City council voted 4/3 in favor of pursuing a certificate of obligation for almost $100 million dollars to do repairs on the aging water plant. Odessa has the means to pay for these repairs without issuing this debt. After going though the legalities of this process if this CO passes your TAXES are likely going UP. If the debt is written for 30-40 years that would equate to a whole lot of property tax increases. Sitting council members Tom Sprawls, Steve Thompson, Detra White and Mari Willis all voted to pursue issuing debt on behalf of the tax payers though several other options were put on the table by Mayor Joven and other council members Mark Matta and Denise Swanner.
Texas state law generally requires our local governments to seek voters’ approval before issuing debt that will be repaid from tax revenues. One common form of borrowing, however, represents an exception to this rule: certificates of obligation (CO’s) which some local governments can use to fund public works without voter approval.
CO’s provide local governments with important flexibility when they need to finance projects quickly, as with reconstruction after a disaster or as a response to a court decision or as a response to a court decision requiring capital spending. But the way CO’s circumvent voter approval has made them controversial.
CO’s were authorized by Texas’ Certificate of Obligation act of 1971 and are often associated with emergency spending, but their use is not restricted to such purposes. Commissioners courts, city councils and health or hospital district boards opting to issue CO’s must post a description of the projects to be financed in local newspapers at least twice, first more than 30 days before the governing body’s vote on the CO issuance and again a week after the initial posting. These postings must describe the general purpose and amount of the debt to be issued, name the method of repayment and list the time and place of the governing body’s vote.
CO’s do not require voter approval unless 5 percent of qualified voters within the jurisdiction petition for an election on the spending in question. CO’s are issued for terms of up to 40 years and usually are supported by property taxes or other local revenues.
CO’s allow local officials to burden taxpayers with long-term, tax-funded debt without adequate citizen input or approval, and that the ability to fund multiple projects with a single CO issuance is confusing and disguises public indebtedness.