Finding out How Much Your Local Government Owes Should Be Easier

Each day, the United States Treasury uses a readily‐​accessible webpage to update the public on the size of the national debt. Unfortunately, getting debt information for most U.S. state and local governments is far more challenging.

While a couple of large states have made significant strides toward providing government debt transparency, others have not. New federal legislation slated to take effect in 2027 may improve the accessibility of government bond information – if implemented properly.

In theory, we should be able to determine how much money governments owe because they are usually required to post information about their bond issues on the Municipal Securities Rulemaking Board’s Electronic Municipal Market Access (MSRB EMMA) website. But the bond offerings on EMMA are in document form and not neatly sorted by the government entity responsible for repayment.

Citizens of Texas have better luck, because their state’s Bond Review Board collects state and local government bond issuances, then computes totals by government entity. A recent check of the BRB’s data hub showed that, as of August 2022, the state of Texas owed $64.4 billion, while the city of Houston owed $13.6 billion, and the tiny Pecan Glen Road District – with just 87 registered voters – owed $950,000.

Not only does the BRB web site provide each government’s total debt, it shows when future interest and principal payments are due, and the amount of fees they paid rating agencies, lawyers, and financial advisors during the bond issuance process. Texas BRB can provide such detailed data because all Texas governments issuing bonds must report debt information to this state agency.

It is worth noting that the above figures refer to bonded debt only. Governments at all levels borrow in other ways, such as by promising pension and retiree health care benefits that they have not pre‐​funded. Information on these other forms of debt can be found in each entity’s Annual Comprehensive Financial Report.

Another state that provides citizens with extensive state and local government debt information is California. The State Treasurer’s Debt Watch website has similar data to that provided by Texas BRB, but it is often necessary to download and analyze its list of 72,000 debt issuances to find detailed information at the entity level. On the plus side, this list is updated monthly, so the public can get more of a real time view of California government debt.

Unfortunately, Texas and California appear to be unique in providing a high level of debt transparency. The state of Florida also requires local governments to submit a form when they issue debt, but the Division of Bond Finance does not place a tabulation of these forms online. Instead, it is necessary to file a FOIA request to obtain the bond information.

Any state that collects debt data should place it online following the examples of California and Texas. But a longer‐​term solution is possible at the national level.

In December, Congress passed, and President Joe Biden signed the Financial Data Transparency Act (FDTA) as part of the National Defense Authorization Act. Among other provisions, FDTA instructs the Securities and Exchange Commission to develop “machine‐​readable” data standards for filings submitted to MSRB EMMA. These include Annual Comprehensive Financial Reports, bond offering documents and call notices, which advise investors that bond principal will be repaid prior to maturity. Finally, FDTA instructs federal regulatory agencies to apply a set of non‐​proprietary identifiers to entities that participate in financial markets, including state and local governments.

If relevant municipal disclosures are properly digitized, and if all bond issues are mapped to unique government identifiers, then it should be possible for MSRB to calculate outstanding bonded debt owed by every government across the country that issues municipal bonds. This would go a long way to catching the rest of the nation up to the level of transparency now available in California and Texas.