Government entities, including school districts, are amassing serious amounts of debt in Texas.
In 2019, the Texas Public Policy Foundation found that local governments had amassed $365 billion in debt, according to The Texan.
School districts hold the largest share of the entities with $137 billion, followed by cities ($113.5 billion), special districts – including hospitals and transportation ($92.8 billion) -- and counties ($21 billion), according to the The Texan. Local government debt also increased by $11 billion in 2019.
On top of that, legislators increased the budget for the current biennium using the state’s rainy-day fund, which has been stretched due to oil prices dropping and severance taxes being funneled into it.
The state dipped into its rainy-day fund to partially fund Senate Bill 2, which changes property appraisal and tax systems and limits property taxes. The other bill that the state dipped into the savings account for was House Bill 3, which increases teacher compensation, reduces recapture and puts more money into the state’s classrooms.
Of the debt amassed by Texas, the state is accountable for $60 billion, The Texan reported. This means 80% of the debt is from local governments in the state, the Texan noted.
There are two different types of debt: tax-supported and revenue-supported. All entities use a combination of both types.
Tax-supported debt applies to property taxes and has to be approved by Texas voters, The Texan reported. The publication also said revenue-supported debt applies to sales tax, severance tax, and other consumption taxes.
In terms of debt, school districts rely more heavily on tax-supported debt, like general obligation bonds that must be approved by voters, the Texan reported.
Cities and special districts tend to rely more heavily on revenue-supported debt. Last year that accounted for 55.3% of cities’ debt and 61.6% of special districts’ debt.
The Texan reported that Texas ranks second behind New York for local government debt per resident.