Texas’ state debt shines compared to most other large, populated states.
According to the Texas Bond Review Board’s 2013 Annual Report (Chapter 1, pg 9), the latest estimates of Texas state government debt totaled $38.5 billion (principal only), or $1,479 per Texan, ranking it 9th of the 10 megastates. As a percentage of all Texas debt, state debt is 14.9 percent of the total.
Source: Texas Bond Review Board
Local government debt, on the other hand, is another matter altogether.
According to the BRB, Texas’ local debt outstanding (principal only) totaled $219.7 billion, or $8,431 per person, ranking the Lone Star State’s local debt per capita as the 2nd highest among the megastates. What’s more, the issuance of local debt continues to grow rapidly with several billion dollars in bonds set to be proposed to voters in May 2014.
One of those local governmental bodies contributing the most to this explosive local debt growth is school districts. Almost one-third of all local debt is held by school districts, some of which are set to go back to voters in May toask the public to approve even more debt. One district with a particularly large proposal is Arlington ISD (AISD).
This May, Arlington ISD will ask voters to approve a proposition that will add an additional $663 million to the district’s debt, about one-and-a-half times its existing outstanding debt total of $445 million. To put these numbers in perspective, the bond will therefore cause AISD to be ranked 40 percent higher on average debt per student compared to other Texas ISDs and the I&S tax rate could increase as much as 15 cents per $100. Among other things, the bond proposes to issue medium and long-term debt for items like instruments and uniforms; digital signage; wireless phones for campus administrators; and a fine arts center.
Some of the contents of AISD’s debt proposal are suspect; but even more, the district’s timing is also curious as its 10-year student enrollment growth does not support an ask of this nature.
According to the Texas Comptroller’s Debt-at-a-Glance, AISD’s enrollment growth from 2003-04 to 2012-13 was just 4.1 percent compared to a statewide average of 14.9 percent.
Given the district’s already large debt-load and it’s relatively slow enrollment growth, the district would be wise to reconsider asking voters to add more new debt. But given the way that local governments have behaved in the past on local debt, it won’t be a surprise if thet don’t.
Incidentally, local governments’ inattention to the issue of debt is one of the reasons that debt restrictions, debt transparency, and ballot box transparency are much-needed reforms to be made at the state and local level.