As I noted here, the most interesting race on November’s ballot for me is Democrat Mike Collier’s challenge to Lt. Gov. Dan Patrick. Dan is and always will be a polarizing figure because of his showmanship background and focus on social policy. As Dan says, he was tea party before there was a tea party and he was Trump before Trump was Trump.
So I was interested in meeting the Democratic nominee, looking him in the eye, and determining for myself whether or not he is an option for fiscally conservative minded, business minded, local control preferring, old school Republicans like me. And the answer is…..maybe.
We met at a coffee shop in a church because I wanted to see if he would melt if trapped in a religious setting. Or if we would be struck by lightning or something. Turns out he is a Catholic and it didn’t bother him a bit and no wrath fell from the heavens. Once we got that out of the way, we were able to talk about his vision for Texas and any changes he would make if he were elected.
Instead of the usual plethora of pie-in-the-sky-never-gonna-happen promises typical of a politician, Mike was adamant that he would focus on only one tax change in his first term in office, even though it would cover two legislative sessions. That one thing would be to repeal the 1997 law popularly called the Equal and Uniform appraisal law. Mike’s assertion is that this law has suppressed commercial property appraisals to the tune of $5 billion since 2006, not adjusted for inflation. Mike insists that reversing this law is not the same as increasing taxes, it is recovering taxes that businesses and corporations already owe under the Texas constitution.
It’s an interesting argument and after researching it, I found that many others have made the same argument. There is a good overview of the issue on the Texas Association of Counties website titledMaking Taxation Equal and Uniform Again. Here is a snippet of that article:
With no definitions of what a reasonable number was, what could be considered a comparable property, or even what appropriately adjusted meant, the law was vague at best. It opened to door for cherry-picking comparable properties from anywhere in the country.
It did not take long for the new remedy to be put to the test in the courts. In early 1998, United Investors bought Mason Park Centre in west Houston for $15,200,000. Harris County Appraisal District (HCAD) had valued the property at just $13,900,000 only weeks earlier. Instead of walking away with a break on their taxes, United Investors contested the appraisal and then sued.
The company didn’t argue that their property was over-appraised. They didn’t argue that they over paid and that the sales price was not a true representation of market value. They argued instead that their appraisal was not equal.
According to FindLaw’s factual background of Harris County Appraisal District v. United Investors Realty Trust suit, the United Investors’ expert Ron Little testified that “he did not make a determination of Mason Park Centre’s market value, did not consider market value and did not compare Mason Park Centre’s market value to the market value of any of its comparables.”
Under the new remedy, Little argued that independent findings of market value were not necessary. He instead took the appraised values HCAD had prepared on other properties, made adjustments and used those numbers as his comparables when arguing Mason Park Centre was not equally appraised.
The court agreed. The property was adjusted down to $10,239,163 — just 67 percent of its sales price.
Hopefully that snippet gives you an idea of what Mike is talking about. He thinks that the actual tax revenue that would be recovered by repealing this law would be far greater than $5 billion because of inflation but wants to be conservative and stick with the 2006 number. Mike says that all of this recovered revenue would be used to fully fund the public school system, allowing local districts to lower their property taxes.
As noted, this is the only tax change that Mike would make during his first term in office. The other significant thing that he would do on fiscal policy is to make the State Auditor independent from politicians by appointing an Audit Commission comprised of partners from the state’s largest accounting firms. He also noted that the state does not currently have a State Auditor, the office having been vacant since January 2016.
This issue is clearly a passionate one for Mike. Perhaps it is because he was an auditor for PwC or perhaps he simply sees problems with the current system. In fact, he was so passionate in pointing out the problems the state has in its accounting systems that I asked him if he was saying that the state was full of corruption. He thought about it, then said that corruption is a strong word and that he wouldn’t say that because he doesn’t know it to be true. What he wants to stress is that Texas currently does not have a functioning anti-corruption system and if elected, he will implement one.
We did discuss other issues that fall under the Lt. Gov. position but Mike mostly circled back to his main points, fully funding public education and reducing local property taxes, along with his anti-corruption platform. As for the other issues:
SB4 – Sanctuary Cities: Mike was pretty strong in his opposition to it, stating that he would side with “all” of the police chiefs that are against it. When I pointed out that many police chiefs support it, he disputed that, pointing to the large urban chiefs like Houston’s Art Acevedo.
Border security – Mike thinks that the border should be secured but not by the state. He says it is a waste of Texas taxpayer money that could be better used to fund public education and that we should insist that the federal government secure the border.
Margins Tax – Mike thinks that it is a terrible tax that never met projected revenue streams, leaving a $6 billion hole in the budget and he would replace it by going back to the Franchise Tax or some equivalent. But he stressed that he would not propose any changes to it in his first term in office, focusing all tax policy on repealing the Equal and Uniform law.
School choice – Mike is adamantly against it, saying that it takes revenue from the public education system.
Gasoline tax – Mike told me that there is a structural deficit of at least $4 billion built in to the current gasoline tax because it hasn’t been adjusted for inflation or for the increased fuel mileage that today’s cars get. But he would not address this tax in his first term in office.
Abortion – Mike told me that his positions on social issues are out there and he isn’t hiding them. So I went and looked and he is pro-choice. His position isn’t as well developed as his potential running mate Andrew White but he does have a short statement on his website here, under Women’s Health.
Second Amendment – We didn’t talk about gun rights so I looked at his website for guidance. He talks about preserving the Second Amendment while encouraging Texans to talk about reasonable gun safety.
While Mike wasn’t evasive during our chat, he certainly didn’t elaborate on most issues, sticking to the Equal and Uniform repeal, fully funding public education and his anti-corruption agenda. So I went to Amazon and bought the book he wrote about his experience running for Comptroller in 2014,Out of Comptrol: A Converted Democrat’s Improbable Quest to Save Texas Politics. I’m betting that Allen Blakemore, Dan’s political consultant, has done the same so I will leave it to him to point out the passages that will turn off Republicans. Here are a few things that stood out to me:
Is any politician truly conservative? Or are they all playing the same shell game? When it comes to fighting government debt, Texans believe their Republican heroes are truly conservative. But the numbers suggest they might be mistaken.
In 2002, when Rick Perry was first elected governor, Texas owed $14.8 billion to bondholders, and we owed $2.3 billion to pensioners (this is the unfunded pension liability that we owe to retired state workers and teachers). By the end of 2014 our bonded indebtedness had grown to $40.8 billion and our unfunded pension liability had grown to $38.9 billion. This represents average annual growth in debt and pension liability of 13.5 percent per year, which is much faster than average annual growth in our economy of 6.5 percent and average annual growth in our population of less than three percent.
That’s true and it is disappointing to any of us that have a fiscally conservative mindset. Right? Here is what Mike thinks of Tea Partiers:
“I understand debt,” I told him. “In fact, I suspect that it’s actually the Tea Partiers that are driving us into debt, whether they know it or not.”
Jim’s face froze. His expression was perfectly blank. It appeared I had struck a nerve. So I leaned in and said, “You guys better marginalize the Tea Party, or the Tea Party is going to marginalize the Republican Party!”
There is a lot to unpack in that passage but to me it shows two things. First, Mike really doesn’t understand the original intent of the protests in 2009/2010. Second, Mike understands that the vast majority of the various “Tea Party” groups morphed quickly into Republican auxiliaries and became nothing more than cheerleaders for terrible public policy. I’ll leave it at that.
So back to the question of whether or not he is an option for some Texas Republicans, I’ll stick to maybe. I found that he has some interesting ideas and that he is spot on in his assessment of the way Republicans have performed in office on fiscal policy. Obviously, the hard-core social conservative side of the Republican voting bloc will not be interested due to his positions on gay marriage and abortion. And hard-line immigration opponents will not be interested because of his views on the sanctuary city bill, even though he does say that the border should be secured by the federal government. The rest of the bloc might be open to listening to a fiscally conservative politician, regardless of party label.
Clearly Mike has a long, uphill climb if he is to defeat Dan in November. The Democrats received about 38% of the vote in 2014. I don’t think it is realistic to think that Mike or any other Democrat could pull 12% of the Republican voters to their side. What he will need to do is to try and expand the Democratic portion of the vote into the mid to high 40’s and then hope that Republican crossovers account for the winning margin. A tall order but this is such a strange time in politics that anything is possible.
In any case, I enjoyed the chat and will continue to follow his campaign to see if he can pick up momentum. You can find out more about his campaign by visiting his website, CollierforTexas.com.
One more passage from Mike’s book:
Is It Time to End Tax Incentives?
Few spectacles are as unsettling to a fiscally conservative Texan as the sight of a politician racing across the country to bribe a company into moving here. Yet it happens constantly, and it’s a race to the bottom.
Businesses, for their part, have highly paid managers who have mastered the art of poker’s bluff. They know precisely how to pit two states against each other and get a huge tax break for their shareholders. One thing they’ve got going for them is that politicians don’t drive a hard bargain. In fact, many do just the opposite. They can’t wait to throw money at big companies because that produces a “Toyota Moves to Dallas Thanks to Rick Perry!” headline.
I come from the business world, and I know how the game is played. First of all, very few companies would put themselves, their employees, their employees’ families, their suppliers, and their customers through the trauma of a big move just to capture a temporary tax break. They move because there is a strategic reason to do so: proximity to markets, access to skilled workers, lower cost of living, and so forth. When they start considering a move for strategic reasons such as these, they pick two or more candidate states and start negotiating. They tell each state that they’d better come up with a bigger tax break or the other state will become the company’s new home.
And it works like a charm. Politicians fall all over themselves to cough up the money (our money!), while the men, women, and businesses that are already here keep paying their taxes.
It’s time we bring this to a complete, permanent halt. The leaders of the fifty states should enter into a gentlemen’s agreement that they will stop, once and for all, the practice of giving tax incentives to companies, for any purpose. Let companies pick the state where they are best able to make a profit. It will work wonderfully, for everyone.