Find answers to frequently asked questions about the 2019 Voted Bond Package
What is a bond package?
A bond package does not mean higher or new property taxes. Rather it provides a mechanism for the city to make the best use of existing resources and represents the final product of a prioritization process. Just like the typical resident looking to purchase a home, the City of Columbus does not have adequate cash on-hand to finance its capital improvement program. Columbus borrows money from investors by issuing bonds and uses the proceeds to build and maintain its roadways, acquire heavy equipment, construct police and fire facilities and so on. In this manner, future beneficiaries of the improvement will help pay for acquisition or construction.
How is debt paid?
The city typically relies on general obligation debt, secured by an ability to levy a property tax if necessary to repay the borrowed funds. However, the debt for non-enterprise agencies has historically been retired through the use of a portion of the city’s 2.5% income tax. One-fourth of such revenues are deposited into a special fund for this purpose. Because the city operates from well-established, sound fiscal management practices and discipline, it has never violated its long-standing promise to our citizens not to impose a property tax for debt service purposes. Such a promise has existed over fifty-seven years.
For water, electricity, sanitary and storm enterprises, user fees provide adequate revenue to retire system debt.
Why voted debt?
Citizen Input: Columbus residents are given an opportunity to help shape the voted bond package by expressing their opinions at public forums as to which capital projects are most needed. Because overall city needs exceed the city’s funding ability, it is necessary to prioritize projects. Resident input is an important component of that process.
Voter approved debt saves money: Investors purchasing city bonds have more confidence they will be repaid if voters have approved the debt issuance, and generally demand a lower interest rate. Cheaper debt allows the city to stretch its dollars further, resulting in more capital improvements.
Columbus is one of the largest cities in the nation with a “triple A” credit rating from all three national rating agencies. This means that Columbus debt is some of the most secure debt in the nation, and therefore fares competitively well in the financial markets. Based on a $1 billion bond package and assuming equal structures, voted debt will save Columbus residents between $9 million to $14 million over the life of the loan as compared to unvoted debt.