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DEBT SERVICE FUND

This fund is used to account for the accumulation of resources for principal
and interest payment of long-term debt. “General bonded debt” or “bonded
debt” is used to finance major capital improvements including the

construction of parks, streets, facilities and other general government
projects. Revenue sources to this fund include the applicable portion of the
ad-valorem tax levy and related interest income usable for debt service

payments.

Article XI, Section 5, of the Texas Constitution is applicable to the City, and

limits its maximum ad valorem tax rate to $2.50 per $100 assessed
valuation for all City purposes including debt service. However, Article XIII,
Section 13.05 of the City Charter, limits the maximum tax rate to $1.50 per
$100 assessed valuation of taxable property within the City limits.

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