Texas Budget-gap Veteran Perry Faces Hutchison In State Primary
Republican voters in the second most-populous state will choose among Perry, 59, the longest-serving governor in Texas history and the front-runner in polls; Hutchison, 66; and Debra Medina, 47. Democrat candidates include former Houston Mayor Bill White, 55, who is ahead in the polls; and Houston business owner Farouk Shami, 67.
Even with a deficit that may be the largest in seven years, Texas bonds have yields below Nevada, which has the same AA+ rating from Standard & Poors. Neither state has income tax. A Texas general obligation bond maturing in 2020 traded last week at an average yield of 3.1 percent, compared with 3.96 percent for a 10-year Nevada bond that traded on Feb. 17, according to Municipal Securities Rulemaking Board data.
“Texas bonds are pretty well respected compared to other places,” said Colby Harlow, who oversees $125 million as president of Harlow Capital Management LLC in Dallas. “I dont think it matters who wins as long as its a Republican,” said Harlow, who said he considers the party most likely to maintain the states rainy-day reserve fund.
Tax Revenue Falls
Texass sales-tax revenue began to drop a year ago amid the worst recession since the 1930s. The state may have to tap its reserve fund for the first time in five years to bridge the first deficit since 2003, Lieutenant Governor David Dewhurst said in an interview last month. S&P cited the $8 billion fund as a strength when it lifted Texass rating in August by one level, to the second-highest ranking. Accessing the reserve requires a two-thirds vote from both houses of the Legislature.
Sales taxes, which generate half the states revenue, declined 13 percent in the first quarter of the fiscal year that began Sept. 1, according to the Texas comptrollers office.
The Republican primary caps political attacks that began before Hutchison, who won re-election to the U.S. Senate by the largest margins in state history, announced her challenge in August. Perry replaced George W. Bush after he was elected president in 2000.
“This could be the nastiest primary of the decade,” said Jennifer Duffy, who follows governors races for the Cook Political Report, a Washington-based election-analysis firm.
Campaign Videos
In campaign videos on YouTube, Perry, endorsed by former Alaska Governor Sarah Palin, portrayed Hutchison as the “Earmark Queen,” showing her next to President Barack Obama to highlight her 17 years in the Senate. Hutchison, endorsed by former Vice President Dick Cheney, posted videos pointing out Perrys ties to lobbyists whove worked for industry and his office.
Perry and Hutchison have given short shrift in their campaigns to the looming budget crisis the state will face when the Legislature convenes to draw up the next two-year budget, said Calvin Jillson, a political science professor at Southern Methodist University in Dallas.
Poll of Democrats
Among Democrats, White got 50 percent of those polled to Shamis 11 percent, according to an early February University of Texas/Texas Tribune Poll that said 30 percent were undecided.
The winner has to get 50 percent of the vote to avoid an April runoff.
Perry has painted Hutchison as a Washington insider who has overseen an increase in the federal deficit while Hutchison portrays Perry as someone who has been in office too long.
“She will truly scrub the budget for waste, cut spending across the board, look to consolidate agencies, boards and commissions where duplication exists and make meaningful use of the governors line-item veto authority where spending should be reined in,” said Joe Pounder, a Hutchison campaign spokesman, in an e-mail. She would achieve this without raising taxes, he said.
Neither Mark Miner, a Perry spokesman, nor Medinas spokeswoman, Nelda Skevington, returned requests for comment. Medina has said on her Web site she would cut taxes and spending, and pledged to get rid of property taxes and replace them with a broader sales levy.
Stimulus Money