Senate Committee Looks at Local Debt
On April 17, the Senate Committee on Intergovernmental Relations held a hearing on its interim charge relating to increased transparency in the issuance of local debt. Among other things, the committee evaluated the idea of requiring specific ballot language for any local debt election. Such language would include information on current outstanding debt, existing per capita debt, current debt service, and any increase the ballot measure would have on property taxes.
The ballot language idea is not a new one. During the 2013 legislative session, several bills were filed that would have done just that. The League opposed the idea in 2013, and testified on the problems with such a proposal at the recent hearing.
As a basic matter, the ballot is not the appropriate place for voters to be educated on large volumes of financial information. By requiring several paragraphs or even pages of financial data on each ballot proposition, the ballot language can present a very misleading picture as to the overall debt burden in the city. The past proposals could even have introduced voter bias by indicating that a city’s level of debt is significantly higher than it actually is. Additionally, S.B. 637 (Paxton), passed in 2013, requires that various types of debt information be included in the election order, and that the election order to be posted on the city’s website and in each polling place. Thus, under current law, detailed debt information is already available at the polling place and online.
The committee also discussed other issues related to transparency when issuing local debt. The committee has been charged with analyzing a proposal to move bond elections to a uniform date coinciding with state general elections. Presumably, this proposal would mean that a city could hold a bond election only on the November uniform election date in even-numbered years. The League voiced its concerns with the proposal at the hearing, noting that allowing a bond election only once every two years drastically limits a city’s flexibility to fund capital improvement projects that may be necessary to respond to population growth, aging infrastructure, or other matters.
Finally, the committee considered requiring all local governments to publicly post their annual budgets, annual financial reports, and check registers online. While many cities currently do this, some very small cities may not have a website or may not have the technology or resources necessary to comply with this type of mandate.
The League will continue to work with the Senate Committee on Intergovernmental Relations throughout the interim on issues related to local debt transparency.