At the most recent Portsmouth City Council meeting, a vote was taken to move $4 million from the general fund to help finish the new city building located in the former 5th 3rd Bank building.
Questions were raised about the city departments that could suffer if that much money were moved out of the General Fund.
In short order, the plan was revealed for the city to sell bonds in order to replace the money from the general fund.
Trent Williams, the City Auditor, told the Council that the true cost of the final renovations could be as low as $1 million. However, he thought it wise to plan for the Top Dollar.
Either way, the city does plan to offer Municipal Bonds to investors.
Let’s take a look at the major differences between Municipal Bonds and US. Treasury Bonds.
Municipal Bonds vs. U.S. Treasury Bonds
Municipal bonds are debt securities issued by local governments to finance public projects. They often offer tax-exempt interest income, making them attractive to investors in higher tax brackets. However, they carry the risk of default if the issuing municipality faces financial difficulties.
U.S. Treasury bonds, on the other hand, are issued by the federal government and are considered virtually risk-free, backed by the full faith and credit of the U.S. government. They typically offer lower yields compared to municipal bonds but provide greater security.
Key Takeaway
While municipal bonds can offer higher yields and tax advantages, they come with higher risk compared to U.S. Treasury bonds. The success of this financial strategy will depend on investor confidence and the city’s fiscal management.
