The Marshall City Council took up an ordinance June 25 to authorize up to $35 million in certificates of obligation for water and sewer work, according to the City of Marshall website. The debt, under Texas law, requires no public vote unless residents petition first.
Marshall is one example of a financing tool that lets Texas cities, counties and districts borrow for as long as 40 years without asking voters. Certificates of obligation, or COs, are repaid with property taxes or local revenues, according to comptroller.texas.gov. Most residents learn of an issuance only when the tax-backed bill is set.
The Marshall notice shows the cost. The $35 million principal carries an estimated $68.58 million in combined principal and interest, with a final maturity of Aug. 15, 2056. The certificates would be backed by an annual property tax and a pledge of water-and-sewer revenue.
State law sets one check. Under Local Government Code Section 271.049, a city must publish notice for two weeks and at least 45 days before the vote. If at least 5% of qualified voters sign a petition before that vote, the city cannot issue the debt unless an election approves it.
The petition is the only public lever, and it is rarely pulled. The 45-day window is short, and the notice runs in a newspaper rather than on a ballot. Reaching 5% of registered voters requires an organized signature drive in the weeks before a single council meeting.
The borrowing has grown. Statewide CO debt outstanding rose from $13.67 billion in fiscal 2014 to $22.67 billion in fiscal 2023, a 65.8% increase, according to Bond Review Board figures cited by the Texas Public Policy Foundation. Cities held 79.3% of that total.
The Texas Comptroller calls COs a “controversial funding tool,” according to comptroller.texas.gov. Backers note the flexibility for urgent repairs, such as fixing roads after a disaster without waiting for an election. Critics say cities use COs for discretionary projects voters might reject.
Residents do sometimes force the question. In Jersey Village, validated petitions in 2025 pushed a proposed city-campus CO to the November ballot, where voters rejected it, according to Community Impact. In Amarillo, a petition challenged CO debt for a water park, as reported by Texas Scorecard.
Marshall’s vote is the next checkpoint. Whether residents petitioned the $35 million issuance, and whether the 2027 Legislature revisits limits on non-voter-approved debt, are the open questions.