Texans to decide on a $1.1 billion prison debt plan, other bond issues.

DALLAS -- Texans will decide today which scares them more: big debt packages or a criminal justice system that releases felons because state prisons are too full.

State officials are betting voters will approve a $1.1 billion general obligation bond proposal -- one of 13 ballot measures -- to build capacity for 25,300 more inmates in an effort to keep criminals locked up.

With only 20% of the registered voters expected to cast ballots, officials say the turnout in Dallas and Houston, whee crime is a leading issue in local races, makes the prison bond measure likely to be approved. If approved, the measure would be the largest ever in Texas.

"Crime is a major factor in the mayor and council races in Houston," said state Rep. Rodney Ellis, D-Houston. "The prison bond program is the major criminal justice issue on the table around the state.

"The alternative [for the crime problem] is to issue debt or not do it at all," said Mr. Ellis, who is also chairman of Apex Securities in Houston. "That's not an alternative."

If voters adopt the bond program, it will cost the state an estimated $350 million a year to build and operate the new prisons. The cost of debt service alone for the double-A rated state is an estimated $100 million over the life of the bonds.

Besides the prison bonds, voters will be asked to decide on a dozen other questions, including $300 million of state-backed bonds for the self-supporting student loan program. Voters rejected an identical measure in August.

If it loses again, the student loan program is not likely to be affected, because lawmakers this fall authorized the state to issue revenue bonds if GO authorization is rejected.

A third measure would change a $500 million bond program approved in 1989 to allow up to half of the $500 million to be used for water projects in poor areas.

The plan calls for the expanded use of low-cost loans and grants for depressed areas along the Texas-Mexico border. If approved, the program would expand the share of the 1989 bond plan available for such programs.

Critics have said, however, that it could force the legislature to dip in to the general fund to meet debt service on the GO bond program, which is now self-supporting.

The $1.4 billion of new debt programs comes as Texas begins a debt monitoring plan to ensure that the state continues its conservative approach to debt as it finances future capital needs.

Tom Pollard, executive director of the Texas Bond Review Board, said even with such an increase, the state would pay only about 1.7% of its general revenues for debt service, well below the 5% average for all states.

Texas will pay an estimated $163 million from the general fund on debt service in fiscal 1992 and 1993 on bonds sold before Aug. 31. That amounts to 1.07% currently of the general revenue.

That ranks Texas 37th in debt burden among states, according to national rankings from Moody's Investors Service.

While statewide polls have shown broad support for prison and student loan bonds, industry observers say it may be difficult to predict how voters will react. Further, they note that in Dallas and Houston voters will also have to decide major tax-supported debt programs.

The city of Houston is asking voters to approve a $500 million general obligation bond program, while Dallas County is seeking support for four propositions totaling $232.5 million for building repairs, road programs, and other needs.

"The cumulative effect of being asked to approve about $2 billion in debt is something you cannot predict," said a Houston investment banker. "If people take a calculator with them, some of these measures might not pass -- particularly the local ones that are supported with property taxes."

A Dallas bond lawyer also says state officials were shocked in August when a $300 million student loan bond program was rejected in a special election. He noted, "I think that may have been a sign of something bigger than that one issue."

Others suggest voters may be just plain confused by the time they sort through 13 statewide constitutional amendments, local bond programs, and more than a dozen contested races for mayor and council seats.

Mr. Ellis, the investment banker, predicts that even if there is confusion, it will not hurt support for the largest debt program: "Prison bonds still means reducing the number of criminals on the street."

One measure on today's ballot might take the confusion out of future debt referendums. If approved, Proposition 8 would require future debt authorization to include a statement regarding the purpose of the debt, amount of the debt created, and the source of repayment.

Texas Treasurer Kay Bailey Hutchison, architect of the proposal, says the legalese of bond proposals often forces many voters to okay debt without really knowing what it is for.

"A yes vote for Proposition 8 is a vote for good government, straight-forward languae, and truth in advertising," Mrs. Hutchison said. "The crux of this issue is clarity."

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