COMPTROLLERS DEBT ARTICLE DOESNT TELL THE WHOLE STORY
On January 19, the Wall Street Journal published an article authored by Texas Comptroller Susan Combs titled "Susan Combs: Debt Excess Even Lives in Texas." In the article, Comptroller Combs focuses almost entirely on the “unchecked and invisible debt” issued by local governments in Texas.
To demonstrate that there is an excessive amount of debt in Texas, the comptroller asserts that “[o]ur local governments, meanwhile, more than doubled their debt load in the last decade, to more than $7,500 in debt for every man, woman, and child in the state.” Significantly, the comptroller fails to acknowledge that state-issued debt has increased at a quicker pace than local debt during the same time period. According to the Texas Bond Review Board (BRB), the amount of state-issued debt has nearly tripled in the past ten years.
The comptroller’s article also doesn’t paint the full picture with regard to cities’ portion of local government debt. The bulk of the increase in local government debt hasn’t come from cities at all. In fact, BRB data from the last five years (2007 through 2011) shows that the amount of outstanding city debt increased from $51.3 billion to $62.9 billion. This represents only a 23-percent increase over a five-year period. That number is well below the level of increase for all other local governments during the same time frame. By comparison, special districts saw their outstanding debt levels increase by 244 percent during the same period. Increases in the total amount of city-issued debt was easily outpaced by state-issued debt, which increased by 53 percent from 2007 to 2011.
The comptroller also asserts that local government authority to issue certificates of obligation should be curtailed, presumably because upfront voter approval is not required for this type of debt instrument. (Voters can, under current law, petition the issuer to call an election on the issuance.) But the issuance of certificates of obligation has not been growing in recent years. To the contrary, the most recent statistics from the BRB show that, for both cities and local governments in general, the amount of debt associated with certificates of obligation was lower in 2011 than it was in 2007.
It is without question that $62.9 billion in city-issued debt is a significant amount of money. But this number reflects the reality that exists in the state today: the responsibility for the infrastructure needs of the state’s rapidly growing population has been passed from the state to cities and other local governments. It is local governments, rather than the state, that are expected to step up to the plate and build the roads, water systems, sewer systems, drainage systems, schools, police and fire stations, and all the other basic facilities that make Texas function.
Judging by the statistics not cited in the comptroller’s recent article, it is evident that elected city officials are up to the task of providing vital infrastructure improvements while remaining good stewards of taxpayer dollars.