November election brings Texas new taxpayer-funded debt opportunities

Despite Texas already carrying record local government debt, the Nov. 3 election will bring opportunity for voters to add more than $9 billion – $12 billion or more with interest – to the state’s already hefty $328 billion debt load.

Texas’ highest debt is with our school districts at $111 billion and closely followed by city debt at $103 billion. Counties have $21 billion with water districts at $48 billion, special purpose districts at $31 billion, community/junior colleges at $7 billion and health/hospital districts at $6 billion.

While degrees of debt can be legitimate and reasonable, it’s important that Texans understand the pace of this current local government-spending spree. The Texas Comptroller’s Your Money and Local Debt report noted that from 2001 to 2011, population and inflation grew at a combined 53.3 percent. Over that same period, however, outstanding local government debt increased 122.4 percent. Can Texans afford growing debt more than twice as fast as any population growth and inflation?

And is this sustainable when other levels of government have their own free-spending practices? In 2011, Texans’ per person government debt levels had each state resident owing $47,383 in federal debt, $1,577 in state debt and $7,507 in local debt. Note this is per capita debt from four years ago – it has grown!

In fact, from a national standpoint, Texas’ only local government debt rivals are California and New York.

In its Upcoming Bond Election Roundup, TexasTransparency.org lists 59 local governments – 35 ISDs, 16 cities, 7 counties and one community college district – pursuing a total $9.15 billion ($9,146,208,920) in bonds on the November ballot.

Further breaking down these numbers, school districts are seeking a total of $6.3 billion in new tax dollars, counties want $1.6 billion while cities are asking for $767 million and one college district, San Jacinto Community College District, $425 million.

An estimate of the full amounts (including interest) for which voters will be responsible brings school district pursuits to $8.5 billion, counties to $2.2 billion, cities to the $1 billion level and the lone community college district closer to $574 million.

Of course, campaigns running up to bond elections ignore important financial issues about which voters both have a right to know and should factor in to their decision-making.

First in that category is the interest that accompanies bonds. Government entity-quoted bond amounts are principal only. Not mentioned are the interest dollars (up to an additional 40 percent) generated upon bond issuance, dollars for which taxpayers are also responsible. For this article, a 35 percent estimated interest rate is used.

Another not discussed topic is existing debt. Taxing entities pursuing new bond money rarely want to discuss current debt levels, but who responsibly makes major financial decisions without considering other significant debts?

And as voters are typically subject to more than one taxing entity, it’s important to know one’s overall community-based debt levels – the combined debt picture of applicable school districts, cities, counties, community/junior college districts, etc. Prudent property owners care if area home prices lose competitive advantage due to skyrocketing taxes. And make no mistake. Passage of a bond is passage of a new tax.

School districts

For the November ballot, Dallas ISD takes the overall top spot asking voters for $1.6 billion designated to fund new schools, classrooms, improvements, educational programs and land acquisitions.  With interest, that’s likely to come in around $2.1 billion, which added to existing debt of $2.56 billion will leave Dallasites closing in on $5 billion of school-generated debt.

Aldine ISD, the state’s 11th largest district located in an unincorporated area of north central Harris County, is seeking $798 million, basically $1 billion with interest, for a new school along with facility renovations and enhancements. This amount coupled with an existing $398 million debt load represents a near tripling of the district’s debt.

Also notable is North East ISD wants to add $495 million ($660 million with interest) to current debt of $1.45 billion; Conroe ISD’s $487 million ($650 million with interest) to $978 million; Ysleta ISD’s $430 million ($580 million with interest) to $199 million; and Highland Park ISD’s $361 million ($487 million with interest) to $95 million.

Cities

McKinney is seeking $160 million ($216 million with interest) over six bond packages for street and roads, airport improvements, public safety, municipal building improvements, a downtown parking structure and flood protection. Any combination of these measures’ passage will be added to the city’s $209 million existing debt.

Similarly, Lewisville is looking for a total $135 million ($182 million with interest) over four separate proposals designated for streets and roads, parks and trails, public safety and aquatic facilities. Lewisville’s current debt stands at $96 million.

Mesquite wants to add $125 million ($169 million with interest) to current debt of $122 million; Richardson $115 million ($155 million with interest) to $263 million; and Cedar Park $97 million ($130 million with interest) to $167 million.

Counties

Harris County is looking for $848 million, about $1.14 billion with interest, between four separate proposals seeking road improvements, parks, an animal shelter and flood control. With $2.4 billion current debt, county residents could raise their obligation up to $3.5 billion.

Travis County wants a new courthouse costing $287 million ($387 million with interest) added to existing debt of $661 million while Montgomery County seeks $280 million ($378 million with interest) for roads.

Voters will additionally decide if Fort Bend County should spend $99 million ($134 million with interest) over four bond packages designated for parks and a community center, county facility improvements, fairground improvements and library facilities. The county’s current bond debt stands at $442 million.

Comal County, meanwhile, has a single package seeking $76 million ($103 million with interest) for a new jail. Adding this amount to the county’s current $60 million debt load will more than double taxpayers’ financial liability.

Community colleges  

This election’s lone community college bond proposal brings San Jacinto Community College District asking voters to approve $425 million ($574 million with interest) for new campus construction, renovations, infrastructure and college development. And again, adding this amount to the current $288 million load will nearly triple the district’s debt.

Bond proposals theoretically benefit the public. Why shouldn’t everyone jump on board to support them? Maybe they should. But not without understanding the playing field and knowing all the facts including the short- and long-term consequences debt accumulation decisions bring.

Local debt matters. Its growth – exponentially faster than local population and inflation – is a drain on our economy. Local debt is the legacy we are leaving our children and grandchildren. Is this the legacy we want to be leaving?

Lou Ann Anderson is an information activist. As a contributor at Watchdog Arena, Raging Elephants Radio and Examiner Austin, she writes and speaks on a variety of public policy topics. Lou Ann is the creator and online producer at Estate of Denial®, a website that addresses probate abuse via wills, trusts, guardianships and powers of attorney as well as other taxpayer advocacy issues.

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