General Obligation (GO) Bonds
Chapters in this video
- 0:00 Why Mayor Mike's police station needs a GO bond
- 1:18 Full faith, ad valorem taxes, and the voter referendum trap
- 2:52 Unlimited vs limited tax GOs and the tax ceiling trap
- 4:23 Credit factors: tax base, overlapping debt, declining population
- 6:14 Net debt math and subtracting self-supporting debt
- 7:24 Rapid-fire exam recap
What this video covers
- Why general obligation (GO) bonds fund non-revenue projects (schools, police stations, parks) and require voter approval, while revenue bonds do not
- What "full faith and credit" really pledges, and why ad valorem (property) taxes are the repayment source
- The difference between unlimited tax GO bonds (no rate cap, lower risk) and limited tax GO bonds (statutory ceiling, higher risk and higher yield)
- The credit factors analysts use: tax base, economic diversity, collection rate, unfunded pensions, population trends, and overlapping debt
- Why overlapping debt is a GO concern only, never a revenue bond concern, since multiple issuers tax the same property
- How a declining population is double trouble: shrinking the tax base while raising per capita debt burden
- How to calculate net debt by subtracting self-supporting debt (revenue bonds paid from user fees) from total debt before running any municipal debt ratio
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