Mayor Oscar Leeser has just vetoed the issuance of $96 million in certificates of obligation, which was approved by City Council on Tuesday under agenda item 11 on a 6-2 vote, with Reps. Molinar and Rodriguez dissenting. The Mayor gave four reasons for his veto:
- We cannot continue issuing debt and obligating future generations to that debt.
- As we just saw with the unexpected COVID-10 public health crisis, we do not know what is in store for us in the future. No one could have foreseen the expenditures we’d be faced with in addressing this crisis. As such, we must tread carefully in issuing any additional debt.
- I believe being fiscally responsible and debt cautious in debt management.
- El Paso already ranks at the top six largest cities in Texas with Certificates of Obligation.
Mayor Leeser must be commended for adhering to his campaign promise to oppose the issuance of CO’s that include funding for QOL bond projects. As I reported below, the $96 million would have included $29.8M for QOL bond projects.
The Mayor points out in his news release that as of 2020 El Paso already had $541,060,000 million in outstanding CO debt, which will cost the taxpayers $851,123,712, including interest. Actually, when one adds the $189,000,000 in CO debt approved since April, El Paso’s outstanding debt will be $730,060,000, amounting to well over $1.1 billion including interest.
But now that the Mayor has vetoed the $96 million issuance, our outstanding CO debt will be $634M, unless City Council votes to override his veto.
DISCUSSION AND ACTION ON OVERRIDING THE MAYOR’S VETO SET FOR AUGUST 31
Item 19 on Tuesday’s City Council agenda is for overriding the Mayor’s veto.
TEXAS HB1869 GOES INTO EFFECT SEPTEMBER 1
On June 15, Governor Abbot signed into law HB 1869, which restricts the use of COs, The text of the law makes clear that CO’s can no longer be used for projects like the MACC or the Eastside Regional Park. There is a list of seven items that are considered “designated infrastructure” that can be paid for with COs, and cultural centers and sports complexes do not qualify.
Article III, Section 3.5(E) of the City Charter makes clear that it will take six City Council reps to override the Mayor’s veto.
Unless one of the six reps who supported the $96M issuance changes position, the override will succeed.
But if the override fails, the City will not be able to spend $29.8M in COs on the QOL bond projects that are currently in the $96M issuance.
Earlier I indicated that the City has only $154,478,476 left to pay for their basketball arena.
They are at least $350M short.
Because of HB1869, they cannot issue COs to borrow the missing $350M.
There is no possible funding source that could make up for the huge shortfall, and I don’t see the private sector lining up to invest in this boondoggle which, like the Ballpark, will certainly end up deep in the red.
Financially, the “Arena” is dead, and the City Manager and CFO know it.