Frequently Asked Questions - Q28


Question:

Issuance of public improvement bonds often results in an increase in the property tax rate. If the City is adding capital improvements with the bond proceeds, why isnít an increase in the property tax rate justified?

Answer:

Because if the City is properly managing its debt program, it is paying off old debt as new debt is incurred. Certainly the new debt will be for a larger amount, due to inflation and the infrastructure needs of a bigger population. But, as pointed out in A29, the underlying property values that will service the debt through taxation also will have increased due to the increased population and inflation.



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