DALLAS — Amid renewed attention to the growing border economy, two major bond issues from the El Paso, Texas, international crossroads region will provide funding for transportation, law enforcement and education.
El Paso County will raise $100 million through certificates of obligation in a negotiated deal expected to price June 25. County commissioners met Monday to select the underwriter on the deal. The certificates will cover construction and improvements to the county’s jail and the Tornillo-Guadalupe Land Port of Entry.
On Monday, one of the county’s largest school systems, the Socorro Independent School District, priced $129 million of general obligation bonds backed by the Texas Permanent School Fund for enhanced triple-A ratings. In preliminary pricing with book-runner Raymond James | Morgan Keegan, 5% coupons maturing in 2037 provided yields of 3.43%. The district also refunded $17.8 million of school bonds through Loop Capital Markets and Ramirez & Co.
Situated on the eastern boundary of the El Paso metropolitan area and extending from the Texas-Mexico border north into the massive Fort Bliss Army post, Socorro ISD enrolled 43,671 students in 2012, a 2.5% increase over the previous year. Growth in enrollment has driven the need for additional district facilities. Officials anticipate a need for seven portable school rooms for fiscal 2013, while construction continues on permanent facilities to accommodate an anticipated 3% growth in enrollment next year.
With an underlying Aa2 rating, “Moody’s expects the district’s large tax base to continue to experience stable growth in the near term given historical growth trends and ongoing development occurring within the district,” wrote Moody’s Investors Service analyst James Hobbs.
Like other school districts in Texas, Socorro is coping with state cuts to education spending. The 2011 Legislature, facing a $24 million budget shortfall, pared allocations for the districts.
In 2009 lawmakers required voter approval for any increase in local property taxes, and since then only three out of 10 districts have sought a higher tax rate, despite unprecedented financial stress.
Of the 1,025 school districts in the state, 224, or a little more than a fifth, have won voter approval to raise their tax rates by as much as 13 cents per $100 valuation. Voters in 78 districts have rejected increases, including 17 that have lost twice, according to TexasISD.com.
Meanwhile, school districts in the state have gone to court to challenge the constitutionality of Texas’ school funding formula. The Legislature, which meets every two years, could consider changes in the 2013 session that begins in January.
About one in five Texas public school students attend classes in the 43-county border region. The 155 public school districts serve more than 850,000 children. Across the 79,423 square-mile region, school districts range in size from Duval County’s 29-student Ramirez Consolidated School District to the 64,000-student El Paso ISD, adjoining Socorro ISD. The districts draw upon local property tax bases ranging from $1.5 million per student in oil-rich Kenedy Countywide Common School District, to about $13,000 per student in the border’s poorest school district, Santa Rosa ISD in Cameron County in the Lower Rio Grande Valley.
The taxable value of the Socorro district in fiscal 2012 reached $7.41 billion, representing a 4.5% increase over the previous year. The district’s five year average annual taxable value rate of growth is 8.7%.
Over the last several years, growth in the district has come from Fort Bliss, which benefitted from the Pentagon’s Base Realignment and Closure process that consolidated military functions at some bases while closing others.
Moody’s Economy.com reported in March that El Paso’s recovery will strengthen further this year, mainly a result of a booming Mexican economy that will augment cross-border flows. Economy.com added that continued BRAC inflows into Fort Bliss will drive the private sector’s expansion as well.
The district’s socioeconomic profile is historically below average when compared with state and national averages, and Moody’s noted El Paso County’s slightly above-average unemployment rate of 9.4% in March 2012. That was above Texas and national rates of 7.0% and 8.4%, respectfully, for the same time period.
Even with the stability of Fort Bliss, the lifeblood of El Paso remains the international transit points that have grown increasingly congested with the expansion of trade between the U.S. and Mexico as Homeland Security and immigration agents have stepped up security.
For the Republican Party that governs Texas, promoting increased cargo capacity across the border while discouraging illegal immigration has proven politically challenging. With Hispanics as the fastest-growing demographic in the state, GOP policies have tended to drive Hispanic voters into the Democratic Party.
Two years after adopting the Tea Party’s harsh stance against illegal Mexican immigration, Texas Republicans passed a platform at their state convention last weekend that softened that position.
Meanwhile, the U.S. Chamber of Commerce is taking a renewed look at the border economy in a visit to key cities this week.
The delegation will visit ports in El Paso and its suburb of Santa Teresa, N.M., Tuesday and Wednesday. Among the topics under consideration is a new rail line across the border from Santa Teresa to Juarez, Mexico, and beyond.
Backlogged maintenance for border infrastructure is as high as $6 billion, according to a study by Erik Lee, associate director of the North American Center for Transborder Studies at Arizona State University, and Christopher Wilson, researcher at the Woodrow Wilson International Center for Scholars in Washington, D.C.