Balancing operational and maintenance needs against future growth and needs as they pertain to county government assets (primarily buildings and facilities) has always been a challenge. The fact is, populations grow and thus the demand and strain on infrastructure and existing assets is somewhat of a moving target. County leaders have the task of projecting those needs and taking appropriate measures for the well-being of the entire community.
Growth costs money. There are four main options counties regularly utilize to finance their needs:
- Save Up and Set Aside
- Debt Financing
In terms of debt financing, there are a number of different types:
- General Obligation Bonds (GO Bonds): This is a property tax levy that generates revenue to repay a bond.
- Revenue Bonds (Enterprise Fund): These pledge the funds of a county’s enterprise fund (such as a liberty fund) to repay a bond.
- Sales and Excise Tax Revenue Bonds: Sales, gas, and excise tax can be used to repay a bond.
- Lease Revenue Bonds: These are bonds issued by a county’s Local Building Authority for projects and can repay a bond.
- Tax Increment Bonds: Counties can target and created designated areas to help facilitate economic development by using tax increment revenues to help pay for a bond.
- Special Assessment Bonds: Counties can also create special assessment areas within the county to finance improvements that pay for the bonds of those improvements.
Once a county determines the best type of bond for their situation, they must take part in a credit check, so that purchasers of the bond can determine the credit worthiness of the county, and also to establish a price for it. Credit ratings are determined by a number of factors including the economy, financial soundness of the county, the county’s current existing debt, and county management practices.
Related: Overview of Tax Exemption, Bank Qualification and Disclosure