09.27.12

State and local debt skyrocketing….cause and effect

Posted in Around The State, Bad Government Republicans, Elections, Had Enough Yet?, Taxes at 10:58 am by wcnews

The reason state and local debt is skyrocketing in Texas is because of the right-wing ideological takeover of our state government. Those who currently run our state don’t believe in raising taxes. Instead of planning and building things as needed, we’ve moved to a system where things must get to a crisis level before anything gets done, and then it must be paid for through debt or some kind of risky privatization scheme.

There are things, especially in a fast growing state like Texas, that have to be built. Infrastructure in particular – roads,bridges, water supply, sewers, electrical grids, telecommunications, and so forth. The question is what is the best way to pay for new, and upkeep on, infrastructure? And since our current state leaders won’t use the former “pay as you go” tax system, all they are willing to do is issue debt. And the localities are left with no choice because of the policy decisions made a the state level:

  • Local property taxes, to pay for schools, are going up because the state passed a tax swap scheme in 2006 that created a multi-billion dollar annual structural budget deficit.
  • State and local debt keeps rising because the state has neglected to raise the gas tax to pay for roads, and therefore the only option left is to go into debt.
  • Another reason that local taxes have gone up is that local governments keep giving tax breaks to corporations and businesses. But the infrastructure to support them still has to be built, so the cost is shifted to the taxpayers.

All of that is to preface a report released yesterday by state Comptroller Susan Combs, Texas comptroller: voters who approve new state, local debt often not aware of prior obligations.

State and local debt more than doubled over the last decade, as documented by a report released Wednesday by Texas Comptroller Susan Combs.

In North Texas, growth is a major catalyst of new public expenditures. Growing suburbs are going to have higher debt ratios than older, more entrenched suburbs. The North Texas Tollway Authority, Dallas Area Rapid Transit and Dallas County Hospital District, among others, are in the midst of major expansion.

“If you’ve got a very, very rapidly growing city, you have got to take a look at schools and services and roads,” Combs acknowledged. “But across the state, the growth rate increase is exceeded rather largely by debt rate increase.”

State debt increased from $17.4 billion in 2001 to $40.6 billion in 2011. Local debt grew from $86.8 billion in 2001 to $192.8 billion last year.

“If I’ve got a 20 percent increase in population, I can understand a 20 percent increase in debt. I don’t understand 50, 70, 80 or 90,” Combs said.

Bennett Sandlin, executive director of the Texas Municipal League, said Wednesday that the amount of debt issued by local governments has grown largely because of unfunded mandates and state government’s refusal to take responsibility for the infrastructure needs of its rapidly growing population,

F. Scott McCown, executive director for the Center for Public Policy Priorities in Austin, said the comptroller’s logic is flawed. The center is a nonpartisan, nonprofit that seeks to influence public policy to help poor and moderate-income Texans.

“When you say we’re not going to spend any more money than population growth plus inflation, you’re basically saying we’re never going to be a better place tomorrow than today. We’re never going to have a higher standard of living,” he said. “What kind of philosophy is that?”

Combs goes on to say that her main concern is that voters don’t have enough information about what they’re actually voting for and that ballot initiatives need more transparency, few if any will argue with that. But voters also have not been given the context and history of why they have to keep voting on debt related ballot initiatives. And maybe if the comptroller would inform them of those reasons, (see above), the people would start looking for leadership and policy changes at the state level.

Combs, the state’s chief accountant who is widely rumored to be considering a run for lieutenant governor in 2014, said she’s not making judgments on local projects but believes voters are too often making decisions without enough information. She also denied any political motivations behind the report, which is in line with fiscal conservative and tea party groups that have recently sharpened their sights on local debt.

Ah yes. Got to get right with the tea party if you’re going to run in the Texas GOP Primary.  The cause of the debt is because of the neglect by state leadership.

[UPDATE]: Texans also need to know why this headline is so funny, Perry pitches “truth in budgeting” in Fort Worth appearance.

Democrats chuckled Wednesday at Perry’s call for transparency.

“The truth is, the last two legislative sessions, the only way they have been able to balance the budget … was to sweep funds out of dedicated revenue sources into general revenue funds,” Tarrant County Democratic Chairman Steve Maxwell said. “If he really means this is what he needs to do … and he says to do away with tricks and gimmickry, that’s great.”

And don’t forget not completely funding Medicaid last session.

Further Reading:
State comptroller raises the red flag on debt.
Perry notes education needs in ongoing call for strict spending..

1 Comment »

  1. Eye on Williamson » State leaders shirking their duty said,

    March 18, 2013 at 2:26 pm

    [...] And like with their intransigence with regards to Medicaid expansion, these bad fiscal decisions will only likely cost the taxpayers more in the long run, then if they would have just done the right thing to begin with. For more on why this was happening, State and local debt skyrocketing….cause and effect. [...]

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