Investing Tax Free
 

General Obligation Bonds

General obligation bonds are common municipal bonds. General obligation bonds are sometimes called general obligation issues or GOs. Many investors invest in general obligation bonds without even knowing that they are general obligation bonds or general obligation issues. Examples of general obligation bonds are Wisconsin general obligation bonds, general obligation college savings bonds, North Kansas City general obligation bonds, and New Mexico general obligation bonds. There are many different issuers of general obligation bonds as well as different series of GOs.

What are general obligation bonds?

General obligation bonds are issued for capital improvements that benefit the entire community. Most projects funded by general obligation bonds do not yield tax revenues so the principal and interests of the general obligation bonds must be paid by the revenues of the municipal bond issuer.

Who issue general obligation bonds?

 

General Obligation Bonds

General obligation bonds are often issued by:

  • the states,
  • towns,
  • cities,
  • counties, and
  • public communities such as:
    • school districts and
    • park districts.


Who back general obligation bonds issues?

General obligation bonds issued by the states are backed by income taxes, license fees and sales and use taxes. For example, the State of Wisconsin general obligation bond of 1991 series B is backed by the income taxes, license fees and sales taxes collected by the stat of Wisconsin. Likewise, the North Kansas City general obligation bonds are backed by the income taxes, fees and other taxes collected by North Kansas City.

General obligation bonds issued by towns, cities, and counties are backed by property taxes, license fees, fines and other sources of revenues of the municipality that issued the general obligation bonds.

When schools, road districts, or park districts issue general obligation municipal bonds, they are backed by property taxes.

Are general obligation bonds safe or risky?

General obligation bonds are rated as very safe municipal bonds because general obligation bonds are backed by the full faith and credit of the government or the municipalities that issue them.