Between 2003 and 2013, local debt in Texas grew nearly twice as fast as the rate of population growth, after adjusting for inflation. In response, Texans for Fiscal Responsibility has joined forces with several other organizations in calling for local government reform.
A recent Forbes article highlighted Texas’ local debt epidemic. Texans are encouraged to enter into a dialogue with their local officials regarding their adoption.
Texas currently has the second-highest, per capita local debt in the nation, or $12,400 per person. Of the $328 billion in current local debt liability burdening property taxpayers, nearly 40% of that figure is interest expense.
In other words, the inordinate reliance on debt financing is projected to cost taxpayers nearly $128 billion dollars in interest alone, in addition to approximately $200 billion in principal payments.
Unfortunately, local governments are not required by law to include the projected interest expense of bond propositions on local ballots. Stated differently, it’s likely that many taxpayers who will vote in November’s local bond elections won’t be aware of its total cost.
Additionally, the law does not require local governments to disclose the effect that the new debt will have on future property tax rates nor does it require them to disclose the current indebtedness of the entity requesting more debt.
How can voters be expected to make informed decisions if local governments aren’t disclosing the total cost of their measure at the ballot box?
The simple answer is, they cannot.
If local governments are unwilling to voluntarily adopt common-sense reforms in good faith, increasing fiscal transparency and accountability in local government may require a mandate from the legislature.
*Below is the list of reform planks the coalition is encouraging local governments to adopt.
Guiding Principles for Local Debt Transparency, Accountability, & Fair Elections
- Arm Voters with Basic Fiscal Information at the Ballot Box
- Avoid Using Long-Term Debt to Finance Short-Term Consumables, Operating Expenses
- End the Use of Exotic (Non-Traditional) Public Financing Schemes like CABs
- Independent, Outside Auditing and Online Assurance for Use of Funds
- Separate Ballot Propositions for Major Projects Financed
- Conduct Fair Elections, Minimum Turnout Requirements