On May 6, voters across Texas will head to the polls to vote on local bond debt exceeding $6 billion, without interest. Both the dollar amount and the historically low turnout in these elections makes it critically important for taxpayers to participate because the slightest effort can make the biggest difference.
As usual, most of the $6 billion in proposals comes from school districts across the state. The top five referendums are all half a billion dollars or more, and Killeen ISD’s $426 million request is the highest the district has seen in 10 years. Many of these proposals, like Denton ISD’s $750 million and the City of Fort Worth’s $400 million, are the largest proposals in their history.
While some of these bond proposals are intended to fund public safety and infrastructure, most are geared to the typical nonessential projects like short-lived technology upgrades and million dollar multipurpose and athletic centers. Goose Creek CISD, for instance, wants to use a portion of its bond funds to develop a 6,000 square foot robotic practice arena.
These debt issuances are particularly important because local debt in Texas is growing at unsustainable rates.
In the past year in Texas there has been over $25 billion in local debt on ballots across the state. Between 2000 and 2015, local debt grew by more than 162 percent, or over 2.5 times the rate of population and inflation growth. As this debt grows, taxation follows, as well as a decrease in quality of core services as budgets are crowded out with debt payments. It also plays a role in the entity’s credit rating, which can affect the costs of future borrowing.
There are a myriad of things that can be done to reform the local debt election process like requiring votes on individual projects rather than lumping them all together, which many cities already do. Also, lawmakers could make the issuance more transparent by notifying voters of current outstanding debt and interest on proposed debt so they know the true, total cost.
Local entities can also make the estimated impact on the taxpayer known, by providing realistic repayment assumptions based on the principal and interest of the debt. But, in the immediate term, voters need to take an interest in their local elections, and question, if not completely reject, unnecessary and nonessential debt proposals that do little to benefit taxpayers.