Billions of local bonds in front of voters in Texas and the Southwest

Texas ballots are bursting with the most bonds among Southwest states in Tuesday’s election, topped by a two-part, $4.4 billion Houston Independent School District proposal that faces bipartisan opposition. 

The bond proposal is the first since 2012 by Texas’ largest public school system, which serves more than 180,000 students in 274 schools. 

Proposition A asks for $3.96 billion of bonds to rebuild, renovate, or expand schools, while Proposition B seeks $440 million of bonds for technology equipment and systems. If approved by voters, the district anticipates issuing the 25- to 30-year general obligation bonds in tranches and does not expect to raise the property tax rate to pay off the debt.

The Harris County Democratic and Republican parties are urging “no” votes on the bonds albeit for different reasons.

A resolution passed by the Democrats cited “Superintendent Mike Miles’ fiscal mismanagement, inadequate oversight, and the detrimental impact on students and public education since the takeover.”

The Texas Education Agency appointed Miles and a board of managers when it took over the district citing academic performance issues in 2023.

The county’s Republican party reportedly based its opposition on the cost of the debt and problems with previous Houston ISD bond programs.

A Houston Chronicle survey of early voters found 67% rejected both bond measures. In October, the district appointed an oversight committee to monitor the progress and implementation of the bond program should it pass.

In a local TV interview last week, Miles said the bond proceeds would address health and safety needs that have built up since previous bond programs, including ensuring schools have a single entry point, getting rid of portable classrooms, and addressing heating and cooling systems. 

The nearly $37.6 billion of bonds on Texas ballots include big debt proposals from other school systems, according to S&P Global Market Intelligence data. 

Frisco ISD is asking for $1.08 billion of bonds in three propositions and Rockwall ISD has a three-part bond proposition totaling $848.7 million with both districts also requesting a hike in their property tax rate for operations. Round Rock ISD has a four-part bond package totaling nearly $1 billion.  

A barrage of school bond sales last year helped make Texas the biggest municipal bond volume state for the first time since 1981. Public school bonds are rated triple-A through the state’s Permanent School Fund bond guarantee program.

Districts that finance water projects and other infrastructure in the Lone Star State proposed big-ticket bond issues, including a two-part $2.15 billion proposal from Waller County Municipal Utility District No. 55B and a two-part $1.42 billion proposal from Rolling V Ranch Water Control and Improvement District No. 4 in Wise County.

In Utah, the Salt Lake City School District Board of Education is seeking $730 million of bonds to rebuild two high schools, construct an athletic field house, and upgrade facilities. The Salt Lake County Council is asking voters for $507 million of bonds to build a Justice and Accountability Center in Salt Lake City that would consolidate the county’s two existing jails.

Colorado issuers are seeking billions of dollars in bonds with school districts accounting for the biggest proposals. 

Aurora Public Schools tops the list requesting $1 billion of bonds for school construction, expansion, and safety and other improvements. Cherry Creek Schools has a $950 million bond measure for construction, renovation, and safety projects. 

Denver Public Schools’ record $975 million bond request would address some of the district’s more than $2.2 billion in capital infrastructure needs — including air conditioning — without increasing property tax rates. In September, its GO rating was downgraded a notch to AA by Fitch Ratings based on local government rating criteria changes.

The Denver Downtown Development Authority has a $570 million bond authorization on the ballot to finance public facilities and improvements through the use of incremental increases in sales and property taxes. 

An Oct. 30 report by the Common Sense Institute Colorado said downtown foot traffic has not recovered from the COVID-19 pandemic, while commercial vacancies remain near record highs.

In Arizona, Tempe has three bond questions totaling $581.5 million to fund public safety, road, drainage, parks, affordable housing, and other projects. Chandler Unified School District is asking for $487 million of bonds.  

New Mexico has four bond questions totaling $290.6 million on the statewide ballot with the largest asking for $230 million to fund capital projects for certain public and tribal schools, as well as for higher education. 

In addition to bonds, some Southwest ballots include proposed tax hikes and measures that could impact budgets or lead to debt issuance. 

Dallas voters will weigh a slew of city charter amendments, including two placed on the ballot through a signature campaign that could have financial consequences.

Proposition U would require the city to appropriate at least 50% of annual revenue increases over the previous year to fund public safety pensions, boost police starting pay, and maintain a police force of at least 4,000 full-time sworn police officers compared to about 3,100 currently. 

“Budgeting for this level of hiring would not make the city safer and it would spell doomsday for the city budget,” Dallas Police Association President Jaime Castro said at a press conference last month. “Parks, streets, libraries and other city services improve our quality of life and contribute to a safer city.”

The Dallas budget is already facing strain after the city council adopted a plan to ramp up contributions to the Police and Fire Pension System to actuarially determined levels over five years to comply with a Texas law aimed at keeping the retirement system solvent.

Kroll Bond Rating Agency last week revised the outlook on Dallas’ AA-plus rating to stable from positive, citing “the limited improvement in the city’s pension funding metrics to date which may limit future financial flexibility.”

Proposition S would allow any Dallas resident to sue the city to force it to comply with the local charter and ordinances, as well as state law and recover litigation costs if injunctive or declaratory relief is granted. 

The Harris County Flood Control District in Texas is seeking a property tax hike that would boost its maintenance budget by $100 million to $241 million.  

Amid stagnant state funding and rising costs, some Texas school districts put maintenance and operations property tax increase requests on ballots, including Austin Independent School District, which is facing a $92 million deficit in the current school year.

Denver voters will decide two ballot measures to boost the city’s sales tax rate. A 0.5% hike would raise about $100 million annually that could be tapped to back bonds for affordable housing. A 0.34% rate increase would generate an estimated $70 million a year for Denver Health, Colorado’s sole safety net healthcare provider, which is struggling with escalating uncompensated care.

The city’s 8.81% total sales tax rate, which includes Colorado’s 2.9% portion, would rise to 9.65% if voters approve both the housing and health care tax increases.

State question 833 in Oklahoma would allow property owners to petition their municipality to create a public infrastructure district as a way to finance roads, sidewalks, parks, and water and sewer services through the issuance of bonds backed by a property tax assessment applied only within the district.  

In Utah, Amendment B would boost annual land trust distributions public schools receive from Utah’s $3.3 billion Permanent State School Fund to 5% from 4%, which amounted to $106 million for the 2024-25 school year, according to the state treasurer’s office.  An increase to 5% in the current school year would have added an estimated $13 million.