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Comptroller's report details soaring local debt
By Conner Hammett, chammett@starlocalnews.com
The office of Texas Comptroller Susan Combs has released a report analyzing the statewide growth of public debt over the past decade.
As of 2011, local government debt around the state totaled $192.7 billion, the report states. That's double the amount of debt local governments had accumulated in 2001.
One-third of this debt comes from cities, which together owe $62.9 billion in bonds for public buildings, infrastructure and other capital projects. The largest growth sector for debt came from public schools, which together owe $52.7 billion.
"As taxpayers step into a voting booth to approve new debt, government should tell them how much debt they are already responsible for repaying and how much debt service is included," Combs said in a press release. "Elected officials are responsible for telling the taxpayers they serve about the price tag associated with new and existing debt."
Plano well-poised
In the city of Plano, more than $355 million in tax-supported debt is outstanding -- more than $1,400 for each resident. The city's debt service tax rate is 17.37 cents per $100 of valuation. It has maintained an overall 48.86-cent tax rate since 2009.
Most of the city's bonds are used to pay for building repairs, water and infrastructure repair, road maintenance, and parks. Bond funds paid for the $3.9 million Fire Station 13, which opened in August 2011.
Plano Mayor Phil Dyer said his city has not only a lower debt per citizen compared to other cities, but a low amount of bond debt compared to its taxable property and an AAA bond rating.
"When we talk about a bond election and issue bonds, we tell the citizens, 'This is what you can expect to happen to your tax rate,'" he said, "and over the years in Plano, we've been able to do a lot of these bond things without modifying the tax rate at all; just through good fiscal management by our city staff."
The city's roadway system, Dyer said, is nearly 100 percent complete. While this ultimately means less major construction -- and therefore less high-dollar bond issues -- the need to maintain existing roads means bond debt won't trickle off entirely.
The Frisco story
According to the report, Frisco has accumulated the most debt of all Collin County cities with $591.4 million in total outstanding bonds, all of which are tax-supported.
Jeff Cheney, Frisco mayor pro tem, said the level of debt makes sense considering the rapid growth of the city, which was the fastest-growing in the country between 2000 and 2009, according to the 2010 U.S. Census. Frisco's debt service tax rate is 19.85 cents, or about 40 percent of the overall tax rate.
"We're always adding projects, and since we've had growth at such a rapid pace, we haven't had bond projects fall off," Cheney said. "If Frisco built out over a 50-year period, then obviously your debt levels are going to be lower because you're spreading all those capital projects over 50 years."
Nell Lange, assistant city manager for the city of Frisco, also pointed to growth as a main driver of Frisco's high debt, the growth rate of which has outpaced that of the city's population.
"What happens, I guess, in some cities is you don't grow in very small concentric circles from the center out," she said. "You grow in pockets. We cover 71 square miles, and we are developing in all quadrants of the city, so trying to get roads down to cover that 71 miles, it's difficult to keep up."
She also pointed out that the debt figures released by the state include certificate of obligation (CO) bonds, which are approved by the council and do not require an election to pass, in addition to the more standard, election-driven general obligation bonds.
"A lot of cities issue revenue bonds for their utilities as opposed to CO's," she said. "We don't do that here. We usually use CO's, but revenue bonds aren't voted on either. We just use the CO support our utility, which is supported by the water bills the customers are getting."
County debt
County debt, according to Combs' report, is a small but growing part of the overall picture. Texas counties, which use debt to pay for jails, technology upgrades, and roads and bridges, owe $13.3 billion, or 7 percent of all local debt.
At $387.5 million, Collin ranked eighth in a list of the Top 10 highest-owing counties included in the report.
County Judge Keith Self said with the overall debt rate amounting to only $491 per county resident, he feels the current level of debt is on point.
"What I tend to look at is, what is the debt service?" he said. "We're paying just over 6 cents in the debt service tax rate. In other words, out of our 24-cent tax rate, debt service is going to be about 6.5 cents, and that's about pegged for me, personally. We don't need to go beyond that."
In 2000, 492,000 residents called Collin County home. By 2011, that number had increased to 812,000. With the county less than 50 percent built out and population expected to hit 2.2 million by 2060, Self said there's still plenty of room for future residents to share the tax burden.
"If the tax base starts growing robustly again, that same 6.5 cents will mean more dollars in the future," he said.
Other debt
The county has managed to save capital funds, Self said, thanks to the proliferation of toll roads, which are built by the North Texas Tollway Authority and paid for over the course of several decades by drivers using the roadways.
With $8.5 billion in outstanding debt, the NTTA ranked No. 1 in a list of highly indebted special-purpose districts included in the report. With $1.3 million in debt, North Texas Municipal Water District ranked No. 6 on a similar list for local water utilities.
By comparison, state debt was about $40.5 billion, or $1,577 for every resident. Texas ranked 10th in state debt among the country's 10 largest states and ranked second -- just behind New York -- with regard to local debt.
The report is the second released by the comptroller's office as part of the "Texas, It's Your Money" campaign. Last month, the office released a study into taxation by local governments. Two further reports -- "Your Money and Education Debt" and "Your Money and Pension Obligations" -- are expected this year.
To read the reports released so far, visit www.texasitsyourmoney.com.
At a glance: Debt by city
Per-capita outstanding debt in Collin County*
Frisco: $5,055.77 of $591.4 million in total debt
McKinney: $2,347.14 of $307.7 million in total debt
Allen: $1,462.62 of $123.2 million in total debt
Plano: $1,451.55 of $379.7 million in total debt
Collin County: $491.60 of $387.5 million in total debt
*includes tax-supported and revenue-supported debt
Source: www.texastransparency.org.
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I'd like to see an article on how much it cost the city to service its debt. That is money going straight from taxpayers hands to wall street and we get nothing to show for in the interest payments. "