Watchdog of the Taxpayer's Dollar Since 1956 Fairfax VA

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In 1994 Fairfax County raised from bond sales an amount that was about double the amount paid for debt service. (Debt service is the annual repayment of principal and interest for bonds already sold.) This is how bonds are supposed to be used, to raise an amount of cash that is much larger than the annual debt service. It is possible to raise from bond sales an amount that is approximately ten times the annual debt service, but doing so requires not selling any new bonds until all old bonds are paid off.

Fairfax County, however, sells bonds every year with the result that revenues from bond sales are about the same as the cost of debt service. Also, each annual bond sale incurs a significant interest cost that increases the County's debt. The cost of interest is almost half the amount borrowed. For example, if the County borrows $200 million by selling $200 million bonds, it will incur an additional interest cost of almost $100 million.

If the Fairfax County had never sold bonds and had spent on construction and maintenance the money used for debt service, it would have had almost the same amount to spend as it did with bonds and not owe $2 billion.

An additional note: The surge in County debt (red line) between 2001and 2002 is mainly due to the large bond sale in 1994. The County did not include $116 million of the 1994 bond sale in its County debt figure until 2002.

The following chart is similar to the previous one, but begins in 1978. The FCTA does not have County total debt figures prior to 1994. Note that the County did not sell any bonds in 1981, 1984, and 1989, indicating a bit of fiscal responsibility.

Updated October 12, 2005