Should Houstonians be given a chance to vote on the issuance of $1 billion of pension obligation bonds (POBs) as part of the city’s overall reform package? Absolutely.
With the possible exception of certificates of obligation issued for emergency purposes, local government debt should almost always be accompanied by a public vote. After all, it’s not the government’s money to spend in the first place nor will it be the government’s responsibility to foot the bill down the line.
And although the issuance of $1 billion in POBs would not create new debt in the traditional sense, these instruments could still end up costing city taxpayers in the long-run if things don’t go as planned. That is, if the interest paid on the bonds ends up being greater than what the investment returns are.
Because there’s some degree of risk involved, Houston-area voters should absolutely have a say in whether or not to go down this path. It’s both prudent and fiscally responsible to let voters decide.