Conservatives Outfox Straus Medicaid Trap

Attempts to raid the Rainy Day Fund fell short last week after conservative Texas House lawmakers outmaneuvered Speaker Joe Straus and his allies.

Authored by liberal Republican State Rep. Sarah Davis of West University Place, House Bill 25, as written, was a bad bill for taxpayers. While perhaps well-intentioned, the bill proposed to expand Medicaid and “reinstate pediatric acute therapy funding by making a supplemental appropriation to the Health and Human Services Commission from the Economic Stabilization Fund,” something outside of Gov. Greg Abbott’s call and thus out of order for lawmakers to address during the special session.

And because the bill took money from the ESF – known colloquially as the “rainy day fund” – for an ongoing expense, it was something that lawmakers shouldn’t pass in any session of the Texas Legislature.

As the bill came to the floor, conservatives faced an obvious trap. They could call a point of order and object to consideration of the bill, a maneuver they could potentially win. But that would be used by Straus’ army of political operatives, print media lackeys, and other demagogues to paint the conservatives as heartless people who value money over medically-needy children. Voting against the bill would be used in exactly the same way, and if they voted for it they’d be abandoning their principles vis-à-vis proper use of the state’s savings account.

So, the Texas Freedom Caucus hatched a plan to turn the tables. State Rep. Matt Krause (R–Fort Worth) offered an amendment substituting the funding source in the legislation. Under Krause’s amendment, no longer would the money come from raiding the ESF. Instead those dollars would be taken from a disaster relief fund within the Office of the Governor.

To be clear, the funding swap isn’t inherently conservative. After all, if lawmakers had wanted to fund the therapy, they would have prioritized it in the budget during the regular session.

Indeed, if funds are removed from disaster recovery efforts, as the bill now requires, and an actual emergency happens, lawmakers might be required to reach into the ESF anyway.

During debate on the motion, lawmakers seemed to be aware of this, claiming that they could easily come back and raid the fund for actual rainy days and that they’d have public support in doing so. That’s true, and it’s why the swap wasn’t very transparent for voters.

To give credit to Krause, he maintained his position from a week prior during his arguments, saying that he still supported raiding the ESF and expanding Medicaid in order to ease the pediatric acute therapy cuts. So he personally wasn’t trying to hide anything from voters.

Furthermore, as Speaker Pro Tempore State Rep. Dennis Bonnen (R–Angleton) even conceded before voting for the amendment, it probably won’t accomplish its stated goal, which was to increase the likelihood of restoring Medicaid pediatric acute therapy funding cuts.

Abbott wasn’t likely to add the issue to the special session call when the funds were sourced from the ESF. After all, he instructed legislators during his State of the State Address not to raid the fund for ongoing expenses and he has been united with Lt. Gov. Patrick and the senate in his resolve on that issue.

But moving the source of funding to a program in Abbott’s office likely didn’t increase the odds of passing the bill either.

Indeed, since taking office, Gov. Abbott has pushed for conservative reform in the legislature, but he’s bristled at attempts to trim budget items under his control. For example, Capitol sources report that Abbott’s chief of staff Daniel Hodge instructed budget conferees in the waning hours of the regular session to add $100 million to the Texas Enterprise Fund and the Film and Music Marketing Program—two corporate handout funds in the Office of the Governor—threatening Abbott would veto the entire budget if lawmakers did not comply.

So, if it wasn’t necessarily good public policy, why was Krause’s amendment a smart political move?

The amendment revealed House leadership’s underlying motivation – to use the cuts and to use medically needy children as a tool to drive a wedge between conservative lawmakers and the grassroots over proper use of the use of the ESF.

With a price tag of “only” $70 million according to the bill’s fiscal note, Straus and his lieutenants could have fully funded pediatric acute therapy in the regular budget. HB 25 was designed as a political stunt, and Krause’s amendment called Straus’ bluff.

When Krause initially offered his amendment, two of Straus’ lieutenants, Sarah Davis and Appropriations Chairman John Zerwas (R–Simonton), were deployed to debate against him while others whipped votes against Krause.

Republicans loyal to the Straus’ coalition with the Democrats were now in for a trap of their own. Vote for Krause’s amendment and rankle their superiors, or vote against it and walk a plank with primary voters.

House Leadership suffered complete and utter defeat. Not only did they fail to win support from dozens of weak-kneed Republican lawmakers who can usually be depended on to fall on their swords, but they lost the vote outright and Krause’s amendment was added to the bill. Apparently most Republicans feared their constituents more than leadership.

Once again, the Freedom Caucus walked into a political trap, and came out of it in control of the House floor.

The next day, Straus’ leadership team could have taken its licks and moved on by simply passing the bill on third reading. Instead they attempted to retake the ground they’d lost with an all-out, no-holds-barred assault.

State Affairs Chairman Byron Cook (R–Corsicana), Straus’ chief deputy, offered a third reading amendment to HB 25 undoing the Krause amendment and was supported by the rest of Straus’ top Republican brass and a united Democrat caucus. State Rep. Phil King (R–Weatherford), a sort of Pied Piper of conservative capitulation, was trotted out to whip conservative votes in support of Cook.

With a high, two-thirds barrier needed in order to adopt the amendment on third reading, many expected that House leadership had the votes they needed in line. Winning the vote after the previous day’s defeat wasn’t the sort of thing that would happen by happenstance. Indeed, Republican members were aggressively pushed and prodded to fall in line. Most didn’t budge.

Despite the full court press, House leadership suffered another, even more humiliating defeat as 67 Republicans broke ranks and rejected the Cook amendment.

Only 19 Republican lawmakers supported the efforts of Byron Cook, Sarah Davis, and John Zerwas: Doc Anderson (Waco), Cindy Burkett (Sunnyvale), Dan Flynn (Van), Charlie Geren (Fort Worth), Todd Hunter (Corpus Christi), Ken King (Canadian), Phil King (Weatherford), Linda Koop (Richardson), Ed Kuempel (Seguin), JM Lozano (Beeville), Geanie Morrison (Victoria), John Raney (College Station), Hugh Shine (Temple), Gary VanDeaver (Texarkana), James White (Lumberton), and Paul Workman (Austin).

Texans should view the outcome of these votes as evidence that they are having an impact. All the pressure placed on the Texas House by Abbott and grassroots Texans is being felt in the halls of the Texas Capitol. It would be an understatement to say that after this week’s votes there are fractures between Republican members of the Texas House and Straus’ ruling coalition. There are canyons.