Proposition 1 and Austin’s Debt Problem
The city of Austin has a big problem with debt. Our city leaders must love it because they have racked up so much debt in recent years. The latest available numbers from the Texas Comptroller are from 2014 when the amount of City of Austin debt was:
How did we get into $2.2B in debt two years ago?
The city, Austin Independent School District, and Austin Community College all issued bonds over the past two decades to get us to this point. Here are the bond totals.
City of Austin: $1,344,154,994
Austin Independent School District: $792,234,059
Austin Community College: $82,713,659
The $2.2B in debt was two years before there was any talk of Proposition 1 to help with our traffic woes and back when another $600M Proposition 1 in 2014 focused on light rail failed to pass.
Prop 1 [2016]: The $720M Mobility Bond
Austin city leaders recently proposed a $720M bond to build better sidewalks, bus lanes, bike lanes, and traffic light synchronization around town. This bond scares me because as with our other debt, the totals will quickly get out of hand.
Austin Independent School District (AISD) provided details on their current debt and if Proposition 1 numbers play out similarly to AISD, we are in for a very long and expensive road with little benefit. Let’s look at AISD debt to better understand how debt of this type works. It is called General Obligation Bond debt and isn’t backed by revenue as with other types of bonds.
AISD’s as our barometer
AISD has racked up $1,163,720,774.97 in debt via bonds since 1998. The school district services 84,591 students.
AISD has $13,757.03 in per-student debt
The debt has gone up significantly in recent years because AISD is hooked on issuing bonds and the debt obligations will be on AISD’s books for quite a while. The following chart provided by AISD shows the current debt continuing to the year 2038.
Equally shocking is the amount of interest on the AISD bonds coming in at $383,040,446.00 of the total (32.9%).
Over the years AISD has taken on more and more debt by issuing bonds. Here is a chart that shows the number of bonds per year. Pay close attention to the late 1990’s and early 2000’s when the district went several years without a bond proposal. Starting in 2004 they issued bonds every year and in 2006 it spiked to 4 bonds, with the last 3 years seeing two per year.
Austin grew but our debt per capita stayed flat
From 2005 to 2014 Austin had a population spike of 28.8%. The debt per capita stayed the same which means Austin took on much more debt. The fast population growth hides the increase in debt so it would appear that everything is fine. The following chart shows how flat it is even though hundreds of people move here every week not to mention the surrounding areas.
We have a very high debt per capita
The numbers get worse as we compare ourselves to other cities. We have almost as much debt as San Antonio yet they have 57% more residents. Austin is in the “unicorn” club with San Antonio, Dallas, and El Paso at over $1B in debt as of 2014. When we add the debt from Proposition 1 to this mix we are going to add a big heaping spoonful of debt on the books.
Help eliminate a billion dollars of Austin debt
The decision for Proposition 1 boils down to us residents not allowing a massive amount of debt to be paid for with our tax dollars, or giving the city a billion dollars to play with in hopes that new bus lanes and bike lanes do the job in the coming years.
Proposition 1’s $720M bond will balloon to over $1B because it will take 40 years to pay off the debt and the interest will quickly stack up as it has for other bonds. I feel this isn’t worth a few streets with more bus and bike traffic. It most certainly isn’t worth giving up lanes that used to be for cars in hopes more people bike to work.
Another key point to Proposition 1 is residents outside Austin who are filling our traffic corridors cannot vote for or pay for this bond. Lakeway, Cedar Park, Leander, Georgetown, Round Rock, Buda, and Kyle residents were not allowed to vote and are paying zero for this bond.
I feel Proposition 1 is too much for our city which is why I voted no and hope you will join me when you cast your vote today.
Note: The most recent numbers from the City of Austin website and Texas State Comptroller website are from 2014.
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