Texas voters face record amount of bonds on Nov. 4

Bloomberg News

Texas ballots for the Nov. 4 election are stuffed with a record $83.7 billion of bonds, as well as 17 constitutional amendments and proposed local tax hikes. 

A majority of the general obligation debt is for development-related districts, while public school propositions total $10.3 billion, down from the nearly $13 billion of bonds in the May 3 election when voters approved 89.5% of that debt, according to Texas Bond Review Board data.

Schools tend to avoid the typically crowded November ballot, opting for a May election instead, according to Kevin Brown, executive director of the Texas School Administrators Association. 

Over the last four years there have been a number of $1 billion or more bond propositions that passed, he noted. 

"So some of the big districts have already tackled big projects," Brown said in an email.

Record bond volume in Texas has been driven in part by prolific school district issuance, which totaled $17.54 billion in fiscal 2024. School bonds receive triple-A ratings through the Texas Permanent School Fund's bond guarantee program, which reported projected available capacity of $29.388 billion at the end of August.

Lamar Consolidated Independent School District put four propositions totaling nearly $2 billion on the Nov. 4 ballot for school construction and improvements, stadium repairs, and technology equipment and devices.

Increasing debt levels led to one-notch downgrades of the Houston-area district's underlying bonds ratings to Aa3 by Moody's Ratings in 2023 and to AA-minus by S&P Global Ratings last year. The school district ended fiscal 2024 with $3.1 billion of outstanding GO bonds. 

Richardson ISD in the Dallas area has three propositions totaling $1.4 billion of bonds to construct schools, purchase technology, and upgrade stadiums.

Municipal utility and other development-related districts account for nearly $72 billion or 85.8% of the proposed bond authorization.

Texas and some other states allow for the creation of such districts to levy taxes and issue bonds with the beneficiaries of the infrastructure within the district paying off the debt.

Proposed bond authorizations that could reach into the billions of dollars would finance water, sewer, drainage, roads and recreational projects, and are at times approved by just one voter.

Cities in the Lone Star State have $847.2 million of proposed bonds on ballots, including a five-part, $264.2 million proposal for Beaumont, which is also seeking a 2% increase in its hotel occupancy tax to fund a convention center.

Parker County west of Fort Worth has two bond propositions, which total $286 million for a justice center and jail expansion.

In addition to bonds, some issuers are asking voters for a property tax rate increase. 

Austin is asking voters for an increase that would generate an estimated $109.5 million in fiscal 2026, which began Oct. 1. Mayor Kirk Watson has said the city's $6.3 billion all-funds budget cannot be fully funded without the tax hike.

A challenge to Proposition Q's allegedly "misleading" ballot language did not succeed.

Garland ISD, which is facing a $60 million budget gap, is proposing a property tax rate that would generate about $56 million in operating revenue. Moody's downgraded the district's underlying rating a notch to Aa1 in February due in part to declining financial reserves and enrollment.

Denton ISD would plug a $15 million budget hole with a tax rate increase that would generate about $26 million annually. Recent deficits led to a negative outlook on its AA underlying rating from S&P this month.

The fate of a $1.3 billion, partly bond-financed arena for the National Basketball Association's San Antonio Spurs will be up to voters via Bexar County's proposition to raise the county's hotel occupancy rate to 2% from 1.75% and continue its 5% motor vehicle rental tax. Up to $311 million of the revenue would help fund the project.

A poll this month by the University of Texas at San Antonio showed 40% of voters polled in favor and 46% against the measure.  

Ballots statewide include 17 constitutional amendments, the largest number for a single election in Texas since 22 measures were voted on in 2003, according to Ballotpedia. 

Several propositions call for property tax exemptions, including one to increase the homestead exemption to $140,000 from $100,000 as part of Texas' move to provide about $51 billion in state-funded property tax relief during the fiscal 2026-27 biennium that began Sept. 1.

Another proposed constitutional amendment could raise $1 billion annually over 20 years for water supply projects. The measure calls for placing the first $1 billion in state sales tax revenue once annual revenue from the tax exceeds $46.5 billion into the Texas Water Fund, which is administered by the bond-issuing Texas Water Development Board, starting in fiscal 2027. Sales tax revenue in fiscal 2025, which ended Aug. 30, totaled $49.06 billion – a 4% increase from fiscal 2024.

In a video post on the X platform last week, Lt. Gov. Dan Patrick said the measure would provide critical funding to improve water infrastructure. 

"By voting for Proposition 4, you are ensuring that Texas has enough water to meet our state's growing needs," he said.

Poll results released in September by Texas 2036, a nonprofit, nonpartisan public policy research and advocacy group, showed strong support for the measure with 73% of the 802 likely constitutional amendment voters polled in favor.  

Proposition 1 would establish a constitutionally dedicated, permanent endowment to fund capital infrastructure for the bond-issuing Texas State Technical College System.

Bonds are on Nov. 4 ballots in other parts of the Southwest, including in Denver, which is requesting $950 million of bonds in a five-part proposition for transportation, recreation, health, housing, and infrastructure projects.

Colorado's Pitkin County is asking voters for $340 million of revenue bonds to help finance a $575 million modernization program for the Aspen/Pitkin County Airport. 

The Aspen School District wants $95 million of GO bonds with proceeds tapped in part for teacher and staff housing.

In Arizona, Maricopa County's Special Health Care District is seeking $898 million of bonds to finance the replacement and expansion of medical facilities.

The city of Chandler has four bond measures, totaling $475 million, on the ballot for recreational, public safety, and roadway projects and equipment.  Chandler Unified School District is asking for $271.5 million of bonds. 

In New Mexico, there is a $350 million bond request by Albuquerque Public Schools to expand and build facilities and upgrade security and other systems.