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A bond election in Texas allows voters to decide whether a local government may borrow money for a specific purpose.
Cities, counties, and school districts use bond debt to finance new schools, highways, bridges, bikeways, fire stations, parks, and other infrastructure.
(A bond is a debt security issued by a local government and bought by investors in exchange for a promise of future repayment and interest).
Local governments in Texas typically repay bond debt through ad valorem tax. This tax is pledged against the debt. A bond election is therefore also a tax rate election, asking voters to approve an increase in property taxes.
Ordering a Bond Election
It’s up to the governing body of a political subdivision to call a bond election. In the case of a municipality, for example, the city council could call the election.
A majority vote of the governing body is sufficient to call the election.
Conduct of Bond Elections
Bond elections in Texas are governed by the same laws as general elections, with certain differences involving notice requirements and the timing of the election.
Required public notices include a legal description of the bond proposal, the purpose for the proposed debt, the amount of proposed obligations, likely tax or interest rates, and the amount of debt or interests rates already owed.
A bond election must take place on a uniform election date, that is, in May or November. On their ballot, voters in a bond election see a proposition to vote for or against “the issuance of bonds” for a stated purpose.
A majority vote of the ballots cast in the bond election is sufficient to authorize for the issuance of the bonds.
Legal Restrictions
In order to issue bond debt, a political subdivision must have explicit authorization by law.
State laws that grant political subdivisions borrowing authority generally also indicate the purpose for which the debt may be used. For instance, school districts can issue new bonds to build new schools or purchase buses, but not to pay salaries or operating costs.
Issuance of Bonds
If voters approve the proposal, this does not automatically trigger the sale of the bonds. That occurs later, and may take place at various times and with various rates of interest, depending on private debt market conditions.
Additional Resources
Voters can learn more about proposed and approved bonds from their own local governments. Additionally, the Texas Bond Review Board maintains a database of bond elections held from 1997 to the present.
