§ 103357 Bond Limits For Tax Revenue

This law lets a school district sell bonds that are paid back using money it gets from local sales taxes, but the total amount of bonds (principal plus interest) can’t be more than the money it expects to collect.

Key Takeaways

•Bonds can only be paid back with money from local sales taxes.
•The total of bond principal plus interest can’t be bigger than the tax money the district expects to collect.
•Bonds that already have money set aside in a trust or escrow don’t count toward the limit.

Example

A district expects to collect $12 million from sales taxes this year. It wants to borrow money by selling bonds to build a new library.

The district can sell bonds whose total principal plus interest is no more than $12 million. If the bonds’ principal is $9 million and the interest that will be owed is $2 million, the total is $11 million, which is allowed because it’s under the $12 million limit.

How to Calculate

Maximum Bonded Indebtedness = min( Principal of Bonds + Interest on Bonds , Estimated Tax Proceeds )

Figure out how much money the district expects to get from retail transactions and use tax (Estimated Proceeds).
Add together the principal amount of the bonds they want to issue and the total interest that will be owed on those bonds.
Compare the sum from Step 2 to the Estimated Proceeds. The allowed amount is the smaller of the two numbers.

District expects $10 million in tax proceeds.

Result: Principal + Interest = $7,000,000. Since $7,000,000 is less than $10,000,000, the district may have up to $7,000,000 of bonded debt outstanding.

(a) The district may issue bonds payable from the proceeds of the retail transactions and use tax. (b) The maximum bonded indebtedness which may be outstanding at any one time shall be an amount equal to the sum of the principal of, and interest on, the bonds, but not to exceed the estimated proceeds of the transactions and use tax , as determined by the district. The amount of bonds outstanding at any one time does not include the amount of any bonds or refunding bonds for which moneys or securities necessary to provide for the payment thereof have been set aside for that purpose in a trust or escrow account. (Amended by Stats. 1989, Ch. 1120, Sec. 2.)

Key Takeaways

•Bonds can only be paid back with money from local sales taxes.
•The total of bond principal plus interest can’t be bigger than the tax money the district expects to collect.
•Bonds that already have money set aside in a trust or escrow don’t count toward the limit.

Example

A district expects to collect $12 million from sales taxes this year. It wants to borrow money by selling bonds to build a new library.

How to Calculate

Maximum Bonded Indebtedness = min( Principal of Bonds + Interest on Bonds , Estimated Tax Proceeds )

Figure out how much money the district expects to get from retail transactions and use tax (Estimated Proceeds).
Add together the principal amount of the bonds they want to issue and the total interest that will be owed on those bonds.
Compare the sum from Step 2 to the Estimated Proceeds. The allowed amount is the smaller of the two numbers.

District expects $10 million in tax proceeds.

Result: Principal + Interest = $7,000,000. Since $7,000,000 is less than $10,000,000, the district may have up to $7,000,000 of bonded debt outstanding.

Key Takeaways

Example

How to Calculate

Key Terms

References

§ 103357 Bond Limits For Tax Revenue

Key Takeaways

Example

How to Calculate

Key Terms

References

Key Takeaways

Example

How to Calculate

Key Terms

Related Statutes

References

Key Takeaways

Example

How to Calculate

Key Terms

Related Statutes

References