SB 16

83(R) - 2013

Vote Recommendation

  • Neutral
  • Neutral
  • Neutral
  • Negative
  • Neutral


Judith Zaffirini

Bill Caption

Relating to authorizing the issuance of revenue bonds to fund capital projects at public institutions of higher education.

Fiscal Notes

Estimated Two-year Net Impact to General Revenue Related Funds for SB16, Committee Report 2nd House, Substituted: a negative impact of ($450,206,975) through the biennium ending August 31, 2015. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.

Bill Analysis

Summary: SB 16 would allow the board of regents of several Texas higher education systems, including the University of Texas System, The Texas A&M System, and the University of Houston System, to issue almost half a billion dollars in new bonds. The bond money would be used for, among other things, financing infrastructure projects, purchasing new properties, and renovating current properties. SB 16, in the case of each institution, would allow an institution’s board of regents to pledge irrevocably any part, or all, of a system’s revenue funds, including student tuition charges. The board of each system would be able to, if sufficient funds are not available to pay a debt, shift resources among its system’s branches to be able to pay a debt.

Analysis: SB 16, by allowing these systems to issue numerous bonds worth a substantial amount of money, is putting taxpayers, students, and every university branch at risk. For instance, if a branch goes into debt and is unable to meet the obligations of a bond, other funds would have to be redistributed from other branches within that system. These funds may include tuition money, which puts students at risk of having to pay another branch’s debt obligation. More broadly, the accumulation of debt within higher education that is funded by Texas government puts Texas taxpayers at risk of having to pay more in taxes for debt service and any default, particularly considering that the debt service is mostly paid out of general revenue. Any debt service would have to be paid for in addition to all of the other expenditures Texas will want to make on higher education in the coming years. We believe that a pay-as-you-go method of financing is far more preferable to financing based off debt. A pay-as-you-go system means there is not a risk of default, and there are no debt service obligations.

We do not support SB 16 because it expands government. Taking on massive new debt is inherently risky, and unjustified when the legislature could support higher education without resorting to bonds on this scale if it budgeted appropriately. We oppose SB 16.