El Paso taxpayers owe over $3 billion in debt according to data legally required to be published by the City of El Paso. The debt is paid for via El Paso’s property taxes. At 2.13%, the City of El Paso has the second highest property tax rate in the nation. On average, El Paso homeowners pay about $3,000 in property taxes. In addition to funding operations, property taxes are used to pay for street repairs and quality of life venues, often via debt payments to payoff the money borrowed by city council to fund the projects. Generally, there are three types of debt that cities can incur. They are certificates of obligations, general obligation bonds and commercial paper.
The Three Types of Municipal Debt
The first of the three types of public debt are the General Obligation Bonds (GOs). GO’s are taxpayer approved debt that the city issues to fund projects such as a library. Unlike Certificates of Obligations (COs), General Obligation Bonds (GOs) require voter approval before the debt can be issued. The second type of debt are the COs, which as stated, do not require voter approval. Although intended for emergencies, many taxing entities like El Paso use them for public works, such as street work. In Texas, Certificates of Obligation were authorized in 1971.
Although COs do not require voter approval, voters can force a vote on COs if 5% of the registered voters sign a petition asking for certificates of obligation to be voted on. If the petition is recognized by the City as valid, it must then hold an election before issuing the COs.
The third type of public debt is Commercial Paper (CP). Think of Commercial Paper as an unsecured credit card with which the city pays bills with. CPs are short term loans that should be paid back within 270 days.
The El Paso Debt
According to the Texas Bond Review Board: Bexar County has issued $571 million, Travis County has issued $555 million and El Paso has issued $541 million.  That was before El Paso’s city council recent authorization to issue additional COs.  It should also be noted that the El Paso County Hospital District, (UMC) is also listed among the top 20 CO issuers in Texas. The University Medical Center of El Paso has issued $128 million in certificates of obligation. Together, El Pasoans owe almost $700 million in certificate of obligation debt. 
However, of the top six cities in Texas, El Paso ranks as the highest issuer of certificates of obligations at $541.1 million, or $793 per capita, according to the Texas Bond Review. For taxpayers, not only is the total debt important to note – especially in terms of certificates of obligation – but when it is shown as a cost per taxpayer (per capita), El Paso’s $793 is much higher than San Antonio whose per capita expense is $278 on $426.3 million in COs and Austin’s $285 on $274.4 million. 
El Paso is also issuing Commercial Paper to fund expenses. The City of El Paso began issuing commercial paper (CP) in 2017, pledging taxes to pay them. In 2017, El Paso issued $30.7 million in CPs, $23.5 million in 2018, and $16.9 million in 2019. In 2020, El Paso had $12.6 million in commercial paper debt, according to the Texas Bond Review Board. 
That is in addition to the El Paso Water Utilities using $190 million in commercial paper from 2016 through 2020. In 2020, El Paso Water Utilities had $50 million in CPs. 
Taxpayers Owe Three Billion Dollars
The City of El Paso owed $1,368,510,000 in certificates of obligation in February 2021, not including accruing interest. Including interest, El Paso taxpayers owed $2,066,262.270 in COs in early 2021. The additional certificates of obligation authorized by city council in July obligates El Paso’s taxpayers to add another $146 million in debt. 
The County of El Paso owed $143,173,147, not including interest payments, in May 2021. 
Total El Paso Debt
The Texas Bond Review Board tracks the amount of debt issued by taxing entities like El Paso. According to their data (accessed August 12, 2021), in fiscal year 2020 El Paso has 47 outstanding debt bonds totaling $3,207,829,955, of which $975,688,955 is interest.
Although it is a common myth that renters do not pay property taxes, tax costs are built into the rent rates. Economies of scale may tend to suggest that renters pay less in property taxes or none at all, but the reality is that commercial properties pay a higher rate than private homeowners because they do not have access to homestead and other exceptions. However, to understand property taxes and renters it is important to understand the living footprint. In a 1,200 square foot house, the property taxes are paid for by one family. In multifamily housing, like apartments, that same 1,200 square foot footprint can be dividing into four units, or even eight units or more if stacked on top of each other giving the impression that renters pay less in property taxes. Yet, they proportionally pay more on their living footprint – through rent payments – because their property tax is assessed as a commercial property via their landlords.
The only exception to multi-family housing property taxes is the Housing Authority of El Paso which provides 6,500 public housing units, according to them. Because their housing is considered “essential public and governmental purposes,” their properties do not pay property taxes, thus its residents do not pay El Paso property taxes.
The Pandemic Economic Impact
“El Paso finances worsened prior to the pandemic,” says a January 26, 2021, report by the non-profit Truth and Accounting that analyses financial report that cities are required to make public. According to the report, that El Paso’s economy was “in poor fiscal health,” before the pandemic. The report goes on to state that “El Paso did not have enough money set aside to weather” the pandemic and that the city “is expected to lose some revenue as a result of the pandemic.” 
In addition to property taxes, the city relies on fees for services like airport and bridge fees to pay its bills. But it is the taxes that fund most of the city’s debt. El Paso’s “financial position worsened by 29 percent” in 2020, “mostly due to low return on investment for the city’s pension plans” says the 2021 report. 
Truth in Accounting has given El Paso a “D” grade on its finances. 
The non-profit wrote that “El Paso’s elected officials have repeatedly made financial decisions that have left the city” with a large debt burden.  In addition to the debt burden, the non-profit says that although El Paso city officials release their legally mandated financial reports within the 180 days deadline, El Paso nonetheless waits until the last possible moment – 180 days – to release its financial reports. 
The reports on El Paso’s economic outlook are mixed. However, regardless of how soon El Paso recovers from the pandemic economy its debt continues to spiral out of control putting more El Paso homeowners in financial peril.
- El Paso City Council Resolution, “Approving and Authorizing Publication of Notice of Intention To Issue Certificates of Obligation,” February 15, 2021.
- County of El Paso, “Notice of Intention to Issue El Paso County, Texas Certificate of Obligation,” May 10, 2021.
- “2020 Local Government Annual Report, Fiscal Year Ended August 31, 2020,” Texas Bond Review Board, January 2021.
- “Financial State of the Cities 2021,” Truth in Accounting, January 26, 2021.