Dear Media,
This email is just for you!
I have completed my research on the issuance of certificates of obligation by the City of El Paso after carefully analyzing the City Council agendas and minutes of every meeting since June 27, 2017, when Mayor Margo and the four City reps who are currently seeking reelection first assumed office.
Since 2017, El Paso has surpassed Lubbock in outstanding debt from certificates of obligation and is now number one in Texas! I have attached the relevant chart from page 42 of the 2019 Local Annual Report of the Texas Bond Review Board.
According to the Texas Public Policy Foundation, certificates of obligation “were originally created to give local governments a tool for emergency spending” but in recent years some Texas Cities have started using them to pay for “projects that are either controversial or discretionary, such as public art projects, swimming pools, and parks.”
$574 MILLION IN DEBT FROM CERTIFICATES OF OBLIGATION AND RISING FAST…
According to page 87 of the Budget Book for FY 2020, the City of El Paso has accumulated $574,450,000 in debt from certificates of obligation as of March 2019, and $305,654,666 of interest will be paid on that through the year 2044.
EL PASO REVISED ITS DEBT MANAGEMENT POLICY AND RAISED OUR TAXES
On July 25, 2017, only four weeks after the Mayor and four new City Council reps assumed office, the City Council voted 8-0 to revise the City’s Debt Management Policy (see section 5.3), allowing certificates of obligation of up to $100 million to be used for a wide range of purposes, including funding the Quality of Life Bond projects. Never mind that the projects were represented on the November 6, 2012 ballot as costing $473,250,000. The City went ahead and wrote itself a blank check!
Without losing any time, on August 7, 2017 the City Council voted overwhelmingly to issue $68,750,000 in CO debt in support of the 2017 Capital Funding Plan, of which $22,900,000 was earmarked for the Quality of Life Bond projects.
On August 22, 2017, in response to the planned issuance of $68,750,000 of new CO debt, the City Council voted 8-0 to raise the Debt Service tax rate from the current level of 30 cents per $100 of property valuation to 35 cents. Thus every property owner in El Paso will feel the financial weight of the City’s binge borrowing and spending.
DEFICIT SPENDING ACCELERATES
Here is the complete list of all City expenditures authorized since June 2017 using certificates of obligation:
8/7/17 $68,750,000 for 2017 Capital Funding Plan
12/19/17 $15,500,000 for East Side Sports Complex
7/23/18 $20,800,000 in added funding for Children’s Museum
9/18/18 $10,750,000 in added funding for the Cultural Center
12/9/19 $46,026,015 for 2020 Capital Funding Plan
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TOTAL $161,826,015
CITY AUTHORIZES $200 MILLION IN NEW CERTIFICATES OF OBLIGATION DEBT!
On January 8, 2019, the City Council voted 7-0 (with Rep. Lizarraga absent) to authorize $100 million in new debt, to be funded by certificates of obligation.
On January 7, 2020, the City Council voted 8-0 to authorize yet another $100 million in CO debt, for a total of $200 million since June 2017!
We know that $161,826,015 of this figure has already been earmarked.
We also know that since June 2017, the City has spent more than $60,800,000 on 27 infrastructure projects that were funded in whole or in part by certificates of obligation, mostly from earlier issuances going back to 2010. (In most cases the City does not indicate the precise dollar figure of CO support for these projects).
WE NEED THE MEDIA MORE THAN EVER!
In summary, the Mayor and City Council (with the exception of Claudia Lizette Rodriguez, who assumed office in February) have acted very irresponsibly in authorizing $200 million in new CO debt that will leave us with massive principle/interest payments through at least 2045. Even worse, much of this debt will be used for finishing three Quality of Life Bond projects that are collectively $47 million over budget so far.
Amazingly, the COVID-19 pandemic has triggered no major effort to curtail this borrowing, even as the City furloughs 400 employees and cuts the salaries of more than 3,000 others.
Just imagine if the City Council voted to issue $70 million more in CO debt to supplement the planned multipurpose basketball arena, as the Mayor and Rep. Svarzbein have publicly suggested. Indeed, that ill-fated project will require more than $300 million in additional deficit spending, and that is a fact!
The media has so far failed to cover comprehensively the City’s use of certificates of obligation, even though the City has not only set the Texas record for CO debt, but has also used COs to fund entertainment projects.
With the data I am providing you here, you now have everything you need to inform the public about what is happening. As this is a general election year, the need could not be greater. El Paso is counting on you to serve as a check against reckless government spending.
Max