in Houston, Texas
No vote, no problem. Fort Worth-area cities skip the ballot box, issue debt in the hundreds of millions of dollars
Monday, Apr 16, 2012, 03:32PM CST
By Steve Miller
IOU

Municipalities and school districts incur about two-thirds percent of all local tax debt in Texas, according to this telling graphic. But even more telling: In Tarrant County, $796 million in debt was taken on by cities between 2005 and 2011 without a vote, according to the Fort Worth Star-Telegram.

The voterless debt is allowed by state law, and the entities selling the bonds – which are paid back via taxes and fees – claim that the practice is used to address short-term and emergency needs, such as infrastructure. The story points out that while this is true in some cases, conference centers, libraries and technology are often the product of the bond issuances.

The proposals to issue the bonds, done in accordance with the Texas Certificate of Obligation Act, are mired in technical talk that even the most ardent gadfly is likely to avoid. Cities are required to publish the information in a newspaper for two consecutive weeks at least 30 days before the sale. These often appear in small print near the classified section, and the publication can be anything from a major daily to the local community paper, described in the law as a paper of “general circulation.”

Even the term “general circulation” can be construed in different ways, as statute doesn’t define what that means, and it has been contested over the years.
The S-T story points out that the city of North Richland Hills issued $23.7 million in debt, but the statement describing that debt left out the fact that $18.8 million of it went for a recreation center.

According to the story:

A spokeswoman said that the information was omitted in error, that it wasn't a legal problem, and that voters were informed through a council resolution and legal notices.

Voters can stop these bond issuances even as they are snuck through.

State law allows voters to force an election through a petition with 5 percent of voters signing on, as noted in the obligation act: “If, within 60 days of the date of publication of the notice of intent … a written petition signed by at least five percent of the registered voters of the district is filed with the board of trustees requesting that the board order a referendum on the question of whether the contract should be approved, the board may not approve the contract or publish the first advertisement for bids for construction of improvements unless the question is approved by a majority of the votes received in a referendum ordered and held on the question.”

***
Contact Steve Miller at 832-303-9420 or stevemiller@texaswatchdog.org.

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Illustration by flickr user zolierdos, used via a Creative Commons license.

Comments
Gritsforbreakfast
Wednesday, 04/18/2012 - 09:41AM

Brazos County is doing their jail with COs instead of risking a plebiscite. Sometimes they don't ask for a vote because they fear voters will say "no."

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