POLITICS Prophet of the Purse Strings

Bob Bullock, comptroller of the stale of Texas since 1975, leans forward in his desk chair and whips out a pack of Marlboros to illustrate what’s wrong with taxes in his state. Or at least some of what’s wrong. While some taxes, like the sales tax, grow with the economy and with inflation, several others on which the state relies for part of its money don’t. That bothers Bullock.

“That right there?” he says, waving the cigarette pack. “You get twenty and a half cents off of that. Doesn’t matter whether that sells for ten dollars a package or two dollars a package. It’s still only twenty and a half cents. And consumption is going down.”

But there’s worse news, says Bullock, who’s made a career out of delivering bad news. Some of the cigarette tax is fenced off by the Legislature so that it can only be spent on buying park land. Just like the gasoline tax is earmarked for highways and education. And several other sources of state revenue are tied up so that legislators have very little flexibility in deciding how they are spent.

“It’s government by straitjacket,” Bullock says.

Bob Bullock loves to talk about problems of state finance. That’s partly because he likes to work out solutions to them, It’s also because he seems to take a certain delight in telling legislators and other state officials how much money they have to spend. According to the Texas Constitution, they can’t spend any more than he as comptroller tells them they can. He’s a feisty, irascible man- and the constitution gives him power to match his ego and his ambition.

In 1983, during Mark White’s first legislative session as governor. Bullock sent the Legislature a continuing stream of ever-smaller revenue estimates, steadily diminishing the amount of money that Texas would have coming in over the next two years. He was right, of course. But because he had announced the day after White was elected in 1982 that he planned to run for governor himself in 1986, the revenue estimates were considered political attacks on White, deliberate attempts to embarrass and weaken the governor.

Bullock has since shelved his plans to run for governor, and is seeking re-election this year. But in 1983, there seemed to be a certain malice in his revenue estimates that made it very clear to everyone (and eventually to White) that the governor couldn’t make good on his campaign promise of a hefty teacher pay raise unless he broke his other promise of no new taxes. Bullock loved it. He may never be governor, but he’ll wield the enormous power of the purse.

In 1984, after White called the Legislature into special session to pass the school reforms and a tax increase to fund them. Bullock addressed the Legislature in joint session. Asked by legislative leaders to talk about money, he got right to the point.

“You don’t have any,” Bullock said. “If you spend any additional money on any new or any existing program, then you must find a way to pay for it.”

And so Bullock brought the hammer down on the pork-barrel dreams, the projects and plans both vital and frivolous of 181 senators and representatives and one increasingly vulnerable governor. The federal government has the Gramm-Rudman-Hollings machinery to tell it when to stop. Texas just needs Bob Bullock.

Bullock is no ordinary paper-shuffling bureaucrat. He has been arrested for driving while intoxicated and investigated by a grand jury for misuse of his office and state airplanes. He has had part of a lung removed because of a tumor, but he still smokes. He has suffered depression, a heart attack, and hemorrhoids. Given the nature of his job, perhaps such ailments are to be expected. He’s been married and divorced four times (twice from the same woman). He shuffles staff members like cards, firing them at will and, as often as not, rehiring some of them.

Bureaucrats and legislators aren’t the only ones to feel Bullock’s wrath. During the years before he quit drinking (in a highly publicized visit to what he calls “drunk school” in 1981), Bullock fought running battles with some members of the capitol press corps. When he was hospitalized in 1979 for surgical removal of hemorrhoids, his press release said that “The keen scatological interest of most reporters originally prompted me to schedule the operation in the Capitol press room. My doctors, however, advised me to seek more sanitary conditions.” After the operation, he sent to Sam Kinch Jr., then a reporter for The Dallas Morning News and a Bullock sparring partner, a glass jar that purported to contain the removed hemorrhoids.

Bullock’s manner seems almost designed to generate political enemies. And yet, he is one of only two statewide elected officials above the level of judge who will be unopposed in November. No Democrat or Republican dared to take him on.

Kicking the bottle may have given Bullock a better recollection of where he was last night, but it’s done little to sugar-coat his salty language. And he never had any trouble seeing the economic writing on the wall. Well before the Legislature convenes in January 1987 to write the state’s budget for the coming two years, he will tell them that a bad situation is getting much, much worse.

“I think they’ve got a clear-cut choice. I think it’s just as clear as a goat’s ass running up the side of a mountain. They can either cut state government. , .or they can raise taxes.”

But Bullock says Texas’s current tax structure isn’t going to be much help to the beleaguered solons. Forty percent of Texas revenues comes from sources like fees, federal funds, interest on the state’s money, rents and revenues from state lands-which don’t grow with the state’s population. The straitjacket again.

Of the 60 percent of the state’s revenue that comes from taxes, Bullock says, only the sales tax and the tax on car sales grow with both inflation and population. “The rest of ’em don’t. Then you’ve got oil and gas-get right around 18 percent of our money from them. But that doesn’t grow with population-or inflation, really. So you’ve got blocks of revenue here that don’t necessarily grow with Texas. Texas could be really booming and prospering. That doesn’t mean the state treasury is.”

So here is Texas, stuck with a tax system that doesn’t properly reflect the state’s economy, at a time when Texas is struggling to get into a high-tech gear to compete with Massachusetts, California, and North Carolina. It’s the type of thing that gets Bob Bullock upset, and gives him another problem to help solve.

After a stint as a House member from Hillsboro, in the late Fifties, Bullock became a lobbyist and lawyer until he helped get Preston Smith elected governor in 1968. He then served as the political and financial operative in the Smith administration, and he was controversial even then. The Texas Senate, with some trepidation, confirmed him as secretary of state under Smith. But he rankled his one-time friend Ben Barnes, the lieutenant governor at the time. Smith named Bullock to the State Board of Insurance in 1972, shortly before Smith was denied re-nomination following the Sharpstown Stock Fraud scandal. But Barnes got the Senate to bust the appointment.

Bullock licked his wounds, opened a law office, assessed his possibilities, and announced for comptroller against Robert Calvert, who had held the job for decades. Bullock came on so strong against the old man that Calvert decided against seeking re-election.

And so Bullock took over the job of collecting the state’s taxes-a chore that had been honored in the breach as often as not. His probing, hard-driving style, fueled by his incessant curiosity, soon whipped the office from a quill-pen embarrassment into perhaps the premier state tax collection agency in the country. And that was before he quit drinking.

How did he do it? By altering Teddy Roosevelt’s adage: he spoke loudly and carried a big stick. And he fought the Legislature for an even bigger stick. During the Seventies, he held weekly sales tax raids, shutting down restaurants and other businesses that weren’t passing on to the state the sales taxes they collected in the state’s name.

Bullock has fought with every attorney general whose term has overlapped his- John Hill, Mark White, Jim Mattox. Regardless of their differences, he thinks they don’t put prosecution of tax suits where it belongs: on the front burner.

“I think they think it’s unpopular to collect taxes, or something,” Bullock says. “I think it’s just the opposite, as long as you do it uniformly, across the board.”

Bullock has used his leverage as the potential kill-joy for legislators on money matters to talk them into giving him more and more money to collect the state’s taxes. Bullock has pointed out, with cold logic and great success, that the more money they give him to collect taxes, the more money they will have to spend.

During the 1985 session, when the Legislature raised university tuition and every conceivable fee to avoid another hike in the state sales tax. Bullock crunched the numbers and again played the spoilsport: he estimated that the state’s revenue for the two years ending August 31, 1987, would barely cover the $37.2 billion budget. Realizing that oil prices were probably going to stay down, he had based the estimates on $25 a barrel oil for 1986. and $24 for 1987.

This time, however, even Bullock wasn’t pessimistic enough. When the moguls in the Mideast couldn’t agree on how much oil to produce, oil prices plunged to $10 a barrel before the slide was over. As the price headed downward, Bullock’s highly trained estimators put their computers to work and figured that unless something changed, by September of 1986 the state would be $1.3 billion short. The Legislature thought it had already written a bare-bones budget for the 1986-87 biennium. Now, Bullock knows, it’s time to cut into the marrow, or come up with new revenue sources.

Gov. Mark White called on state agencies to voluntarily cut spending by 13 percent until the Legislature convenes in January. Bullock doesn’t think the cuts the agencies volunteered will be enough. And he says the revenue picture has gotten worse since he issued the $1.3 billion shortfall estimate. Still, most observers think it will take a combination of tax increases and spending cuts to balance the budget for the current spending period that ends in August 1987. For the two years after that, it will take even more.

It is not a fun time to be in the government finance business in Texas, but Bullock loves it, wants more of it. He announced the day after White was elected in 1982 that he would run for governor in ’86. He later backed off.

“I couldn’t get any support, even old-time friends of mine.” Bullock says. “I mean, it was zero. Almost inevitably, the people I talked to, when it was brought up, would say, ’Oh, Bullock, you’re doing a good job where you are. You ought to stay there.’ “

Part of his continuing battle with Mark White has to do with style. Bullock doesn’t use the word “shallow” to describe the governor, but he drops some strong hints.

“White’s got the uncanny ability of being able to paint with a very broad brush the problems and solutions of government here in Texas-and that’s being accepted, apparently, by the people of Texas. I can’t do it. Maybe it’s the alcoholic personality, that I want to get into the little bitty details: ’Well, how is this done?” I mean, there’s no details to it.”

Bullock is fond of Bill Clements, but he is loyal to ideas-and to numbers. He looks askance at Clements’s secret plan to cut spending without raising taxes, which Clements says he will reveal if White calls a special session, which he knows White won’t do, Clements has pledged that there will be no new taxes if he is elected governor, come hell or $5 oil, a claim that most budget-watchers think is hogwash, unless Clements plans to close down the public schools. Bullock isn’t using words like “voodoo economics,” but he can’t buy the Clements fiscal plan. “Clements knows better than that,” he says, shaking his head.

Bullock says he “almost threw up” last spring when Republican gubernatorial candidate Kent Hance announced that if oil climbed back to $20 a barrel, everything would be hunky-dory, and a tax cut might be possible. Hardly, Bullock says. With production already dropping during Texas’s oil boom years, it would take oil prices soaring to $40 or even $60 a barrel-a very unlikely prospect-to bring back those halcyon days, Bullock says.

Texas will now track the national economy like other states, he says. “Where in the past we had oil to rely upon, we went into recessions a little bit later, we came out of them quicker, because we had this crutch. We ain’t got it right now, and won’t for some time to come.”

What can replace oil in the Texas tax base? Bullock says we could raise the state sales tax, now at 4.125 cents on the dollar, to an even nickel, and remove exemptions on services, such as fees for lawyers, doctors, and others. Texas fees are still low in comparison with other states. Bullock says.

That might solve the shortfall for the remainder of this biennium, and help some in the coming spending period. But just staying even with anticipated growth, with no increases in the level of services, will take at least $2 billion more in the next budget. To continue improvement in education and other services will take even more. Bullock says.



So where will the money come from? Bullock is not afraid to flirt with heresy. Texas is the largest state, and one of the very few, without a corporate or personal income tax. Other states have been collecting in their personal income tax about what Texas has been collecting in oil taxes. Bullock doesn’t think an income tax is the end-of-the-world “bugaboo” many fear. “My lord!” he exclaims. “Can you say we’re ahead of California? California’s got an income tax. Are we ahead of Florida? They’ve got a corporate income tax.”

He’s squirming inside that governmental straitjacket, but Bullock is still the realist. He knows it’s a waste of time to talk about either a corporate or personal income tax, since both White and Clements have pledged to veto either one. The history in most states, he says, is that they don’t pass an income tax until they first cut spending on education, social services, or highways. Then voters rise up to support the tax rather than cut services they consider vital. That’s still to come in Texas.

Bullock’s plans for the summer and fall are to issue a string of reports on the Texas economy-so that the contestants for governor and other offices will have a tough time glossing over the fact that if state services are to be continued at their current rate or higher, new money will have to come from somewhere. Next spring, he will watch as the Legislature gets down to the nitty-gritty of the toughest Legislative session in years-after several sessions in a row that legislators considered savage.

Somewhere in there, Bullock may ponder his own political future-what he’s liable to be doing four years from now, when he’s sixty and, probably, a huge shuffle will be going on in Texas’s elected officialdom. What are his political plans?

“I’m telling you the honest truth: I don’t really have any,” he says. “I’ve got a lot of things that I want to do here. This office has never been one that disinterests me.”