Watchdog of the Taxpayer's Dollar Since 1956 Fairfax VA

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The consequences of excessive bond sales.

In 1989, Fairfax County raised from bond sales an amount that was more than double the amount paid for debt service. (Debt service is the annual payment 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.

However, Fairfax County sells bonds every year with the result that revenues from bond sales are about the same or slightly less than the debt service. However, each annual bond sale incurs a huge interest cost that increases the size of the County's debt.

If the 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 but not be $2 billion in debt.

See also: Supervisors mislead County about bonds

Updated October 24, 2004