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Sunshine Week: Lots of money, little transparency in Texas bond campaigns

By   /   March 14, 2017  /   News  /   No Comments

Part 3 of 6 in the series Sunshine Week 2017
Photo by Kenric Ward

DANGER SIGN: San Antonio’s latest dive into debt comes with weak financial transparency.

 

San Antonio officials say their $850 million bond won’t raise the local property tax rate. So Watchdog.org asked how much tax bills would drop if voters turn down the record debt package at the May 6 election.

“We don’t answer hypothetical questions,” a city spokeswoman responded.

Straight answers and financial transparency are in short supply whenever Texans are asked to approve bond referendums. As the nation marks “Sunshine Week” to promote open government, San Antonio’s rear-engineered debt package is the city’s latest, biggest example of government operating in the dark.

A group of local taxpayers last month filed an open-records request for bond financials. Citizen activist Stan Mitchell roughly calculates the full cost of the bond somewhere north of $1.3 billion — $500 million more than the price listed on the ballot.

City accountants have yet to produce records to confirm or refute Mitchell’s math, but interest charges on the bond will likely exceed even its largest component: $445 million for streets, bridges and sidewalks.

To help Texas voters better understand what they are voting on, the state Legislature is considering several disclosure bills.

  • House Bill 1658 (Rep. Dade Phelan, R-Beaumont) would require the requesting government or school district to disclose its current outstanding debt and to list its current debt payments – along with any projected tax increase.
  • HB 1310 (Rep. Scott Sanford, R-McKinney) would require interest rates to be included in any bond referendum.
  • HB 738 (Rep. Matt Shaheen, R-Plano) would require disclosure of the maximum expected repayment cost.
  • SB 201 (Sen. Donna Campbell, R-New Braunfels) would require that the aggregate amount of any outstanding principal be disclosed.
  • SB245 (Sen. Konni Burton, R-Fort Worth) requires disclosure of the remaining interest of all outstanding debt obligations.

“The Legislature should consider providing basic essential information that will inform voters of the potential impact of the issuance of new fiscal obligations,” says James Quintero, director of the Center for Local Governance at the nonpartisan Texas Public Policy Foundation.

Similarly disclosure reforms were considered by the 2015 Legislature. All failed amid organized opposition from local government lobbyists.

Without being told the true costs and financial implications of local bond issues, low-information voters continue to approve debt referendums across the Lone Star State.

Last year, 94 percent of school bond elections won passage at the polls – a success rate that mirrored previous years.

From 2000 to 2015, Texas city and county debt spiked by 162 percent, 2½ times faster than the rate of population and inflation. Per capita local debt in Texas is second highest in the nation behind New York.

Truth in Accounting, a nonpartisan organization that studies municipal finances, found that the Alamo City is heavily and unhealthily leveraged.

“When all unfunded liabilities and hidden debt are included, San Antonio’s total debt amounts to $1.2 billion after available assets are deducted,” said TIA President Sheila Weinberg.

For all the campaign spin by paid booster groups such as One SA, the fact is that San Antonio’s latest bond would double the municipal operating debt – currently $3,300 for every city taxpayer. And that does not count capital debt obligations.

Every dollar spent servicing that debt is a dollar not spent on crumbling roads, degraded municipal services and an overall lower quality of life

Kenric Ward reports for the Texas Bureau of Watchdog.org. Contact him at [email protected] and follow him on Twitter @Kenricward.

Part of 6 in the series Sunshine Week 2017

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Kenric Ward was a former San Antonio-based reporter for Watchdog.org.