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Financial Terms Glossary Get your popcorn ready - exciting stuff!


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Key Financial Terms

  • Accreted Interest and/or Discount is the increase in the value of a discounted instrument, such as Capital Appreciation Bonds, as time passes and the maturity date looms closer. The value of the instrument will accrete (grow) at the interest rate implied by the discounted issuance price, the value at maturity and the term to maturity.

  • Ad Valorem Tax a tax based on the value of property.

  • Authorized But Unissued Debt refers to Tax-supported Debt that has been approved by the voters but not yet issued.

  • Capital Appreciation Bonds (CABs) are long-term securities sold at a deep discount. The yield, or accretion, is reinvested at a stated rate until maturity at which time the investor receives total payment. The payment represents both principal and interest. For capital appreciation bonds and compound interest bonds, accreted values are calculated as interest in the year of maturity.

  • Capital Lease is financing the purchase of an asset over time through lease payments that include principal and interest. Lease purchases can be financed through a private vendor.

  • Certificates of Obligation (COs) debt is similar to general obligation bonds in their usage but do not require voter authorization and are not used for refunding debt. Certificates are authorized under the Certificate of Obligation Act of 1971, Subchapter C of Chapter 271 of the Texas Local Government Code. A certificate of obligation may be payable from ad valorem taxes, revenues, or a combination thereof.

  • Debt can refer to public securities issued or outstanding public securities, including General Obligation bonds and Certificates of Obligation. It does not include long-term liabilities that are not public securities (e.g., unfunded pension and other post-employment benefit liabilities) or are not reported to the Bond Review Board. This term includes both Revenue-supported Debt and Tax-supported Debt.

  • Debt Issued is the total principal amount of debt sold. The amount of debt issued depends on the will of the voters (in the case of most tax-supported debt), action of the governing body, market conditions and budgetary needs.

  • Debt Outstanding is the principal owed over the remaining life of all debt issues.

  • Debt Service is the annual combined principal and interest amount needed to repay all debt on time and in full.

  • Deferred amounts Include the net amounts of any discounts or premiums related to outstanding debt, which are amortized over the life of the bonds.

  • General Obligation Bonds (GO’s) are secured by the county’s ad valorem taxing power and issued pursuant to voter authorization. The proceeds are used for major capital projects. General obligation bonds have also been issued in previous fiscal years to refund prior debt issues. General Obligation bonds include Permanent Improvement Bonds (PIB’s), Road Bonds, and Refunding Bonds.

  • Interest and Sinking (I&S) Tax Rate is the tax rate levied by local governments to repay all principal and interest on the outstanding debt for a given year.

  • Limited Tax Debt  are General Obligation bonds or Certificates of Obligations payable from ad valorem taxes that are limited by law in rate or amount.

  • Maintenance and Operations (M&O) Tax Rate is the tax rate levied by local governments to fund the operations and maintenance.

  • Maintenance and Operations Tax-Supported Debt is debt payable from revenue other than dedicated debt service taxes, including maintenance and operations taxes. May be used for any purpose other than payment of debt service, including maintenance and operating expenses.

  • Refunding Bonds are General obligation bonds issued to refund prior debt issues. General obligation bonds for refunding purposes do not need voter authorization.

  • Revenue-supported Debt is secured by non-property tax revenue such as sales tax, tuition, admissions to athletic events, tolls, or water, gas, or electric municipal utility charges. As used in this site, it does not include debt that is also payable from property taxes. Revenue-supported debt generally does not require voter approval.

  • Tax-supported Debt is backed by a pledge of property taxes levied within the issuer’s boundaries. Some tax-supported debt may be secured by a combination of property taxes and other revenue sources. It generally must be voter-approved (with exceptions for COs, tax notes, school district maintenance tax notes, certain county road bonds and contractual obligations for personal property.)

  • Unlimited Tax Debt are General Obligation bonds or Certificates of Obligations payable from ad valorem taxes that are not limited by law in rate or amount.

  • Voter Approved Tax-supported Debt is secured by a pledge of a sufficient property tax dedicated to pay debt service. May be used for school capital projects such as buildings, renovations, technology, athletic facilities, school buses and performing arts facilities or to refund maintenance and operations tax-supported debt.