Author Question: What are self-supporting and general obligation bonds? For what are they typically used in Texas? ... (Read 54 times)

nevelica · **on:** Jul 8, 2018

What are self-supporting and general obligation bonds? For what are they typically used in Texas? Why are such bonds necessary in Texas, and is there any problem with their use?

What will be an ideal response?

Question 2

Because of pay-as-you-go requirements in the Texas Constitution, the state government stopped providing any funding to highway improvements in 2012.

Indicate whether this statement is true or false.

heinisk01 · **Reply #1 on:** Jul 8, 2018

Answer to Question 1

Answer: An ideal response will:
1. Define self-supporting and general obligation bonds.
2. Explain that bonds are typically used to fund capital projects, particularly general obligation bonds.
3. Explain that the prohibition against deficit financing in the Texas Constitution makes bond funding essential for some major projects.
4. Explain that the use of general obligation bonds increases project costs because of interest payments and that debt represents a tax liability for future taxpayers.

Answer to Question 2

Answer: False