Thursday, April 4, 2013

Will Texans Rein in Local Government Debt Before It's Too Late? UPDATE

With Texas Comptroller Susan Combs sounding the alarm on local government debt, and the State Legislature considering various debt reform measures, I thought this would be a good time to look at the amount of debt held by a few of our Williamson County municipalities.

The Indebtedness 'Bad Boy' of the county is Leander ISD of course, with a total payback holding now at $2.7 billion.  Here's stats for a few other school districts (from the Texas Bond Review Board- an official state agency, even if some LISD Board members claim otherwise.)

Georgetown ISD:  $321,539,037
Hutto ISD:  $407,650,613
Round Rock ISD:  $1,057,789,047 (That's a billion, folks.)

City debt burdens are typically lower- The City of Round Rock has a debt burden of $326,865,149- but of course we are still talking about hundreds of millions.  Unlike similarly sized cities, much of the responsibility for road construction in the area has fallen to the county; consequently Williamson County government shoulders an unusually high infrastructure burden.  However, Round Rock certainly has managed to keep up with the 'best of them' in borrowing practices.  Sadly, we haven't had a city council election in ages, and city spending hasn't been much scrutinized.  So, it's really easy for that indoor sports facility cost to climb from $12 million to $14.5 million.  But what's $2.5 million these days?  (And we can always take comfort in the fact that the council recently voted to spend an extra $119,000 on a stone upgrade so that the walls will "really pop."  I'm sure the contractor really appreciated a little more cost on the backs of taxpayers.)

Unless we want to end up like the failing states of California, et al., we must act.  House and Senate Bills 14 cannot prevent local governments from being stupid about debt, but the proposals will certainly make voters more aware of how local leaders are building a house of debt cards.  The bills require clear ballot language about current debt and take steps to restrict non-voter approved 'Certificates of Obligation.'  (The latter now constitutes 16.6% of certain local debt burdens.)

Please contact your local representatives in the House and Senate and ask them to support government transparency.  Let's not go all California on debt.

Who Represents Me?

Update:  The City of Round Rock issued $12.5 million in certificates of obligation in 2007.  From the city's website

In 2007 the Round Rock City Council approved the issuance of $12.5 million in certificates of obligation to help fund $18.2 million of improvements to Old Settlers Park.  The improvements to the park include major renovations to the existing 20 baseball fields and construction of a 5-field softball complex. 
Update:  Below is a response from Round Rock's Communications Director Will Hampton.

The City of Round Rock has been one of the fastest growing cities in the country for the past three decades, and that growth necessitates the issuance of debt to pay for large capital projects. That said, the City has also spent $75 million in cash over the past 15 years on large capital projects that most municipalities would have to issue debt to pay for – thanks to sales tax revenue that was generated in large part from Dell customers across Texas.

While Williamson County has certainly done its part build new roads, the City of Round Rock has actually shouldered much of the burden for its own growing infrastructure needs, for both transportation and our water and wastewater utility – which boasts some of the lowest rates in the region.  We have leveraged $173 million in Type B local sales tax revenue – which was approved by voters – into $535 million in transportation improvements since 1999. We’ve partnered with Williamson County, the Texas Department of Transportation and private developers to expand our transportation infrastructure, sometimes using cash and sometimes issuing debt.

Construction costs for the Round Rock Sports Center are being paid for through hotel occupancy tax (HOT) revenue. And the extra money to pay for improving the aesthetics of the walls, we believe, is a sound investment. The City’s Convention and Visitors Bureau, by recruiting tournaments and events to Round Rock, helped bring $8.6 million in direct spending into the local economy in 2012. HOT revenue, by law, must be spent on activities and facilities that draw tourists to town. That revenue cannot be spent on, say, more police personnel or a new trail.

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