in Houston, Texas

Growing governments: How 'special districts' spread across Texas with limited oversight and accountability -- but with plenty of power to tax

Tuesday, Feb 15, 2011, 02:07PM CST
By Jennifer Peebles
Growing governments photo illustration

The way some Texas politicians talk, you might think Texans don’t like government and don’t like taxes.

But Texans and Texas public officials keep creating more and more governments themselves, data show -- governments that keep piling on taxes. And as these small local government districts sprout up across the state, they have one thing in common: They are inconsistent at best in both their transparency and their accountability to their constituents.

The number of small “special” government districts that levy sales taxes has gone from five to 185 in the past two decades, state data show.

That’s on top of 1,700 districts that levy property taxes on residential or commercial property, along with hundreds of utility districts and management districts that exist as public entities and have certain authority over a public service or facility in their area.

"I just don't think we need these additional layers of government," said Denton County Commissioner Hugh Coleman, who has proposed a moratorium on the creation of special districts in his North Texas county.

Growing governments photo illustration

The “rapid spread” of special districts was also pointed out in a research paper penned 15 years ago by a group of University of Texas grad students, who said the districts “preserve the myth of limited government while insulating local public officials from citizen complaints about inadequate service performance or mandatory taxes.”

All together, the number of special government districts in Texas has quadrupled since 1952, and has gone up by a quarter in the last 30 years alone, according to U.S. Census Bureau figures.

There are now nearly 2,300 special districts in Texas, not counting school systems. According to the state comptroller’s office, those special districts range from the very large -- such as the agency that manages Houston’s two major safety-net hospitals for the poor and uninsured, which collects $530 million in property taxes a year -- to the very tiny, covering or serving just a few people, such as North Fort Worth Water Control & Improvement District No. 1, which collected a grand total of $85 in property taxes from its constituents in 2008.

The special districts provide all manner of services from drinking water to public transportation to running community colleges and libraries, as well as efforts to control floods, crime and even mosquitoes. (Just 13 of the special districts are mosquito control districts, in case you were curious.)

And they are everywhere -- and some can be set up with the vote of as little as one person.

And one vote is all it took to create a new government for a place called Shiney Hiney last year.

Shiney Hiney may not be on your map. As of this writing, Google Maps doesn’t know of its existence, either. It’s not a community -- at least, not yet. It’s a ranch in Denton County, north of Dallas-Fort Worth, that’s being eyed for development.

And now it has its own government. No, it’s not a town or an incorporated place -- incorporating takes more than one person.

It’s a special district.

One person was all it took last year to create the Denton County Municipal Utility District No. 7 out of 1,000 acres of Shiney Hiney Ranch. As the Denton Record-Chronicle reported, that one guy -- a former medical student from Dallas who had moved to a trailer home at Shiney Hiney a month prior to the election -- was able to vote to create a special district with rights to invoke eminent domain and to issue $400 million in bonds, along with setting a $1 property tax rate (per $100 of assessed value).

In an editorial, the Record-Chronicle dubbed the lone voter “the emperor of Shiney Hiney," the absolute monarch of his kingdom, "retained by potential developers to guarantee a landslide vote."

It went on:
(The lone voter) is one of a small but growing breed of citizens who have hired themselves out to live in lonely splendor on undeveloped land in order to qualify as the sole voters in proposed improvement districts of one form or another. Their job is to establish residence by squatting for a time within the proposed district and then, as the only registered voter, approve the creation of the district and with it the attendant financial breaks that accrue to such an entity.
The newspaper wasn't the only critic. Denton County's Coleman calls the special districts "bad public policy for growing counties.

"They were meant to provide needed infrastructure for rural counties for areas that needed economic help, and I think they've just been turned into a way for developers to get low-price financing for their high-density developments outside of urban areas," Coleman said.

Developers, such as those in the Shiney Hiney MUD, can effectively leverage the new districts' bond-issuing authority to borrow millions of dollars at the same cheap interest rates that governments enjoy.

"The high tax rates to boot are just unconscionable, given that they (the districts) provide no services,” Coleman said. "They generally only provide water and sewer, which are things that are initially used to be paid for by the by the developer. Now, they're being loaded off to the hip pocket of the residents in the future."

But Shiney Hiney's lone voter wasn't the only person complicit in the proliferation of such governments. Some types of special districts can be created solely by actions of counties or cities, but others -- depending on what services the district would provide -- first need the blessing of the state legislature. Before an emperor was crowned in Shiney Hiney, the Texas Legislature voted to build him a throne.

Special districts do have their positives. Many special districts provide necessary services to their communities -- services that existing cities or counties may have been unwilling to underwrite, including fire or ambulance service or clean water. In other words, many of the special districts provide a way for people, often in rural or suburban areas, to get government services they really need, particularly in growing areas outside city limits.

But they’re so easy to create, and there are now so darn many of them -- many of them small  -- that some of them operate almost totally off the radar screen of the general public.

Coleman wasn't the first person to voice concerns on the issue.

The special districts received sharp criticism in a 1997 research paper penned by four then-graduate students at the University of Texas’ LBJ School of Government. They noted that the number of special districts had nearly doubled between 1972 and 1992, calling them “perhaps the least known and least understood units of local government, even though they are the most rapidly proliferating.

“Since Texas political culture has tended to call for minimal government and the lowest possible taxes, special districts provide a mechanism whereby government services can be delivered without existing government assuming responsibility for them,” the grad students wrote in their report, which is still available online.

In other words, a county commissioner taking flak from voters about sales tax increases in a certain neighborhood can deflect the criticism toward the board members of the tiny “special district” that voted to raise the tax rate in that area.

But unlike the county commissioner, whose name and phone number might be readily available to most county residents, people in that area may have little idea about the existence of the special district, much less know the identities of the people who oversee it or make its decisions.

And the members of that governing board may be appointed instead of elected, meaning their names aren’t regularly put forth on a ballot to get a thumbs-up or thumbs-down from the people they govern.
Growing governments photo illustration


The lack of accountability has led multiple sources, including the Handbook of Texas Online, to refer to the special districts as the state’s “invisible governments.”

The small districts “are subject to little or no supervision by the state, leading to administrative, personnel, and financial practices that are inefficient and sometimes ethically and morally questionable,” the LBJ School group’s paper continued.

Special districts, it said, are “neither responsive nor accountable because public knowledge of these local governments is essentially nonexistent. These small districts are in fact shielded from public scrutiny because many of their functions are narrow, technical, and not readily publicized to those taxed by the districts.”

Take, for instance, the special district north of Houston that didn't have an election for 10 years.

As Texas Watchdog reported last year, between 2000 and 2010, the Woodlands Road Utility District didn't have an election for its board members -- because there were no voters living in the district. Still, it levied property taxes, though only on commercial property, and has issued $75 million in bonds since it was created 20 years ago.

In this case, however, the same residency law that crowned the emperor of Shiney Hiney was instead used by a local activist to try to stage a political upset: A group of volunteers asserted last year that they had taken up residency inside the district -- at a Residence Inn, no less -- and tried to get three outsiders elected to the district board.

They were successful, up to a point. The three newcomers did beat the three incumbents in the election by a 10-2 vote. But the incumbents sued, and a judge later threw out the votes of the Residence Inn Ten, handing the election back to the incumbents.

The patchwork quilt effect of the special districts can present its own accountability problems.

For instance, a person concerned about the quality of ambulance response times in unincorporated parts of Harris County might have a hard time making a list of all the public officials they’d need to lobby for improvements: The county has more than 30 emergency services districts alone, offering ambulance or fire services or a combination of both, each overseen by its own board.

Some of the special districts are funded at least in part by tax dollars passed on to them by their county or city governments or the state. Some also take in other funds for things they make or services they sell, such as tuition paid by students to community college districts, or revenue a river-management agency would get from selling the electric power it generates.

But many of the districts also levy their own taxes.

Texas property owners paid nearly $5 billion in property taxes to special purpose districts in 2008, according to data from the state comptroller’s office. And special districts have taken in an additional $19 million in sales taxes in January 2011 alone.

Though the money may be coming in, information doesn't always go out. Of 3,000-plus special districts in the state, less than 10 have been tapped for the state comptroller’s transparency “leadership circle,” reflecting that they meet certain standards for publishing financial and other information about themselves on the Internet.

But the special districts aren’t going away any time soon, if the bills filed in the state legislature are any indication.

Legislators have proposed creating the Bandera County River Authority and Groundwater District outside San Antonio, the Timber Springs Municipal Management District near Nacogdoches, a municipal utility district in Hunt County and an additional one in Harris County that will be named Number 524, and three management districts in Rowlett.

And more thrones may yet be built for emperors of Texas' tiny kingdoms.

***

Contact Jennifer Peebles at jennifer@texaswatchdog.org or 281-656-1681. Follow her on Twitter at @jpeebles and @texaswatchdog.

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Creative Commons

Like this story? Then steal it. This report by Texas Watchdog is licensed under a Creative Commons Attribution 3.0 United States License. That means bloggers, citizen-journalists, and journalists may republish the story on their sites with attribution and a link to Texas Watchdog. If you do re-use the story, we'd love to hear about it. E-mail news@texaswatchdog.org.

Photo credits: Watering can photograph by flickr user chichacha; Texas state capitol photograph by flickr user abbamouse; Houston City Hall photo by flickr user leeroy_holmes; Harris County courthouse photo by flickr user stjnky, all used under a Creative Commons license. Photo illustration by Jennifer Peebles/Texas Watchdog.

Comments
Rorschach
Tuesday, 02/15/2011 - 03:58PM

Stupid question but is it not a state felony to offer and/or accept any thing of value in return for a vote? So if the guy was hired to live on the property and to vote a certain way, did he and the developer not violate that law?

Peggy Venable
Wednesday, 02/16/2011 - 11:08AM

great work

Cruiser 1144
Thursday, 02/17/2011 - 12:11PM

Mr. John Otto a house representative for District 18 needs to be reminded that a tax is a tax is a tax. He seems to think that the voters in a small portion of Dist 18 in East Montgomery County don't mind if he is in bed with the improvement district. Mr. Otto you are a RHINO. Shame on you for HB-737 and your special gate tax for East Montgomery County.

Soapboxmom
Thursday, 01/26/2012 - 02:14PM

Speaking of East Montgomery County, it is high time for more research into the EMCID and the expenditures related to the EarthQuest Adventure / Dino Park that is in bankruptcy.

http://www.realscam.com/f11/trey-white-fake-multi-billionaire-marlin-atlantis-earthquest-park-don-lessem-654/index4.html#post14855

Some $9,000,000.00 in bond money has been spent and there has been no public disclosure of the financial records yet. The Institute EarthQuest Charity tied to this dino disaster sure blew a lot of money.

http://www.realscam.com/f11/trey-white-fake-multi-billionaire-marlin-atlantis-earthquest-park-don-lessem-654/index3.html#post14660

This is certainly hard and clear evidence these deals need a lot more oversight. Any board member who helped push this through should be voted out. Frank McCrady should be fired for allowing this fiasco to get this mired in problems. I was one of many that tried for months to warn and inform McCrady about those shady developers, Marlin Atlantis. Once again the taxpayers are getting screwed!

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