The swirling force of Texas politics

Governor's Wealth Fueled by Land Deals

By JAY ROOT
|  Sunday, Sep 27, 2009  |  Updated 11:45 AM CDT
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Governor's Wealth Fueled by Land Deals

Taylor Jones/Getty Images

Gov. Rick Perry has squeaked over the millionaire line thanks to his investments and a series of private land deals.

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Gov. Rick Perry never had much money growing up, and he has spent most of his adult life in public office, drawing a part-time salary as a legislator and relatively modest earnings in statewide office for the last quarter century.

But thanks to his investments and a series of private land deals, some that took advantage of his political connections, Perry has squeaked over the millionaire line, records examined by The Associated Press show.

Perry's Democratic opponents have suggested that Perry traded on his power and influence to turn a buck. Now that he is in a tough primary for a third full term, Perry's Republican opponent, Sen. Kay Bailey Hutchison, is raising the same accusations.

"Rick Perry should do an infomercial on how to become a millionaire as a professional politician," said Hutchison campaign manager Terry Sullivan. "From abusing his power over appointments to getting sweetheart real estate deals from supporters, he's a regular get-rich-quick icon."

Perry aides say the governor has benefited from nothing more than strong business acumen and good timing. He has also lost some dough along the way, most notably last year, when a trust fund he owns took a huge hit during the Wall Street meltdown and shed more than a half million dollars in short and long-term losses, tax records show. Aides note that he has one home and is putting a kid through college, like many Texans.

The West Texas ranch boy won a state House seat in 1984 and has never yet lost an election. A former Texas A&M yell leader and Air Force pilot, Perry was elected agriculture commissioner in 1990 and then lieutenant governor in 1998. He took over as governor in 2000 when Gov. George W. Bush became president, and finishing his second term has gone on to become the longest serving governor in Texas history.

When he first entered the Legislature, the Haskell County native was still working on the family ranch, farming cotton and ranching cattle. But he's made most of his wealth buying and selling real estate -- earning him about $2 million in pretax profits since 1991, records and interviews show.

Perry once sold a 9.3-acre tract to computer magnate Michael Dell for nearly four times what he paid for it, using influential Texas lobbyist Mike Toomey as the broker. The west Austin property sold for $465,000 in 1995 and gave the Dell estate badly needed access to an adjacent municipal sewage district.

A little more than a year later, Perry snapped up 60 acres southwest of Austin, after acting on a tip from flamboyant developer Gary Bradley, whose real estate empire fell into bankruptcy in 2002. The property was sold two and a half years later at a $239,000 profit. Perry has also bought and sold houses and raw land for various gains since he won statewide office in 1990.

"He just manages to fall into these deals over the years," said Houston accountant Bob Martin, who helped analyze 18 years' worth of Perry's tax returns for the AP. "It looks like his net worth increased while he was in office, in the relative scheme of things, on a small salary." Perry made about $85,000 a year as agriculture commissioner and currently draws $150,000 annually as governor, but as a legislator and lieutenant governor, he was making a part-time salary of just $7,200.

He also was entitled to daily expense payments during legislative sessions and later, as lieutenant governor in 1999 and 2000, Perry boosted his take-home pay by filling in for then-Gov. Bush, who was spending a lot of time outside Texas running for president.

Anita Perry helped boost the family's income during the lieutenant governor years, making about $67,000 as a salaried employee for The Perryman Group, a business-consulting firm based in Waco.

Perry's biggest real estate pay day came in 2007, when he sold two-thirds of an acre of lakefront property he had acquired in 2001 from his friend Troy Fraser, a Republican state senator who owns a nearby tract in Horseshoe Bay in central Texas. Perry sold the property in March 2007 for $1.14 million -- for a profit of $823,766, tax records show.

That helped produce the highest annual income Perry and his wife Anita have ever reported -- about $1.1 million in adjusted gross income, according to their 2007 tax return.

Perry put the profits from the sale into his blind trust, an instrument politicians use to shield themselves from conflicts between public actions and private wealth.

Though Perry knows what has gone into the trust, including proceeds from land sales, aides say he has no control over what's done with the assets once they're deposited into it.

Buying land low and selling it high isn't the only way Perry has pushed his income above his salary. He turned a $38,000 profit in 1996 after selling shares of Kinetic Concepts, Inc., the hospital equipment company founded by wealthy Republican donor James Leininger.

Spokeswoman Allison Castle said she did not have a figure for Perry's net worth, but she said his blind trust worth about $896,000. Perry also owns a home in College Station valued at $243,900 this year.

"The real estate investments they have been involved with have been fully disclosed and reported," Castle said. "They own one home with a mortgage that is approximately the same value as the house. The governor and first lady both work, have a mortgage and are paying off student loans for one child while putting another through college."

Anita Perry now works as a $65,000 a year consultant to the Texas Association Against Sexual Assault.

Records also show the principal balance of their trust fund took a loss of $567,529 in capital losses in 2008. Castle said the Perrys are not aware of the performance or fluctuations of the fund other than what gets reported on their tax returns.

Perry has voluntarily released all of his tax returns since 1991, showing earnings from property dealings, the blind trust he formed in 1996 and other holdings.

They show the blind trust fund has produced at least $600,000 in income since 1997, before taxes and management fees. Another investment partnership that Perry owns with his father, the J.R. Perry Co., has generated income of about $42,000 since 1991. All told, Perry reported adjusted gross income of $4.3 million, paid $851,000 in federal taxes and gave at least $104,000 to charity in the last 18 years, according to the records.

One source of future income: his state pension.

If he retired at the end of his current term with 26 years of service, Perry, 59, would be eligible to collect at least $74,750 a year for the rest of his life.

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