Bloomberg News

Castro Burnishes Star Selling San Antonio Preschool Tax

December 11, 2012

San Antonio Mayor Julian Castro

San Antonio Mayor Julian Castro, 38, stepped into the national spotlight in September with a speech at the Democratic National Convention, cementing his place as a Latino leader in a Republican-dominated state. Photographer: Scott Eells/Bloomberg

San Antonio Mayor Julian Castro knew his plan to raise sales taxes to expand preschool for the poor required a full-court press, and he knew who his team would be.

For three years, the 38-year-old Democrat had lunched monthly with about 15 executives, a gathering nicknamed the Billionaire’s Club. One member, Peter Holt, owner of the National Basketball Association’s Spurs and a $500,000 contributor to Republican Governor Rick Perry, this year ordered repeated advertisements during games pushing the levy. Castro’s plan passed with 54 percent of the vote Nov. 6.

The win in America’s seventh-largest city, where 19 percent of 1.36 million residents live in poverty, cemented the mayor’s place as a rising Democratic leader in a state where taxes are anathema. Christian Archer, a Castro adviser since 2005, said the victory, and the basketball executive’s role in it, showed his boss’s ability to win support from across the political spectrum.

“Holt is an unabashedly conservative Republican who came out unabashedly for a guy who gave the keynote address at the Democratic convention,” he said.

After Castro’s top speaking slot at the September gathering in Charlotte, he came to personify Hispanic support for President Barack Obama and swiftly found himself the subject of speculation for higher office.

Filling Classrooms

“I’ve heard it consistently from El Paso to Fort Bend County and other places throughout Texas that people would like to see Julian run for governor,” said Gilberto Hinojosa, chairman of Texas Democratic Party. “He not only has a chance of winning, but he’d be a great governor.”

Castro says he wants to be mayor into 2017, bypassing the 2014 election in which Perry may seek a fourth term.

Castro’s tax increase will fund full-day prekindergarten classes for about 3,700 children each year through 2021, according to campaign literature. The measure will raise the sales levy to 8.25 percent from 8.125 percent for eight years, starting in 2013.

“When we invest in people, we’re investing in our shared prosperity,” Castro said during his September speech. Raised by a Mexican-immigrant grandmother and Rosie, his single mother, Castro graduated from Stanford University and Harvard Law School.

“He sees education as transformational,” said Graham Weston, head of Rackspace Hosting Inc., a San Antonio-based Web services provider and a self-proclaimed political independent. “He’s been elevated through the ambition of his mother and the education afforded to him.”

Constant Outreach

Weston meets monthly with Castro for lunch with a group that includes former Spurs owner Red McCombs, a Clear Channel Communications co-founder; supermarket magnate Charles Butt; Ed Whitacre, a former AT&T Inc. (T:US) chairman, and Richard Evans, chief executive officer of Cullen/Frost Bankers Inc. (CFR:US), which donated $50,000 to the ballot campaign.

“We like the way the program was designed,” Evans said.

Holt gave $25,000, Archer said. Holt didn’t respond to messages seeking comment on his support.

The initiative’s success marked the first time Texas voters have backed a tax for prekindergarten, said Kara Johnson, a policy analyst for Texans Care for Children, a nonprofit advocacy group in Austin.

Its passage came 18 months after lawmakers cut $100 million in annual grants for full-day preschool. Lawmakers also reduced public-school funding by $5.4 billion in the two-year budget that ends in September.

Taking Lead

“The mayor said we won’t wait for the Legislature” to restore the funding, Johnson said. “We’re going to move ahead on our own.”

Texas hasn’t provided enough money for early childhood programs even though research shows it’s the best way to spend money on education, Castro said in an interview in his office. Teachers hired for the expanded program will get an average of $60,000 a year, he said.

Tuition is free for certain children, including those from low-income families or who don’t speak English as a first language. Others will pay a small fee, according to Deputy City Manager Peter Zanoni. The sales-tax increase at first will provide about $31 million a year, supplemented by state and federal grants, and will end in 2021 unless voters extend it.

Castro has been fostering relations with business as the city grows, with a 16 percent jump in population from 2000 to 2010, the fastest rate of increase among the top 10 U.S. cities, according to data compiled by Bloomberg.

Worthwhile Jobs

San Antonio has benefitted from expanded military bases and the nearby Eagle Ford shale formation, where oil and gas production has risen. Energy companies including EOG Resources Inc. (EOG:US) and Halliburton Co. (HAL:US) have added hundreds of jobs over the past year, Castro said.

“We don’t just want more call centers with jobs that start at $30,000 and cap out at $45,000,” Archer said.

Castro himself gets only $78 a week as mayor and relies on savings, speech stipends and the salary paid to his wife, Erica, an elementary-school teacher. He’s too busy to practice law, he said.

He meets with officials from businesses over monthly breakfasts, and regularly lunches with about 150 artists, bankers and community activists, Archer said.

“I like the way the mayor has worked with all segments of the community,” Evans said.

Changing State

Castro is positioning himself as a bridge to a new politics in Texas, arguing that Latino power is a force that will remake the state. Republicans hold all 29 statewide elective posts and control legislative majorities. Yet Hispanics will become Texas’s ethnic majority by 2030, state figures show. Cal Jillson, who teaches politics at Southern Methodist University in Dallas, has said Hispanics vote for Democrats by a 2-to-1 margin.

George Rodriguez, a past president of a San Antonio Tea Party group, said the mayor has exerted unfair pressure in the city, 63 percent of whose population is Hispanic.

“The business community falls in line behind Hispanics to avoid embarrassment or headaches,” said Rodriguez, a San Antonio native who worked in the U.S. departments of Justice Department and Housing and Urban Development under Presidents Ronald Reagan and George H.W. Bush. “The Hispanics fall in line behind business to get the benefits. They scratch each other’s back.”

‘Social Engineering’

The city’s 16 independently financed and run school districts get $56 million a year in federal preschool aid, making Castro’s plan unnecessary, said Republican state Representative Lyle Larson of San Antonio. “This is social engineering with politics blended in,” he said.

“All he’s doing is trying to build a resume for higher office,” said Becky Edler, president of the Bexar County Republican Women. “This program will cost $15,000 per child and it’s going to be 14 years before that child is a productive citizen.”

Zanoni said the budget calls for about $11,000 per child, which doesn’t include potential capital expenses.

Currently, more than a quarter of the city’s 20,000 4-year- olds don’t take part in full-day prekindergarten, according to the mayor’s website.

Laura Tristan’s group of 22 children at Barkley-Ruiz Elementary School, on the city’s west side, sat attentively as Tristan read a Christmas story. About 92 percent of Barkley-Ruiz pupils are from low-income households, she said. Many start without knowing how to hold a pencil.

Castro said that their well-being, and San Antonio’s, is a delicate thing to manage.

“Educating children isn’t like paving streets,” he said. “I’m interested in the things you can’t necessarily touch.”

To contact the reporter on this story: David Mildenberg in Austin at dmildenberg@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net


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