Texas voters face a record $11.7 billion on bond ballots
DALLAS – Texas voters will consider a record $11.7 billion of bond proposals on local ballots next week, including hurricane-stricken Houston’s bid for $1 billion of pension obligation bonds.
The statewide total compiled by the Texas Comptroller’s Office exceeds the previous record of $9.1 billion in November 2015 and includes more than $8 billion for schools alone.
“It is only natural that with the strong growth in Texas' economy and population will come a need for additional schools and other infrastructure, and this year's bond volume reflects that fact,” said economist Ray Perryman, founder of The Perryman Group in Waco, Texas.
“Over the last 10 years, enrollment in Texas public schools has increased by about 764,000,” Perryman noted. “Other bonds on the ballot deal with issues ranging from flood control to roads to parks, among other needs, but the underlying driver of many of the requirements is population growth.”
In this year’s voting, Austin Independent School District has the largest school bond proposal at $1.051 billion, followed by Spring Branch ISD with $898.4 million and Fort Worth ISD with $750 million.
With nearly $500 million of traditional bond proposals and the $1 billion in pension bonds, Houston has the largest amount on the ballot of any issuer at $1.5 billion.
Dallas’ $1.052 billion combined bond package slightly exceeds Austin ISD’s to rank as the second largest. The Dallas request is split into nine bond propositions, the largest being $534 million for streets.
Dallas had originally planned to ask voters for $800 million of bond authorization in May, but the city council postponed the election until the Texas Legislature could revise governance of the nearly bankrupt Police and Fire Pension Fund.
Cities across Texas are asking for nearly $2 billion of bonds, with counties seeking $708 million and one community college district, Alvin CCD near Houston, requesting $48.5 million.
Cities and counties seeking bond approval are asking for $1.05 billion for streets, $727 million for libraries and parks, $381 million for public facilities, and $85 million for water, sewer and flood control projects. Three new jails in Waller and Webb counties account for $170 million of the public facilities proposals.
More than $4 billion of the bond proposals come from the fast-growing southeast Texas region that suffered flooding after Hurricane Harvey’s arrival Aug. 29.
Houston Mayor Sylvester Turner has acknowledged the difficulty of winning votes for the $1 billion of pension bonds and nearly $500 million for city projects in the wake of Harvey. Proponents of the bonds under the “Lift Up Houston” political action committee had to lower their fundraising target after the storm.
"The biggest obstacle is not coming from political parties or political groups,” Turner told the Houston Chronicle. "It's that people are having to deal with some immediate concerns presented by Harvey. And we have to convince them to take some time to go to the polls to cast a 'yes' vote."
The proposed pension bonds are critical to restructuring the city’s pension funds under an agreement with its unions and new regulations approved in the 2017 Texas Legislature. Lawmakers who approved pension bill insisted that voters have a right to approve the pension bonds, even though city officials feared rejection.
In exchange for the pension bonds, Houston’s unions have agreed to reduce benefits by $1.8 billion. If voters reject the bonds, city employees and police would no longer have to agree to the $1.8 billion benefits rollback. That would produce a gap of about $150 million in next year’s budget.
The regular bond proposals include money for police cars and fire trucks, among other items. The Fire Department says that many of its trucks are beyond their retirement age. About $53 million of the bond package would allow gradual replacement of the fleet of ambulances and fire trucks. The police department, which lost 135 vehicles to Harvey, would receive $66 million for fleet replacement.
None of the bond proposals on the Houston ballot, including the pension bonds, would require a tax increase, proponents note.
Seven school districts in Houston’s suburbs are seeking more than $2.5 billion of bond authority, led by Spring Branch ISD with its $898.4 million and Katy ISD’s $609 million. Lamar Consolidated Independent District in Fort Bend County is requesting $445 million. Tomball ISD in Harris and Montgomery counties north of Houston has $275 million on the ballot. Deer Park ISD in Harris County is seeking $156 million.
Texas holds bond elections in May and November of each year. On May 6, voters rejected $1.42 billion of the $8.2 billion on the ballots, representing nearly 83% passage.
The largest bond package to fail last May was Round Rock ISD’s $573 million of bonds, an outcome which could serve caution to nearby Leander ISD. Both school districts are in the booming Austin suburbs of Williamson County. Leander ISD has $454 million of bonds on the Nov. 7 ballot.
Leander ISD’s last bond election was in 2007. Since then, the district has added 11,828 students. Enrollment growth will continue by about 1,200 students per year as builders place new homes throughout the city of Leander, officials said.
Just across the county line, Austin ISD is seeking the largest bond package in its history at $1.05 billion. School officials say the sizable request represents only a quarter of the district’s total facility needs. According to AISD, the bond’s price tag represents the maximum amount the district can take on without raising its tax rate.
Elsewhere in Texas, voters in Webb County, which includes Laredo, will vote on the largest jail proposal on the ballot at $125 million.
If voters pass Proposition A, the jail would raise property taxes in the county an additional 4 cents per $100 property valuation, or about $44 a year for owners of a $100,000 home and $220 a year for a owners of a $500,000 property.
Officials anticipate that they will be able to pay off this $125 million plus the county's existing $72 million debt by housing federal inmates at the current jail, after a remodeling.
Leasing 500 beds at the current facility for about $70 a day, every day, could bring in almost $13 million annually for the county, officials estimate. The Department of Homeland Security recently began soliciting proposals for a detention facility in South Texas within 50 miles of Interstate 35, which begins in Laredo.