Opinion: Our AAA Rating Isn't a Blank Check - Why College Station Should Slow Down Its Capital Plan

By Lloyd Davis, President, College Station Association of Neighborhoods

At the July 9, 2026 City Council Meeting, CSAN President Lloyd Davis discussed the large increase in the capital spending portion of the proposed Fiscal Year 2027 budget, and the impact this could have on the city's future growth plans.

You can watch Lloyd Davis' speech to council HERE. Lloyd's talk begins at the 27:25 mark and ends at the 30:36 mark. Let me start by congratulating the city, our staff, and this council on securing the upgraded AAA credit rating from Moody's yesterday. That is a terrific milestone that lowers our cost of capital.

However, as we look at this achievement, we have to recognize a basic tenet of public finance: rating agencies do not grant a AAA rating because a city has low debt. They grant it because they recognize our sovereign power to tax. Moody's looked at our skyrocketing local property appraisal values and concluded that our citizens provide an absolute, guaranteed safety net for lenders. The AAA rating confirms that the banks will always get paid; it does not mean the debt is painless for the local families writing the checks.

The FY 27 Capital Plan: Doubling Down on Debt

This brings me to the FY 27 capital improvement plan. According to the city's own documents, this single budget item takes College Station's debt from $449.5 million to over $630 million. Committing to a capital plan of this scale effectively maxes out our borrowing capacity, and our ability to issue new debt, until 2034. By locking down our financial flexibility now, into fixed projects today, we are giving up our future flexibility.

If a game-changing commercial entity, like the proposed nearby SpaceX TeraFab, encourages others to move here, they may require an unanticipated infrastructure partnership to make the deal feasible. If a city infrastructure emergency arises, we will have no credit runway left to act. These businesses will likely just choose a Bryan or Navasota location, leaving us out of the picture.

How Debt Handicaps Our Flexibility

Our debt handicaps our flexibility with high fixed costs. In 2023, we crossed the $30 million mark in annual debt service. With the FY 2027 Capital Plan, we are staring at $51.8 million annually in 2029, climbing to $56.8 million the very next year. That is a steep escalation in un-cuttable, fixed costs.

It's Not Too Late — But the Cuts Have to Be Real

It is not too late to alter this difficult path. If our City Council reduces the proposed capital plan by $50 million, our 2030 debt service drops from $56.8 million to $52.7 million — that's not much help. A $75 million reduction only gets us to $50.7 million in2030. To stay within a sustainable 10% of where we are today, we must cut this plan by $120 million, which still grows our annual debt service in 2030 to $47.1 million. The current plan of more than doubling our capital budget is neither safe nor sustainable.

Why the Cuts Don't Show Up Right Away

And why aren't we seeing bigger drops in future years' debt service from these cuts? Because of the municipal borrowing lag. This year's and last year's capital spending are not yet in the active debt service numbers. Neither are all of the previous years. They're coming, but are unnoticed by taxpayers. So far.

The Path Forward

By slowing our capital spending right now, we protect our new AAA rating, lower the permanent upward pressure on neighborhood property appraisals, and ease the strain on families in our community — all while preserving our ability to pursue potential economic breakthroughs when businesses knock on our door. Please keep our financial margin flexible, and our future secure.