House and Senate Committees Consider
Fiscal Transparency Bills
On March 18, the House Appropriations Subcommittee on Budget and Transparency considered H.B. 14 (Pitts). The Senate Finance Subcommittee on Fiscal Matters simultaneously considered its companion bill, S.B. 14 (Williams). The bills would have the effect of imposing redundant financial reporting requirements on local governments and limiting local governments’ ability to issue bonds and certificates of obligation.
The legislation was filed on behalf of Comptroller Susan Combs, who testified at both hearings. The comptroller claimed that voters do not have adequate access to information on local debt, which is why local debt has increased in recent years. (The fact that the percentage increase of city debt is significantly less than the percentage increase of state debt over the same period isn’t reflected in the bills, and they place no additional requirements on the issuance of state debt.)
The comptroller’s misperception of local government debt also doesn’t account for the reality that local governments are responsible for the lion’s share of infrastructure needed to provide for a growing state. City debt is not being approved by citizens and city councils, because citizens are kept in the dark about the overall debt picture. In fact, city debt is issued in response to informed citizens who demand essential capital improvements to deal with population growth and increased economic development.
Several city officials joined representatives of other local governments to testify against the bills during the hearings. The witnesses argued, among other things, that: (1) requiring a variety of different debt statistics to be placed on the actual ballot for a bond proposition is the wrong way to inform the voters who already have access to all debt information under a number of public financial reports under current law; and (2) limiting the situations where certificates of obligation could be issued takes away a flexible debt tool for cities that is used to receive better interest rates that ultimately saves millions of taxpayer dollars in the aggregate.
Both bills were left pending in their respective committees.