As the Temple ISD is seeking approval from voters for nearly $3 million in new taxpayer funds through a Sept. 21 tax ratification election, the city of Temple is preparing to issue $5.7 million of limited tax notes and another $25.3 million in certificates of obligation. These measures, though obligating city residents to new long-term debt, are not subject to voter approval.
The $5.7 million will be used to incorporate compressed natural gas garbage trucks into the city’s sanitation operation. In addition to purchasing 16 CNG garbage trucks, funds will be used in the design and construction of a CNG fueling station, recycling containers and other building improvements associated with implementation of the CNG fleet.
Though city officials say a portion of the debt will be paid by sanitation revenues and fuel savings, government-run operations like Texas toll roads remind how taxpayers can see additional obligations when projected funds don’t materialize. Low interest rates, now a staple in the litany of local government long-term spending justifications, were also cited as an advantage of action at this time.
The $25.3 million will fund the following reinvestment zone master plan projects:
- Constructing, improving, extending, expanding,upgrading and/or developing city streets, bridges, sidewalks and trails, including related water, wastewater and drainage improvements, signage, landscaping, irrigation and purchasing any necessary rights-of-way;
- Constructing, improving and extending city trails and parks, including related landscaping, irrigation, drainage, signage, parking and lighting;
- Costs related to developing city master plans;
- Constructing, improving, extending, expanding and upgrading a downtown plaza, including landscaping, irrigation, parking lot and related improvements;
- City airport improvements, including parking lot, landscaping, signage, roadways, related drainage and irrigation;and
- Paying the professional services including fiscal, engineering, architectural and legal fees including the costs associated with the issuance of one or more series of certificates.
TISD’s most recent $1.28 per $100 of property valuation comprises $1.04 for maintenance and operations, 24 cents for debt service (long-term debt whose service requires payment of both principal and interest). The district’s September election seeks voter approval to generate nearly $3 million through increasing the current $1.04 state maximum rate for maintenance and operations to $1.12 for a total of $1.36 per $100 valuation.
The district says these funds will support a variety of technology, transportation, security, fine arts, career preparation and after-school initiatives. Potential expenditures have been reported as:
- A library improvement plan projected to cost $301,345 for 2013-14 and $175,245 for 2014-15. With TISD libraries’ average materials age from 1995, state guidelines listing the average age of materials (1999 or newer as acceptable, 2001 or newer as recognized and 2003 or newer as exemplary) are not being met.
- Upgraded science labs at a cost of $119,684 to comply with state-imposed unfunded mandates requiring additional science and cultural arts classes.
- With the 2014-15 school year bringing new required fine arts classes including visual art and media, theater art and media, music art and media along with dance art and media, TISD plans to expand its offerings with a middle school dance team, stomp program, mariachi band and folklorico dancing.
- Regarding student technology, the district is aiming to provide a Chromebook for all high school students, a laptop for every two middle school students, iPad Minis for every two students kindergarten through second grade and Chromebooks for every two students third through fifth grade.
- Citing an industry standard of replacing 15-year-old buses, TISD plans to spend $450,000 on buses. Officials note that of TISD’s 79 buses, 50 percent are 15 or more years in age, 25 percent are 20 years or more with only 25 percent 15 years or newer.
- With officials additionally citing TISD’s afterschool program as likely to soon lose its funding by state tax dollars, this stands as another area for which local tax dollars are sought.
As local government entities increasingly look to taxpayers for new dollars, taxpayers should research the total debt level within their communities. Local government spending is encouraging a legacy of debt – debt from which future taxpayers may neither recover nor from which they will necessarily benefit.
Local government debt is issued by public school districts; cities, towns and villages; water districts; special districts; counties; community and junior colleges and health/hospital districts.
Per the Texas Bond Review Board, Texas’ local government debt exceeds $300 billion. Unlike figures reported by most local government entities, this includes principal plus interest. The Lone Star State is second only to California in total debt and second only to New York in per capita debt.
The Texas Bond Review Board tracks government debt. For FY 2012 (Sept. 1, 2012 – Aug. 31, 2013), the city of Temple’s bond debt is listed as $270,175,363 ($195,205,000 principal/$74,970,363 interest). TISD is listed as $138,855,898 ($93,957,836 principal/$44,898,062 interest) while Bell County comes in at $158,839,770 ($118,200,000 principal/$40,639,770 interest).
Taxpayers are roughly on the hook for $567 million in city, school and county bond debt, but add to that Temple College’s $49,324,108 ($36,725,000 principal/$12,599,108 interest) and the tab grows to more than $600 million in local debt alone. This includes no state or federal obligations.
TISD is going for a straight tax rate increase which in this case requires voter approval. The city of Temple is taking a different route via the issuance of certificates of obligation. The issuance of COs is attracting attention in taxpayer advocacy circles as they are increasingly used to sidestep bond elections.
SB 14 and HB 14 were killed during the 83rd Texas Legislature’s regular session after Texas Association of School Boards, Texas Association of School Administrators, Texas Municipal League, Texas Association of Counties and a host of other taxpayer-funded organizations voiced strong opposition to transparency measures that would have better informed taxpayers and included printing accurate (principal plus interest) debt levels on bond election ballots, required a release of detailed debt information prior to issuing COs and blocked use of COs for projects failing to get voter approval through a bond election.
Residents of neighboring Belton are seeing a similar action as that city has also made public its intention to – rather than call a bond election – pursue $6.8 million in COs.
In May 2012, a Belton ISD bond election passed 54.1% to 45.9% and added $60 million in new bonds to then-existing debt of $136,530,451 ($88,780,000 principal/$47,750,451 interest). In promoting passage of the package, the district claimed its debt load as $88.9 million ignoring the additional $47 million taxpayers owed in interest. An opposition group attempted making this point, but voters seemed to not understand the bad information being disseminated along with the bad faith it represented while the media appeared choosing to ignore the point. With interest generally about 40 percent of the principal, the bond’s passage functionally added $100 million of debt.
With the Belton’s current $21,366,439 ($16,780,000 principal/$4,586,439 interest) debt load and Belton ISD’s now $235,288,378 ($140,109,996 principal/$95,178,382 interest) added to Bell County, Belton residents are slightly above $400 million in their local debt obligations. Again, this includes no state or federal obligations.
To encourage good decisions, taxpayers must become better educated on how their tax dollars are spent and in holding accountable those doing the spending. Government officials, prominent community and business leaders, even the media regularly tout overwhelming support for this type of spending. One need not be a child to exert or experience peer pressure or even bullying.
Too bad what’s being supported is the saddling of future generations – including those leaders’ children and grandchildren – with an unmanageable, unsustainable level of debt for decades to come.