Debt Crisis Looms for Texas Local Governments

By Brooke Rollins, Texas Public Policy Foundation

There’s an emerging local government debt crisis in Texas.

For more than a decade now, Texas’ local governments, consisting of cities, counties, school districts and special districts, have gone deep into debt to do everything from build new schools to purchase the latest technology for the classroom to buy new police cars. The rush to finance all of this on the taxpayer credit card has created a mountain of debt for current and future taxpayers.

A recent report from the Texas Comptroller’s office pegged Texas’ total local government debt at $192.7 billion in 2011, up from $86.7 billion just ten years prior. This means that in only the span of a decade, local debt has more than doubled, indebting every man, woman, and child in Texas to the tune of $7,500 per person. If this sounds like a lot, it is.

Of the ten largest states in the nation, Texas’ local debt per capita ranks as the second highest, behind only to New York ($8,744). Other large states like California ($6,469), Illinois ($5,510), and Michigan ($4,853)—normally criticized for their big spending ways—are far less indebted at the local level. Of course, these figures are tempered somewhat by the fact that Texas’ state debt ranks comparatively low, but for the homeowner or business seeing huge property tax increases year-after-year, this is of little consolation.

Now arguably, some of Texas’ local debt may have been assumed out of necessity—people need roads, water, and schools. No one disputes that. But the data suggests that local governments’ insatiable appetite for borrowed money is going for more than what the community needs, or what they can afford.

Consider that from 2001 to 2011, local government debt soared by more than 122 percent. By comparison, population and inflation, the best metric by which to measure how fast spending and debt should grow, increased just 53 percent – meaning that the growth of local debt outstripped people’s ability to afford their government by a ratio of more than 2-to-1.

So why does all of this matter? Simple: The Texas Model.

Our state’s economic success over the last decade has been based on a few simple facts: 1) we keep taxes and spending low; 2) we maintain a predictable regulatory climate; and 3) we create a fair legal system. These things combined create The Texas Model of governance, a system that has proven immensely successful in creating jobs, attracting businesses, and generally proving a public policy success where other states have failed.

This style of governance has been immensely successful—but, as we’re learning, it cannot only be applied to state governance, there has to be a local government buy-in if Texas is to remain prosperous over the long-run. And part of that means fiscal discipline at the local level. Jobs, businesses, and growth simply won’t come to the state if part of Texas government is dysfunctional.

Recognizing that conservative governance at the local level is critical to the state’s future prosperity, especially when it comes to local debt, the Texas Public Policy Foundation is taking the bull by the horns, and is proud to announce the launch of the Center for Local Governance, a one-of-a-kind research center dedicated to promoting excellence in local governance.

In addition to producing original research and commentary, the new Center’s focus will be on educating local taxpayers, officials, and interest groups all throughout the state on area-specific issues: spending, debt, taxes, and the like. Not just the problems though, but also how to solve them.

Texans cannot afford the status quo. The state has come too far and made too much progress under the banner of The Texas Model to fail now because of the excess of a few. That’s why it’s time to open up a new front in the battle for conservative principles at the local level, and begin engaging people on these critical issues.

This article  originally ran in the Austin American-Statesman on June 30, 2013

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