Which bond type typically requires voter approval?

Which bond type typically requires voter approval?

• A. Revenue Bonds
• B. Certificates of Participation
• C. General Obligation Bonds
• D. Lease-Purchase agreements

Answer: (C)

General Obligation bonds are debt backed by the issuer’s taxing power and full faith and credit. Because they involve committing taxpayers to repay the debt—often through taxes—voter approval is typically required so taxpayers consent to the additional obligation. In contrast, revenue bonds are repaid from a specific revenue stream (like user fees), so they don’t pledge general taxes; COPs and lease-purchase agreements are typically not tax-backed debt and often don’t require a vote. So the instrument that usually needs voter approval is the General Obligation bond.

General Obligation bonds are debt backed by the issuer’s taxing power and full faith and credit. Because they involve committing taxpayers to repay the debt—often through taxes—voter approval is typically required so taxpayers consent to the additional obligation. In contrast, revenue bonds are repaid from a specific revenue stream (like user fees), so they don’t pledge general taxes; COPs and lease-purchase agreements are typically not tax-backed debt and often don’t require a vote. So the instrument that usually needs voter approval is the General Obligation bond.