Taxpayers Deserve a Vote on Their Debt

Texans deserve a meaningful voice in deciding whether major debt obligations imposed on their communities are necessary—and whether they are willing to pay for them.

Yet cities, counties and certain special-purpose districts can incur significant long-term financial obligations without first receiving voter approval, including through Certificates of Obligation (COs) and other financing structures such as public-private partnerships (P3s).

Current Texas law gives certain local governments the authority to issue Certificates of Obligation without first obtaining voter approval. COs provide local governments important financing flexibility. They can be particularly valuable when governments must respond quickly to emergencies, replace infrastructure following a disaster, comply with court orders, or address other circumstances in which waiting for the next election may not be practical.

The issue is not whether that flexibility should exist. The issue is who should have the final say when it is used to undertake major discretionary projects that taxpayers will finance for decades.

Before most CO issuances, a governmental entity must publish notice disclosing information including the proposed amount, purpose, estimated interest, maturity and existing debt obligations. If a petition signed by at least 5% of the issuer’s qualified voters is submitted before authorization, the proposed certificates generally must be submitted to voters.

But that process reverses the normal burden of democratic accountability.

Instead of government making its case and obtaining voter approval before undertaking major debt, taxpayers must organize, collect thousands of signatures in some jurisdictions, meet a statutory deadline and force their government to hold an election.

The burden of justifying major long-term taxpayer obligations should rest with the government—not the governed.

Certificates of Obligation are also available for discretionary capital projects that could otherwise be presented to voters. Local officials may point to construction inflation, financing conditions and project delays as reasons for proceeding without an election. Those may be legitimate considerations, but they should be weighed against something equally important: the right of taxpayers to have a meaningful voice in major financial commitments they will ultimately be required to fund.

Texas law already recognizes that voter rejection of debt matters. State law generally restricts the issuance of COs for the same purpose as a bond proposition rejected by voters during the preceding three years, subject to statutory exceptions.

The Legislature should examine whether those protections are sufficient and whether comparable taxpayer safeguards should apply when local governments use alternative financing structures to create major long-term financial commitments.

The scale of local government debt makes this issue increasingly important.

According to the Texas Bond Review Board, Texas local governments had approximately $333.32 billion in outstanding debt at the end of fiscal year 2024, an increase of approximately $81.94 billion—or 32.6%—since fiscal year 2020. Of that amount, approximately $229.22 billion was general-obligation debt to be repaid from local ad valorem tax collections.

At the same time, property taxes remain one of the most persistent concerns Texans bring to our office.

During both the 88th and 89th Legislatures, lawmakers took significant steps intended to reduce the property-tax burden, including school-district maintenance-and-operations tax-rate compression and increases in homestead exemptions.

But state-funded property-tax relief can be diminished from the taxpayer’s perspective when local governments continue adding substantial new debt and the taxes or other revenues necessary to service those obligations.

The question for local officials should not be: How can we structure this transaction so that an election is unnecessary?

The question should be: Have the taxpayers who will ultimately pay for this project been given sufficient information and a meaningful opportunity to approve it?

That is what local control should mean.

Local control should mean local citizens deciding the future of their communities. It should not simply mean transferring decision-making authority from Austin to a handful of local officials when those decisions can obligate taxpayers for decades.

For that reason, I intend to file legislation next session addressing the use of Certificates of Obligation and examining whether major P3 and lease-financing arrangements should receive comparable taxpayer disclosure and voter-consent protections.

The Chambers County Justice Center provides an important case study.

Under the County’s P3 structure, approximately $153.7 million in lease-revenue bonds were issued in connection with development of the new justice center. The arrangement contemplates a long-term lease under which the County makes annual payments associated with the facility.

Whatever one’s view of the merits of the Justice Center itself, the financing structure raises a larger statewide policy question:

Should a local government be able to undertake a financial commitment of this magnitude through a long-term lease or P3 structure without providing taxpayers substantially the same opportunity to vote that they would receive if the project were financed through traditional voter-approved general-obligation debt?

That is the question the Legislature should answer.

This is not about preventing local governments from responding to emergencies. It is not about stopping responsible infrastructure development. And it is not about eliminating innovative financing tools that can genuinely save taxpayers money.

It is about restoring the proper balance between financial flexibility and taxpayer consent.

The Legislature should consider reasonable thresholds, disclosure requirements and voter-approval protections for major nonvoter-approved financial obligations. Emergency exceptions can and should remain available for genuine emergencies. But exceptions should not become the rule.

If a major project is truly necessary and represents a responsible use of taxpayer resources, local officials should be willing to make that case to the people who will ultimately pay for it.

Texas itself recognizes the importance of voter consent for certain forms of public debt. Our Constitution imposes significant restrictions on state debt and requires voter approval for certain state obligations.

Texans are therefore entitled to ask a simple question:

Why shouldn’t comparable principles of taxpayer consent apply when local governments undertake major long-term financial commitments?

The Legislature should focus not merely on what a financing instrument is called, but on its economic substance.

If it looks like debt, functions like debt, and obligates taxpayers like debt, taxpayers should receive substantially equivalent disclosure and consent protections regardless of what the financing instrument is called.

The people of Texas are not an obstacle to responsible government.

They are the government.

Our laws should ensure that government never forgets it.