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.
We welcome your thoughts in a letter to the editor. See the guidelines and submit your letter here. If you have problems with the form, you can submit via email at letters@dallasnews.com
Texas
Texas needs at least $174 billion to avoid water crisis, state says
AUSTIN (Texas Tribune) — Texas communities will need to spend $174 billion in the next 50 years to avert a severe water crisis, a new state analysis revealed Thursday. That’s more than double the $80 billion projected four years ago, when the Texas Water Development Board last passed a state water plan.
The three-member board presiding over the agency authorized the highly anticipated draft blueprint Thursday, the first administrative step toward adopting the water development board’s plans for the next 50 years. The plan, released every five years, encompasses the projects that 16 regional water planning groups in Texas said are the most urgent, water development board officials said.
The board’s latest estimates come as the state’s water supply faces numerous threats. Growing communities across Texas are scrambling to secure water, keep up with construction costs and cope with a yearslong drought. This week, Corpus Christi officials said the city may be just months away from declaring a water emergency. Meanwhile, other rural cities by the Coastal Bend are rapidly drilling wells to avoid a crisis. Residents in North Texas have also been bracing for groundwater shortages.
In an effort to restrain the crisis, lawmakers last year called an election in which voters approved a $20 billion boost for communities to use on water-related expenses. The water development board’s estimate shows that what lawmakers proposed on the ballot falls dramatically short of the needed cash, experts said.
“What this number tells me at the end of the day is if we don’t get serious about (funding water projects), there are going to be serious consequences for Texas,” said Perry Fowler, executive director of the Texas Water Infrastructure Network. “Even with the billion-dollar-a-year plan kicking in, it’s not going to be enough to offset the costs of the projects that are going to have to be executed.”
The new estimate accounts for 3,000 projects, from regional infrastructure upgrades to smaller endeavors such as drilling new water wells. Texas’ water supplies are expected to drop by roughly 10% between 2030 and 2080, according to the water plan. In that same time frame, the maximum amount of water communities can draw is also expected to decline by 9%.
The 80-page plan notes approximately 6,700 recommended strategies that would add water to the state’s dwindling portfolio. The recommendations — which are not accounted for in the cost — include developing new supplies from aquifer storage and recovery, brackish groundwater, desalination and recycled water. It also calls for water conservation.
The report suggested that if Texas does not implement the plans and recommendations, the state is one severe drought away from an estimated $91 billion in economic damages in 2030.
The state’s plan attributes a variety of reasons for the bigger price tag, such as higher costs of construction due to inflation, impacts of the COVID-19 pandemic on supply chains, and a growing backlog of water supply projects.
“There’s a plan that can meet our needs,” said Matt Nelson, deputy executive administrator for the Office of Planning at the water development board, adding that they take their cues from the regional planning groups. “These are local projects that folks need to implement; they’re needed regardless of how they’re funded. It’s important to remember these are not top-down projects or state projects.”
Experts told The Texas Tribune that the board’s estimate is only a fraction of what Texas communities will need to ensure they have water in 50 years’ time, saying growth and development are outpacing the state’s ability to keep up.
“This is a bigger water plan in terms of volume strategies and capital costs compared to anything we’ve ever seen before,” said Jeremy Mazur, the director of infrastructure and natural resources policy at think tank Texas 2036.
Mazur suggested that the $174 billion only covers water supply projects and does not account for updating aging infrastructure, adding that the actual price could amount to a quarter of a trillion dollars.
“There’s a substantial magnitude with regard to the capital investment needed to both fix our aging and current systems and potentially develop the water infrastructure, water supply projects that we need.“
The report largely confirmed what many water experts have warned regarding threats to the state’s water supply, said Sarah Kirkle, director of policy at the Texas Water Association.
“Population growth, extreme weather, and economic development needs are all increasing demands on our infrastructure, and the state is going to need more water, sooner,” Kirkle said. “This is all while water projects are becoming more costly and complex because the easiest and cheapest local projects have already been developed.”
Fowler, with the infrastructure network, said he expects the Texas Legislature to take up the issue next year, when lawmakers meet for the 90th legislative session. He said the state should take a bigger role in ensuring that communities can afford their respective water projects.
“It’s going to have to be a top-down priority, there’s no way around it,” he said. “The challenges are so immense that it’s going to take all hands on deck.”
Texas residents have until the end of May to comment on the proposal. Water development board officials must adopt it by January 2027.
Alejandra Martinez contributed to this story.
This article originally appeared in The Texas Tribune at www.texastribune.org. The Texas Tribune is a nonprofit, nonpartisan media organization that informs Texans – and engages with them – about public policy, politics, government and statewide issues.
Texas
Co‑worker confesses to killing missing North Texas man and stealing his car, police say
A North Texas man reported missing earlier this week was found dead Friday, and police say a co‑worker has confessed to fatally shooting him and stealing his car.
The suspect, Gregory D. Lewis, 34, remains in custody and faces a forthcoming capital murder charge, according to the Fort Worth Police Department.
Lewis is accused of killing 31‑year‑old Thomas King, who had been last seen in his Taco Casa work uniform. King was reported missing on Tuesday after failing to return home Monday from the fast‑food restaurant in the 1100 block of Bridgewood Drive.
Car found at Arlington motel
Police said King’s car was found at the Quality Inn on I‑20 in Arlington, and surveillance video showed Lewis arriving in King’s vehicle shortly after King left work.
Detectives identified the man in the video and arrested him on unrelated charges.
Body discovered on Fort Worth’s East Side
King’s body was located on Friday in an open field on Fort Worth’s East Side, authorities said.
According to police, Lewis confessed to shooting the victim and stealing his car.
Medical examiner review pending
The Tarrant County Medical Examiner will determine the cause of death.
CBS News Texas has reached out to Taco Casa for comment.
Texas
Exclusive | Mexican mayor urged relatives in US to vote for Texas Dem for Congress who would ‘take care’ of their city
WASHINGTON — A Mexican mayor earlier this month urged her constituents to get their relatives in Texas to vote for House Democratic candidate Bobby Pulido because he would “take care” of their city if elected to Congress.
“We need to get out the vote for him,” said Patricia Frinee Cantú Garza, mayor of General Bravo in Nuevo León, less than two hours from the US border, in a recent Spanish-speaking Facebook reel,which The Post reviewed and translated.
“Talk to your families in the United States. Make sure they go vote,” Garza added, noting that she would be presenting the keys to the city to Pulido, a two-time Latin Grammy winner, on April 3.
“When he becomes a congressman,” she also said, “we want him to take care of Bravo.”
The city ceremony celebrating Pulido in General Bravo never received enough funding and was cancelled, the Mexican outlet El Norte reported.
Pulido has headlined concerts in General Bravo as recently as November 2023. Local officials promoted the show and the current mayor and her husband, then-mayor Edgar Cantu Fernandez, appeared.
“Bobby doesn’t know the mayor and has never met her,” a Pulido campaign spokesperson said in a statement. “He declined the invitation, didn’t attend the event, and isn’t responsible for unsolicited comments made by other people.”
Bradley Smith, a former chairman of the Federal Election Commission, said the statements wouldn’t pose legal or ethical issues for Pulido — but that the remarks may have a political cost, given the focus on foreign involvement in US elections in recent years.
“If you were making financial contributions, that would be a different thing, but just to exhort people to vote,” Smith said, “I don’t think that’s going to be a problem for them.”
Jessica Furst Johnson, a partner at the Republican-aligned campaign finance and election law firm Lex Politica, noted that event appeared to function as an in-kind contribution to Pulido’s campaign but it would be difficult to determine without “more details.”
Congressional Republicans have thus far failed to pass a bill this session aimed at beefing up identification requirements for voters when registering, though many have said laws as currently written are too lax and could lead to non-citizens casting ballots.
State investigations and audits have shown in recent years that thousands of non-citizens ended up being registered, but few have ever illegally voted. Those who have are federally prosecuted.
Pulido is challenging incumbent GOP Rep. Monica De La Cruz in the Texas district this November and has faced questions from the press about his ties to Mexico, where he has said he maintains a home for parts of the year.
The Latino music star admitted to splitting time with his family between there and Texas just two years before launching his campaign, telling a YouTube show in a 2023 interview that he’s a “summer Mexican” but “winter Texan.”
“We live on the border,” he has also said. “My wife and I have a house in Mexico. So, we travel there, and we spend time over there.”
There was no indication of a current mortgage on a property either there or in the US, according to financial disclosures that Pulido filed April 15 with the House. Those filings also revealed he holds a checking account at a Mexican bank.
“Bobby lives in his family home in Edinburg, Texas, where he was born, raised, and is raising his own family,” the Pulido campaign rep noted. “He is in complete compliance with all House disclosure rules — the property you are referencing is not his primary residence so is not required to be listed.”
-
Sports8 minutes agoRyan Ward has a solid debut, but bullpen blows it again as Dodgers lose to Rockies
-
World20 minutes agoSchools, shops shut in northern Israel to protest the Lebanon ceasefire
-
News50 minutes agoCommunities launch cleanup after severe weather and tornadoes churn across Midwest
-
Detroit, MI3 hours agoGame 21: Tigers at Red Sox, Garrett Crochet battles both Detroit and the weather
-
San Francisco, CA3 hours agoWhy do gray whales keep dying in San Francisco’s waters?
-
Dallas, TX3 hours agoDallas Mavericks Owners Might Be Making Big Mistake in Search for New GM
-
Miami, FL3 hours agoDefense dominates, Mensah flashes in Miami’s spring game – The Miami Hurricane
-
Boston, MA3 hours ago
A crowd scientist is helping the Boston Marathon manage a growing field of 30,000-plus runners