IPFS Menckens Ghost

More About: Economy - Economics USA

Houston, you have a problem with spending

It's a little-known fact that if employment by state and local governments had kept pace with population growth instead of exceeding it over the decades, there would be 12.4 million fewer public sector workers today, resulting in an annual savings of over $1 trillion, in much fewer unfunded public pensions, and in 12.4 million more workers in the private sector to produce wealth.  The State of Texas has not been immune to the problem, contrary to the myth that it is a paragon of fiscal rectitude, as the comptroller of Texas (aka chief financial officer) explains below.  Her solutions are spot-on in theory and DOA in practice. 
Self-rule isn't working, folks, because it doesn't work with a brainwashed, unlearned and drugged citizenry.  But don't worry:  more money for public education, more computers and cops in the classroom, and more college degrees will fix this.  Trust me.  All you have to do is vote yes for the next school bond issue.
Mencken's Ghost
The Wall Street Journal
January 18, 2013 
Debt Excess Even Lives in Texas

Austin, Texas

Federal, state and local governments have generated millions of pages of unreadable prose laying out rules and regulations and asserting their authority over our lives. But the whole nation began with a Declaration of only about 1,300 well-chosen words—and perhaps the most important are the words that say governments derive their powers "from the consent of the governed."

Is that what America's leaders have today? It's hard to argue that they do, given their bottom-of-the-barrel approval ratings. Instead of consent, the best most government officials can hope for from taxpayers is a bone-tired, cynical acquiescence. For the people who spend tax dollars, that may be enough.

But it shouldn't be enough for the people who actually pay the bills. Taxpayers have a right—and, more important, a responsibility—to see how their money is spent.

It's not just federal spending. As the chief financial officer of the nation's second-largest state, even I have found it hard to get a handle on how much governments are spending, and how much debt they're taking on. Every level of government is piling up incredible bills. And they're coming due, whether we like it or not.

Even in low-tax Texas, property taxes have risen three times faster than the inflation rate and four times faster than our population growth since 1992. Our local governments, meanwhile, more than doubled their debt load in the last decade, to more than $7,500 in debt for every man, woman and child in the state. In Houston alone, city-employee pension plans are facing an unfunded liability of $2.4 billion.

But too many taxpayers aren't given the information they need to make informed decisions when they vote debt issues. Recently I spent several months holding about 40 town-hall meetings with Texans across our state. Each time, I asked the attendees if they could tell me how much debt their local governments are carrying. Not a single person in a single town had this information.


Apathy costs money. In Texas, local debt generally is approved by shockingly low shares of the electorate, often with turnouts of less than 10%. That leads to just the kind of oversight you'd expect: We've found that some apparently similar school-construction projects cost 2½ times as much per square foot as others, for no obvious reason.

So how can we turn this around? I believe the answer is that information drives action.

• The first step for many Americans may be simply identifying all the authorities that tax them. In some areas, you may be paying taxes to the state, a city, a school district, a hospital district, a port authority . . . the list goes on. You can't confront these entities about spending and debt if you don't even know who they are.

• The second step is to agitate for some common-sense changes that will put vital information about government spending and debt in front of the public. That will limit governments' ability to make an end run around your wishes.

We should, for instance, strive to limit all the various mechanisms that governments have crafted to get around the usual requirement for voter approval of new debt. In Texas, we have an instrument called "certificates of obligation." Other vehicles used around the country include lease-purchase financing, lease-revenue bonds and "certificates of participation." Regardless of the name, they're all designed to allow governments to sell debt without your permission. The practice should be limited—and watched closely.

• Another key reform would make it impossible to vote on debt in a vacuum. Most people don't have the first idea of how new proposed debt fits into the total debt being carried by their local governments. Every ballot in an election for new bonded indebtedness should state, at minimum, the current amount of outstanding debt and annual debt-service payments, and show how the proposed debt will affect the tally.

• Because most education debt is used for school construction, school districts should be required to provide essential information on the Web about the cost of each new facility. The information would include the cost per square foot of construction and the number of square feet per student. Voters would then be able to make meaningful comparisons—and ask the right questions.

• Given the dire financial conditions of many public-employee pension systems, the systems should be required to publicly report net investment returns for each of the past 10 fiscal years, as well as one-year, three-year, five-year, 10-year, 30-year and since-inception rolling rates of return. We need to know whether projections ever match actual returns or if these government pensions are selling us a bill of goods.

• Finally, given the growth of special districts with taxing authority, each district should be required to perform a self-evaluation every few years to ensure that it continues to fulfill its mission and further a public good. This information should be posted online, so you can determine if your money is being used for the purpose that was intended.

These are basic but essential steps that could be implemented in every state across the country. They would give taxpayers the same kind of information on government debt and spending that they'd need to prepare and balance their own budgets, to handle a mortgage or buy a car—a clear knowledge of what we're spending and what we owe.

Unchecked and invisible debt and out-of-control spending are putting the nation in real jeopardy, and too many public officials seem happy to keep you in the dark. It's up to you to demand that the lights be turned on—before it's too late.

— Ms. Combs is the Texas Comptroller of Public Accounts. Her office has released a series of reports on government debt that can be found at www.TexasItsYourMoney.com.

A version of this article appeared January 19, 2013, on page A11 in the U.S. edition of The Wall Street Journal, with the headline: Debt Excess Even Lives in Texas.

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