DALLAS - Houston will begin selling $25 million of five-year judgment bonds next month now that taxpayers have approved the issue in a vote that Mayor Robert Lanier called an endorsement of his debt-balanced budget.
"It wasn't a direct vote on the budget, but it had overtones of that in it," the mayor said yesterday. "This is probably the most difficult and controversial part of the plan."
Other Texas cities also held elections Saturday, with mixed results for bond issues.
Dallas voters rejected by a 60% margin a proposal to raise the city's sales tax a half-percent for one year to generate an estimated $60 million to pay for repairs to the historic Fair Park, including the Cotton Bowl football stadium.
In Austin, voters approved all but three of 22 bonds proposals, authorizing $286 million of debt in the city's first major capital program since 1984.
The 53% victory won by the Houston issue was critical to Mayor Lanier's first budget. The spending plan for fiscal 1993, which began July 1, is balanced largely with one-shot revenues and debt maneuvers that include the sale of $25 million in general obligation bonds to pay legal claims traditionally paid out of the city's general fund.
The approval in the sparsely attended election comes as the Houston City Council prepares for a public hearing Wednesday on the spending plan. The council is expected to adopt a balanced budget later this month that will not require higher taxes.
On Monday, the mayor rejected criticism that his budget depends on one-shots and debt, including a restructuring of nearly half the city's GO debt to extend the payout while freeing up $39 million this year that would have been needed for debt service.
"The only one-shot in my budget is the $25 million, but it treats a one-shot problem of the legal judgments," he said.
The GO bonds will be sold beginning in September in at least two blocks of variable-rate issues, according to Tom Masterson, chairman of Masterson Moreland Sauer Whisman Inc. of Houston, the city's financial adviser.
"I think it will go in smaller pieces of $10 million or $15 million," he said yesterday. "The final decision has not been made yet."
J.P. Morgan Securities Corp. is expected to be named underwater for the deal. The firm was to underwrite a similar issue of $17.7 million last spring before a legal and political argument between the mayor and city Controller George Greanias postponed the deal and forced last weekend's election.
The mayor had originally planned to sell the bonds without voter approval, citing state law that allows GO debt to be used to pay legal claims without authorization. Mr. Greanias blocked the sale and forced the matter into state district court, arguing that the city charter required a vote. To avoid a prolonged legal fight, the two agreed to call Saturday's election.
For Dallas, the rejection over the weekend presents no immediate financial difficulty, but could affect the city budget late in the decade.
In June, the city sold 10-year certificates of obligation to finance $9.7 million of repairs to the Cotton Bowl. While not a direct tax obligation of the triple-A-rated city, the securities call for Dallas to pay debt service in the last six years of the certificates.
The first four years of debt service will be funded with hotel-motel tax revenues. City officials had planned to use part of the projected $60 million in one-time revenues from a sales tax increase to retire the bonds, canceling the need for funding from the city's $1 billion budget.
Even though Saturday's 13% voter turnout was the smallest ever for an August election in Dallas, the proposal to raise the sales tax drew heated debate.
"You ask voters a question, and they'll give you an answer," Mayor Steve Bartlett said after the defeat. "They have said times are tough, people are out of work, and people are afraid. Regardless of the merits, people are just fed up with taxes."
Had Dallas voters approved the plan, the measure would have then required approval by the Texas Legislature next year. Approval there would have been uncertain because four leaders of the opposition No More Tax Committee are Dallas County lawmakers.
The measure proposed raising the city's combined sales tax rate by a half cent to 8.75%. If successful, the increase would have given Dallas the highest such tax of any major city.
In Austin, voters authorized $159.5 million of general obligation bonds in the largest slate in eight years. Taxpayers also approved two utility revenue bond issues totaling $126.5 million while deauthorizing $174 million of previously approved bonds. It was the first time voters in a Texas city had canceled issuance at the request of city officials.
"This should take care of all our capital needs for a few years," said Austin Finance Director Betty Dunkerley, who estimated the capital city may not need new bond authorizations until 1997. "We still had $59 million in bonds from our last [referendum], but none of them were in the area that we needed."