Local Debt Continues to Skyrocket

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Texas’ local debt epidemic continues to worsen at an alarming rate. In response, conservatives such as State Sen. Konni Burton (R-Colleyville) have pledged to push for debt-related reforms next legislative session.

Texas has the second-highest per-capita local debt in the nation, second only to New York.

Rapidly rising debt levels are contributing to ever-increasing property taxes, with school districts taxing and borrowing the most. According to the Tax Foundation, Texas has the 14th most burdensome property tax system, with homeowners paying the 6th highest effective property tax rate in the nation.

The debt problem is getting worse, not better.

Since 2010, local governments collectively grew their total debt burdens by ten percent, an increase of more than $30 billion. Today taxpayers are on the hook for more than $338 billion total local debt, according to the Texas Bond Review Board.

That’s more than $12,250 for every man, woman, and child, a figure higher than in previous years, or $50,000 for a family of four.

Shockingly, nearly forty percent of that amount (roughly $130 billion) is interest expense, a cost not disclosed to voters on local ballots. That’s because state law does not require local governments to disclose to voters a proposition’s total cost, its effect on property taxes, or the fiscal status of the asking entity.

But ballot transparency is only the first step in addressing local government excess.

Lawmakers have also proposed enacting real taxing and spending limits on localities, effectively limiting how fast their budgets can grow year over year. The limits could be broken, but only with the permission of local voters. Lastly, the state could exempt certain types of property from taxation altogether, such as business and industrial personal property.

Predictably, opposition to common-sense reform will come from local politicians, public-sector unions, and tax-funded lobbyists. The decision before state lawmakers will be simple—side with taxpayers and those who elected them, or with local governments and their lobbyists.