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Star-Telegram.com

Perry became a millionaire while serving in office

Posted Sunday, Aug. 28, 2011

By Aman Batheja

abatheja@star-telegram.com

Since his first race for office more than a quarter century ago, Gov. Rick Perry has emphasized his roots as a rural farmer.

Yet Perry's bank account no longer reflects those humble beginnings as his bottom line has soared in recent years, records show, thanks largely to a handful of real estate deals that critics allege were achieved through the presidential candidates's political connections.

In just about every campaign Perry has run since 1989, allegations of his using his position for financial gain have come up. It's an issue Perry long ago accepted would linger as long as he remains in the public eye.

"I've been in politics long enough to know that this is just a part of doing business," Perry told the Star-Telegram in 1998. "I know full well, as my wife knows, that our private lives, particularly on the financial side, becomes fair game."

While much of the scrutiny has focused on land deals Perry made while a statewide official, "real estate investor" doesn't properly capture all of his recent financial activity, just as "farmer" is too simple a description of Perry's earlier years.

When he became the state representative from Haskell in 1985, the married father of two was far from living high on the hog. In 1987, the earliest federal tax return Perry has released, the couple reported total income of $45,224.

Perry drew a $7,200 annual salary from his public job. In Austin, he roomed with two other lawmakers to save money. Anita Perry worked as a nurse, and took in less than $8,000 a year between 1987 and 1990.

Like many Texas farmers, Perry benefitted from federal agriculture subsidies. Between 1987 and 1998, Perry received over $80,000 from such programs. Along with operating their own farm, Perry and his father, Ray Perry, also worked several hundred more acres of land that they leased. Even back then, Perry was extending himself beyond his agrarian upbringing. Either with his father or on his own, Perry had financial stakes in gas wells as well as some real estate. Through his wife, the couple had a small investment in a local bakery. Perry also found work during that period as a pilot.

In 1983, Perry was named to the Haskell National Bank Board of Directors and maintained an advisory role with the bank until 1996. Over most of that period, he was paid between $700 and $3,500 a year from the bank, according to available tax returns. Bank President Andrew Gannaway recalled Perry attending the board's meetings.

"I think I would say the board felt like his contributions were valuable to the bank as were the other members," Gannaway said.

Though his real estate successes were years off, Perry's interest in the field started earlier. Gov. Bill Clements appointed him to the advisory committee of Texas A&M University's Real Estate Center back in 1981. Perry also became a licensed Realtor, though he never worked as one.

Perry got an early taste of how his financials would be put under a microscope in 1989 when he ran for agriculture commissioner. Incumbent Jim Hightower's campaign accused Perry of greedily billing the state tens of thousands of dollars for the cost of flying himself on state business. In 1989, Perry's reimbursements made up over half of the private aircraft mileage reimbursed in the Texas House.

Land transactions

By defeating Hightower, Perry's life changed dramatically. His public salary as Agriculture Commissioner jumped to over $70,000. His wife stopped working as a nurse. The family sold their home in Haskell and moved to Austin.

Perry quickly began investing in land in Travis County. Perry has said that much of the property he bought in the 1990s were spots he had hoped his family would settle down on but that his wife always argued were too remote.

In 1991, Perry found 29.1 acres of raw land near Lake Travis for sale via a liquidation auction. He purchased the lot for $55,288 with plans to build a home there but soon put it back on the market. Three years later, he sold the property for $125,000, according to tax records.

Perry bought another 10 acres of undeveloped land in 1993. That property drew interest from Michael Dell, a computer magnate who needed Perry's tract to connect his new home to municipal sewer lines. Dell took the property off Perry's hands for $465,000, more than triple what Perry had paid for it two years earlier. Perry reported a $342,994 profit on the sale in his 1995 tax return.

Texas Democrats have repeatedly questioned the sale over the years, in part because Mike Toomey - an influential lobbyist who would later become Perry's chief of staff - closed the deal for Perry while Perry was out of town. Perry has always maintained he didn't know that the land would be so valuable to Dell when he purchased the property.

The following year, Perry reported a $38,000 profit off selling stock in Kinetic Concepts, a medical bed and supply company founded by James Leininger, a long-time generous donor to Perry over the years.

Around the same time, Perry also invested in MKS Consulting, a Weatherford company started by Ric Williamson, a former state representative that Perry would later appoint Texas Transportation Commissioner. Williamson died in 2007. Last year, Democratic opponent Bill White questioned whether Perry's investment showed he had used his political connections to profit off the Barnett Shale natural gas drilling boom while opposing stricter drilling regulations.

Since 1996, Perry has put most of his investments into a blind trust. A spokesman for Perry's campaign could not provide the trust's current value. Though the arrangement has shielded most of Perry's investments from public view, his finances again drew sharp attention in 2007 when he reported income of over $1 million.

Horseshoe Bay windfall

Most of Perry's gains that year came from the sale of a lot in the resort community of Horseshoe Bay.

Perry purchased the land from state Sen. Troy Fraser, R-Horseshoe Bay, in 2001 for $314,770. Six years later, Perry sold it for $1.1 million, pulling a profit of $823,776. Perry has attributed the gain to a favorable market for Hill Country land.

"We bought a piece of property, the property appreciated and we sold it," Perry said last year.

Critics, including the liberal watchdog group Texans for Public Justice, have suggested a dubious dealing considering that the man Fraser bought the land from and the man Perry sold the land to were business partners.

'Pay-to-play' state?

"I think there's a narrative developing around Rick Perry that kind of encompasses the Texas political culture in that we're a pay-to-play state," Texans for Public Justice Director Craig McDonald said.

The Perrys have yet to file their 2010 taxes and have requested an extension, according to a spokesperson. In 2009, Perry reported $135,278 in wages as governor. From 2004 to 2009, Anita Perry reported average annual pay of $63,111 from work with the Texas Association Against Sexual Assault.

Perry's financial history will provide a contrast to some of his rivals on the national stage. While primary rival Mitt Romney made a fortune in the private sector before jumping into politics, Perry's biggest gains took place while in elected office.

"He has always been just a public servant," McDonald said. "He's had some whopper real estate deals but he's no Mitt Romney that's for sure."

And unlike President Barack Obama, who has made millions of dollars from two books, Perry didn't collect profits off of his books. Rather, Perry directed proceeds of one book to legal defense for the Boy Scouts of America and from the other to an Austin-based conservative think tank.

Perry is required to file his first financial disclosure form with the Federal Elections Commission by Sept. 15. He can request up to two 45-day extensions, according to an FEC spokesman.

This report includes material from the Star-Telegram archives. Rick Perry's financial records were obtained via online databases from the Houston Chronicle and the Texas Tribune, and through the Texas Ethics Commission.

Aman Batheja, 817-390-7695

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