DALLAS — Texas’ 254 counties would gain new bonding authority and could team up for long-term project financing under two constitutional amendments awaiting voter approval next week.
Proposition 4, one of 10 proposed amendments on the Nov. 8 ballot, extends to Texas’ counties the same authority its cities have to issue bonds for redevelopment of so-called blighted areas.
Proposition 5 would allow counties and cities to jointly finance various services and programs without requiring them to meet tax assessment and sinking fund requirements.
“Currently, a contract between local governments that is longer than one year is considered to constitute a debt, requiring the imposition of a tax and the creation of a sinking fund,” according to the Texas House Research Organization’s report on ballot measures.
“A lot of times, cities and counties might have joint projects such as animal shelters, criminal justice buildings and, most commonly, roads,” said Elna Christopher, a spokeswoman for the Texas Association of Counties. “Current law prevents them from jointly financing and operating extended projects.”
Instead of teaming up on certain operations, in some cases counties and cities have adapted the state constitution’s requirements by entering into one-year agreements. That has increased costs and reduced efficiency, according to proponents of the measure.
“It hopefully would save money, in that you could plan ahead,” Christopher said. “That’s kind of difficult at this point.”
Proponents of Prop. 4 expect the new county bonding authority to be used for roads in areas facing redevelopment. Like the Texas Department of Transportation, counties are hard-pressed for road-project funding in the rapidly growing state.
“This is a financing tool you can use without obligating the whole county,” said Donald Lee, executive director of the Texas Conference of Urban Counties, which pushed for the amendment. “This lets the counties obligate the tax-increment revenue behind some bonds. It’s most likely to be used where you’ve got a developer in an area where he needs infrastructure.”
The rapid growth in unincorporated areas of Harris, Dallas, Tarrant, Bexar, Travis and Williamson counties makes Prop 4 a logical tool to handle such rapid development, Lee said.
“We have more and more growth outside of the cities,” he said. “If you took all the city areas out of Harris County, Harris County’s population would still be equivalent to one of the five largest cities in the U.S.” Unincorporated Harris County has more than 1.5 million residents.
Opponents of Prop. 4 say that extending the rights of counties to issue development bonds will allow possible abuse of eminent domain by forcing property owners to sell when they don’t want to.
“We disagree with the idea, with the underlying idea, that local government should be taking property from one person and giving it to another,” Michael Quinn Sullivan, president of Texans for Fiscal Responsibility, said in an interview with radio station KERA in Dallas. “And certainly, we shouldn’t then be giving them taxing authority or, rather, debt-making authority to underwrite that activity.”
Sullivan’s organization supports Prop. 5, allowing long-term interlocal agreements, but opposes Prop. 4.
“Once the land is redeveloped, the land is then sold off to private interests,” according to the group’s analysis of the ballot measure. “The increase in property tax revenue is then used to pay off the debt on the outstanding bonds.”
The group says that the proper role of government does not include seizing private land in the interest of increasing tax revenues. “As it stands now, taxpayers are the ones on the hook if these 'redevelopment zones’ don’t produce enough tax revenue to cover the bonded debt,” the analysis said.
Both propositions could be used to advance toll road projects in urban areas. Harris County, which includes Houston, operates and finances the toll road system there. Adjacent Fort Bend County operates a separate toll road system. Under the new constitutional amendments, the two counties could draft interlocal agreements for multiple years, rather than renewing the agreements annually.
Similarly, the North Texas Tollway Authority in the Dallas-Fort Worth area would have a simpler system for its numerous interlocal agreements with cities and counties in its expanding region.
The propositions are not expected to bring a large increase in debt from the counties but are likely to eliminate some barriers that increase costs. Texas counties issued $1.96 billion of bonds in 2010, about a fourth of the debt issued by Texas cities. Most commonly, counties issue bonds for roads, jails and hospitals.
In addition to toll roads, Harris County provides tax revenue for Houston’s sports stadiums and arenas through its hotel tax. In Dallas County, the county commissioners act as supervisors for the Dallas County Hospital District that manages and finances Parkland Hospital.
Counties can authorize more debt by serving as conduit issuers. Tarrant County, which includes Fort Worth, provides tax-exempt financing for conduit issuers that are not even located in the county. Tarrant is one of the largest providers of conduit bond issues in the state.
The fact that Texas requires a constitutional amendment to authorize financing plans that are typically covered by legislative action is one of the peculiarities of the its arcane and oft-amended constitution. Since its adoption in 1876, the Texas Constitution has been amended 467 times, and 175 proposed amendments have failed.
Lee said that his organization tried to get an amendment like Proposition 4 to the voters six years ago, but it never made it through the Legislature.
Among the more peculiar and specific of the 10 proposed amendments on the statewide ballot is one that would allow a single county — El Paso — to join the list of counties that may create conservation and reclamation districts to develop recreational facilities and parks.
Proposition 7 would allow El Paso County voters to decide whether to create a parks district and is supported by the El Paso County Commissioners Court and by the city of El Paso. With voter approval, the district would be allowed to issue bonds for the parks.
But even that extremely local measure has drawn opposition from the conservative Texans for Fiscal Responsibility.
“If the residents of El Paso want a parks district so badly, why don’t the city or county fathers just vote locally to raise their property taxes?” the group asks in its analysis. “Because that would force those same political leaders to make decisions and trade-offs.It’s easier for the state to create a new way to tax their citizens than for them to do it themselves. With a new taxing district, they can have it all.”