Wednesday, May 31, 2017

TXLV: The lie of tax cuts and government fiscal restraint.

The Texas Legislature has (finally) reached Sine Die.  This means that it's time for the Texas LockStep Political Media and other groups to start spinning their fantasies about what it all means.

Money Grab. The Increasingly Irrelevant Chron Editorial Board. ($$$)

In what is really a love letter to local State Senator Sylvia Garcia (who has been a progressive fave/rave in the area for some time now) the bi-annual unsigned editorial bemoaning Texas relatively low tax system takes a new tack this year.  Suggesting that high property tax values are due, in whole, to the lack of other taxes at other levels.

One thing that never changes at the Chron is the desire to have large wads of cash thrown into a catapult and hurled at the problem.  Of course, those taxes are best when paid by other people than them.  In an attempt to seem bipartisan the Chron lists one "solution" as being a tax proposed by a Republican (Ed Emmett's proposed County Sales Tax) and one from a Democrat (Fort Bend County Chairman Ben Brown's proposal for a State income Tax).

In reality neither of these would put much of a dent in property taxes.  The idea that government will enact one tax while lowering, or eliminating another is a false promise placed in front of gullible voters which has historically never come to fruition.  Remember when the Texas "Margins" Tax was supposed to lower property taxes?  How did that work out for you?

The problem, although it won't be admitted to publicly, is that there are too many organizations with too many hands reaching into the taxpayer pie, each with different agendas.  Let us say, for grins, that the County gets a sales tax of .05% and decreases their property tax burden proportionately. OK, but the City of Houston is already pushing to raise their property tax rate due to pension under-funding and the fact that the past three mayors have acted in fiscally imprudent manners, so Houston will raise their share of the takings until resident's eyes bleed.  This will lead to more people moving out of the city and into the county, who will then be forced to re-raise property taxes to keep up with infrastructure demand.

So now, especially if you live in the city, you're saddled with higher property taxes that are still increasing due to appraisal creep AND you have to pay more in sales tax and a state income tax to boot.

Even Steve Radack's idea to "expand Medicare" to cover costs is not the bag of free money that's being promised.  Medicare is nearing insolvency, and to make up the loss the United State's federal government is going to have to get serious about fixing their tax system soon. Also, there's a 10 year limitation in what's left of ACA for "free" access to those funds. Eventually, the bill comes due and the State has to start covering those costs. There is not now, nor has there ever been, any such thing as a free lunch.

Here's the rub.

Things (stuff, trinkets, etc.) have to be paid for, political legacies have to be enshrined and no one wants to have their name attached to the phrase "tore down the Astrodome".  In order to continue to bribe the electorate the government has to figure out a way to increase tax burdens while convincing a majority of the citizenry that they're doing it to "the other guy". People are more likely to accept a small tax increase on themselves if they think those slightly more well off than they (or even better, evil "corporations") are shouldering a much larger share of the version. Politicians, who are rational actors despite being (for the most part) functional idiots, understand this and have done a great job convincing most of academia and the media that this is a swell way to run a country.  How else do you explain a man who owns three homes running around suggesting that he's a 'man of the people' and really only wants healthcare and higher education to be "free" not being laughed out of the building?

Even though the ideas are wrong the country still has to run, things need to be purchased, the general security provided for and debt service paid.  What this means is that serious, meaningful tax reform has to be broached at every level of government. The goof-balls in Washington D.C. could do a lot worse than simplifying the tax code to the point that the IRS is not really needed while the pugilists in Austin (and other state-houses) should start by figuring out what NEEDS to be done, fund that and then do those "nice to have" things based on remaining money.  Counties and Cities just simply need to go on a diet. Public works is a must, of course, as are policing and other emergency services.  But after that?

Yes, I get it that you feel you really NEED that $100K per year from the County to hold your civic club's annual garden party but the facts are that you don't. If the business community feels that parks and green space is vital to their ability to attract talent than allow them to underwrite the cost. If nothing else it will save us from having politicians gloating that their legacy is a sidewalk on which dogs pee and poop. (The Bill and Andrea White promenade at Discovery Green in case you're wondering).

A trap that conservatives (including little l libertarians) fall into is the fallacy of "no".  You cannot run a government simply by shouting that and hoping for the best.  Because things have to be done.  The biggest issue for what's left of the conservative movement is not sanctuary cities, or bathroom obsessions, it's making the case for real, meaningful tax reform for all. And doing a better job explaining to the family of four making $45K per year why it's a boon for them.

The alternative is in the link above, an asinine argument that by failing to increase taxes sufficiently the government has failed to cut them.

To be fair, there is one thing on which the Chron and I agree.  In order to get nice things from our government we're going to have to elect new, serious people to do the governing.  This might come as a shock but I am referring to your elected representative, including the one in your district that you like.  They need to go. (as do mine)

Until that happens we're just whistling past the graveyard.

Wednesday, May 24, 2017

TXLV: You're about to pay more for your beer and liquor, with less choices.

Hold on to your wallets, because the Texas Legislature is at it again....

Craft Brewers call Texas Legislature's passage of bill 'disheartening'. Ronnie Crocker, ($$$)

A bill that would force Texas breweries, once they've grown beyond a state-limited size, to sell and buy back their own beer before offering it in their own taprooms has now passed both houses of the state Legislature.

Before we go any further I want you to think about the logistics of this for a minute.

1. Texas Brewery brews beer, wants to sell some from their taproom.
2. If they are above a certain size (175,000 barrels of annual production) they cannot unless....
3. The 'sell' the beer to distributors and then buy it back at a mark-up (sometimes as high as 30%).
4. It is likely the beer in question will never leave the premises.

In other words the Texas Legislature, supposedly one of the most conservative in the country, has just mandated that Texas brewers of a certain size must pay up to a 30% tax on their wares to a private industry for which the industry does not have to offer any services upon return.

Of all the bad liquor laws in the State of Texas, including those that Wal-Mart is challenging in Federal Court and almost anything related to the TABC this undoubtedly takes the gold medal as the worst.

Imagine if you made sandwiches and wanted to sell them at a restaurant, but the Texas Legislature ruled that you could not sell those sandwiches until you paid 30% of their value to Sysco. This would be true even if you purchased your meat from a local butcher, and brought it to your restaurant without their services.

I would imagine you would feel a little bit put out by all of this.

Yet, our august officials in the Texas Legislature (with mostly Republicans voting in the affirmative) have determined that this is a very good thing and an area where government should get involved. I would say that I can't wait to hear Dan (the Man who would be King) Patrick offer up a 'conservative' argument for this but I'd be lying.  Lying because I doubt any politician is going to be asked to explain their vote, or offer justification for it. It's unlikely that they'll suffer for it at the ballot box either because, on the whole, Texas citizens don't care.

What they do care about is being able to buy beer, wine and liquor at commodity prices, whether or not the product in question is, in fact, a commodity.  While buying liquor in Houston I've, first-hand, heard customers arguing for massive discounts on luxury liquors such as Louis III, Pappy and some high-end Champagnes.  They want Dom or Veuve (more of a mid-range product but that's another post) but they want to pay low-end Moet prices. $9.99 per bottle please.

Of course, that $3.00 tap beer will now cost $4.00 despite never having left the facility. A dollar of that cost is going to a company that is doing nothing at all except collect a private tax imposed on the producer by Texas' increasingly un-conservative legislature.

I, for one, hope the breweries sue.  Because I think they'll win if they frame this as an unconstitutional taking. The argument for seems pretty strong.

I hate to say it for the small liquor stores but I hope Wal-Mart wins as well.  Texas liquor laws need to be blown up, rewritten and the ground needs to be salted where the three-tiered system once stood.

Then what is left of the GOP needs to do some soul-searching and decide whether or not they want to keep their elected officials. Increasingly, it's getting harder and harder to find ones that deserve an affirmative answer to that question.  Certainly no-one in leadership.

Wednesday, May 17, 2017

TLSPM: "If I (and my friends) don't like it it must be cronyism" is a tired saw.

I have to admit to chuckling, just a bit, when I read the latest missive from the Houston Chronicle's business-unfriendly business columnist today.

Buddy System still rules in Austin, and those friends don't come cheap. Chris Tomlinson, ($$$)

It's the same-old, tired, Texas Lock-Step Political Media saw:  "If I don't like the bills that passed, and the things they accomplished I'm just going to bemoan special interests and call it a column."  I'm starting to wonder if these are pre-written, or if there is a form column out there somewhere?

Because it's always the same.

That is not to say that crony-capitalism is not alive and well in Texas. Of course it is. In fact, Tomlinson mentions a couple of areas where it's on full display.  Namely, auto sales and the construction industry.  He left out one of the biggest, the liquor distribution con that upholds the "Texas 3-step" to the benefit of a few and the detriment of many, but he's never seemed to really get behind issues such as this anyway.

Of course he's mad that the Texas Railroad Commission wasn't totally revamped, because his friends in certain special interest groups didn't get their way.  An argument could be made however that the voters who elected oil and gas industry-friendly representatives to large majorities in Texas are quite happy with the way things are going at the RRC right now.

The name change to the Texas Energy Commission seems like an expensive waste of time, and the proposals that Sierra Club and others are making are not to protect the environment, they're designed to cripple and industry that is one of the largest employers in the State.  People rarely vote to be unemployed. regardless of whether or not their industry makes political donations.

Yes, it would have been nice to see some real tax reform come from the Lege this year, but not of the type Tomlinson is asking for (which involves huge tax increases on everyone in case you're wondering) and it also would have been nice to see something done about roads.  Texas is currently solving it's problems via the toll road option, an option for which I'm not entirely opposed.

Education spending is a tougher hill to climb. In large part this is because our schools are doing a horrible job in regards to wise spending. It's tough to cry poor when many districts are still spending hundreds of Millions of dollars on football stadiums, or when it's reported that the administration growth outpaces teacher growth.  Also when centralized administrative staff is averaging twice the salary of teachers. In short, we have too many administrative staff on the payroll making too much per year.

Speaking of cronyism, isn't that what happens when the Texas Municipal League advocates against property tax reform? Yet the TLSPM does not treat it as so despite the fact that you have an organization seeking to protect its bottom line at the expense of consumers. The only difference being that Tomlinson and his ilk like to attend cocktail parties with elected officials, they don't get invited to the cocktail parties thrown by CEO's and the like.

Almost every bill is going to have winners and losers, and quite often the winners will donate money to politicians to ensure they stay in the W column. This is not cronyism as much as it is politics today, especially at the State and Local level where the ordinary citizen does not pay much attention to the goings-on.

I would say that it would help if columnists stopped being lazy by using the non-magical version of Rita Skeeter's auto-quote quill, but it wouldn't.  Because most people aren't paying attention anyway. Increasingly, they're just tuning out the newspapers and finding other things to do.

It's, partially, the newspaper's fault because they failed to adapt to changing times. It's also partially our fault because we haven't been paying attention. We get the government we deserve.

Blaming cronyism doesn't change that central fact, but it probably makes for quicker column writing, which allows for a writer spending more time in leisure activity.

Thursday, May 11, 2017

TXLV: Just pass the budget and call it a day.

Apparently, the Texas Legislature is getting close to being hopelessly snarled as the personal pillow fight between Lt. Gov. Dan 'The Man who would be King' Patrick and House Speaker Joe "Special Interest" Straus continues to fester.

Not that this is a bad thing. Because when the Lege gets it going, Texas taxpayers typically take a hit to the pocketbook.

So how about this then:  Just pass the budget and walk away.

It's the only thing that the Texas Legislature is required to do by the Texas Constitution, and the only thing they should do in this raucous atmosphere.  Pass the budget, leave well enough alone.  Ignore those "important" conservative issues and those Democratic plans to increase spending, just pass the budget and walk away.

Yes, there are important issues out there that need to be addressed, tax reform (especially property tax) being the most important, but do you trust this cast of clowns to pass anything meaningful?

I know I don't.

At this point it seems most prudent for lawmakers to just admit that they don't have the skill, creativity or talent to address those issues, pass a budget and fade into the sunset.  Let the voters sift through the ashes in the next election cycle.

I'm not suggesting that will change anything, because people will re-elect the same idiots back into the offices they currently hold for the most part, but maybe it will give this cast of D-list public servants two more years to talk to people who actually understand the issues and craft some legislation that makes sense.

Right now it's a clown show, a crisis not only of leadership, but of statesmanship as well.

Hit the reset button folks, pass the budget and go home.

Wednesday, May 10, 2017

HALV: Turner's Running out of Time.

Before we get started on Houston Mayor Sylvester Turner's proposed budget a couple of key points need to be understood.

1. The current bill that's floating around the Texas Legislature is not "pension reform". It's a funding mechanism to kick the can down the road until more revenue can be raised.
2. The current budget is designed to make Houston residents pine for increased services. It's effects were calculated to increase the pain.

Turner to use cuts, one-time fixes and reserves to close $123 Million gap. Rebecca Elliott, ($$$)

The budget itself is a mish-mash of cuts and payment obligation deferments, where Turner is seeking to kick the fiscal can just a little bit further down the road until he can get his vote on removing the revenue cap.

In order to fulfill this thirst for money, the Zoo, the animal shelter and needed maintenance are going to be financially burdened, making already bad problems worse.

Turner, a life-long back-bencher in Texas politics, has a limited ideological toolbox with which to fix this mess. His one-note, unimaginative style of politics only knows "raise taxes" and that's what he's planning to do.  In fact, if you own a home in Texas you might want to be braced for your taxes to be increased until your eyes bleed.

Houston needs a LOT of money to meet current and future pension obligations and since the City of Houston generates no revenues to speak of, they can only increase their money by increasing their levels of forced takings from the citizenry. This money will then be given over to the police, fire and municipal employee unions and what's left will be distributed to the political patrons of Houston elected officials.

I expect the developers in town will continue to do OK.

Turner continues to preach about Houston being "competitive" with the local market.  He thinks that if the city raises property taxes and other fees people will still stay in the city limits because of the plethora of walking paths and parks they have built.

I've a feeling Turner is 100% wrong. Population trends are already showing people voting with their feet and moving outside the City limits to escape a high-tax environment, shoddy infrastructure and unsafe neighborhoods.  Can you imagine this will lessen once Turner pushes through his first massive property tax increase?


Turner is running out of time.  And he lacks the political creativity to do anything but throw up proposals to remove the very revenue caps that keep Houston's government in check, if only just.

That's not very world class Houston. Not very wold class at all.

TXLV: Texas is getting the government it deserves. (And it's not pretty)

I've never met a politician that I would like to join at a bar and drink a beer with.

And I've met several of them. This is probably because all politicians are not the "sit down and enjoy a beer while watching the game" type of people.  In reality they are the "sit down and enjoy a beer while watching the game only if I can see some benefit to me or my campaign" type of people.

I'm not being rude, that's just reality.

The way our political system currently operates people don't get re-elected by being a decent person, or even all that personable (i.e. Borris Myles) they get re-elected mainly through name-recognition and the fact that the power of the incumbency grants them large campaign chests with which to outspend all but the most wealthy competition.

How do they amass wealth in their campaign funds? By offering gift-basket legislation to large political donors.

Brewers Object to Beer Measure. Ronnie Crocker, ($$$)

The bill originally would have forced Karbach and the others to shutter their taprooms. A revised version allowed them to continue operating them, but it would require breweries above the limit to first sell their beer to a distributor and buy it back - at a markup of around 30 percent - before selling it on site.

The wholesaler's logic behind this is laughable. They are only trying to "protect" craft brewers from those big, mean multi-national beer companies.  They alone have the ability to do this you see.  All they need is a 30% mark-up on beer that never leaves the brewery in order to do so.  Never mind that some (not all) of these distributors are part-owned by the very multi-national liquor companies they claim to be so valiantly protecting the little guy against.

The thing is, there's a better than average chance that a bill this odious, so obviously an attempt to redistribute income for no work whatsoever, is going to pass because the distributors spend a LOT of money wooing politicians, throwing "welcoming" galas for them at the beginning of the Legislative session and dumping the maximum amount into their campaign chests.

When a Texas politician sits down to have a beer, it's usually to discuss what the Wholesale lobby is going to do for him/her next.  Even the ones that DO sit down with the small, independent brewers are only doing it because someone in their staff told them it's a "good look", good looks being important to those in show business after all.

The point here is that it doesn't matter which party you put in power, the levers are still the same, only the labels change.  If you think that a Democratic regime in Texas wouldn't do the same thing you're sadly mistaken. They're the ones that allowed the distributors to gain so much influence and power in the first place.  Democratic cows are no less sacred, they're just a different breed of cow.

A lot of people moan and cry over this. Functional idiots such as Elizabeth "High Cheekbones" Warren and Bernie "Three Dachas" Sanders have made a living pushing the "get money out of politics" fallacy after all.

What they all know is this:  As long as a significant portion of the American population doesn't pay attention to politics at any level beyond glancing at the occasional headline, or poorly reported story (the media in this country is just as bad as the politicians for the most part) they can go on saying one thing, doing another, and still be held up as the "hero of the little guy" while deciding which vacation home they should visit next.

The story in Texas is just the same, only the casual dress is different.  While the pols in DC prefer Cardigan sweaters the 'everyman' politician in Texas likes to be seen hunting and wearing camouflage. On dressy occasions its boots and a cowboy hat, the latter of which they frequently wear indoors.

Something no gentleman or lady would ever do.

Something to think about.

Tuesday, May 02, 2017

HALV: The road frequently traveled.

It's always cute when the local media in Houston discovers traffic.

Who is battling the worst commute in Houston? Tera Roberson & Jennifer Reyna, KPRC

Our region is growing so fast, commutes are getting longer and longer for many people. KPRC Channel 2 News crunched drive times from the north, east, south and west to find out who is sitting in traffic the longest.

My guess is that the bulk of you stuck in this morass have heard the My Metro ad for Catherine, the ballet dancer. It's a touchy-feely ad about what Metro considers to be their demographic and it's illustrative of why the agency is not a serious transit solution.

The fact is, Catherine is one-tenth of one-tenth of one-tenth of one percent of Houston's commuters. But she's exactly who Metro is targeting.  Not the 99.999% of people who need to get to/from work every day, but people who view the train as a wedding chapel or a way for tourists to go from downtown to NRG during the Super Bowl, or as a vehicle for Inner-Loop land developers to pad their pockets.

What Metro is decidedly not, is a commute solution for the overwhelming majority of Houston commuters.

Then there are the freeways themselves, designed on the "wheel and spoke" system they are hopelessly congested and becoming more and more so as people continue to move into the areas surrounding Houston. (Not the city center, which is a problem)

Of late I've been reading a lot about the problems with the US transportation system and I've come to the, admittedly somewhat radical, conclusion that our biggest mistake was turning it over to our government. In short, the government is a horrible transportation planner, because their goal is not (as they profess) to provide transportation options to the masses, but to ensure that their sacred patron cows get fed.

In that vein, Metro is not trying to serve the transportation needs of Houston, but trying to ensure that the smart-growth set has their wish-list boxed ticked. Metro wants a shiny train because a few people, often of the bat-shit crazy David Crossley persuasion, feel that having one makes a city "world-class". In fact, they couldn't be more wrong.

Metro-rail is the leading example of "world-classiness" in a city that is full of them. In fact, there is nothing with a higher "world-classiness" shine on it than the mumble-something miles of track that actually don't go anywhere.

This is because (and this is going to be hard for city "brights" to swallow) Houston is NOT a world-class city. It's a global hub for energy development sure, and a shining star in the world of medicine, but as a city Houston is decidedly regional in nature. In fact, watching government for as long as I have the only conclusion can be that both Houston, and the media who covers it, are decidedly small-town, full of cronyism and possessing an inferiority complex so-large it might have it's own gravity field.

In fact, America only has two "world-class" cities. New York and San Francisco, each for different reasons and each facing their own crisis of leadership.  Everyone else is just fighting to be the leading light of the second team.

And Houston is failing at that.

The problem with finding a solution is that neither side seems to have enough mental capacity to understand that the solution is not either a.) the Crossley solution i.e. everyone but he and his friends give up their cars, move inside the loop and survive in a ghetto-like morass of high-rises and body odor or b.) the Culberson plan where everyone has a car but insufficient, poorly designed infrastructure to allow them to move.

I would argue that the ultimate solution lies in trying to find a blend to the two, with the acknowledgement that there are some people that you are never going to convince to not take their car to work, and those who would happily do so if the Danger Train was somehow converted into a transit solution instead of a serial killer.

Would there still be congestion?  Of course, because even with the best-planned and executed transit systems people have a desire to drive.  London has a wonderful system that (most times) can get you where you need to go. When vacationing abroad I never buy a car. I walk, ride and can get wherever I need to go relatively quickly. But London is still one of the more congested cities in the world.

Nothing is going to change that in Houston, but were Metro a competent organization at least there might be an "opt-out" option, something that is lacking now.

No, SB 2190 is not a "Pension Fix"

There's joy in Mudville this morning as the Texas Lock-Step Political Media is casting joyous shouts to the tax heavens declaring Houston's coming pension disaster "fixed" with the passage of a bill in the Texas Senate that does no such thing.

Texas Senate passes bill overhauling Houston's troubled pension system. Brandon Formby, John Thornton's Tribune.

Houston is already facing a $90 to $100 million shortfall in its budget that has to be approved by the end of next month. In July, when Houston's 2018 fiscal year begins, the city will have to pay $130 million into the police retirement fund. If pension reform legislation goes through, the city plans to quickly issue its $1 billion in planned bonds to avoid draining $130 million from its general fund. If the city has to use its the general fund for that payment, it will create a $220 to $240 million budget shortfall that will lead to layoffs for city employees, including police officers and firefighters, according to Turner.

Houston Pension Reform Bill Passes Senate by wide margin. Mike Morris, HoustonChronicle

The legislation would require a referendum on the $1 billion in bonds Turner plans to inject into the under-funded police and municipal pensions, cash that also was used to bring those groups to the negotiating table for additional rounds of benefit cuts since Houston's pension crisis began in the early 2000s. If the referendum fails, the bill would reverse the groups' benefit cuts.

There are two important take-aways here that are being downplayed by the TLSPM.

First, this bill is not now, nor was it ever intended to be, a pension "fix".  This bill allows for the City to take on $1 Billion of extra debt to pay obligations without draining the general fund to cover current and overdue liabilities.  Since the overdue liabilities are, relatively, interest free, and the bonds will have interest, this is akin to refinancing your house with credit cards.  It's a dumb move but it does provide the city of Houston a moment's pause without having to make any politically unpopular cuts.

Second, Turner's "pension fix" is actually the upcoming vote on lifting Houston's pillow-soft revenue cap.  If that is successful then he can raise taxes during his "lame duck" 4-year term extensively to a point that his political patrons on the pension boards are made whole.  For as much as Turner has tried to be seen as "adversarial" to the pensions, he really has them to thank for much of his political career.

So the entire enchilada is going to be rolled up in two future votes. One addressed in this bill (the $1 Billion in bonds) and one that's out there but only being paid lip-service for the time being.  The city's hope is that the populace doesn't put two and two together, and that they're not paying close enough attention to realize what is going on.  The media can't be relied upon to report it, in part because they don't understand what they're reporting on and in part because they don't have a problem with huge tax increases to fund the pensions of their institutional sources, people they like, spend a lot of time around and rely upon to get scoops.

Another problem is that the opposition to this, although correct in their arguments, doesn't have a popular face of the franchise to lead them into the debate.  Bill King is a nice enough guy, but he was rejected by Houston voters while Bettencourt and (The Man who would be King) Dan Patrick are unlikable actors supported mainly by people living outside the city limits. It also doesn't help that the opposition has failed to keep its powder dry on many occasions in the past, instead of focusing on a few key issues affecting Houston's future.  Deserved or not, what passes for conservative opposition in Houston is widely viewed as the "Party of No" because that seems to be their default for everything. At least on this King offered an alternate plan, which is out of character for the right-leaning groups in town.

To be clear, there can be no pension 'fix' until something is done to lower the funding obligations. As long as the pension rules stay the same (and the tweaks here for "cash-balancing" plans is not enough of a change) then the city will continue to find itself in danger of perpetually under-funding, or being forced to raise taxes to a level that the population drain becomes unsustainable.

Nothing in this bill addresses that, and there's no sign that Mayor Turner understands the problem, or that he would be inclined to address it even if he did. You don't get elected Mayor by stepping on the toes of those who have carried you your entire career after all.

That sucking sound you're hearing is not just the tax vacuum being turned on, it's the continued suction created by Houston's lack of leadership.