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Bush overplayed his hand during his second legislative session, in 1997. He launched his boldest reform as Governor, an ambitious and ultimately failed attempt to restructure the state tax code. He was trying to fix a big problem: public school funding depended far too heavily on local property taxes, which had risen dramatically. In January 1997, he proposed cutting property taxes by $3 billion, by using a $1 billion budget surplus, raising the sales tax by half a cent and levying a new tax on partnerships--lawyers, accountants, doctors and other professionals. It was risky politics and good policy, an attempt to create a tax code that reflected the modern Texas economy. But Bush multiplied his risk by violating a key lesson of 1995: he announced his plan without consulting Bullock or Laney. He did this, Bush told TIME, because "I was very aware what their reaction would be: 'We need the [surplus] for other programs.'" The maneuver infuriated Bullock, who thought he had his Governor better trained than that.
Laney thinks Bush had become overconfident. "The fact that everything had been smooth sailing up until then probably had to do with his eagerness," he says. Laney cooled him down by appointing a special committee to rewrite the bill. When the Democrats were done, it was almost unrecognizable. Where Bush had taken a small step toward tax fairness, the committee, chaired by Sadler, galloped down the road, shifting billions in taxes from property owners to business. Corporate interests howled and Republicans were aghast--but Bush supported the Democratic plan. "It was incredibly courageous of Bush to back this bill; he didn't have to," says Sadler, pointing out that former Governor Ann Richards, though faced with a school-funding crisis in 1993, refused to reform the tax code. "Bush didn't have a crisis but tried reform anyway."
First he lobbied the 68 Republicans in the house. "He used a finesse approach," says Laney, "and when it got down to the short rows, he maybe got harsher. He started out with the good-government speeches, then got a little more...vivid." Why did Bush work so hard to pass a reform bill his party couldn't stand? As he tells it now, he knew the house bill would never become law, because the senate was pushing a far more modest plan. He says his main concern was preserving a tax cut based on the $1 billion surplus, which was tucked inside the Trojan horse of the house reform bill. "I knew what I was doing," he says. "I was trying to get the bill over to the senate." He persuaded half of the house Republicans to support the bill, enough to win passage.