What is the primary source for the repayment of general obligation bonds?

The primary source for the repayment of general obligation bonds is general tax revenues. General obligation bonds are a type of municipal bond that is backed by the full faith and credit of the issuing government entity. This means that the government commits to using its taxing power to ensure that the principal and interest on the bonds are paid.

General tax revenues encompass a wide range of revenue sources, including property taxes and income taxes, thus providing a stable and reliable source of income for fulfilling debt obligations. The ability to levy taxes to repay these bonds is what gives investors confidence in the security of their investment, making general obligation bonds a crucial financing tool for local governments to fund public projects such as schools, roads, and other infrastructure.

In contrast, other options like sales tax revenue, federal grants, and special assessments might be used for specific projects or funding sources but do not generally represent the broad and stable repayment mechanism for general obligation bonds. Sales tax revenues fluctuate with economic conditions, federal grants may not be guaranteed over time, and special assessments apply to specific properties benefitting from improvements rather than serving as a general revenue source.