Georgetown's Debt is Out of Whack!

Georgetown's debt for 2016 is $229,460,000 and has been growing at an annual rate of 10.09% for the last ten years.  Over that same period, the population has grown from 41,395 to 59,391. That is an annual growth rate of 3.68%

The Texas Public Policy Foundation (TPPF) recommends that a municipal budget grow not more than population growth plus inflation. It seems reasonable that the debt should also not grow more than population plus inflation.

Inflation has been increasing at an annual rate of 2.3% over the last ten years, therefore, the budget or debt growth should be less than 5.98% for Georgetown if managed in a fiscally conservative manner.

Let us examine a similar city that has been growing at about the same rate as Georgetown. Carlsbad, CA is a coastal community in North San Diego County. Carlsbad is slightly less than twice the size of Georgetown, however, as the population chart below shows, the two cities have been growing at about the same rate.

That is where the similarity ends.  Carlsbad has $37,578,039 in long term debt while Georgetown's long term debt is $229,460,000.  That is six times more debt for a city less than twice the size.  The debt per capita for Carlsbad is $339 while the debt per capita for Georgetown is $2275 in FY-15.

Recall that Prop 13 limits property taxes in California, so Carlsbad is providing city services and building the necessary capital projects to support their growth out of their current revenues with property tax increases limited to 2% per year.

The Georgetown City Council and City staff maintain that it not practical to pay for the city's growth out of current revenue, more debt is the solution.  The city of Carlsbad shows that a growing city can be supported using current revenues with limitations on property tax revenue growth.

Georgetown needs a change in mindset to start developing a plan to pay off the existing debt and start paying for all city services and capital needs from current revenue.