Ahead of the Nov. 3 election in which Temple Independent School District voters will weigh in on a $136.5 million bond proposal, important opportunity exists to discuss Texas local government debt levels and the means by which today’s debt is grown.
Understanding Texas’ overall local government debt picture is the first step toward responsible financial decisions as despite the state’s already hefty $328 billion debt load, the November ballot will bring entities across the state seeking an additional $9 billion – $12 billion or more with interest.
Texas local government debt
School districts lead the local government debt-generator pack at $111 billion with cities following closely at $103 billion. Counties bring another $21 billion to the debt discussion with water districts at $48 billion, special purpose districts at $31 billion, community/junior colleges at $7 billion and health/hospital districts at $6 billion.
It’s also important to recognize that government-quoted bond amounts used during campaigns are principal only. Not mentioned are the interest dollars (up to an additional 40 percent) generated upon bond issuance, dollars for which taxpayers are also responsible. For this article, a 35 percent interest rate is used to estimate a more accurate reflection of the increased debt taxpayers are being asked to assume.
While some debt is a functional necessity, Texas’ current local government-spending spree can justifiably be questioned as outside the realm of reasonability or even rationality.
The Texas Comptroller’s Your Money and Local Debt report noted that from 2001 to 2011, population and inflation grew at a combined 53.3 percent. Over that same period, however, outstanding local government debt increased 122.4 percent. Can Texans afford growing debt more than twice as fast as any population growth and inflation?
In 2011, Texans per person government debt levels had each state resident owing $47,383 in federal debt, $1,577 in state debt and $7,507 in local debt. Note this is per capita debt as of 2011 – it has grown!
The November election
In its Upcoming Bond Election Roundup, TexasTransparency.org lists 59 local governments – 35 ISDs, 16 cities, 7 counties and one community college district – pursuing a total $9.15 billion ($9,146,208,920) in bonds on the Nov. 3 ballot. Remember, this is without interest.
From a list price standpoint, school districts are seeking a total of $6.3 billion in new tax dollars, counties want $1.6 billion while cities are asking for $767 million and one college district, San Jacinto Community College District, $425 million.
However, more realistic estimates (with interest included) for which voters will be responsible bring school district pursuits to $8.5 billion, counties to $2.2 billion, cities to the $1 billion level and the lone community college district closer to $574 million.
TISD bond election
TISD is pursuing a bond package with a sticker price of $136.5 million. Add interest and the drive away price will be closer to $184 million.
The district’s 2011 bond election was characterized as $55 million, but per the Texas Bond Review Board, $30,144,888 interest was added to the $54,850,000 principal upon issuance for an actual total of $84,994,888. This combined with prior debt brought the district’s current debt load to $122 million.
Passage of the proposed package will result in new taxpayer liability likely exceeding $300 million, more than double the district’s current debt load.
How does this compare to the area’s other larger school districts? Belton ISD sits at nearly $212 million, Copperas Cove ISD at $32 million and Killeen ISD at $99 million. Other area comparative data is available at TEA Snapshot data offers view of Bell County ISDs.
Bell County debt
With updated numbers expected mid-November, the BRB site lists the current debt level for local governments under which TISD voters likely live at $620 million.
This number represents the city of Temple at $311,408,607 (principal $225,340,000/interest $86,068,607), Bell County at $143,369,295 (principal $113,865,000/interest $29,504,295), Temple Junior College District at $41,501,254 (principal $32,165,000/interest $9,336,254) and of course, TISD at $122,223,242.
Not included is the city’s $27.6 million park bond package (with interest probably closer to $37 million) and recent county-issued Certificates of Obligation. With those, typical TISD voters are likely on the hook for closer to $700 million.
Add the TISD bond and voters are flirting with $1 billion in local government debt.
Signs all over town encourage supporting this bond package “for our kids.” Bond elections in Temple and throughout Texas promote a debt legacy that will impact our children and grandchildren for decades to come.
Households generally make major spending decisions based on their overall financial pictures. For our kids’ sake, let’s hope at least a few voters do the same by learning more about the bigger debt picture at hand, how we’ve reached this point and what it could mean for the future.