Page 45 - HaltomCityFY26Budget

City Of Haltom City Adopted Budget, FY2026 Debt Service Fund

DEBT SERVICE FUND DESCRIPTION

The Debt Service Fund administers the government fund’s finances as established by ordinances authorizing
the issuance of general obligation bonds, certificates of obligation and tax notes. The purpose of the fund
is to provide for the payment of bond principal and interest as they become due and payable. The debt
service tax rate and levy are computed and collected to provide sufficient funds to pay principal and interest
as they become due.

The issuance of debt finances the City’s purchase of land, buildings, building improvements, street
reconstruction, parks, and capital equipment. Other types of capital projects supporting the Water and
Sewer fund or the Drainage fund, such as sewer system rehabilitation and drainage facilities, can also be
financed by the issuance of debt but is serviced through the enterprise funds. Current projects are described
in the Capital Funds Section of the budget.

Retirement of the notes, bonds, certificates of obligation and contractual obligations in General Long-
Term Debt is provided from taxes allocated for debt service together with transfers from other resources
and interest earned within the Debt Service Fund. Certificates of obligation issued for water and sewer
improvements are retired from net revenues of the Water and Sewer Fund. Certificates of obligation issued
for drainage improvements are retired with net revenues of the Drainage Utility.

Debt Management

The City issues debt only for the purpose of acquiring or constructing capital assets for the general benefit
of its citizens. Capital assets must have a value of at least $5,000 and a useful life of at least two years by
policy. In practice, the majority of assets financed through debt are structured to align their useful life with
the entire repayment period, with few exceptions, but never less than three years. Debt may be issued
for land acquisition, right-of-way purchase, improvements to land, construction projects, and purchase of
capital equipment.

The ordinances authorizing the issuance of the Combination Tax and Revenue Refunding Bonds and the
Public Property Finance Contractual Obligations require that the City’s ad valorem tax revenues and charges
for services be enough to generate revenues sufficient to provide for the payment of the debt service
requirements of the bonds issued.

While City policy does not prohibit the issuance of variable rate debt, the City has no variable rate debt and
no plans to issue variable rate debt in the near future.