86th LegislatureLocal NewsStatewide NewsTaxes & SpendingTexas Local Governments Increase Debt to $365 Billion in 2019

After the reforms of the 86th Legislature, local entities have increased their collective debt by $11 billion from the last fiscal year.
December 9, 2019
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A Freedom of Information Act (FOIA) request by the Texas Public Policy Foundation (TPPF) revealed that local governments in Texas have accumulated $365 billion in debt. The Bond Review Board unveiled an $11 billion increase in overall local debt from the previous fiscal year.

James Quintero, director of the “Think Local Liberty” division at TPPF, conducted the FOIA. 

“Despite the reforms enacted during the last legislative session, local governments continue to pile on debt at an unsustainable rate,” Quintero told The Texan.

Quintero plans on releasing a more detailed report on the findings early next year but said the bulk of the debt is attributable to school districts — followed by city governments, special districts (such as hospitals and libraries), and then county governments.

Dax González, director of governmental relations with the Texas Association of School Boards (TASB), told The Texan, “Any increase in voter-approved school debt is most likely attributable to districts needing to build new schools and renovate aging facilities to accommodate the ever-increasing student population, which is increasing to the tune of about 80,000 students per year in Texas.”

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Remarking on the previous session, Quintero stated it was the first time “not only that there was an interest in but also a political will to do big things on local government debt reform.” 

Some of those indicators, Quintero pointed out, include the elimination of “rolling polling” (temporary early voting locations in non-cost-efficient areas), the requirement that school districts separate out their bond propositions, and a realignment of debt to the maturity rates.

Quintero also identified certificates of obligation (CO) as a notable source of increasing spending. COs do not require voter approval and can be issued for terms of up to 40 years.

The Texas Comptroller notes that as of 2015 over $13 billion in outstanding CO debt was held by cities, counties, and hospitals. Quintero said these “have been increasingly exploited by local governments who love to spend other people’s money.”

One reform Quintero specifically mentioned was to require a minimum voter turnout threshold for bond elections. A bond is money borrowed from taxpayers down the road to pay for an expenditure now.

Oftentimes, bond elections are conducted during low-turnout time periods — whether its primaries, odd-numbered years or special elections.

Texas Comptroller Glenn Hegar, whose office started the Transparency Stars program which highlights local governments with high transparency, told The Texan, “Too often voters head to the polls and make decisions on debt and bond issuance without a clear and accurate picture of the debt already on the books.”

Lower turnout means constituencies — such as teacher’s unions — who want to see the bond election passed typically have an outsized influence over the results of the vote.

This strategy is one significant factor contemplated when taxing entities make the decision on issuing a voter-approved bond.

Quintero’s thinking is a turnout threshold would require bonds to be approved by higher portions of the electorate — therefore reducing the power of any one particular constituency group.

He also mentioned the constitutional limit on state spending, and said local governments should have one too.

Quintero concluded, “Local governments are addicted to debt.”

Hegar also emphasized the importance of local debt on residents.

“Before taxpayers approve new debt they should absolutely know how much their local governments already owe,” Hegar said. “After all it’s the taxpayers who will have to pay it back.”

In Texas, the total average debt (federal, state, and local) owed per citizen is nearing six figures: $70,000 federal, $2,000 state, and $12,500 local governments

Neither the Texas Municipal League (TML) nor the Texas Association of Counties (TAC) replied for comment by the time of publishing.

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Brad Johnson

Brad Johnson

Brad Johnson is 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 watching and quoting Monty Python productions.