Texas

How Texas taxpayers are already paying the price of bad politics

Published

12 months ago

January 10, 2024

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

Texas at No. 13 Texas A&M gamethread

Published

7 hours ago

January 4, 2025

Press Room

The College Station editions of the Lone Star Showdown continues on Saturday with the Texas Longhorns facing the No. 13 Texas A&M Aggies at Reed Arena in the SEC debut for head coach Rodney Terry’s team.

Tip is at 7 p.m. Central on SEC Network and this is your gamethread.

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Texas

The stories that defined Texas high school football in the Dallas area in 2024

Published

17 hours ago

January 4, 2025

Press Room

The stories that defined Texas high school football in the Dallas area in 2024

As we turn the page on 2024, The Dallas Morning News is looking back at the stories that defined high school sports in the Dallas area over the past 12 months.

Our staff considers it a privilege to write about schools in the Dallas area, and our coverage goes far beyond gamers and stats. Every year, we get to tell stories of incredible triumphs, heartbreaking defeats, tragedy, resilience and hope. These are your stories. Thank you for allowing us to tell them.

Below are the stories that defined football in the Dallas area in 2024.

More of our year-in-review

— Boys, girls basketball

— Baseball, softball

— Boys, girls soccer

— Volleyball

— Track, golf, others

North Crowley head coach Ray Gates poses with his players after a victory over Austin Westlake in the Class 6A Division I state football championship game on Saturday, Dec. 21, 2024, in Arlington.(Smiley N. Pool / Staff Photographer)

D-FW can claim Texas’ best high school football team in an otherwise down year for Dallas

ARLINGTON — North Crowley showed out on Saturday in its dazzling 50-21 victory over Austin Westlake in the 6A Division I state title game, winning the program’s second state championship and putting Fort Worth high school football on the map in front of 36,120 fans at AT&T Stadium.

Until North Crowley took the field at 7:30 p.m., there was a possibility the Dallas-Fort Worth area might boast only one state champion in 2024. Celina routed Kilgore 55-21 in the 4A Division I state championship to capture the program’s ninth state title and its first under coach Bill Elliott.

But North Texas teams came up short in the next three title games, the region’s worst showing at state since 2021, when South Oak Cliff became the first Dallas ISD school to win a recognized state championship since 1958, but Denton Guyer and Duncanville fell in the 6A state championship games.

Two-time state champion South Oak Cliff missed a last-second field goal, falling 38-35 to third-year program Richmond Randle in the 5A Division II state title game Friday night. It was SOC’s second straight loss in the state championship game.

“The future is still bright,” South Oak Cliff coach Jason Todd said. “We just gotta find out what’s going to get us over this hump.”

— Click or tap here to read the rest of Myah Taylor’s story —

More 2024 state coverage

— Texas high school football central: 2024 state championship game stories, photos and more

— Gunter grabs third straight crown in dominant 3A-II state title win over Woodville

— Celina routs Kilgore in 4A-I state final, joining elite Texas high school football club

— North Crowley becomes new king of Class 6A with state title win over Austin Westlake

— Celina is a state champion once again, thanks to Bowe Bentley and a little air superiority

— Quentin Gibson broke an NFL player’s Dallas-area record in North Crowley’s state title win

— North Crowley, coach Ray Gates didn’t ‘duck any smoke’ in bold state championship season

— Attendance down for UIL state title games at AT&T Stadium for second straight year

— Full 2024 statewide UIL Texas high school football playoff, state championship results

Conrad football coach Josh Ragsdale cheers on students in a beginner’s class at the 9th... — Conrad football coach Josh Ragsdale cheers on students in a beginner’s class at the 9th Street Gym, Tuesday, Oct. 1, 2024, in Garland. Ragsdale is working toward his black belt while learning forms of taekwondo in classes.(Chitose Suzuki / Staff Photographer)

Player’s death inspires Dallas football coach to finish goal: a black belt in karate

GARLAND — Josh Ragsdale thinks he resembles Will Ferrell.

Not from a physical standpoint, but during karate classes at the 9th Street Gym in Garland. That is where the 44-year-old Ragsdale towers over boys and girls a quarter of his age who are learning the same punches, kicks and self-defense moves — such as how to throw an attacker to the ground — as Conrad High School’s head football coach.

Picture Ferrell’s character Buddy in the movie Elf, except he’s wearing a traditional karate uniform called a gi and doing tornado kicks and fighting instead of making toys.

“I’m Elf,” Ragsdale said. “I’m the adult amongst a bunch of smaller folks, but it’s been neat for me to connect with them.”

— Click or tap here to read the rest of Greg Riddle’s story —

Kailer Pettijohn, left, Riley Pettijohn, and Cam Pettijohn pose for a photograph at the... — Kailer Pettijohn, left, Riley Pettijohn, and Cam Pettijohn pose for a photograph at the McKinney High School practice field in McKinney, TX, on Oct 14, 2024.(Jason Janik / Jason Janik)

Tips on protecting plants and property as North Texas homeowners prepare for freeze

Published

1 day ago

January 4, 2025

Press Room

Tips on protecting plants and property as North Texas homeowners prepare for freeze

01:41

NORTH TEXAS — In a couple of days, temperatures are expected to drastically drop. This weekend is a good time to get prepared.

Richardson homeowner Stephanie Brownell is now preparing her home for freezing temperatures while it’s still pleasant outside.

“I don’t like cold weather, so I’ve come out and I wrapped all my faucets and then put covers on them,” she said.

She’s also moved all her potted tropical plants inside.

“So for this freeze you’re going to want to bring in anything that’s tropical, tender vegetation such as house plants, and things like that,” Fort Worth Botanic Garden Senior Director of Horticulture Keith Brock said. “Most of your annuals will be fine.”

He said based on the forecast, water your plants now if you can.

“Water has insulating quality,” he said. “It also makes sure that plants are not under stress because like water, you want your plants in good shape when we get these kinds of temperatures. I would start no later than tomorrow.”

He said for the most part, outdoor plants don’t need to be covered. However, if there’s any concern based on the type of plant you have, you can always throw a frost cloth or an old sheet on it.

Brownell said her gardenias are vulnerable to the cold. She’s making the preparations now, hoping they pay off in the coming days.

Erin Jones

Raised in Richardson, Erin Jones is proud to call North Texas home. Her passion for journalism began in elementary school. For a 5th grade graduation memory book, she was asked what do you want to be when you grow up? She wrote journalist.

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