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Local Debt, Bond, & Election Transparency

While the state of Texas carries little debt relative to its large population, the debt held by its political subdivisions has exploded in recent years. At the close of the 2018 fiscal year, Texas’s local government debt stood at $230 billion.That represents a staggering increase of more than $88 billion (approximately 63 percent) since the close of the 2007 fiscal year. This growth is concerning because political subdivisions issue bonds to finance their debt and this debt is generally paid back through property taxes. This arrangement creates a temptation for Texans to spend freely now while transferring responsibility for payment of the debt to future Texas taxpayers. Indeed, it is not simply the growth in the amount of local debt that is concerning, but the ease with which new debt is being issued. For example, on November 6, 2018, 86 local governments held 141 bond elections; of these, 127 (or 90 percent) authorized the issuance of new debt in the amount of $11.27 billion. The Legislature enacted several bills this past session to increase transparency of local debt and bond issuance.

Senate Bill 30 will require that bond elections be more transparent by separating and itemizing the various projects to be funded. The following bond purposes require such separation: (1) the construction, improvement, or renovation of a stadium, natatorium, recreational facility other than a gymnasium, performing arts facility, or housing for teachers, and (2) the acquisition or update of technology equipment, other than equipment used for school security purposes. Each proposition will be required to state the principal amount of the bonds to be issued that constitutes the cost of construction of that portion of the building or complex. The purpose of the bill is to avoid situations in which voters are faced with a single proposition for multiple purposes; in such cases, voters might approve of the proposition even though they disapprove of bonds being issued for certain purposes in the proposition. 

House Bill 440 will prohibit political subdivisions from issuing general obligation bonds to purchase, improve, or construct improvements or to purchase personal property if the term of the bond (i.e., the time from issuance to maturity) exceeds 120 percent of the reasonably expected economic life of the improvement or personal property. In addition, HB 440 would restrict the use of funds raised by political subdivisions through such bonds to the specific purpose for which the bonds were issued, or for the retirement of those bonds. This bill will ensure that political subdivisions are not burdening future taxpayers for benefit of current taxpayers. 

House Bill 477 requires ballot propositions authorizing the issuance of debt by a political subdivision to disclose the purpose for which the debt obligations are to be authorized, the principal amount of the debt obligations to be authorized, and that taxes sufficient to pay the principal and interest on the debt may be imposed, the estimated or maximum interest rate on the debt, and the maximum maturity date of the debt. In general, a voter information document would have to be prepared showing additional detailed information, such as the political subdivision’s total outstanding debt and the estimated remaining interest on all outstanding debt obligations of the political subdivision. HB 477 will help make voters aware that the bond propositions they are voting on are but one small part of the larger debt issue in their local jurisdictions in Texas. By providing taxpayers with a clearer picture of their total debt burden and the related tax obligations, the bill may result in less enthusiasm for increases in local debt. 

House Bill 305 requires a political subdivision with taxing authority to post information on its website, including the political subdivision’s contact information, the names of each elected officer, the date and location of the next election for those officers, the requirements and deadline for filing for candidacy of each elected office of the political subdivision, and open meetings notifications required by law. HB 305 is a positive transparency measure that helps empower voters by making relevant information easily accessible. 

House Bill 803 requires toll project entities to publish a report on the entity’s annual financial data within 180 days of the close of its fiscal year. The report would include information such as toll revenue for each toll project, the final maturity of bonds issued by the entity for a toll project to toll system, and any capital improvement plan; however, certain public-private toll projects would have to list only the name and cost of the toll project and the termination date of the agreement. Transparency is crucial to the public in understanding the state of each toll project and understanding the costs, and revenue, of toll projects that individuals use on a daily basis.

House Bill 1888 addresses the issue of “rolling voting,” whereby local districts or municipalities move voting machines during an ongoing election, ostensibly to seek out a specific electorate. House Bill 1888 clarifies that “temporary” locations must remain open for at least (1) eight hours each day, or (2) three hours each day if the city or county clerk does not serve as the early voting clerk for the territory holding the election and the territory has fewer than 1,000 registered voters. HB 1888 attempts to make elections more transparent, accessible, and predictable by requiring that movable voting locations stay in the same place for a certain period each day. To be clear, HB 1888 does not prohibit movablevoting locations. It merely prohibits poll operators from moving around during the day seeking out voters more likely to vote a certain way. Voters have to go to the polls. Not the other way around.