era…

    Texas Senate Race Update for May 11, 2012

    Friday, May 11th, 2012

    Certainly Sarah Palin endorsing Ted Cruz was the big senate race news of the week (compared to the tiny news of my own endorsement of Cruz), but there’s still a bunch of other Senate race tidbits:

  • Both Ron Paul and Rand Paul have endorsed Ted Cruz. Rand Paul, of course, has been in Cruz’s corner a while. Not as big as the Sarah Palin endorsement, but not chopped liver either.
  • In the wake of Richard Mourdock’s defeat of Dick Luger, The Weekly Standard wonders if Ted Cruz is next.
  • A look at The Club for Growth’s record of backing winners, and how they’re backing Ted Cruz.
  • Dewhurst skips another debate.
  • Dewhurst puts out a new ad featuring Mike Huckabee:

    TV Ad: Values from David Dewhurst on Vimeo.

  • Pro-Dewhurst SuperPAC put up another attack ad against Cruz:

  • Dewhurst announces the endorsement of Texas RNC member Bill Crocker. Might help a bit more than John Gordon.
  • I still don’t see how highlighting his father’s World War II service is supposed to convince me to vote for Dewhurst. (Cruz’s story of his father (who was at Sunday’s rally) at least dovetails nicely with his campaign themes.)
  • Actual headline from Tom Leppert’s website “Dykes Urges Support For Leppert For Senate”. Were they actually trying for a Fark link? (That’s Pastor David Dykes, by the way.)
  • Leppert’s pastor also goes to bat for him:

  • A look at last Friday’s Senate candidate forum. I didn’t liveblog it, but i did put up some random tweets.
  • Kate Alexander on the state of play in the race.
  • Any new information in the Texas Tribune round-up of the race? (scans it) Nope.
  • Even by the previous lame standards of Team Dewhurst leaks, this “internal poll leak” that shows Leppert about to overtake Cruz is lame.
  • Heh. Team Dewhurst has that “Ted Cruz on Chinese currency ad” appearing on the sidebar of National Review Online. You know, the magazine that just endorsed Cruz. I don’t think that ad will be winning Dewhurst any new supporters…
  • Big Jolly endorses Dewhurst. This is hardly a shock.
  • Glenn Addison endorses Ron Paul. As you can see further up this blog post, you can’t switch the subject and predicate in the preceding sentence…
  • Craig James gets profile in the Dallas Morning News. It’s a nice profile.
  • DMN talks about their Republican endorsement interviews. For the dozen or so conservatives their endorsement might actually sway.
  • James also put up an anti-Cruz radio spot:

  • Naturally, Democrats Sean Hubbard and Paul Sadler both back gay marriage.
  • As the anointed Democratic establishment candidate, it’s no surprise that Sadler picked up the endorsements of both The Dallas Morning News and The San Antonio Express News.
  • Addie D. Allen finally turned in a campaign finance report (some 15 days after deadline), and raised $9,889, of which $5,000 is a loan to herself.
  • Texas Senate Race Update for April 20, 2012

    Friday, April 20th, 2012

    Q1 reports trickle out and Team Dewhurst attack websites start popping up like mushrooms:

  • Ted Cruz has accused David Dewhurst of helping use gimmicks to balance the state budget because, well, gimmicks have been used to balance the state budget.
  • Here’s James Bernsen of the Cruz campaign making the case that Dewhurst employed accounting gimmicks and increased state budgets an aggregate of $25 billion for the 2004–2011 period. Hopefully I’ll have a chance to bring you some expert opinion on how how balanced the Texas budget has been, what Dewhurst’s role in the budget has been, etc.
  • I’ve already reported the gross numbers, but here’s Cruz’s Q1 fundraising report. Cash on hand was $3.25 million.
  • Cruz has new ad up touting the Mojave desert cross case:

  • MSM members still seem to be baffled that Cruz is a Hispanic who’s not a liberal.
  • Rick Perry formally endorses Dewhurst:

    Before he had sort-of endorsed Dewhurst in an offhand way on the Presidential campaign trail; this is the real deal. It certainly helps Dewhurst, but the language is a bit tepid, “I’m a loyal supporter” rather than “David Dewhurst is awesome and is far and away the best man in the race.” (Hat tip: The Weekly Standard.)

  • Dewhurst’s Q1 FEC report is up. Just shy of $3.2 million cash on hand, or slightly less than Cruz. Presumably Dewhurst could start pouring millions in self-funding into his campaign at any moment. So why hasn’t he? Is he already assuming he’s going to be in a runoff and will carpet-bomb the race with dough then? (I’ll try to look through Dewhurst’s report more thoroughly when I have time.)
  • Robert T. Garrett of The Dallas Morning News sums up the fund race.
  • Team Dewhurst strikes back at Dewbious with their own attack website, The Real Ted Cruz, which seems to be all about the Chinese business case. I still think it’s pretty weak sauce, but I must admit that the Photoshoping of Cruz’s face onto Chinese currency is a nice touch…
  • The Cruz response to the Chinese client issue.
  • Dewhurst has also put up a parody Cruz Pintrest site. Remember the Saturday Night Live 2.0 cast, the one after the entire original cast quit but before they promoted Eddie Murphy? Yeah, it’s not quite that funny.
  • KYFO has a poll asking which Senate candidate you support. So far Cruz is creaming the rest of the field.
  • Dewhurst pushes for repeal of the death tax.
  • Tom Leppert says he’s made several million dollars worth of ad buys.
  • Garrett is also reporting that Craig James had “$525,000 in cash as of March 31, and most of it’s probably money he can use before the May 29 primary, because he himself accounted for three-quarters of his campaign’s $1 million haul.” James’ FEC report isn’t up yet, and I don’t see it linked from James website.
  • James appeared before the Clear Lake Tea Party:

    If you watch all 24 minutes of that, congratulations! You have even more dedication to covering this race than I do…

  • Glenn Addison talks about the environment in Corpus Christi.
  • Addison also raised $19,111 in Q1.
  • Longshot Curt Cleaver raised all of $390 in Q1.
  • Democrat Paul Sadler finally starts to look like the Democratic frontrunner, having raised $72,800 this quarter, including $17,500 in union money. That won’t keep Cruz or Dewhurst up at night, but it may be enough to finish off Sean Hubbard. Lots of contributions from his home base in Henderson, a few from Austin, not much from the rest of the state. (One $500 contribution is from Austin political consultant G. K. Sprinkle, who I knew slightly back in the 1990s when she got a few science fiction stories published.)
  • And you know you’re doomed when even the Dallas Morning News calls your race “Quixotic”.
  • Sean Hubbard picked up the endorsement of the Stonewall Democrats of Dallas Hubbard has been pursuing the endorsements of the gay rights community hard, so this isn’t a surprise, but compared to a lot of other Democratic special interest groups (blacks, Hispanics, unions, government employees (but I repeat myself), etc.) there just aren’t that many votes there.
  • There are supposedly two candidates (David B. Collins and Victoria Ann Zabaras) running for the Green Party nomination for the Senate race. Neither seems to have bothered to put up a website.
  • Roundup of Senate Debate Coverage

    Tuesday, April 17th, 2012

    Here’s a roundup of coverage of the Texas Senate candidate debate I liveblogged on Friday:

  • Tom Benning at the Dallas Morning News also live-blogged the debate. His write-up is more coherent but less comprehensive or colorful than my own.
  • KERA has some more extended quotes from the debate.
  • The Texas Tribune/Houston Chronicle piece. I think Tom Leppert was admonishing the media more than the candidates.
  • “Dewhurst plays Pinata.”
  • The Ft. Worth Star Telegram story.
  • Big Jolly ranked the debate Leppert, Dewhurst, Cruz, James. He notices the pauses before Dewhurst’s answers, but doesn’t seem to notice the ones in the middle of them, the rambling nature of his answers, or the times he looked absolutely lost in mid-argument. I’m sure Tea Party activists across the state will also take exception to his defense of Dewhurst for not attending “every podunk forum.”
  • Eric Erickson over at RedState (someone far more critical of Dewhurst than myself) had no problem with Cruz’s attacks.
  • Fellow RedStater Susan Cloud liked Leppert the best, and thought Cruz’s “hyper-aggressive attacks” harmed him.
  • Pondering Penguin liked Cruz, who she’s endorsed.
  • WFAA grades the debate:

  • I’ve been looking to see if someone uploaded the debate to YouTube, but so far all I’ve been able to find is Craig James’ closing statement:

  • Twitter feed for the #belodebate. Keep scrolling if you want to read them all…
  • There’s some chatter on Twitter that Cruz’s comment that the Dallas Morning News had “retracted” the story about Cruz hiding the date his father fled from Cuba was wrong. Well, here’s what Robnert T. Garrett said in the DMN: “CLARIFICATION: On some occasions since 2005, Ted Cruz has publicly mentioned the date of his father’s departure from Cuba and even the fact he fought on the same side as Fidel Castro. However, in the past two months, the newspaper found no instances in which he offered audiences any clues that his father was a pre-Castro exile.” That sounds pretty darn close to a retraction to me, even if they didn’t use the word “retraction.”
  • Texas Senate Race Update for March 23, 2012

    Friday, March 23rd, 2012

    Wednesday night I finally got a chance to interview Craig James, so I hope to have the video of that up next week (though I have to warn you in advance that the technical quality is not as good as it could be, as the location (the Rudy’s on south 360) was less than ideal for filming, sound-wise). I also hope (if he has the time) to post an email mini-interview with Ted Cruz specifically focused on the Supreme Court taking up the ObamaCare case.

  • Ted Cruz picks up the endorsement of the Republican Liberty Caucus.
  • Cruz also got a generally fair and balanced piece on his arguing of cases before the Supreme Court by Kate Alexander in the Austin-American Statesman. Of all the MSM reporters covering the race, so far I’d say she’s doing the best job, something I never thought I would say about someone at the Statesman
  • He also appeared on the Mark Levin Show.
  • He also produced a TV ad that offers a subset of last week’s radio ad:

  • National Journal says the Cruz add buy on Fox News is $222,000.
  • Craig James joins the chorus of those complaining about Dewhurst ducking debates.
  • And the one upcoming debate Dewhurst is not ducking? Turns out one of the hosts is backing a Dewhurst SuperPac That’s some might fine objective journalism you’ve got going on there, Lou…
  • Big Jolly is impressed with Dewhurst and Tom Leppert’s campaigns.
  • Leppert campaigned in Longview.
  • Leppert appeared on the “Dr. Carol Show” (I’m assuming it’s this one, which seems to be out of Austin, and not the “Holistic Veterinarian”):

  • Craig James gets a Texas Monthly profile. It’s an interesting piece.
  • The Houston Chronicle‘s Joe Holley also speaks with James.
  • Glenn Addison campaigns in Lubbock.
  • The Wall Street Journal offers up a surprisingly bland and insight-free snapshot of the race. Like the mashed potatoes on your cafeteria tray, it’s strictly filler.
  • Paul Sadler, Addie Dainell Allen and Grady Yarbrough all appeared at a debate in Dallas, the details of which, alas, are hidden behind the Dallas Morning News paywall. But where was Sean Hubbard?
  • Texas Senate Race Update for January 25, 2012

    Wednesday, January 25th, 2012

    Time for another update. And since none of the Republicans liked the Keystone Pipeline decision, or Obama’s State of the Union address, I’m not going to list each individual reaction here.

  • Ted Cruz endorsed by the national Tea Party Express.
  • A roundup piece from the Ft. Worth Star Telegram, in which we learn that the academics that MSM reporters usually go to for consensus wisdom say that Tea Party influence is on the wane. Imagine my shock.
  • Mark Davis of WBAP talks to Michael Quinn Sullivan of Empower Texas about both the Texas redistricting decision and the senate race:

  • Robert T. Garrett of The Dallas Morning News reports that David Dewhurst pledged to serve only two terms in the Senate if elected. As Garrett notes, Ted Cruz and Tom Leppert have also pledged to support term limits. Also, since I have been fairly critical of Garrett’s reporting on the race, I should point out that there seems to be neither errors nor sneers in this piece.
  • Somehow I overlooked this Garrett piece from 12 days ago where Craig James admits to taking “insignificant” amounts from boosters in his SMU days.
  • Also in the DSM, John David Terrance Stutz notes that David Dewhurst is preparing a state senate agenda that just happens to dovetail nicely with his U.S. senate race themes. Including “the potential negative repercussions of Obamacare and Sharia law.”
  • Another poll done for the David Dewhurst campaign comes to the startling conclusion that the David Dewhurst campaign is awesome. As I previously discussed, the partial results of secret polls leaked to the media without full disclosure of the complete results, including the questions asked, the sample size, the screening criteria, etc., is essentially meaningless spin. In fact, I just sent a query off pollster Michael Baselice asking for that information. I’ll let you know if I get a reply…
  • Glenn Addison calls Cruz, Dewhurst, and Leppert flaming moderates.
  • Addison also gets a nice profile over at KXAN.
  • Addison also announced he would be attending the Texas Republican Assembly Biennial Endorsing Convention at the Southwest Baptist Theological Seminary in Ft. Worth on Saturday, January 28.
  • Addison also announced he would be at the East Texas Conservative candidate forum in Tyler Friday, January 27. Say what you will about Addison, but I don’t think I’ve ever seen a longshot candidate keep up such a hectic schedule.
  • Democrat Jason Gibson has updated his website. Slightly.
  • Lela Pittenger raised $13,159 in Q4.
  • Ben Gambini doesn’t seem to have a website yet, but he does have a Facebook page. Judging from the graphic he put up there, he seems to be running mostly as a social conservative.
  • Democrat Addie Dainell Allen also has a Facebook page, where she seems to be going by Addie D. Allen.
  • Still can’t find campaign web presences for Dr. Joe Agris or Charles Holcomb.
  • Via email, longshot, non-filed Democratic candidate Virgil Bierschwale indicated he could not afford the filing fee, and thus is out of the race.
  • Via email, longshot, non-filed Democratic candidate Stanley Garza indicated he was giving up his campaign for 2012. Which brings up the question: Will he return that $1 of unspent campaign contributions?
  • All the above updates have also been made on my page linking all the candidate’s websites.

    Tom Leppert Critic Jim Schutze on Problems During Leppert’s Term as Mayor

    Monday, January 23rd, 2012

    Before I interviewed Tom Leppert, I wanted to research several controversies that came up during his term as Mayor of Dallas. Unfortunately, because of The Dallas Morning News paywall (and, as you can read below, possible DMN involvement in some of those controversies), information about them was hard to come by.

    Lacking a good Dallas political connection to pump for information, I ended up reaching out to Jim Schutze, one of the writers for the Dallas Observer‘s Unfair Park section on local Dallas politics. Schutze had foolishly generously offered to dish the dirt on Leppert’s term as mayor, and when I called him up I was evidently the first person who had taken him up on the offer. I ended up talking to Schutze on the phone for over an hour.

    I’ve edited the notes from that phone call into the semi-coherent form found below, and the material in block-quotes represents the gist of what I was able to transcribe from Schutze’s description (I can only type so fast, so word-by-word transcription of a one-hour phone call in real time is quite beyond me). I’ve also included some links to columns where he covers some of the issues we discussed.

    I should point out that neither The Observer (which is the Dallas equivalent of The Austin Chronicle, but not as sad) nor Schutze could be considered conservative (though Schutze says that a quarter-century of observing local politics firsthand has “beaten the bleeding liberal” out of him). As such, everything said below should be taken with a grain (or several grains) of salt, and adjusted as needed for bias. However, while Schutze’s version of events should not be treated as gospel, all of the below seem to be real controversies that occurred during Leppert’s term as mayor, and I believe all should be looked at and investigated more thoroughly than they have been heretofore.

    I conducted the interview with Leppert on September 19, and I really meant to have all this up considerably earlier, ideally just a week or two after that interview, but events intervened. I’ve been both busy (including a new job) and lazy, and this material needed considerable editing, which meant it got put on the back-burner while I grappled with the endless press of current events.

    Trinity Toll Road Controversy

    Angela Hunt (East Dallas progressive City Council member) put up a referendum on wonk infrastructure issues. Leppert mischaracterized it as an attempt to kill the toll road, but it was really a debate over where to put it: outside the flood plain or (as Leppert wanted) inside the flood plain. The 1998 election to authorize the bonds for the original project didn’t say “highway,” it said “park road” on top of the levee, not a highway. When it became a freeway, the U.S. Army Corps of Engineers said you couldn’t build one on the levees, because it was unstable and too big a risk. Plan B was to build the highway between the levees. None of the numbers for this road work, because the road is way too expensive for the amount of traffic to be carried.

    Angela Hunt referendum said the road would flood, and the plan would diminish the carrying capacity of the floodway and increase flood risk. Five rightaways were under consideration, only one in the flood plain. A levee collapse would be worse than Katrina.

    In 2007, Leppert was anointed by the business leadership to defeat the Hunt referendum as Job One. Leppert could sell any board of directors on anything. He was a developer in Hawaii. He was the one who moved to Dallas, Turner Construction didn’t. He wasn’t CEO for long, and I [Schutze] don’t know why he left.

    Carol Reed (of a consulting company now called The Reeds) lead the campaign to defeat the referendum. Leppert said the Corps of Engineers had signed off. But the Corps said: “We haven’t signed off on anything.” The North Texas Toll Road Authority told reporter Michael Lindberger they hadn’t signed off on the money. The Dallas Morning News sat on the story; the owners are landholding families in favor of the road.

    The referendum was narrowly defeated, meaning the road stayed between the levees.

    The estimated $400 million turned out to be $1.4 billion (2007), $1 billion over budget, now over $2 billion. (Leppert’s dodge: “I am very comfortable with their [the Corps’] position.”)

    Leppert said there were fewer issues with a toll road than there actually were, and promised numerous recreational facilities would be built as well. Angela Hunt said that “Leppert’s not a liar, he’s a salesman, and he believes his pitch.”

    After Katrina, the Corps of Engineers reexamined levees and said they were useless even in a hundred year flood.

    Police Statistics

    Urban Crime statistics have been dropping nationally. When Leppert came into office in 2007, Dallas had the highest crime overall per capita for cities of over a million people. Leppert vowed to change that. Leppert called in Police Chief David Kunkle (a tough, respected chief) and said he wanted the crime numbers down. DPD changed the way it reported crime statistics to the FBI for the Uniform Crime Statistics. Dallas Morning News did a terrific series of investigative news on the process. For burglary, an incident would no longer be counted unless something was stolen. Most other cities disagreed with the Dallas redefinition and called it a “Lawyering of the language.” As soon as they put in the new guidelines, crime rates dropped, and Dallas was no longer number one.

    SAFE Teams

    Another Leppert crime controversy was the creation of SAFE (Support Abatement Forfeiture and Enforcement) teams: A team of cops, code inspectors, health department inspectors, etc. would “wallpaper” cheap apartment complexes with code violations in order to seize properties. The Property Owners Association got involved, since property rights were being trampled, and in some cases apartment buildings were turned over to connected city council friends.

    The City-Funded Hotel

    Built by the city, owned by the city, funded by bonds, unless there’s enough revenue. Trammel Crow was against it and said the Dallas hotel market was flooded. Leppert pushed it forward anyway.

    Lynn Flint Shaw and Willis Johnson

    What role did Lynn Flint Shaw and Willis Johnson play in Leppert’s campaign and administration? And what role did they have in steering/approving minority business contracts with City Hall and/or DART?

    Shaw was a black woman who was well liked by sophisticated white arts people, a liaison between rich white Republicans and poor blacks. That vote has been important in pushing big Business Establishment initiatives (sports stadiums, etc.). Shaw was chair of Leppert’s fundraising committee.

    As soon as he was elected, she sent an email to all business contacts to go through Willis Johnson (then a radio DJ). The email said that all requests for minority contracts with the city should go through Shaw, Johnson and a small cabal of black leaders who called themselves the “Inner Circle.” Willis Johnson is at the center of an FBI investigation as a major minority contractor and lobbyist. He had a regular weekly meeting with Leppert when he was mayor.

    Shaw had no official roll in City Hall, and an unpaid role at DART.

    Rufus and Lynn Flint Shaw’s Murder/Suicide

    Lynn Flint Shaw and her husband, columnist Rufus Shaw, were found dead of an apparent murder/suicide on March 8, 2008.

    Shaw was about to be indicted on a fraud charge that had nothing to do with politics, on a debt/signature forging issue. Circumstances of her death are mysterious. She had started to run for the council, then lived on the campaign funds, and made up phony expenses. Police determined there was nothing there to investigate. She was still Leppert’s campaign chair at the time of her death.

    The Inland Port

    Richard Allen in California buys up 5,000 acres, says he’ll create an “inland port,” a transshipping hub in south Dallas that will create 65,000 jobs. This would compete with a Ross Perot initiative in Ft. Worth. (Perot was a big Leppert backer; Leppert had his mayoral victory party at Ross Perot, Jr.’s pad). Dallas County Commissioner John Wiley Price, longest tenured and most powerful among Dallas’ black politicians, stopped the project. He said there needed to be more planning, and Leppert backed him up. Allen had been planning for six years. Price sent cronies (the SALT group), including Willis Johnson, demanding $1 million to be paid to them, and 15% cut of profits. It was a classic shakedown. Allen refused, they blocked the project, and now Allen is in bankruptcy. (Note: The FBI raided the offices of John Wiley Price on June 27, 2011.)

    Despite all the foregoing, Schutze wasn’t universally negative on Leppert. He said Leppert’s friends thought he was a good guy, more of a chamber of commerce guy than a politician, and would would probably be naturally somewhat shy and retiring if he weren’t in politics.

    As soon as this goes up, I’ll send a query to the Leppert campaign to let them respond, and I’ll post their reply (if any) unedited here.

    Texas Senate Race Update for January 20, 2012

    Friday, January 20th, 2012

    Still waiting on Q4 fundraising numbers from the candidates. In previous quarters they came out around the 15th of the month after the deadline, but maybe the deadline is longer for End-of-Year reports.

  • Jason Embry notes that hey, this just might be a real senate race. Thanks for noticing.
  • Another blogger grading the TPPF debate. He ranks Tom Leppert first (followed by Ted Cruz, Craig James and Glenn Addison) and David Dewhurst last. However, the Leppert campaign will find no comfort in his analysis of their candidate: “Once Texans take a closer look at his actual record (and how deeply he appears to be in the back pocket of T. Boone Pickens), I think he’ll be reduced to what he actually is: the least conservative and—other than Craig James —the least qualified candidate running for KBH’s vacated seat.” Ouch! But his rating of Dewhurst is even worse: “There is a reason that Dewhurst has been ducking Ted Cruz and refusing to attend any of the previous debates: he’s really, really bad at it…Remember the cartoon Droopy the dog? That’s pretty much exactly what Dewhurst sounded like on stage on Thursday evening. No energy, seemed lost and confused at times. Halting, slow speech.” Double ouch!
  • KYFO has a poll up on the race.
  • They also did an interview with Cruz.
  • In The Dallas Morning News, Robert T. Garrett brings newspaper readers up to speed on the Huckabee/DeMint stuff I covered one to three weeks ago. Though he does manage to add some sneering liberal condescension at Fox News.
  • The American Jewish Committee and the World Affairs Council of Houston are sponsoring a foreign policy Senate candidate debate on Monday, January 23, at the Omni Houston Hotel. According to an email from the AJC, “12 of the 16 [candidates] have confirmed,” though Dewhurst and Democrat Paul Sadler were not among them.
  • Here’s a crappy headline: “Texas Republican candidates hold first debate.” Uh, no. It’s more like the 20th. Or maybe the 25th.
  • Speaking of which, maybe I just wasn’t paying attention heretofore, but I don’t recall nearly this many debates for statewide elections in previous cycles. I mean, we’ve already had three times as many Texas Republican Senate debates as there were Lincoln-Douglas debates in 1858! Thanks to the Tea Party, Texans are really enjoying a golden age of grassroots democracy…
  • Dewhurst gets the endorsement of Michael Reagan, AKA “Ronald Reagan’s non-goofy son.” That won’t hurt him, but I also don’t see it swaying any undecided voters.
  • Glenn Addison gets some attention from his local Community Impact newspaper. (For those unfamiliar with the, Community Impact newspapers are very local (I get the one for NW Austin) free monthly newspapers delivered by mail. I generally find the quality of their stories better than the Statesman.)
  • He also gets compared to Ron Paul by KVUE. The problem with almost right analysis of this sort is that it would probably take way too much time to list the salient differences between the two than it’s worth expending…
  • David Dewhurst appeared on the Mark Davis show on WBAP:

  • As did Addison: