El Paso County Commissioners are set to discuss issuing $52 million in certificates of obligation (COs) on March 17. According to county officials, the non-voter approved debt is needed for drinking water, improving roadway safety and enhancing flood control. The vote to move forward on issuing the COs is scheduled for March 17. If the county commissioners vote to move forward on the issuance of the COs, El Paso County voters have 45 days to object by lobbying their county commissioners or starting a petition drive.
In 2022, a vote by county commissioners on a proposed $345.7 million of certificates of obligation for the University Medical Center (UMC) was stopped after the Libre Initiative submitted 35,000 signatures to the county objecting to the COs.
According to the Texas Comptroller of Public Accounts, “certificates of obligation (COs),” are a type of public debt “which some local governments” use to “fund public works without voter approval.” The issuance of COs was authorized under the Texas’ Certificate of Obligation Act of 1971. The public debt issued without voter approval is paid through the taxes, mainly property taxes, collected by the governmental body that issued the COs.
Under the Act, after the county commissioners vote to issue the COs, if 5% of the county voters object to the issuance through a petition, the county commissioners then must ask the voters for permission to issue the public debt through an election.
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El Paso Certificates of Obligation Over $1 Billion
Property taxes, both residential and commercial pay for public debt issued by the City of El Paso, the County of El Paso, the University Medical Center of El Paso (UMC) and the school districts. Generally, there are two types of public debt. The first is the general obligation debt where the governmental body asks the voters for permission to issue the debt.
An example of a voter approved debt is the City of El Paso 2012 Quality of Life Bond that included the controversial multipurpose arena that was slated to be built in the Duranguito footprint. The measure included two propositions totaling $470 million. Proposition 2 included the controversial multipurpose arena. El Paso voters approved increasing their property taxes by about $41 annually in 2012.
The second form of public debt is the certificates of obligation where the governmental body votes to issue public debt generally paid for by the homeowners and business owners through their property taxes without asking the voters for permission to do so. Because they do not require voter approval, certificates of obligations are controversial.
According to the Texas Bond Review Board, a government body reporting on public debt, the issuance of COs grew “by nearly 85 percent” from 2006 to 2015. In 2015, the City of El Paso had $523.1 million in outstanding COs. El Paso County had $141.9 million, and the University Medical Center (UMC) had $133.5 million on outstanding COs. In total, El Paso voters owed $798.5 million in non-voter approved debt in 2015. Today, El Paso voters owe just over $1 Billion in certificates of obligation.
El Paso News analyzed the data on certificates obligation held by the State of Texas through its Texas Open Data Portal. The Portal allows users to generate reports from the data collected by the state.
According to our data analysis, as of last year, the City of El Paso has $720.7 million in outstanding COs. The County of El Paso has $83.5 million in outstanding COs, and the University Medical Center (UMC) has $227.4 million in outstanding certificates of obligation. Because it is the county commissioners who vote to approve the UMC debt, the total outstanding CO’s by the County is $339.5 million.
Because the non-voter approved debt is generally paid for by property taxes, we examined the portion of the non-voter approved debt belonging to each El Paso County registered voter. Both residential homeowners and business owners pay property taxes on their properties. The City of El Paso’s certificates of obligation are paid for by the properties within the city limits and all residents in and outside of the city limits pay the county’s portion of the non-voter approved debt. This means that city residents owe an additional $484.39, which represents the city’s portion of the COs.
We asked the El Paso Central Appraisal District for a count of residential and commercial properties yesterday to identify each portion of the outstanding debt. As of publication time, they have not responded to our request. However, we were able to obtain the count through a real estate data aggregator.
According to ATTOM Data, there are 240,001 residential properties in El Paso. Property taxes, which are used to pay for the certificates of obligation, are also collected from commercial properties. According to ATTOM, there are 106,978 commercial properties. ATTOM is a property data aggregator.
For the number of voters, we used the voter data on El Paso Votes to get the voter count.
It should be noted that the tax burden calculations for certificates of obligation do not include the other public debt, like the 2012 Quality of Life projects that the city and the other taxing entities have issued. However, that public debt is approved by the voters, who vote to tax themselves, unlike the certificates of obligation.
The City’s current Budget Book shows that the city is carrying $2 Billion in public debt as of August 31, 2024. To meet its obligations, the city must pay $129,123,846 this year. The amount includes $62.9 million in interest payments. In his comments yesterday at the El Paso State of the City, Renard Johnson alluded to the tax burden by stating that the city must find “alternative funding sources” for projects to help the taxpayers.
According to the County’s Fiscal Year 2025 Annual Operating Budget, the county is carrying $231.7 million in public debt, including several certificates of obligations totaling $86.9 million. The COs represent 17% of the county’s public debt. About $82 million of the outstanding certificates of obligation were issued under Ricardo Samaniego, including $57.1 million issued in 2023.
Should the county commissioners vote to issue another $52 million in certificates of obligation on March 17, the total debt owed by El Pasoans will increase to $1,083,781,050 before any interest is applied to the new debt.