The Texas House Committee on Ways and Means meets at 10 a.m. Sept. 15 to take testimony on how local governments spend and borrow, and on whether the Legislature should cap the growth of both. The charge that will occupy most of the morning names one borrowing tool by name: the certificate of obligation, a form of local debt that does not require a bond election unless voters petition against it first.
It does not name Austin’s Project Connect either, a financing arrangement two consecutive legislatures tried and failed to shut down.
The committee’s instruction from Speaker Dustin Burrows reads: “Examine local government spending and debt practices, including the use of certificates of obligation, to determine the overall impact on property tax rates. Evaluate other revenue sources, such as fees, utilized by local units of government to facilitate increased spending. Make recommendations to improve the long-term affordability for Texas families by limiting the growth of local government spending.” The verb in the last sentence — limiting — tells members where the assignment is expected to land.
Three other charges travel with it: build on the property tax relief the Legislature passed in 2025, monitor two 2025 transparency laws, and oversee the agencies in the committee’s jurisdiction, which include the comptroller. The Dispatch reported the hearing’s mechanics and its property tax charge when the notice went up.
Rep. Morgan Meyer, R-Dallas, chairs the 13-member panel; Rep. Trey Martinez Fischer, D-San Antonio, is vice chair. A revised notice moved the hearing to Capitol Extension room E2.014. Written testimony was due to the committee clerk Sept. 10, and testimony at the microphone is capped at two minutes.
The debt numbers are not in dispute. Texas local governments carried $368.89 billion in outstanding principal at the close of fiscal 2025, up 10.7 percent in a single year, according to the Texas Bond Review Board’s annual local government report, published in January. Certificates of obligation account for $30.85 billion of it — a figure that has grown 132.9% in ten years, from $13.24 billion in 2016. Cities hold about four-fifths of it, spread across 694 of them. Total local debt works out to $11,789 for every Texan, up more than half since 2016.
What makes certificates distinctive is the election that does not happen. Under the Certificate of Obligation Act of 1971, a city or county publishes notice and then issues the debt on its own vote. Residents can force an election only by gathering signatures from 5 percent of qualified voters before the governing body acts. The Legislature has not touched that threshold since 2019. School districts cannot issue certificates at all.
Gov. Greg Abbott has made local spending the center of his own property tax agenda, though what he has proposed depends on where you look. His office’s official description, issued Aug. 20 in Fort Worth, lists five items: roll back tax increases, “require common sense local spending limits,” create appraisal predictability, require two-thirds voter approval for tax increases, and curb appraisal growth. “It is very achievable for jurisdictions across the entire state to do exactly what Tarrant County has done,” Abbott said there. “And that is to cut property taxes while fully funding operations.”
The numbers live on his campaign site, which carries a political advertising disclaimer. There, the spending limit is defined as population growth plus inflation or 3.5 percent, whichever is lower, and the rollback petition threshold is set at 15 percent of registered voters. The campaign version also promises to let Texans vote to eliminate school district property taxes on homesteads; the official list does not mention it.
On certificates of obligation, Abbott has proposed nothing. The phrase does not appear in his five-point plan, in his 2025 emergency-item paper, in his 2025 State of the State, or in the Aug. 20 release. His one local-debt proposal in an official document came in February 2025, when he asked the Legislature to “require all local bond issues and tax rate elections be on the November ballot and approved by a two-thirds supermajority of voters.” That item did not carry over into the 2026 plan.
The Legislative Reference Library’s background reading for this charge lists one advocacy document: an August paper from the Texas Public Policy Foundation, which urges the Legislature to “limit the growth of a political subdivision’s spending to population and inflation” and, separately, to cut the certificate petition threshold from 5 percent to 2 percent. Cities are moving the other way. At its policy summit in August, the Texas Municipal League, which represents them, recommended adding the words “expenditure caps” to the list of measures its members formally oppose — a change its membership votes on in November.
Which brings back the case nobody has to name.
In November 2020 Austin voters approved an 8.75-cent increase in the city’s maintenance and operations rate — the part of a property tax bill that funds day-to-day operations, as distinct from the separate rate dedicated to paying off bonds. The ballot ran to roughly 200 words describing rail, buses, sidewalks and anti-displacement housing. It never used the words bond, debt or borrow. The city routes that revenue to the Austin Transit Partnership, a nonprofit corporation created the following month, which plans to issue long-term bonds against the expectation that the transfers keep coming.
That structure matters beyond Austin because of how state law is built. Cities may not issue bonds backed by property taxes without voter approval. And under the Tax Code, an obligation budgeted for payment out of maintenance and operations funds is not counted as “debt” at all — which means it produces no debt-service rate, and sits inside the 3.5 percent annual cap on operating-rate growth rather than outside it, where debt-service rates run. In a 2023 opinion requested by Bettencourt, the attorney general’s office wrote that the election statute Austin used “does not authorize a municipality to ‘earmark’ use of a voter-approved increase in its maintenance and operation property tax revenue for debt service.”
Six years and roughly $990 million in transfers later, the partnership has issued no bonds. “To date, ATP has not yet issued any debt,” its own proposed budget says. No track has been laid. The dispute is frozen in court: on Aug. 13 a Travis County judge denied competing motions from the attorney general and from the city, both sides appealed within hours, and the trial court is stayed. The Dispatch covered the hearing that produced those rulings and the rulings themselves. Opening briefs at the Fifteenth Court of Appeals are due Sept. 21.
Austin’s position is that it followed the law and wants a ruling. “Austin Transit Partnership and the City of Austin filed bond validation proceedings in 2024 so that we could have an impartial judge confirm that we have complied with state law at every step,” said Casey Burack, the partnership’s executive vice president for business and legal affairs, after the August hearing. The city added that “voters approved the creation and funding of Project Connect in 2020.”
Legislators have tried twice to reach the structure directly and failed . A 2023 bill by Rep. Ellen Troxclair, R-Lakeway, clarifying operations & maintenance revenues could not be used to pay back bonds passed both chambers and died on a procedural point of order. In 2025, Bettencourt’s Senate Bill 2519 would have barred transferring a voter-approved operating-tax increase to a local government corporation to repay securities; it cleared committee in both chambers and was never set for a House floor vote. Bettencourt’s certificate of obligation bill died the same way. So did Meyer’s own local-debt bill, House Bill 19, which was left pending in the committee he chairs.
Members will hear about all of it in general terms Sept. 15. What they recommend is due back before the Legislature convenes in January 2027 — and so is the comptroller’s review of school district spending that Abbott ordered in August, which lands on this committee’s desk by Dec. 31.