September 6, 2006

Strayhorn's Campaign Sees Perry Financial
Advantage Disappearing with High Burn Rate

By Mike Hailey
Capitol Inside Editor

Political strategists call it "the burn rate," and it's what gives Comptroller Carole Keeton Strayhorn's independent campaign cause to believe that Governor Rick Perry has lost most if not all of the financial advantage that he had heading into the final months of one of the more bizarre races ever waged for a public office in Texas.

As Perry and Strayhorn launch a long-anticipated air war of simultaneous television advertising in their campaigns for governor, Strayhorn's camp estimates that the incumbent may have about the same amount of money to spend on media in the final stretch of the race as she does. Even though Perry had $2 million more in the bank on June 30 than Strayhorn, who'd reported slightly more than $8 million in cash on hand at the time, the comptroller's campaign figures that the gap has narrowed dramatically or even disappeared because the incumbent had been spending the money he raised twice as fast as she did this year.

Perry spent about $2.5 million on two separate television spots that he aired at the start of the year and during the spring special session on school finance - and his campaign has pumped almost $500,000 into a Governor's Mansion restoration fund since January. Most of the other $3 million in expenditures presumably went to pay overhead such as campaign staff salaries, utility bills, office supplies and other administrative costs. Perry raised $4.7 million between January 1 and June 30 - about $1.3 million less than he spent during that time.

Strayhorn - on the other hand - raised about the same amount of money as her campaign shelled out during the first six months of 2006 - with contributions and expenditures both in the neighborhood of $3.1 million. But Strayhorn had about half as many people on her campaign payroll as the Perry camp employed - and while the governor spent substantial sums on private aircraft for campaign travel - Strayhorn flew at no cost on planes as in-kind contributions from supporters who owned them.

When the costs of media advertising and extraneous expenses such as donations to the mansion fund are taken out of the mix, the Perry campaign appeared to be spending closer to three times as much on its day-to-day operations than Strayhorn between the first of the year and the end of June. If the burn rates on non-media expenses for Perry and Strayhorn remained about the same throughout the remainder of the race as they were for the first six months of 2006, the governor would presumably need between $1 million and $2 million more to pay his campaign's bills in the closing months of the race than the comptroller would be spending on overhead and administrative expenses for her gubernatorial bid down the stretch.

In such a scenario, Strayhorn would have almost as much for a television advertising budget between Labor Day and Election Day on November 7 as Perry - despite perceptions that the incumbent has had a clear financial advantage over the only one of his three major rivals who's competing with him in the campaign finance department.

Basing campaign spending predictions on past expenditures can be risky because of potential factors that can throw an analysis off course. One candidates fundraising could pick up while another's declines as the election approaches. Or the candidates could cut back substantially on expenses not related to television advertising in order to have more for the TV blitz in the final two months.

Strayhorn's advisors aren't sure why Perry's campaign made a comparable TV buy for the post-Labor Day stretch when it reportedly had more cash in the bank than the comptroller. It's conceivable that the Perry camp spent all it could afford on broadcast advertising after calculating how much it would need to cover the other expenses in the months leading up to the general election. Or it could be that the governor's campaign doesn't think it will need to empty its war chest on Perry's re-election bid and is saving some instead for a future endeavor. The governor has consistently received between 35 percent and 40 percent support in polls over the past several months while Friedman, Bell and Strayhorn have been scrambling to break out of a three-way tie at 20 percent each on average or less. .

But Strayhorn and her supporters estimate that she has the most to gain from a television advertising barrage because a fourth of the electorate still doesn't know who she is while Perry already has about as much name identification as he could hope to get.

A big television advertising budget is no guarantee for a successful campaign - and Strayhorn faces a dilemma in how to get the most mileage from the dollars she's been saving up for the air war. Attacking Perry on television could backfire, driving voters away from him and into Friedman's camp. Strayhorn, who's ignored Friedman for the most part, will have to decide if she'll have to go negative on both Perry and Friedman to keep that from happening as a result.

Perry and Strayhorn kicked off their fall television campaigns with positive spots - with the governor focusing on what he's done for border security while the comptroller uses her first two ads vowing to shake up Austin in order to put an end to business as usual by politicians in debt to special interests. Both sides dismissed the other's television spots as weak. Voters can be assured that the advertising will turn ugly when they hear one camp or the other saying that it plans to stay positive but reserves the right to respond. That usually means that attack ads are in the can and ready for use when needed.