A short, new video is making the rounds online, highlighting a troubling situation in Amarillo, Texas.
Recall that in May, Amarillo city councilmembers voted 4-1 “to approve an ordinance authorizing and issuing $260 million in tax and revenue notes to fund the Amarillo Civic Center project.” City hall’s decision sparked outrage because just a short time prior, Amarillo voters had rejected a $275 million bond proposition for the same project. In fact, the election contest wasn’t even close—“61% of Amarillo voters were against and 39% were for Prop A.”
Enabling Amarillo to move forward with the controversial project—and against the will of voters—is a short-term debt instrument called tax and revenue anticipation notes (TRANs). The Texas Bond Review Board defines TRANs as: “Short-term loans that the issuer uses to address cash flow needs created when expenditures must be incurred before tax and or other revenues are received.”
From the definition, it is clear that TRANs have a particular purpose, i.e. overcoming cash-flow challenges, and the tool was not envisioned as a way to circumvent voter approval, especially in furtherance of a dubious public project. Still, Amarillo officials, leaning heavily on a misinterpretation of Texas Government Code 1431, used the tool in brand-new perfidious way, setting off alarm bells in Austin and leading to two lawsuits being filed locally.
For now, Amarillo’s TRANs abuse is an isolated incident (as is communicated in the aforementioned video); but it’s only a matter of time before other municipalities take note of its rule-bending behavior and charge forward with their own attempts, much as local officials have done already with certificates of obligation. Before that sort of abuse gets normalized, the next Texas Legislature should pass strong, new state laws to protect taxpayers and the democratic process alike. Act now lest we regret it later.