There were a variety of referendums and other ballot measures this election. In Fairfax County there were four separate bond measures and each passed with a wide margin. Surely each of these are “good” and “needed,” but on seeing the results I questioned if most voters understand how municipal bond issues work.
There are two primary bonds issued by municipalities – revenue bonds and general obligation bonds. Revenue bonds guarantee repayment (solely) through the revenues generated from a specific project or activity specified by the bond issue. Stadium bonds are examples of revenue bonds with the interest and principal of the bond being repaid from revenue generated by the stadium once construction is complete and the stadium is put into use.
General obligation bonds conversely, are backed by the municipality’s ability to levy taxes on the residents of the municipality. By definition, general obligation bonds mean higher future taxation presuming spending on other projects and services don’t decline.
