Texas voters are being asked to consider local 81 bond initiatives totaling $6.7 Billion which are on the May ballot. Early voting is underway and runs through May 6 for the May 10 election.
Prudent financial management at all levels of government is crucial to ensuring Texas remains a desirable destination for business and an affordable place for Texans to live and work. That isn’t only AFP’s view but the focus of a study by Texas Comptroller Susan Combs.
Why do we focus on local debt?
- First, Texas is second in the country in local government debt – second only to New York State in per capita debt and second only to California (the Greece of America) in total local debt.
- Second, local debt is soaring compared to expenditures and growth. During a period of only 9 years, when combined population and inflation grew 44.9%, local spending grew 84% and local debt grew 144.4%!
- Third, fully 10% of our education funding is going to pay off the debt.
- And some ISD’s have used Capital Appreciation Bonds which result in “balloon payments” and incur as much as 10 times the principal in interest.
Here are some highlights of what is on the ballot:
Frisco ISD’s $775 Million bond initiative: Last week, AFP-Texas hosted a program in Frisco with speakers Peggy Venable, Jess Fields form TPPF and Ross K…. from Empower Texas. Jess shared a policy piece TPPF had issued on the Frisco debt. It is appropriate that the public get as much information as possible on this massive bond election as the official Texas Bond Review Board has ranked this the 8th largest in Texas history. In the past, the District has issued Capital Appreciation Bonds – a risky form of debt. And the District has around $111 million in unissued (but taxpayer-approved) bond authority. The District’s current debt is $2.6 billion in debt (principal + interest). Collin County polling places can be found here.
Cypress-Fairbanks ISD’s $1.2 Billion initiative: This bond initiative is the largest on the ballot and includes “a second natatorium ($197.6M)” along with “student mobile upgrades”. Some local citizens are speaking out against the bond package were on the Houston Chronicle blog: http://blog.chron.com/texassparkle/2014/04/cy-fair-isd-we-have-a-spending-problem/ . Here is a list of the polling places for the Cy-Fair ISD bond election. Cy-Fair is already $2.8 Billion in debt and if passed, when these bonds are issued could owe $5 well over billion!
Round Rock ISD taxpayers have received numerous fliers from a group calling itself Classroom for Kids. But the $299 Million bond package being proposed includes $38.9 million to build two additional fine arts venues in the District. This is in addition to the Performing Arts Center on McNeil. The District currently owes $705 million. All three bond initiatives have been heavily supported by a Political Action Committee, Classrooms for Kids. Early voting locations for RRISD can be found here.
These are just three of the 68 ISD bond initiatives on the ballot along with nine city bond packages, one community college and three hospital districts asking voters to approve more debt.
Public sector pensions not yet added as part of this debt total:
And while we cite the local debt figures, please know those do not include the public pension liabilities – retirement benefits which may not be fully funded.
According to an article by Steven Malanga which appeared in City Journal:
The Indebted States of America: States and localities owe far, far more than their citizens know, debt should not just include what is borrowed.
If you define municipal debt simply as what states and localities have borrowed, the total nationwide comes to about $3 trillion. Nevertheless, these governments actually owe more than twice that much, according to estimates from groups like the States Project. The reason for the discrepancy is that states and localities carry another kind of debt—promises of retirement benefits to public-sector workers—and they have radically underfunded the systems that must pay for it.
Houston Pension Problems:
According to a recent report by the Texas Comptroller – YOUR MONEY AND PENSION OBLIGATIONS – Houston’s city budget will have less to spend on other projects as its pension payments grow. Houston expects its contributions to employee pensions to rise from $181 million, consuming 10.9% of all city expenditures in 2007 to $349 million and 17.1% by 2017. Three of their pension funds have a combined unfunded liability of more than $2.4 billion.
Early in 2011 the Houston mayor sought state legislation to give the city a stronger role in setting benefits. Those efforts were unsuccessful as the three pension systems spent at least $375,000 on lobbyists during the year, according to the Texas Ethics Commission.
It’s time for reform. The unfunded liabilities are mounting and City officials can’t even get data from one of the funds regarding the taxpayers’ liabilities.