Local bond debt becomes hot topic in Belton, Austin (TX)

With early voting now underway, the Belton ISD bond election is receiving media attention yet the conversation still seems lacking with regard to detailed information taxpayers deserve when being asked to take on $60 million in new debt.  An earlier article, Taxpayers should do ‘homework’ on Belton ISD bond election, urged BISD voters to take a look at all aspects of their existing local government debt – this would include principal and interest amounts due.

Concern over growing debt is not limited, however, to local districts.  CNBC.com reports that a hearing today found activists offering policy alternatives while telling Texas lawmakers “they’d like the Legislature to abolish property taxes and to curb the power of school districts, cities and counties to take on debt through bond initiatives.”

CNBC.com described Americans for Prosperity-Texas State Director Peggy Venable’s testimony before the House Ways and Means Committee hearing as follows:

Peggy Venable, president of the Texas chapter of Americans for Prosperity, also called on the state to address the $320 billion in debt generated by local authorities. Much of that must be repaid by future property tax collections.

“This has a grave implication when we talk about local property taxes, because it’s sold to the taxpayers as just a few pennies.” Venable said.

She said there should be limits on how much debt a local authority takes on and that taxing authorities should have to reveal their debt level when asking voters to approve new bonds. She complained that school officials in particular manipulate the public into supporting bond packages.

A March 14, 2012, Temple Daily Telegram Letter to the Editor discussed Texas Comptroller Susan Combs’ visiting Temple.  It also not only echoed Venable’s concerns, but it also emphasized how current debt is too often an overlooked or ignored factor in local bond election discussions.

Threats posed by ever-increasing local bond debt – threats to current/future generations’ economic freedom – is a key Americans for Prosperity-Texas issue. While taxpayers should make their own choices, they must understand the range of implications attached to public policy decisions. Current bond debt isn’t likely to be a top talking point of entities pursuing such initiatives, but what responsible person would consider incurring new financial debt without first considering their current debt load?

In fact, with no such discussion part of last May’s TISD bond election, I wrote an article, Taxpayers should do ‘homework’ on Temple ISD bond election, detailing a then-TISD resident’s overall local bond debt to give wider perspective than appeared being otherwise offered. The article references the Texas Bond Review Board web site, a great information source. Upcoming Belton ISD bond election coverage hasn’t yet appeared to address how this $59.9 million bond package will increase current debt ($88,780,000 principal/$47,750,451 interest/$136,530,451 total) by about 44%.

Lou Ann Anderson
Policy Advisor – Americans for Prosperity-Texas

Americans for Prosperity-Texas does not take positions on election issues or candidates, but we work to educate taxpayers regarding a variety of public policy issues and are strong promoters of open, honest and transparent government.  With that, an article from today’s Temple Daily Telegram quoted members of Concerned Citizens for Fiscal Responsibility, a group opposing the $60 million Belton ISD bond package, including member John Fulwiler.  The article offers educational opportunities not only in local bond debt levels, but also in bond election tactics with this:

Fulwiler said Belton ISD’s current debt load is $136 million, and he’s concerned about adding another $60 million to that.

District figures show the current debt load at $88.9 million.

The article offered no explanation or even questioning of the discrepancy, but it’s easy enough to identify.

The Texas Bond Review Board was created in 1987 and comprises the Governor, Lieutenant Governor, Speaker of the House of Representatives and Comptroller of Public Accounts.  Its Local Government Info section contains searchable databases containing information including Local Government Outstanding Debt.

Per the BRB,

Although the BRB does not play a part in the approval of local government debt issuance, one of the agency’s goals is to ensure that public officials have access to current information regarding debt issuance, finance, and debt management. The agency is mandated by statute (Chapter 1231.062, Texas Government Code) to submit a report to the legislature that contains statistical information concerning the bonds and other debt obligations issued by local governments (cities, community & junior colleges, counties, health & hospital districts, independent school districts, water districts and other special districts).

This information is also available to the public.  Belton ISD’s most current information (based on FY 2011 numbers) parallels the school district’s TDT-stated number of $88,780,000.  This, however, is only the Principal currently due – it in no way reflects the additional $47,750,451 listed for Interest which brings Belton ISD’s Total Payment due to $136,530,451, the number used by John Fulwiler.

If Belton ISD has in fact paid off this more than $47 million interest amount, that would seem an untold success story deserving to be told.  If, however, the $136.5 million amount stands, that would seem a misrepresentation of current debt levels that might ultimately encourage voting decisions based on what used to be called “half-truths.”

Texas Comptroller Susan Combs explained to her recent Temple audience how her concern over increasing bond debt included the idea that all bond initiatives placed on an election ballot should include the amount of current debt (principal and interest) held by the entity.  Our local discrepancy emphasizes the benefits that exactly such a measure would bring both through enhanced voter education and increased government transparency.

The Telegram says Concerned Citizens for Fiscal Responsibility’s advice to BISD board members is to “slow down, build less and think more.”  Whether you are for or against the $60 million bond proposal, slowing down to at least independently study this issue and its long-term overall ramifications might not be such a bad idea.

Lou Ann Anderson is an advocate working to create awareness regarding the Texas probate system and its surrounding culture. She is the Online Producer at www.EstateofDenial.com, a Policy Advisor with Americans for Prosperity – Texas and a Director of Women on the Wall. Lou Ann may be contacted at info@EstateofDenial.com.