Bonding Propositions and Ballot Measure Up Next but first...

Despite having been an excellent student in public school I did not learn much. I knew how to test well but what I studied did not stick! I'm sure most of us can relate to that. Now I am on a learning adventure and boy is it fun!

Let me ask you something.... do you know what a bond is? Do you understand the different types of bonds? Who sells them, who buys them? If you wanted to, how would you buy one? What is the rate of return on one?

In researching for this upcoming election these are some of the questions I have had and am currently (in my mid 30's) learning about. I have been voting since 18 and am just now trying to be an informed voter instead of a blind approver.

When "we the people" vote yes on a bonding proposition we are authorizing an investment proposal without knowing all the detail's of it. And from what I have learned I'm not sure I want to approve an investment proposal with out that information.

Here's what I've learned so far:

"A general obligation bond is a common type of municipal bond in the United States that is secured by a state or local government's pledge to use legally available resources, including tax revenues, to repay bond holders.

Most general obligation pledges at the local government level include a pledge to levy a property tax to meet debt service requirements, in which case holders of general obligation bonds have a right to compel the borrowing government to levy that tax to satisfy the local government's obligation."

Emphasis added, http://en.wikipedia.org/wiki/General_obligation_bond

In case you don't know, levy is defined as 1. impose tax: to use government authority to impose or collect a tax.

To me, and if my understanding is wrong please comment, the bond propositions are essentially "we the people" approving our government to sell pieces of paper (bonds) to investors who will then be paid back over an undisclosed period of time and at an undisclosed rate of interest. What money source will be used to pay back the investors? Who will the investors be? Why would they invest? If the money source is depleted before investors are fully paid the obligation owed them will additional taxes of the people be levied?

Just some food for thought....

Update 10/23/10 Just spoke with Rep. Tammy Wilson. Who I have always found to be quick to return my calls and willing to answer my questions. Some clarification and understanding on the bonding issues.

• The State of Alaska is guaranteeing the funds (which particular State funds used for the guarantee she was not certain on).


• She believes the bonds (essentially loans) are on a 30 year pay back plan.


• The terms of interest, etc. on the bonds is not delineated now; it is determined at the time when the bonds go out. Just like with a mortgage or car loan.