Fiscal Transparency Bills May Miss the Mark
The Texas Comptroller’s recently-filed “fiscal transparency” bills (S.B. 14 by Senator Tommy Williams (R – The Woodlands)/H.B. 14 by Representative Jim Pitts (R – Waxahachie)) impose additional requirements on local governments that wish to issue debt. (Detailed summaries of the bills are available in the “City-Related Bills Filed” section elsewhere in this edition.) Interestingly, nothing in the fiscal transparency bills addresses the issuance of state debt.
On the same day the comptroller and the authors held a press conference to discuss the importance of limiting the “increasing amount of debt issued by local governments,” the Senate Finance Committee heard testimony from the Texas Bond Review Board, which is the state agency responsible for oversight of both state and local debt. During the hearing, Senator Kevin Eltife (R – Tyler) accurately pointed out that, while so much attention is being paid to local government debt, debt issued by the state has actually increased at a higher rate than local debt over the last four years. Click here to watch a short video of Senator Eltife’s comments.
The fiscal transparency bills place a number of requirements on cities and other local governments that seek to issue debt. Those include, among other things, notice of certificate of obligation (CO) issuance and detailed ballot language for any bond proposition. The notice and ballot language must include technical financial information about the total and per-capita amount of principal and interest of all outstanding debt obligations by the city and the principal and interest information for the bond or CO. The bills would also mandate additional, detailed reporting requirements regarding city debt, and would alter the petition threshold requirement for COs.
The League is generally supportive of efforts to increase transparency. But the goal of increased transparency sometimes leads to proposals that can actually have the opposite effect. For instance, under current law a ballot proposition must provide basic and pertinent information about a bond proposal, including how much the bond will cost the taxpayer in a given year. The addition of detailed financial data to the ballot will ultimately distract from the most useful data that a taxpayer needs to know—the purpose of the debt and how much it will cost the taxpayer.
The text of the bills is available at: