Wednesday, August 28, 2013

"Local Government Debt: What Transparency?" and LISD Public Hearing on Budget & Tax Rate

My "All In Perspective" column from August 22 is republished below.  In related news, it seems that the Leander ISD is holding a specially called meeting on Thursday, August 29, at 6:15 at the Support Services Complex.  This will include a public hearing on the Budget and Tax Rate for the 2013-14 school year, and presents an opportunity for the community to speak out.  Concerned citizens should plan to attend. 

Original Column:

In a recent San Antonio Express News article, Donnis Baggett of the Texas Press Association claimed that ‘transparency’ was the buzzword of the Texas’ 83rd Legislative Session.  Baggett applauded a new law that allows the public to better scrutinize communications between elected officials, and gives news publishers more leeway to “correct, clarify, or withdraw” false reporting before being subject to defamation laws.  According to Baggett, these are marvelous advances for transparency in Texas.

However, the Elephant in the Room ignored by Baggett et al, is that Texas legislators quietly killed important transparency legislation that could have a dramatic impact on the long-term economic health of Texas.
The “Transparency for Texas Taxpayers” act, authored by House Appropriations Chair Jim Pitts, would have required greater disclosure on local government debt.   Both House and Senate versions of the bill stated that all taxing entities must prominently publish their spending and debt information online.  Also, when asking voters to approve new debt, local governments would have been required to include ballot language stating the:
  • Amount of proposed debt;
  • Principal outstanding on current taxable debt;
  • Estimated remaining interest on existing debt; and
  • Estimated total debt service on existing debt.
While many Texans are self-righteously clucking their respective tongues over the financial demise of cities like San Bernardino and Detroit, the truth is we have growing debt problem right here in the Lone Star State.  According to the Texas Bond Review Board, state taxpayers are now on the hook for $324 billion in local debt, and local taxes are on the rise.  Locally, the Leander Independent School District alone has a total debt/payback burden of nearly $2.7 billion dollars.  LISD is able to manage this monstrosity for the time being via the use of highly controversial Capital Appreciation Bonds (CAB’s,) which defers payments to future generations of Leander citizens.  In the meantime, LISD’s bond rating has been repeatedly downgraded and area homeowners already shoulder a significant property tax burden.
Defenders of public debt are eager to point out that most local government borrowing is “voter approved. “  Of course in most cases less than 10% of registered voters participate in bond elections, and proponents intentionally schedule such elections on odd dates for the express purpose of stifling voter participation.  (Like the Hutto ISD’s Labor Day Weekend election last year.)  Furthermore, local government officials set up separate Political Action Committees to promote these bond proposals.  Said committee then launches a slick advertising campaign that downplays the necessary tax increases and up-plays the benefits of the swanky new city/school district/county thing-a-ma-jigger.  Never, ever, ever is there any mention of the current debt carried or the impact on the next generation of taxpayers.
Unsurprisingly, cities and school districts sent their well-paid lobbyists and even a few elected officials to Austin to try to stop the Transparency for Texas Taxpayers Act, with the City of Georgetown in Williamson County playing an active role.  One witness actually stated aloud that he opposed the publication of the data because voters would not support higher debt if they knew how much they already owed.  In other words, we can’t continue to borrow and spend like drunken sailors if the public realizes what we’ve done.   The Texas House pulled down the act on a procedural problem and quietly let it die without taking action.

If we are to avoid the fate of the failed states of America, we must have a serious and persistent conversation about debt, and perhaps send some of our local elected officials to consumer credit counseling.  While some debt is necessary, excessive debt and extravagant spending (like $2500 park benches and unrealistic government pension plans,) can only have one, Detroitesque outcome.  Unfortunately, politicians are kicking the debt-can down the road for our children and grandchildren to solve.
This November, numerous local governments will be asking voters to approve ever more debt, and since there is little interest in off-year, single-issue elections, in all likelihood fewer than 10% of registered voters will bother to vote, and most of those will be completely unaware of the existing debt burden.  Local governments have until August 26 to call for bond elections for this year.  Be sure to check out local proposals, stay informed, and by all means, vote. 

No comments: