What is the difference between general obligation bond and revenue bonds?
John Thompson
Published Feb 19, 2026
General obligation bonds are issued by municipalities are backed by the full faith and credit of the issuer. Revenue bonds are issued by municipalities and fund projects; they are backed by the revenues the projects bring in.
What are general obligation school bonds?
Bonds) A form of borrowing commonly used to fund school facilities. bond, which is repaid by state funds and has no impact on property tax rates. …
How are general obligation bonds taxed?
Their interest payments are usually exempt from federal income taxes, and may be exempt from state income taxes if the bond issuer is located in the investor’s home state. …
What is a PHA bond?
Housing authority bonds, or housing bonds, are issued by a state or local government agency to help finance the construction or rehabilitation of affordable rental housing. Under certain programs, the proceeds from such bonds also may be used to help low-income people purchase homes.
Are general obligation bonds a good investment?
General obligation bonds are backed by the general tax revenues and credit of the municipality that issued them, which means they are generally considered safe investments, with the same credit rating as the underlying municipality, though they can pay comparatively low interest.
How do you get general obligation bonds?
How to Buy General Obligation Bonds
- Contact a broker.
- Research the credit rating of the bond.
- Find out the interest pay dates of the bond.
- Check the maturity date of the bond.
- Understand the minimum purchase commitments.
- Ask your broker what the mark-up or commission on the bond will be.
- Pay for your bonds.
DO GO bonds require voter approval?
GENERAL OBLIGATION BONDS ARE THE SIMPLEST FORM OF BORROWING. State GO bonds must be approved at an election by a majority of the voters. Local GO bonds must be approved at an election by 2/3 of the voters (except for school bonds, which require a 55% majority).
Do general obligation bonds require voter approval?
General obligation bonds must be approved by the voters and their repayment is guaranteed by the state’s general taxing power. Lease-Revenue Bonds. These bonds do not require voter approval and are not guaranteed by the state’s general taxing power.
What is general obligation bond example?
There are two types of general obligation bonds: the limited-tax GO bond and the unlimited-tax GO bond.
- Limited-tax general obligation bond.
- Unlimited-tax general obligation bond.
Are general obligation bonds safe?
General obligation bonds are prized for their relative safety as investments. Because the credit of a municipality stands behind them, GOs typically have high bond ratings, higher than revenue bonds tend to.
Bonds) A form of borrowing commonly used to fund school facilities. bonds, financed through an increase in local property taxes, can be used for renovating, reconstructing, and building new facilities and for acquiring certain new equipment. …
What are some examples of general obligation bonds?
There are different types of general obligation bonds The most common types of GO bonds issued are: GOs backed by a dedicated tax pledge as well as unlimited taxing authority. GOs backed by unlimited taxing authority, with no dedicated tax. GOs backed by limited taxing authority.
How does a general obligation bond work?
A general obligation (GO) bond is secured by an issuing government’s pledge to use all available resources — even tax revenues — to repay holders of the bond. At the local government level, pledges may include a pledge to levy property taxes to meet the local government’s obligation on the bondholders.
Who can issue general obligation bonds?
General obligation bonds are debt instruments issued by states and local governments to raise funds for public works. What makes general obligation bonds (or GO bonds for short) unique is that they are backed by the full faith and credit of the issuing municipality.
General obligation bonds, also called G.O. bonds, are backed by the full faith and credit of the issuing agency and are paid for by increasing local property taxes above the limit imposed by Proposition 13. Because they involve an increase in property taxes, they require voter approval. The agency issuing a G.O.
What kind of bond is a general obligation bond?
General Obligation Bond. What is a General Obligation (GO) Bond? A general obligation (GO) bond is a type of municipal bond in which the bond repayments (interest and principalPrincipal PaymentA principal payment is a payment towards the total principal amount of a loan that is owed.
What’s the difference between a revenue bond and a go bond?
No assets are used as collateral . A GO bond may be contrasted with a revenue bond in the context of munis. A general obligation, or GO, bond is a type of municipal bond that is backed entirely by the issuers creditworthiness and ability to levy taxes on its residents.
Can a government raise taxes on a general obligation bond?
However, this increase is bound by a statutory limit. With limited-tax general obligation pledges, governments can still use a part of already-levied property taxes, use another stream of income, or raise property taxes to an amount equating to existing debt service payments to answer its debt obligations.
What happens if you don’t pay your general obligation bond?
If the property owners are not able to pay their property taxes on or before the designated due date, the government is legally allowed to increase the property tax rate to make up for any delinquencies. On the designated due date, the general obligation pledge requires the local government to cover the debt with its available resources.
