Government Accountability: Voter approval should be required for Austin debt

Robbins: Voter approval should be required for Austin debt

A July 20 American-Statesman editorial took issue with the Austin City Council for planning to issue bonds for buyouts of the homes of Onion Creek flood victims, since these bonds will be sold without voter approval. Upon reading the editorial, I wondered why the Statesman set its threshold for protest at such a low level. The Austin City Charter specifically states that all revenue bonds, including those that finance Austin’s electric and water utilities, be approved by the voters. Yet this Charter provision has been ignored for 16 years.

Article 7, Section 11 of the Austin City Charter clearly reads: “All revenue bonds issued by the city shall first be authorized by a majority of the qualified electors voting at an election held for such purpose.”

The tradition of utility bond approval by Austin voters goes back as far as 1890. However, this practice of voter approval began to be attacked for various reasons beginning in the 1980s.

In 1984, the City Council approved bonds without voter approval to finance the skyrocketing cost of the South Texas Nuclear Project. The council did this because the city was legally required to pay for cost overruns, and believed voters were so outraged by these overruns that they would not vote to keep up payments. The decision was taken to court, which ruled that the city had the right, but not the obligation, to sell bonds without voter approval. The public was so outraged by the episode that the City Council continued to seek voter approval for all other revenue bonds.

In the mid-1980s, several city purchases of buildings were financed with certificates of obligations, which are similar, though not identical, to revenue bonds. While technically complying with the charter, these transactions also raised hackles in the electorate.

Beginning in 2000, the city began purchasing large long-term supplies of renewable energy. These contracts were, in essence, virtual debt. However, they were not revenue bonds, so again, they were not precluded by the charter. Most of these transactions made good business sense and were good for the environment, but the expensive purchase of electricity from a biomass plant in East Texas is still controversial, and the complete terms of this contract have never been made public.

The last revenue bond election in Austin was held in 1998. There was no official reason given for their cessation after this. There were several contributing factors though.

1. A lot of bond money already had been authorized.

2. There was an economic recession in 2001, so growth-related expenditures were limited for a time.

3. The electric utility was over-collecting revenue to buy down debt so it did not need to borrow a lot of money.

4. Some public officials found it convenient to “forget” what was in the charter.

I began protesting their forgetfulness in 2006. The City Council-appointed Charter Revision Committee recommended in 2011 that this section be updated to mandate voter approval of projects costing more than $50 million. However, the City Council never placed the issue of voter approval on the 2012 Charter election ballot for voters to approve.

So here we are today, with a new water treatment plant exceeding a half-billion dollars in cost that will not be needed for a generation, a $2.3 billion biomass contract that continues to raise electric rates, and an acute affordability problem for the majority of Austinites. While voter approval of debt is not a panacea, it is part of a checks-and-balances system that needs to be resuscitated.

The new 10-1 City Council to be elected this fall could be a turning point to enlist more citizen participation in city government. I urge voters in the upcoming November election to ask candidates if we will be allowed to participate in our Charter-prescribed right to economic self-determination. Or will we continue to be ignored by a government that thinks it always knows best?