[This post has been revised since it was first published yesterday to reflect that the water bonds will not have to be paid for with general revenue. Since then, a reader has posted the fiscal note. It says that the bonds include both self-supporting and not self-supporting debt, and that the latter (which is paid for from general revenue) counts against the state's 5% debt limit.]
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The answer is obvious, right? Of course we should vote for them. We’re in the middle of an historic drought.
Well, I’m not so sure about this. Governor Perry and the legislature are up to their old tricks. We’re supposed to have a pay-as-you-go fiscal system, but that is just a fiction. In fact, we’re borr0w-as-we-go. We borrow to build highways. We have borrowed to buy “equipment.” We borrow to build college buildings with tuition revenue bonds, knowing that the tuition will not cover the cost of the bonds and they will have to be paid out of general revenue. As will the water bonds. The debt service will eat away at the meagre general revenue that our tax system produces. Can you imagine how much it is going to cost to pay the debt service on $6 billion in water bonds?
The boosters are lining up behind Senate Joint Resolution 4, which will be proposition 2 on the November 8 ballot. In this case, the boosters are the H2O4Texas campaign, which they self-describe as “a newly created 501(c)4, nonprofit corporation – brought into existence to develop the Texans for Prop 2 Campaign, which will educate voters about the importance of passing Proposition 2 in November.”
The boosters tout a recent article featured in the San Antonio Express-News by State Representative Lyle Larson (R- San Antonio). The water boosters say, “In addition to stressing the importance of SJR 4, Rep. Larson said, ‘We’re on the right track and Texas is fortunate to have some of the world’s best and brightest working on this issue. We just need to get Texans engaged. While missing out on Independence Day fireworks or living with dead landscaping is the extent of most folks’ experience with drought today, if we continue to do nothing, ‘drought’ will mean something entirely different tomorrow. Texans must commit to preparing for the future and demand that their elected officials make water planning a top priority.””
I’m all for making water planning a top priority. I just want us to pay for it, fair and square, instead of borrowing it and pretending that it doesn’t cost anything. I would just like to see one politician — preferably, governor Perry–say that we are going to pay for something with revenue, not by going deeper into debt. (To repeat what I said above, the water bonds will not cause the state to go deeper into debt.) There were several proposals before the Legislature this session that would have paid for the water plan, including a tap fee, a bottled water assessment, and other ideas. Governor Perry could have done an enormous service for this state had he stepped forward and said that we must fund the water plan. He knows we have to have water projects to protect our state’s future. Everyone knows we have to do it. But it’s never going to get done, because the Lyle Larsons and the Rick Perrys want the people to think we can do it for “free” by going into debt. Then Perry can say, look, we never raise taxes. True. And we also don’t ever do anything about the water plan, even when we are stricken by drought. I’d vote for the damn things if anybody would ever say, This is so important that we have to raise the revenue to pay for it. But no one ever will, not while we are in the throes of the anti-tax gridlock — and certainly not Rick Perry. He has had ten years to do something about the water plan, to lead this state, and he has done nothing, except complain about the lack of federal aid. This is the problem with Perry. He is as clever a politician as Texas has ever had, but he is not a leader, not if it means raising revenue. And the public continues to think it is getting something for nothing. I voted against the transportation bonds several years ago, but I will vote for the water bonds, since they do not pose a risk to the state’s general revenue fund. The main point I want to make is that we need to practice sound fiscal policy and pay for the things we want instead of going into debt and eating away our general revenue. Again.
Tagged: Lyle Larson, proposition 2, rick perry, water plan
Pat says:
Anymore, I question the label “conservative.” There are two distinct flavors of conservatism today, and they don’t get along. There are Country Club Republicans who largely believe in the laws of reason and arithmetic, and there are those Tea Partiers who believe that any slight compromise is a sell-out. If you subscribe to that theory, the long run game is quite clear: a complete realignment of the parties to pre-Civil War era allegiances (recall that business aligned with the Republican party because industry was headquartered in the Union North).
Today at least, Bill Clinton is looking pretty smart.
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Anonymous Reply:
July 28th, 2011 at 4:19 pm
Well said by Paul and Pat. Perry is a back room schemer, not a leader. Bill Clinton was a leader and knew how to get things done, and done right. These guys are going to use the drought to spread fear, create contraversy and manufacture someones outrage into a back room deal we all pay for later. A Perry hallmark.
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Pat Reply:
July 28th, 2011 at 6:52 pm
I wasn’t commenting on Clinton’s leadership abilities, but rather his political strategy of appealing to business as a “New Democrat.” Clintonism is the ideological heir to Grover Cleveland and the Bourbon Democrats of the 1880s.
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Fiftycal Reply:
July 28th, 2011 at 7:30 pm
HA HA HA HA HA HA HA HA HA Yah. Klinton was a “leader”! Ask Monica “blue dress” about that.
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Texian Politico says:
H2O4Texas is probably the first time we’ve had H2O in a campaign slogan since AuH2O in ’64.
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Anonymous Reply:
July 28th, 2011 at 4:19 pm
Hopefully with the same result.
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Vernon says:
I believe the idea that we as Texans and Americans deserve “something for nothing” is largely what’s slowly destroying every facet of good government.
Remember the last time you got something for nothing? How good was it?
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Texian Politico Reply:
July 28th, 2011 at 2:35 pm
I had some free pizza yesterday and it was awesome.
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Anonymous Reply:
July 28th, 2011 at 4:20 pm
I had a free cholesterol test.
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Vernon Reply:
July 28th, 2011 at 4:21 pm
BLAST! He used the pizza comeback. Touche, Texian…touche.
But honestly, was it truly “awesome” pizza or merely adequate as most free pizzas are?
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Texian Politico Reply:
July 29th, 2011 at 9:29 am
I was very hungry, so it was awesome.
Anonymous says:
I am anti-tax when it comes to this state because the political sytem is set up in such a way that ANY new tax is going to be regressive in nature. This is also increasingly what you hear in the debate in D.C.–how can we shift taxation onto the poor so they will have “skin in the game.” It’s insane and I refuse to play along with ANY tax schemes. Just let it all collapse rather than bury the poor with taxes they cannot pay to begin with.
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Hydrogen Jukebox says:
The policy/philosophical arguments aside: these bonds won’t result in any debt service from general revenue. The main thrust of the prop is to give “evergreen” authority so that the bonds continually revolve as they are paid back from the locals doing the water projects. Using the state’s full faith and credit simply gets a better rate, so the locals can afford it.
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Simon says:
Paul: I doubt you paid for your house in cash. It makes sense to pay for long-lived projects over the life of the project.
The problem is the lack of new revenue to cover interest payments, not the fact that the project is paid for with bonds.
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anita Reply:
July 28th, 2011 at 2:02 pm
I don’t buy the analogy — a home is the single largest purchase most folks make in their lives. I don’t know the amount of bonds authorized by this, but certainly not comparable.
Let’s be honest about this. We’re paying more on this and other items just to maintain the ruse of the leadership’s ‘no new taxes’ pledges.
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Anonymous says:
Not to worry, the free market fairy will solve all our problems.
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Nomo says:
Here’s what the fiscal note said:
This joint resolution includes bond authority that would comprise a mixture of self-supporting debt and non-self-supporting debt. Any non-self-supporting debt that receives a General Revenue appropriation for debt service would impact the state’s constitutional debt limit (CDL).
TWDB can only issue non-self-supporting debt with the authorization of the Legislature. For the purposes of calculating the CDL, this entire authorization would be considered self-supporting and would not have an impact on the CDL until the Legislature authorizes the issuance of non-self-supporting general obligation water bonds.
Article III, Section 49-j of the Texas Constitution limits the authorization of additional state debt if the percentage of debt service payable from the General Revenue Fund exceeds 5 percent of the average annual unrestricted General Revenue Fund revenues for the previous three fiscal years. As of the end of fiscal year 2010, the Bond Review Board estimates the constitutional debt limit for issued, and authorized but unissued debt, to be 4.10 percent.
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Representative Allan Ritter says:
Paul,
I can certainly understand your frustrations with the legislature not finding a dedicated source of revenue to fully implement our State Water Plan. As you know, I carried legislation this year that would have provided a mechanism for funding the plan. I also carried the joint resolution that resulted in Proposition 2. I cannot stress enough that a dedicated source of funding is only one component in the overall implementation of the plan which cannot be accomplished without bonding authority. The passage of Proposition 2 is a crucial step towards accomplishing this goal for the State of Texas.
Proposition 2 furthers our progress in meeting the future water needs of Texans. The importance of Proposition 2 is that it allows a self-supporting debt which is borrowed from the state through the Texas Water Development Board. These bonds would be issued only to provide funding requested by local communities, and the debt is then repaid by the borrowing entities.
Currently, many local entities are not able to access the financing necessary to complete projects without partnering with the state. The bonding authority enables a water provider to borrow funds backed by the good faith and credit of the state, lowering the cost of the loan, and thereby lowering the bottom line cost to the consumer. In fact, authorizing this type of bonding authority is the most fiscally conservative and responsible way to do business.
The failure of Proposition 2 means the imminent end of that partnership for water projects around the state, with or without a dedicated source of funding. I strongly support the passage of Proposition 2, and I hope that you will encourage your readers to do the same.
Representative Allan B. Ritter
Committee on Natural Resources, Chairman
Texas House of Representatives
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Robert Morrow says:
Rep. Ritter,
“many local entities are not able to access the financing necessary to complete projects without partnering with the state. The bonding authority enables a water provider to borrow funds backed by the good faith and credit of the state”
Well, these communities cannot borrow money because no one will lend them money because there is a high likelihood that they will never be paid back the principal. So you are endangering the “good faith and credit of the state” of Texas by letting them piggyback on us.
You guys in the legislature really love to borrow, borrow, borrow don’t you? Have you ever heard of saying “No” to any constituency group? Borrowing, because of the debt service, is really a gargantuan tax. So you want to borrow money for water projects; you want to facilitate the BORROWING of money for transportation public-private partnernerships (CDAs). Now that is completely insane – the toll road policies. And the Legislature approves BORROWING of money for Lance Armstrong cancer bonds, as if that were appropriate. It is not.
So what if water projects don’t get funded? So what if roads don’t get built? So what if cancer research does not happen? So what if college buildings don’t get built?
You guys have not figured out that WE, as Texans, can’t afford all that. And that is because you Republicans and Democrats are drunk on socialism and think that if you just spend, borrow and tax enough that everything is affordable in your fantasy world.
Borrow, borrow, borrow means debt service, debt service, debt service which means TAX, TAX, TAX.
The Legislature and Perry/Dew/Straus are never honest about what needs to be done and what is actually affordable. If something is so crucial, and FEW things are, then just have a simple straight tax (pay as you go) and cut out all this financially insane borrowing binge that you guys continually do.
Again, I ask, so WHAT if these water projects can’t get done? Is the world going to cave in? You guys need to quit borrowing, borrowing, borrowing (which is FAR more costly than a straight tax) on everything.
Sincerely,
Robert Morrow
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bnrtn Reply:
July 28th, 2011 at 2:31 pm
I think the answer you would get to your arguement (correct in my view), from legislators and ,frankly, a majority of voters is that one cannot operate like that in the “real” world. We have to borrow, tax and spend what we don’t immediately have in order to get what we immediately “need” (want).
I would even be willing to accept that methodology IF it were used only for very specific and very limited and very few things / projects / services. In the “real” political world, of course, the use of that methodology is never specific and limited and few! The bottom-line rationale for continuing to operate in the manner you well describe seems to boil down to: We’ve been doing this for years without any significant fallout to us, so we’ll keep barrelling right on through. Bad news for the kids / grandkids!
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Hydrogen Jukebox Reply:
July 28th, 2011 at 5:50 pm
We already do this and the local entities do pay off the loans. It’s been very successful. This prop just let’s it continue and revolve, since the initial approved bond issuance is about done (and paid back).
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paulburka Reply:
July 29th, 2011 at 10:13 am
Jukebox is correct. The loans are paid by local entities. Sen. Hinojosa also confirmed this to me.
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RonKabele Reply:
July 28th, 2011 at 10:56 pm
There are a few things that government must take care of. In my opinion, these include 100% funding for infrastructure projects. If we can do anything for our kids, it’s to leave them a properly functioning infrastructure with no debt to pay off. If this means raising certain taxes specifically for these projects, I’m all for it. I don’t see how even Tea Partiers could be against this, as long as the new taxes are set up so that this funding cannot go to social programs, education, or our general revenue fund. We should be pouring money into infrastructure, as this is a definable (and, really, undeniable) benefit to our society.
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Linda Curtis says:
In addition to the debt problem, please consider the fact that many state agencies, including the Texas Water Development Board, are under the influence. They’re drunk on Perry kool-aid to build projects that are attempting to seriously undermine local water control.
Example: Perry allies in the private water vending business (remember Frankie Limmer, former Williamson County Commish). He is part owner of Endop, LLC, which is working feverishly to get the state to use their bonding authority to back a $400MM, 100-mile water pipeline (we call it the Trans-Texas Water Highway), to steal Bastrop & Lee counties’ groundwater — destined for Hays/Bexar county development.
Of course, Frankie baby makes a nice profit. The deal is being brokered by GBRA. Did anyone catch that Clifton Thomas (GBRA Vice-Chair) $250,000 donation to Perry?
We’re sick and tired of being sick and tired. I’m voting no on Prop 2 — sorry Lyle!
Linda Curtis, Independent Texans
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Kenneth D. Franks Reply:
July 28th, 2011 at 6:14 pm
I’m glad you gave your opinion on this Ms. Curtis. Keep staying involved in the process and letting people know what is going on.
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Linda Curtis says:
Forgot to ask — I believe Quorum Report said that the Veterans Land Board is the only state agency that has revolving bonding authority. I’d like to understand that better.
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The House is Not a Home says:
Will the Tea Party folks support water bonds since “water bonds” are not specifically mentioned in the U.S. Constitution?
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John Birch says:
Sure hope we spend a lot of time talking about the miniature computer chips embedded in the fluoride injected into our water system.
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anita says:
Hope everyone picked up on Perry’s massive flip-flop today — yesterday he declared that “you either believe in the 10th Amendment or you don’t” for his position that gay marriage in New York was “fine with him”.
Today, no — “not fine with me” says Perry. In fact, there should be a consitutional amendment to force the states not to recognize gay marriage.
So he runs against Washington, writes screeds against D.C. telling the states how to operate, but now, with a nudge from the Family Research Council, decides Washington telling the states what to to is just fine and dandy.
Amazing. So much for the 10th Amendment. He left it crumpled in a wastebasket while jetting off to meet with more R bundlers.
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Fiftycal says:
Hey, with a little luck, we can TAX our way to PROSPERITY!
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paulburka Reply:
July 29th, 2011 at 10:11 am
The idea is not to tax our way to prosperity. It is to have a sound fiscal policy of paying for infrastructure without going deeply into debt, so that the state will have water fifty years from now.
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Anonymous Reply:
July 29th, 2011 at 3:54 pm
Don’t even acknowledge Fiftycal’s existence, Burka. I’m sick of stupid people scaring the shit out of our leaders. I can’t believe I live in a country where stupid people get more attention than rich people. A sad day.
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Fiftycal Reply:
July 29th, 2011 at 5:13 pm
What “water shortage”? I was just in HEB and there was a whole aisle full of nothing but water in bottles. $1 a liter. Oh, how is that conversion to the metric system coming? Gotta be like the europeons you know.
Now go milk your cat anonymouse.
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Anonymous Reply:
July 29th, 2011 at 11:38 am
A big problem this nation has is simpleton’s like cow poop, and mr. “my IQ is 50″ who can only understand things when they are dumbed down to a bumper sticker slogan. No one has ever said “Tax our way to prosperity”. Not everything is an useless expense. Some things are investments and even families know that and will take on debt to provide it. i.e. buying a house or providing an education. If the country was run by these morons from the beginning we would still be a british colony because no debt to fund the revolution would be allowed. Or we wouldn’t have an interstate highway system or the GI Bill or even the highland lakes damns which provide all our drinking water for crying out loud. All those things added to the national debt but the ROI was exponentially more. Thankfully grownups who realized that investing in the country is a good thing were in charge. Too bad the curent repiglican party is made up of pandering boobs.
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FredCDobbs says:
I honest to God cannot figure out why so many seem really excited by the thought of this country devolving into feudal Europe. Hey, let’s all die of cancer during our two hour commutes while drinking filthy water! That’ll show the French how free we are!
As far as TAX TAX, we simply don’t do that. Those days are gone. We have the lowest taxation rates in modern history. Its time to raise them for the common good, sorry, because the common good ain’t good enough any more.
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bnrtn Reply:
July 29th, 2011 at 12:10 am
Okay, But there is not now any broadly shared national idea of the common good, because there is not any broadly shared common trust.
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JohnBernardBooks Reply:
July 29th, 2011 at 1:58 pm
Is “common good” like “share the wealth?”
“America’s abundance was not created by public sacrifices to “the common good”, but by the productive genius of free men who pursued their own personal interests and the making of their own private fortunes”
~ Ayn Rand (February 02, 1905
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I am an island? Reply:
July 29th, 2011 at 2:23 pm
I would think every current and former member of our armed forces makes sacrifices for the common good.
I certainly hope Ayn Rand’s books aren’t in the free public libraries–what an oxymoron that would be!
I guess Ayn got her water out of her own well which she dug?
JohnBernardBooks Reply:
July 29th, 2011 at 3:17 pm
Any Rand was an anti-communist who fled from Russia as a teen. Probably not a Travis Cty hero.
Anonymous Reply:
July 29th, 2011 at 3:29 pm
So, because ayn rand spouts off some nonsense then it must be true??
JohnBernardBooks Reply:
July 29th, 2011 at 4:18 pm
so, because Ayn Rand tells the truth it must be false?
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Anonymous Reply:
July 29th, 2011 at 6:41 pm
Ah, more fact free “truth” from jbb. Glad you could visit planet earth. When are you going back to your home planet?
JohnBernardBooks Reply:
July 30th, 2011 at 4:02 am
I just looked up the definition of “common good” I found it right next to “useful idiot”.
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Anonymous Reply:
July 30th, 2011 at 1:33 pm
What did you do, look in the dictionary until you saw a picture of yourself?
Fiftycal Reply:
July 29th, 2011 at 5:16 pm
Yah, lets’ raise that tax on the 51% that DON’T PAY TAX! What was it Jefferson said about when people figure out how to get “free” money from the government? Ending the communist “earned income” tax rebate would not spend more than 3 times the money the “tax the riche’” tax scheme would bring in.
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Anonymous Reply:
July 29th, 2011 at 6:40 pm
wouldn’t you love to be one of the lucky duckies that don’t make enough money to pay federal income tax?? remember you still have to pay property taxes, social security, medicare and sales tax. I’ll bet you think the homeless are lucky too, right? The only freeloaders are teat sucker like you and jbb. Like I said above, such a simpleton.
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JohnBernardBooks Reply:
July 29th, 2011 at 8:56 pm
wow the commies are back.
What happened to having a little skin in the game?
Todays “poor” have one sometime two cars, color tvs, xboxs….my my my such suffering.
anita says:
And for that, you can thank Ronald Reagan, who ushered in the cynical era of government as the enemy, not composed of us but of parasitic do-gooder sandal-wearers intent on directing our lives. Rick Perry expresses zero commitment to the common good, in fact he mocks it.
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Anonymous says:
If you have one state agency such as TCEQ mandating that cities or counties upgrade their water and/or wastewater systems to meet state water quality standards, you’re pretty much stuck with the options of either having the state in some way help fund those improvements, or simply pass the burden of paying for those improvements off onto the local taxing entities. Do the latter, and Texas would be guilty of the same thing state officials here and in other states accuse the federal government of doing — passing unfunded mandates that make them look good, but dump off the burden of financing the programs onto state and local officials, who are then forced to come up with the revenue on their own.
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Mark M says:
I completely disgree with Burka on this one. Texas most definitely needs SJR4/Prop 2. Water infrastructure requires significant planning in order to design and construct it most efficiently. This bond program will allow TX water planners the certainty necessary to help maximize the “bang for the buck”.
Mark McPherson
McPherson LawFirm, PC
@enviropinions
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S Minick says:
You need to do your homework, Paul. These bonds are repaid through water and sewer rates that we all pay, not the state’s general tax dollars. That’s why the historic default rate is so low – ZERO.
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Robert Morrow Reply:
July 29th, 2011 at 5:45 pm
Then they should not need to “partner” with the state of Texas to get bonded. Remember, there is always the threat of embezzlement and mismanagement in these infrastructure bonding deals.
A very real threat. Have you heard about the gargantuan bankruptcy of Jefferson County Alabama? $4.1 Billion, that is a whopper.
http://www.google.com/search?q=Jefferson+County+bankruptcy&sourceid=ie7&rls=com.microsoft:en-us:IE-SearchBox&ie=&oe=#q=Jefferson+County+bankruptcy&rls=com.microsoft:en-us:IE-SearchBox&oe=&um=1&hl=en&ie=UTF-8&sa=N&tab=nw&bav=on.2,or.r_gc.r_pw.&fp=a73016c6148e60c4&biw=792&bih=431
You could have some of those waiting to occur in Texas, perhaps not on that large a scale.
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Anonymous Reply:
July 29th, 2011 at 7:28 pm
The bonds should be null and void since proven fraud and bribery were involved in the deals and several government officials are now in jail. That’s a problem with the legal system, not bonds in general.
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anonymous says:
The earned income tax credit is widely supported by the business community that is part of that 49% paying INCOME taxes. They want the other 51% to have disposable income to spend on the junk they sell to them.
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JohnBernardBooks Reply:
July 30th, 2011 at 12:10 pm
GE is a prime example, why shouldn’t “the poor” have $10 light bulbs mfg’d by GE and paid for by government workers?
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Anonymous Reply:
July 30th, 2011 at 1:31 pm
Just out of curiosity, do you ever have the slightest clue what you’re talking about???
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JohnBernardBooks Reply:
July 31st, 2011 at 4:08 pm
yes, however no one has a clue why you’re posting.