Just as individuals and families use savings and take on debt to make large purchases, so do local, state and federal governments.
While a family buying a new vehicle or a home might look for a car loan or mortgage, governments have a variety of debt-financing options available, each with their own rules and benefits.
A family might get a loan based on credit scores and the expected income of household members. Governments issue bonds, which serve the same purpose. A government gets approval from voters or its elected leadership and conducts a bond sale, typically bringing in the money needed for a specific project or group of projects.
Bondholders are paid back with interest from the government’s annual revenue, or through some special arrangement tied to additional revenue from bond-financed improvements.
In November, Bernalillo County voters will be asked to approve $40.5 million in general obligation bonds for capital projects, including improvements at the Tijeras Biozone Education Center and other new public buildings, parks, vehicles and renovations.
That vote will conclude a process the county goes through every other year, with county staff submitting recommendations to commissioners, who approve a final list of projects after hosting public meetings.
Last year, Albuquerque voters approved $200 million in general obligation bonds, including $50 million for street and transportation improvements, more than $25 million for public safety projects and almost $16 million for libraries, museums and other cultural spaces.
This November, voters statewide will be asked to approve $230 million in bonds for improvements at New Mexico’s colleges, universities and specialty schools. That total includes $94.5 million for the University of New Mexico and its branch campuses.
University officials say the biennial bond issue has become a proven and accepted method of funding brick-and-mortar higher education projects across the state. They say the electorate has approved bonds the last six cycles — dating back to 2012 — allowing investment in higher education without increasing taxes.
In addition to general obligation bonds, the state can also issue severance tax bonds, which are backed primarily by future revenues from taxing oil, gas and mineral extraction in New Mexico.
Albuquerque Public Schools also issues general obligation bonds, with a package going before voters every three or four years. That money — used primarily for new schools, major additions and technology — is paid back from local property tax collections.
Governments also issue some bonds that don’t cost them anything and theoretically provide indirect benefits. Bernalillo County recently opened the door to issuing industrial revenue bonds in support of a proposed film studio project on the West Mesa. Those types of bonds mean tax benefits for the developer, who would take on the debt and pay it off with revenue generated by the project. In the case of the studio project, the benefits could include almost 50 new jobs and additional spending related to film and TV production.