My county government has managed to bungle the roll-out of a proposal to borrow a ton of money to finance a new courthouse so stupendously that it inspired a tax revolt. The county tried to proceed by what's called a "certificate of obligation" bond, which under Texas law requires only a 45-day notice and no election unless 5% of registered voters petition for one. County leadership waited until the 45th day before the deadline for setting the year's budget and taxes, not only to announce the intent to borrow, but even to release the long-awaited plans and budget for a courthouse to replace the one that was destroyed by Hurricane Harvey in 2017. On that same day, they announced that we have to borrow the money this year or the world will end, and the only way to borrow it this year is to have the dedicated tax approved by the tax and budget deadline at the end of August. Hey, sorry there's no time for your input! You'll take this courthouse plan and budget and eat it! I say "they," because as a commissioner even I learned about all this when the public did, though clearly the County Judge must have been cooking it up for some time.
If the timeline hadn't been so mismanaged, we could still hold an election and get to work bringing the taxpayers on board, not an impossible task, since it's one thing to get 5% of voters on a petition but another to get 51% to vote down the courthouse project. As it is, however, the next available election date is in November, which means the whole thing has to wait until next year, because that's too late to dovetail the borrowing with the tax rate and approve them both by August 31. It's not ideal to delay the financing by a full year, but it beats denying the citizens a bond election.
The more I learn about "certificates of obligation" the less I like them. They were intended to give county governments a little emergency flexilibility, but there are no caps, so we are legally entitled to jam through $20MM in debt in a county whose typical ad valorem tax receipts are only $13MM, without an automatic election requirement. In some Texas counties, local officials have developed the unseemly habit of floating an ordinary bond proposal, losing the election, then jamming through a CO bond without an election, for the same purpose. The legislature put a stop to that by forbidding a CO bond that was identical to a failed general obligation bond election, which only inspired some counties to make trivial changes in the proposal and jam it through anyway.
It's going to be a serious problem for the county to put its reconstruction plans off for a year, but I'm beginning to think it's well worth it for the lesson in the consequences of overreaching with voters. I'm proud of my fellow citizens who stepped up. It's a small county, and the required 5% of registered means they need only about 850 signatures. In only two days, they've already collected about 500.
Now is not a good time to be building anything. Cause it'll just get blown up again sometime later this year.
ReplyDeleteSounds familiar -- similar to how the school district and our board approached "Tax Anticipation Notes".
ReplyDeleteStaff, and the "bond advisor" and the attorney all seemed to think the elected board was a rubber stamp -- or an obstacle to be eliminated.
Who's assessing each signature's legitimacy?
ReplyDeleteThen, who's counting the approved signatures?
Eric Hines
The state law provides for some careful process: each page of signatures has to be signed by someone who swears to witnessing each signature, and notarized. The signatories give their names, addresses, and voter's certificate number. The petition organizers then present the petition to the county formally. If the county contests the count or the legitimacy of any signatures, there's a process for that, too, that ultimately would go to court.
ReplyDeleteThe organizers are doing a good job of restricting the petition handlers to a small group who get instruction in these rules. They're going to aim considerably higher than the minimum count, as a buffer, and also as a political message. The whole thing is very much like the petition process I followed when putting myself on the ballot several years ago.
I still think this thing could be approved at an election. There's a big difference between 5% of voters protesting and 51% of voters voting no. It now looks like the county can pull off the bond issuance without raising the tax rate at all this year. It also turns out there is still time to put the bond on the November ballot, and that it is not necessary (as they tried to convince me) to approve the bond at the same time the tax rate is set in late August.
Meanwhile county leadership and the Chamber of Commerce crowd are bemoaning the fact that the public doesn't trust their elected officials.
The real teeth of the petition probably is that no one wants to touch a bond issuance that's subject to a bona fide legal contest. If the county tried to ignore a sufficient petition for an election, I'd be surprised if they could find investors willing to close. The bond's no good if it doesn't have a legally binding claim on future tax revenues.
ReplyDelete