Earlier this week, James Quintero, Director of the Center for Local Governance, and Dr. Vance Ginn, Economist with the Center for Fiscal Policy published an article in Forbes discussing the emerging local government debt crisis in Texas.
From the article:
Cities, counties, school districts, and special districts in Texas are drowning in debt. The latest information from the Texas Bond Review Board suggests that total local debt, including principal plus interest, in the Lone Star State grew by $5 billion in fiscal year 2013 to roughly $328 billion. In only the last five years, local debt has increased by a staggering $30 billion.
Texas’ local debt per person—ranked as the 2nd highest among the top 10 most populous states in a September 2012 Texas Comptroller report—is more than $12,400 per Texan. Yet even with such large obligations, past trends suggest this local debt will likely get much, much bigger on its own. From 2001 to 2011, the compounded growth rate of population and inflation increased by just 53 percent. By comparison, local government debt outstanding (principal only) rose by 122 percent over the same period, meaning that local debt growth is outpacing population and inflation by a factor of almost 2.5-to-1.
As the article notes, a major contributing factor to the girth and growth of local government debt is the lack of basic information that voters have access to at the ballot box. Right now, Texas voters are only provided with two pieces of information—the principal amount to be borrowed and a short, often vague description of the project being voted on. This is simply not enough information for anyone to make an informed decision.
Fortunately, the next legislative session presents a good opportunity to begin addressing the growing problem of local government debt through voter education and ballot box transparency.