The Dumas City Commission is scheduled to vote Tuesday morning on a proposed new City Ordinance that would authorize the City to secure $9.9 Million in new debt to help fund infrastructure costs. The public meeting is scheduled to take place at 11:30 a.m. in the Dumas Municipal Court building.

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Many repair locations around Dumas have plagued drivers and residents over the last few years as aging city infrastructure has failed. – Photo Credit: @McJoNews

According to a legal public notice released by the City of Dumas, the new ordinance would authorize the City of Dumas to issue one or more certificates of obligation (CO) for the purpose of paying contractual obligations of the City to be incurred for making permanent public improvements and for other public purposes.

Included in the list of possible expenditures are: City utility system, storm and drainage improvements, purchasing equipment, machinery, rights-of-way, and professional services.

If the proposed city ordinance passes, the certificates of obligation will be payable from a levy of an annual ad valorem tax upon all taxable property within the City of Dumas and from a lien on, and pledge of, certain revenues from the City’s utility system.

A Dumas residents yard flooded on North Maddox Ave. during a June 2020 thunderstorm – Photo Credit: MCJ Reader Submitted

The Certificates of Obligation Act of 1971 allows some governmental entities—like cities, counties, and certain special districts—to issue debt without voter approval to fund any public project.

According to the Texas Public Policy Foundation, over the recent past, COs have seen a modest uptick in use. The Bond Review Board says: “Since fiscal 2009, CO debt outstanding has increased by 25.4 percent ($2.88 billion) from $11.33 billion outstanding in fiscal 2009 to $14.21 billion outstanding at August 31, 2018. At August 31, 2018, cities accounted for 78.8 percent of the total CO debt outstanding.”

More specifically, certificates of obligation (COs) can be used “to fund the construction, demolition, or restoration of structures; purchase materials, supplies, equipment, machinery, buildings, land and rights of way; and pay for related professional services.” As provided for in Local Government Code 271, Subchapter C, COs are usually payable from property tax revenues or other taxable sources.

A June 2020 thunderstorm flooded many Dumas streets and some homes as the City of Dumas storm drainage system couldn’t drain water fast enough. – Photo Source: MCJ Reader Submitted

While COs provide local governments with a flexible financing option to handle unforeseen circumstances or emergency situations, they are not restricted to only that use—which has been the source of recent controversy.

A rotted out yard waste bin inside the City of Dumas – Photo Source: @McJoNews