What happened
In response to House Bill 19—which would cap how much debt Texas cities can take on—the Buda City Council on May 6 reviewed the city’s debt portfolio and the timeline for spending voter-approved bond funds.
Buda’s current funding portfolio includes remaining funds from its 2021 general obligation bonds, along with planned funding for capital improvement projects, such as the Sequoyah drainage improvements and downtown streetscaping.
Some context
In November 2021, Buda voters approved two bond propositions totaling $89.66 million to fund citywide infrastructure and quality-of-life upgrades, including road reconstruction, trail expansion and park improvements, according to previous Community Impact reporting.
The overview
By the end of the fiscal year, Buda is expected to carry $138 million in tax-supported debt and $60 million in utility-supported debt, according to city documents. For fiscal year 2024-25, debt service payments will total $13 million—$8 million for tax-supported debt and $5 million for utility-backed debt.
Tax-supported debt is repaid through the city’s interest and sinking property tax rate, currently $0.2496 per $100 of assessed value, according to city documents. Utility debt is repaid through customer water and wastewater bills.
Digging deeper
HB 19, filed by state Reps. Morgan Meyer, Greg Bonnen, Giovanni Capriglione and Ken King, would cap cities’ annual debt payments at 20% of their average property tax revenue from the past three years.
For Buda, that cap would restrict borrowing capacity to about $27 million—preventing the city from issuing the remaining $38.5 million in GO bonds approved in 2021, according to city documents. If passed, the bill could delay or halt several planned projects until the city’s property tax base grows.
The bill is scheduled to take effect Sept. 1. However, according to Jennifer Ritter with Specialized Public Finance Inc., debt issued before that date would be exempt. The bill received a hearing in the House Ways and Means Committee on April 21 but remains pending. If no action is taken by May 15, the bill will die.
“I really hope that the doomsday scenario that I’m thinking of doesn’t come to fruition,” council member Matt Smith said. “But I do think that it should energize us somewhat to do what we can through our channels and our means to oppose the measure.”
Next steps
To avoid restrictions under HB 19, the city would need to issue the remaining bonds before Sept. 1, according to Ritter. That would require a decision in June and a sale by July—just before the city sets its tax rate for the next fiscal year.
City Council is expected to revisit the topic at its May 20 meeting.
