Texas aims to make it harder for city governments to borrow money

SAN ANTONIO – The San Antonio Report says that Texas lawmakers are proposing a host of ideas to make it tougher for local governments to borrow money — the natural next step in a yearslong effort to take greater control of spending at the municipal level. If successful, bond elections like the ones San Antonio has used to finance hundreds of major projects in recent years will require two-thirds support from voters instead of a simple majority. They would also have to appear on a November ballot, instead of May, as the city has done in recent years. Gov. Greg Abbott set the wheels in motion for such changes in this year’s State of the State address, which are now laid out in House Bill 2736. Unlike some other revenue-limiting measures the state has approved in recent years, it would apply to all political subdivisions, including cities and counties of all sizes, as well as school districts.

“This is a very important taxpayer protection that ensures that a small minority of voters are not responsible for massive tax increases,” said James Quintero, policy director for the right-leaning Texas Public Policy Foundation’s Taxpayer Protection Project, which is supporting the bill. A bond program allows a municipal government to issue debt to finance large projects, using just a portion of their property tax revenues to repay the loan over time. Often, cities are leveraging their future growth, since tax revenues rise as more people move into the community and home values increase. In a city like San Antonio, where the average resident’s income is relatively low compared to other cities, city leaders say bond programs have been a helpful tool to finance community priorities while keeping the individual tax burden relatively low. The city’s 2022 bond program, for example, is expected to finance 183 projects totaling $1.2 billion, while keeping the debt service portion of residents’ tax bills the same as they were before.