Texas
How Texas taxpayers are already paying the price of bad politics
In November 2023, Texas voters approved tens of billions of dollars in new bonds for school districts, cities, counties, special districts and other local governments. Proceeds from these bond sales will be used to construct and maintain schools, parks, roads, utilities and other infrastructure projects.
Voters approved these borrowings with the understanding they will incur substantial interest costs. But would they if they were aware that a portion of the interest costs will be for no purpose other than to make a purely political statement? In fact, that is how a substantial share of the interest payments — hundreds of millions of dollars — will be used.
In 2021 the Texas Legislature passed, and the governor signed, SB 13 and SB 19 that prohibit Texas state and local governments from entering into contracts with banks that have policies restricting investments in oil and gas as well as firearms companies. The measures, targeted mainly at Texas pension funds, were intended to prevent the funds from investing in financial institutions that directly or indirectly support the anti-fossil fuel or anti-gun movements.
Unfortunately, Texas school districts, counties, towns and utility districts must also contract with these same financial institutions when they issue debt. Hence, they (and their taxpayers) are collateral damage of the legislation.
How so? When governments issue bonds they must rely on financial institutions to provide underwriting services. An underwriter purchases bonds directly from the issuer and resells them to investors. The municipal underwriting business is competitive, with scores of companies seeking the business of Texas governments. Not surprisingly, the larger, more well-established firms often have an advantage over smaller, more regional firms.
Owing to their size, they may not only be more efficient in performing the services expected of them, but also their national distribution networks are better able to market the bonds to investors. The result is that the larger firms can often enable the issuing governments to save on interest costs.
Ironically, these larger firms, such as Citigroup, JP Morgan Chase, Goldman Sachs, Bank of America and UBS, are the ones that have landed on the Texas comptroller’s list of ousted underwriters. As could have been anticipated, empirical evidence indicates that Texas governments did, indeed, pay a significant price for banishing them. A study by two economists, one from the Wharton School, the other from the Federal Reserve Bank of Chicago, estimated that based on $31.8 billion of bonds issued in 2022, Texas governments incurred between $300 million to $500 million of additional interest costs as a result of SB 13 and SB 19.
Even if one disputes the study’s interest cost estimate, most economists agree that providing governments with a choice among fewer financial institutions undermines the benefits of market competition. Ironically, in a different political environment, Republicans such as Gov. Greg Abbott and most of the Texas legislators who championed this legislation would likely be among the loudest opponents of this anti-competitive legislation.
Within the last several weeks Citigroup announced it was exiting the municipal bond underwriting business entirely. Experts believe other investment banks may follow. Policies of both Texas and other GOP-led governments on fossil fuels and guns are among the reasons cited. To be both fair and politically neutral, it should be noted that the problem of using the financial markets to make political statements is not confined to Republican governments. On the other end of the political spectrum, Chicago has restricted contracts with institutions on the “wrong side” of issues relating to prior ownership of slaves and gun control.
Oil and natural gas companies employ almost 350,000 Texans. Hence, it would make perfect sense for our Legislature to protect and promote that industry. However, there is no evidence these firms have received anything of economic value from the Texas legislation. It seems reasonable to suspect executives of Texas oil and gas related companies check their computers daily for the international price of oil, not the investment portfolios of municipal bond underwriters. The latter have no demonstrable impact on their firms’ investment or employment decisions.
The benefits of any legislation should exceed its costs. To be sure, it is not unusual for governments to enact measures to ensure that contractors advance beneficial non-economic social goals. For example, they may mandate that contracts give preference to minority-owned or disadvantaged businesses. But in SB 13 and SB 19 we have laws that produce only costs, no benefits other than misguided anti-woke darts.
Texas growth will require substantial amounts of new investment in infrastructure. That means increased borrowing. To protect taxpayers by minimizing borrowing costs, we need more competition among bond underwriters, not less. Taxpayers should not have to pay for empty political gestures. But if they must, let’s at least be honest and tell them what they are voting for when they go to the polls.
Michael Granof is the EY Professor of Accounting Emeritus at the University of Texas at Austin. Martin J. Luby is an associate professor at the LBJ School of Public Affairs at the University of Texas at Austin.
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Texas
Democrat James Talarico wins Senate primary in Texas
AUSTIN, Texas (AP) — James Talarico did not mention Donald Trump when he greeted exuberant supporters at his primary night celebration.
But the newly minted Democratic U.S. Senate nominee in Texas is now a front man for the political opposition to the Republican president, not just in his own state but around the country. With his victory over U.S. Rep. Jasmine Crockett, the state lawmaker from Austin will test whether a smiling message of unity and change is enough to answer voters’ frustrations amid discord at home and now a war abroad.
READ MORE: What to watch in the consequential Senate primaries in Texas
“We are not just trying to win an election,” Talarico told supporters in the Texas capital early Wednesday. “We are trying to fundamentally change our politics, and it’s working.”
The campaign provided “Love thy Neighbor” signs to people in the crowd.
The question for Talarico as he heads into the general election campaign is whether he can generate enthusiasm from voters who opted for Crockett because they saw her as the more aggressive fighter against Trump. Crockett conceded to Talarico on Wednesday morning, saying that “Texas is primed to turn blue and we must remain united because this is bigger than any one person.”
Talarico will need all the help he can get in a Republican-dominated state where Democrats have gone decades without winning a statewide race. He will face either U.S. Sen. John Cornyn or state Attorney General Ken Paxton, who advanced to a Republican runoff on Tuesday.
Conventional political wisdom has it that Talarico was the stronger Democratic candidate in November, especially if Republicans nominate Paxton, a conservative firebrand who has weathered allegations of corruption and infidelity over the years.
WATCH: What’s at stake for Democrats and Republicans in the Texas Senate primaries
Although Democrats are often choosing between moderate and progressive candidates in primaries, they faced a largely stylistic choice in Texas.
Talarico, 36, is a Presbyterian seminarian who quotes Scripture and rarely raises his voice. Crockett, 44, is an unapologetic political brawler who hammers Trump and other Republicans with acidic flourish.
Both have been reliably progressive votes in their current roles and telegenic faces across cable news and social media. Both represent generational change for a party with aging leadership. Each called for a more equitable economy and society. Each talked about bringing sporadic voters into their coalitions.
But Talarico’s broader argument is one that he could have made regardless of whether Trump was in the White House. Talarico’s campaign, he said often, is about addressing a country whose fundamental divide is not partisan but “top vs. bottom.” He regularly assails the rise in Christian nationalism. A former teacher, he has advocated for public education –- and against Texas conservatives’ policies to restrict curriculum and reshape how U.S. history is taught.
“He’s just a good friend and he’s a serious advocate for the disenfranchised and a serious policymaker,” said Lea Downey Gallatin, 40, an Austin resident who became friends with Talarico when they interned together for a congressman.
Crockett promised Democrats that she could increase turnout within the party’s base, while Talarico campaigned on the theory that he could pull new people into the party’s tent.
“I can’t tell you how many have come up to me, whispering that they’re not a Democrat,” Talarico said as he campaigned in San Antonio in the closing days of the primary campaign. “I can’t tell you how many young people have said it’s the first time that they’ve ever voted, and that they are participating for the first time.”
As he strolled through the city, Talarico posed for pictures and greeted the singer of a Tejano band playing nearby. He later spoke to hundreds of people at the historic Stable Hall, a 130-year-old circular structure built for showing horses and now a converted event center. Hundreds more, unable to get into the full event, wound around the corner and along the sidewalk for blocks.
Inside, Lori Alvarez, a 39-year-old who works for a disaster relief nonprofit, said she supported Talarico because “he really listens to what we need.”
“I think he’s going to be able to make change in Washington for us,” said the married mother of three young girls.
Yet that was not what attracted so many voters to Crockett.
Troy Burroughs, a 61-year-old Navy retiree, called Crockett “rugged” and “the only one I see fighting for us.”
He added: “I like how she doesn’t back down from anybody.”
Burroughs said some voters probably saw Talarico as more electable because he is more soft-spoken. But, he said, “We’ve got to get into the gutter with these folks, because that’s where they are.”
Talarico, meanwhile, keeps fighting his own way.
“Tonight, the people of our state gave this country a little bit of hope,” he said Tuesday, “and a little bit of hope is a dangerous thing.”
Barrow reported from Atlanta, Figueroa from Austin, Texas, and Beaumont from San Antonio.
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Big top, bigger mission: Inclusive Omnium Circus makes Texas debut in Garland
Garland is about to witness a different kind of big top spectacle when Omnium Circus’ new show “I’m Possible” rolls into town for its first Texas performance on March 16 and 17 at the Atrium in Garland.
This inclusive circus was founded in 2020 by founder and executive director Lisa B. Lewis. She is no stranger to the circus world. Lewis grew up attending the circus with her grandfather, who was a Shriner. She would then later begin her own circus career at the Ringling Bros. and Barnum & Bailey’s Clown College.
A performer in a black suit rides inside a cyr wheel
against a stage lit in red. The letters of the OMNIUM
sign are in the background.
The idea for an inclusive circus came to her during one of her first experiences working as a clown. Lewis says that during her performance, she saw a row of grumpy teenagers.
“They had their arms folded like they were mad and grumpy, and then my partner, whom I was working with, began telling jokes in sign language,” Lewis said. “How he knew they were deaf, I don’t know. The group of teenagers immediately started laughing, and the energy of the entire section shifted.”
Lewis said that in that moment, something clicked in her head, and she realized the power of inclusion.
She would then go on to spread joy through the art of circus to special-needs kids. And then later, she created Omnium Circus.
“Circus elevates our belief in ourselves; it allows us to see the best of what humanity has to offer,” Lewis said.
A female with blue hair facing a man with a red hat
Maike Schulz
between them is a large bubble with smaller bubbles
inside of it. There is a golden light coming from
behind the bubbles.
Omnium is a Latin word meaning of all and belonging to all. The circus’ mission is to create joy and entertainment for all no matter the body you inhabit or the skin that you’re in.
The hour-long show in Garland will feature many inclusive acts, such as deaf singer-songwriter Mandy Harvey, an America’s Got Talent finalist and Golden Buzzer winner.
The show will feature two ringmasters: deaf ringmaster Malik Paris will conduct the sign-language portion of the show, while ringmaster Johnathan Lee Iverson will handle the vocal portion. Iverson is the first Black ringmaster for a major U.S. circus, the Ringling Bros. and Barnum & Bailey Circus.
A juggler wearing red and black gazes at his pins in
the air while cast members around him look on in
amazement. The letters of the OMNIUM sign are in
the background behind the performers.
The show will also feature the six-time Paraclimbing World Cup champion, the world’s fastest female juggler, clowns from Dallas, plus more.
Details: March 16 at 7 p.m. and March 17 at 10:30 a.m. and 1:30 p.m.at the Atrium, 300 N. 5th Street, Garland. Tickets are $21.99 for youth and $27.19 for adults.
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