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.. I <br /> <br /> OU£S~IO~S A~O R~SW£R$ <br /> <br /> O. Why should the State issue bonds and lend ~oney to counties rather than <br /> each County issuing its own bonds? <br /> A. State bonds are rated Trlple-A by P~ody's and by Standard & Poor's and <br /> borrowing costs are about 50 basis points or 1/2% less than the average <br /> county. Thus, savings on a bond issue of %! billion dollars wnuld <br /> approximate %50 million. <br /> <br /> Q. Will the State's bonds require a referendum? <br /> A. Yes. The bonds will be backed by the State's 'full faith and credit", <br /> but a tax need not be levied to pay debt service on the bonds if other <br /> moneys are available; nevertheless, a referendum will be required, since <br /> the State's credit is being pledged and since the State will be standing <br /> behind the debt created. <br /> <br /> Q. How will the State's debt be paid? <br /> A. From the viewpoint of the investing public the State's debt will be <br /> repayable from all of its full faith and credit resources. Loan <br /> repa_vnents from the counties will be deposited into the State's general <br /> fund and are expected to be in amounts sufficient to cover the State's <br /> debt service. <br /> <br /> Q. Will each county be reautred to have loan referendums? <br /> A. Not unless the county commissioners decide to pledge the County's faith <br /> and credit, in which case voter approval is required. <br /> <br /> Q. Can the voters of the county force a referendum on a loan agreament? <br /> A. Yes - by petition of 10% of the register&d voters. <br /> <br /> How much State debt will be authorized? <br /> A. The amount to be recon~ended by the Governor will reflect the loc~l <br /> needs and local ability to pay. It is assumed that $1.5 to $2.Z billion <br /> dollars will be needed based on past surveys. A new survey by the <br /> Division of School Planning will reveal the needs as of January, 1987. <br /> <br /> Q. Will all the bonds authorized be issued at the same time? <br /> A. No. The bonds will be issued as funds are actually needed to provide <br /> money to counties as provided by underlying loan agreements. <br /> <br /> O. Why borrow rather than use pay-as-~ou-go? <br /> A. For many counties the funds would accumulate too slowly to make a <br /> meaningful impact on the need for public school facilities. This <br /> program will make it possible to leverage the funds orovided by the <br /> General Assembly and get the facilities in~nediately. Inflationary <br /> increases in building costs, associated with the pay-as-you-go concept <br /> could exceed the interest costs associated with this plan. <br /> <br /> Q. Can a county issue its own bonds? <br /> A. Yes. 'Several counties also enjoy triple-A ratings and may not benefit <br /> materially by this program. <br /> <br /> <br />