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Hewitt council debates state bills that would limit municipal spending and borrowing; staff told to prepare budget options
Summary
Council members spent an extended May 5 briefing reviewing two pending state bills — House Bill 5267 (limits on annual municipal expenditures) and House Bill 19 (restrictions on certificates of obligation and additional debt) — and instructed staff to prepare a budget-amendment resolution and invite a bond advisor to the next meeting.
Hewitt City Council members spent more than an hour May 5 discussing two pieces of pending state legislation they said could sharply restrict how the city spends existing revenues and issues local debt.
Staff presented two bills and spelled out likely effects: House Bill 5267 (described at the meeting as limiting annual municipal expenditures by reference to measures such as a Consumer Price Index, inflation rate and population growth) and House Bill 19 (described as restricting issuance of certificates of obligation and limiting new debt such that annual debt service from property tax could not exceed 20% of the total property-tax collections from the prior three fiscal years).
“It means you don't pay anybody. It means that you basically close the doors and send everybody home,” Mr. Thomas said, describing a scenario in which a municipality has exhausted its expenditure limit but faces urgent expenses later in the fiscal year. He told the council he would return at the next meeting with a proposed resolution to amend the current budget to account for unrestricted expenditures already authorized and advised the council to consider timing if it plans to issue debt before statutory deadlines.
Mr. Thomas described specific consequences from HB 19 using Hewitt figures: with an average property-tax collection of roughly $7.5 million, a 20% cap would allow about $1.5 million in additional borrowing under the bill’s formula. Council members asked whether bond proceeds, material-cost inflation and unanticipated capital failures (for example, pump or utility infrastructure failure) were covered; staff repeatedly said the bills do not account for existing asset condition or planned capital programs and that the city’s options would narrow if the laws pass unchanged.
Council discussion produced two near-term directions: staff will bring a resolution to amend the current budget to reflect previously authorized, unspent expenditures, and the city manager’s office will invite Andrew Friedman of Samco Capital Markets to the next meeting to advise on debt-timing options. No formal council vote was taken on the legislation itself; members urged individual outreach to state representatives outside of a quorum but did not authorize collective lobbying.
