News Article | January 27, 2022
Texas Bond Review Board: Counties hold 5.8% of total local debt
The Texas population boom continues and local governments are building the infrastructure required for sustainable economic and community development. Counties, cities and school districts issue bonds to build roads, schools, streets, parks, jails, and water and wastewater treatment systems. Local taxpayers vote to approve and pay off this debt. Using new data on outstanding local government debt from the Texas Bond Review Board (BRB), the following provides a brief update on local government debt and Texas counties’ share of that debt as of Aug. 31, 2021.
The BRB monitors local government debt, providing annual reports on outstanding debt and the long-term requirements this debt imposes on property taxpayers. In January 2022, the BRB released its most recent report, which provides a snapshot of local government debt as of Aug. 31, 2021. Aug. 31 is the end date for the state fiscal year.
The table above shows that outstanding debt for Texas counties totaled $15.4 billion on Aug. 31, 2021. At that time, 167 of Texas’ 254 counties had outstanding debt. The outstanding debt consists mainly of tax-supported debt of $12.8 billion; the remaining $2.6 billion is revenue debt. The county’s ad valorem taxing power (property taxation) secures the tax-supported debt. Counties secure revenue debt with a dedicated, specific revenue stream, the source of which varies depending on the project. Counties’ outstanding debt includes $32.9 million in lease-purchase debt. Lease-purchase debt is financing to purchase an asset, such as a road grader, an ambulance or sheriff’s office’s cruisers.
Although the $15.4 billion is a large sum, it only accounts for 5.8% of outstanding local debt as of Aug. 31, 2021. Public school districts and cities account for most of the local debt. The table above shows that combined, the debt of these two government entities accounts for 68.3% of all local debt as of Aug. 31, 2021.
This distribution of local debt has been relatively consistent over the past 10 years, with school districts and cities accounting for two-thirds of local debt. County debt stands at 5.8%, down from 7% on Aug. 31, 2012.
Our analysis of county debt issues for state FY 2001 through FY 2020 shows that most of the county debt has been for:
- Bond refunding to take advantage of lower interest rates, thereby reducing taxpayer obligations (44.5% of county debt).
- Road and bridge construction and maintenance to keep pace with the state’s rapid population growth (25%).
- Jails and correctional facilities (7.2%).
- Courts and courthouses (5.5%).
- Other county facilities, parks, flood control, sports, and other venues (~14%).
For more information on this article, please contact Zelma Smith.