Texas Comptroller Shines a Light on State-Local Govt. Debt
Excellent new report on state and local government debt out this week from the Texas Comptroller’s office. A lot of really good data, charts, and factoids—too much, in fact, to do the report full justice in a short blog post.
But here are a few things that stuck out:
- The state has some debt, but local governments have a LOT of debt. In FY 2011, outstanding state and local government debt totaled $233.2 billion, of which local debt was $192.7 billion or 83 percent of the total. On a per capitabasis, state debt totaled $1,577 per person while local debt totaled $7,507.
- The growth of local debt is fast-outpacing the growth of local spending and population plus inflation. Between fiscal years 2000 and 2009, local debt grew by over 144 percent, while over the same period local expenditures increased just 84 percent and the sum of population only 45 percent.
- Local governments are issuing a lot of debt without voter approval. Since fiscal year 2005 local govnerments have issued almost $13 billion in Certificates of Obligation (COs), a type of debt generally not approved by voters. This type of debt currently accounts for 7.1 percent of all local government debt issued since 2005.
- The biggest issuer of local debt: public school districts. According to the report, “As of Aug. 31, 2011, 854 of the state’s 1,024 school districts had one or more types of debt outstanding totaling $63.6 billion. This is almost a third of all Texas local government’s $192.7 billion debt and the majority of it, about $52.7 billion, is backed by the state’s Permanent School Fund.”
- Debt transparency is sorely needed. Three recommendations put forth: 1) Give voters more information about the debt they are being asked to approve, such as amount of outstanding debt in the area, the amount of new debt, estimated debt service, etc. 2) Narrow the authority of local entities to issue COs; and 3) Instruct local authorities to post more financial information online, such as long-term debt obligations.