by James Quintero
You may not know how much debt your city, county or school district has piled up over the years, but the rising tide of red ink could be affecting your life in more ways than you think — from where you live to where you send your kids to school to how much you have to spend every month.
That’s because Texas’ local governments have amassed a staggering one-third of one trillion dollars’ worth of debt and the massive amount needed to pay the debt service on all those obligations is resulting in everything from higher property taxes to less affordable housing to fewer and feebler government services. Put another way, growing government debt is leading to personal financial hardship and a poorer quality of life for many Texans, whether they know it or not.
And the problem is only getting worse.
Since fiscal 2009, the total debt owed by cities, counties, school districts, and special districts has grown from $298.3 billion to $333.1 billion in fiscal 2014. That’s an increase of almost $35 billion over a relatively short period, pushing up the total amount owed by each Texan to near $12,500.
Over a longer time frame, it’s even clearer that local government debt is headed in the wrong direction. According to the Texas Comptroller’s report Your Money and Local Debt, population and inflation grew a combined 53.3 percent from 2001 to 2011. Over that same period, local debt outstanding rose 122.4 percent, outpacing population and inflation by a factor of more than 2-to-1.
The growth and level of local debt in Texas represents one of the state’s greatest public policy challenges, posing a threat to both Texans’ financial well-being and the very philosophy that has made the Lone Star State successful, i.e. lower taxes and less government. But what’s the solution?
It starts with education. Voter education, to be more precise.
One of the greatest enablers of local debt has been the lack of information provided to voters at the ballot box. Right now, existing state law requires that voters only be provided with two pieces of information about local bond propositions: the principal amount to be borrowed and a short description of the proposed project, which is oftentimes so vaguely worded that it could be construed to mean anything. That’s simply not enough information to make an informed decision.
Think about it. No reasonable person would purchase a house or a car armed with so little detail, yet voters — most of whom are busy working and raising a family — are regularly tasked with making spending decisions of a much greater magnitude with so few snippets of information. It’s no wonder that local debt has begun to spiral out of control.
Texas voters need more financial information with which to make informed decisions about the direction of their communities. Fortunately, that may be something that happens sooner rather than later.
Several bills are working their way through the legislative process to improve local debt transparency. Two bills in particular, Senate Bill 102 and House Bill 134, would arm voters at the ballot box with basic financial information about local bond propositions. Among other things, information that could be provided to voters under these bills includes: the total cost of the bond (principal and interest), the amount of debt owed by the entity asking for more, and the expected tax impact should a proposal pass.
While some, particularly those invested in the status quo, might scoff at providing voters with so much information, it’s clear that the electorate suffers from just the opposite. It’s only when voters have a more complete picture of their government’s finances that we can expect to see an improvement in the overall health and direction of our communities.
James Quintero is director of the Center for Local Governance at the Texas Public Policy Foundation, a nonprofit, free-market research institute based in Austin. He may be reached at email@example.com.