Data from the Texas Bond Review Board (BRB) shows localities across the state have accumulated nearly $250 billion in general obligation debt, which is spending that is financed through property taxes. The other main category of debt is revenue, which is funded through returns from projects like a wastewater system.
Independent school districts account for the majority of the accumulated debt. Texas’ bottom-up and property tax-heavy system places more taxing by localities, and thus, more money to spend. School districts, with only the ability to levy property taxes while other localities may issue consumption taxes, rely even more heavily on the property taxes for their funding.
Collectively, independent school districts (ISD) featured a slight increase from last year’s update while cities’ outstanding debt fell substantially.
While cities and school districts are more numerous than the other taxing entities, they also hold more debt per capita than the others.
Eighteen of the top 20 localities in terms of outstanding debt are either cities or ISDs.
Entity Population Outstanding Debt Debt Per Capita
City of Houston 2,304,580 $4,893,972,289 $1,476
Dallas ISD 1,377,641 $4,555,100,802 $2,366
Cypress-Fairbanks ISD 538,919 $4,452,484,125 $5,760
Northside ISDa 675,000 $3,686,385,518 $3,356
Houston ISD 1,529,513 $3,638,312,379 $1,678
Frisco ISD 310,932 $3,339,886,018 $6,912
City of San Antonio 1,434,625 $2,909,073,653 $1,561
City of Dallas 1,304,379 $2,904,287,095 $1,485
Bexar County 2,009,324 $2,881,077,226 $938
Katy ISD 374,056 $2,811,456,647 $4,815
Leander ISD 213,674 $2,492,579,170 $5,050
Lamar CISD 198,975 $2,203,655,081 $6,724
City of El Paso 678,815 $2,194,598,403 $2,189
Fort Bend ISD 364,771 $2,155,092,903 $3,826
Denton ISD 199,319 $2,140,364,949 $6,610
Harris County 4,731,145 $2,062,684,597 $320
City of Austin 961,855 $2,055,818,826 $1,626
Austin ISD 1,364,332 $2,053,704,674 $1,093
North East ISD 442,047 $1,959,027,180 $3,073
Conroe ISD 388,457 $1,949,865,427 $3,478
Among those, the top two in debt per capita are Frisco ISD and Lamar Consolidated Independent School District.
For comparison, the State of Texas has $24.6 billion in outstanding debt, or $846 per citizen. However, in October the legislature approved $3.3 billion in tuition revenue bonds for higher education institutions to pay for renovations and facility expansion.
James Quintero, policy director for the conservative Texas Public Policy Foundation’s local government arm, told The Texan, “Local governments are borrowing us into oblivion. As a result, property taxes are being pushed higher at a time when many can’t afford it.”
“We need strong, new laws that encourage greater public participation in bond elections by requiring they be held in November; that prevent special interest manipulation by establishing minimum voter turnout requirements; that promote transparency and accountability by telling voters the cost of new debt on the ballot; and more.”
The Texas legislature instituted reforms in 2019 to the state’s property tax and school finance systems. By injecting $5.1 billion of state funding, they lowered local property tax rates, called “compression,” as the system acts as a kind of seesaw with ISDs on one side and the state on the other. As one side increases, the other decreases for that fiscal year.
Last year, the state approved $1.1 billion in continued property tax compression for the 2022-2023 biennium. It also appropriated $3.1 billion in additional public education dollars to account for enrollment growth. As of a year ago, the schools across the state were experiencing an enrollment dip caused largely by the pandemic.
A spokesman for the Texas Association of School Boards (TASB) pointed to postponed bond elections from 2020 to 2021 as a likely explanation for the ISD debt increase. “[T]here were over 200 less bond elections in 2020 compared to 2021, and of those called in 2020, almost half of them were canceled or postponed,” the TASB official said.
“Its very possible a number of local governments paid off portions of their bonded debt in that time which would explain why the overall debt per capita went down from 2020 to 2021. Additionally, the number of elections for ISD’s increased in 2021, and with a number of those passing you likely saw an overall increase in outstanding debt for ISD’s coming out of 2021 as the economy opened back up.”
TASB also pointed to the number of residents in the state increasing, which would drive down the debt per citizen.
“Without additional reforms, such as extending efficiency audits to local jurisdictions beyond that of just school districts, requiring that bond elections be held on a uniform election date in November, or auditing on a regular basis, Texas taxpayers can only continue to expect increasingly volatile liabilities into the future,” said Jeramy Kitchen, executive director for the accountability organization Texans for Fiscal Responsibility.
“Debt, especially debt left unchecked, will inevitably work to saddle future generations with burdens like higher taxes and credit rating downgrades stifling business growth and economic investment.”
Editor’s Note: This article has been updated to include comment from a TASB official.
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Brad Johnson is a senior reporter for The Texan and an Ohio native who graduated from the University of Cincinnati in 2017. He is an avid sports fan who most enjoys watching his favorite teams continue their title drought throughout his cognizant lifetime. In his free time, you may find Brad quoting Monty Python productions and trying to calculate the airspeed velocity of an unladen swallow.