Although cities are required by law to balance their operating budgets, many municipal construction projects are financed by loans through the issuance of

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General obligation bonds are a common way for municipalities to finance capital projects such as building construction or improvements to infrastructure. These bonds are backed by the full faith and credit of the municipality and typically require voter approval. The municipality pledges its taxing power to repay the bondholders, which means that if necessary, property taxes may be raised to service the debt. This makes general obligation bonds a relatively low-risk investment for bondholders and a reliable source of capital for municipalities.

Although Cities Are Required by Law to Balance Their Operating