Debt in Texas State & Local Governments

Texas has a balanced budget requirement; however, the Texas Constitution of 1876, as amended, does allow state and local governments to borrow funds through the use of bonds.  There are two types of bonds:

  • General-obligation (GO) bonds, which are backed by the full faith and credit of the state.  State GO bonds must be approved by two-thirds of both legislative chambers and then approved by a majority of voters
  • Revenue bonds, which are secured by specific revenue sources

Debt repayment for GO and revenue bonds can be either self-supporting debt (repaid with revenues other than the General Revenue fund*) or not self-supporting debt (repaid from the General Revenue fund*).

“State debt is used to fund a variety of purposes, including transportation, water projects, public housing and construction at state colleges and universities” (Texas Comptroller of Public Accounts, Debt at a Glance, n.d.). Outstanding debt per capita of Texas compared to other states, 2019

Public debt in Texas is relatively low compared to other large states.  In 2019, the state’s total outstanding debt was $51,529,919,000, or $1,799 per capita.  Of this,
  • $18,128,727,000 corresponds to state GO bond debt
  • $13,350,915,000 has been authorized but has not yet been issued to be appropriated/spent ($10,151,061,000 of which is associated with GO bonds)
  • $33,090,518,000 is self-supporting debt

Debt levels have been increasing both at the state level and the local level.  At the state level, outstanding GO debt increased 41 percent between 2010 and 2019 (Texas Comptroller of Public Accounts, Debt at a Glance, n.d.).  Local governments such as cities have been increasingly relying on debt in an attempt to keep up with the state’s rapid growth.

*NOTE:  The General Revenue fund is an appropriated fund in the state budget that is used to make general expenditures to support the daily operations of state government.

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