It’s the start of a New Year, and in some localities, thoughts turn to the idea of a bond referendum. Here are the answers to some frequent questions we get about that process:
When can I have a bond referendum?
Is it too late to plan for a referendum in November 2026? If not, when will it be too late?
What kinds of projects can we propose for voter approval at a referendum?
What does the bond referendum ballot question look like?
Wait . . . should we even have a bond referendum for our projects?
How does the LGC process work for a bond referendum?
What does the LGC application involve?
How do we promote the bond issue?
If the referendum passes, when can we issue bonds?
How much time do we have to issue bonds?
Do we ever have to issue the bonds?
What if we have a referendum, but end up needing more money for the project?
Do I need a separate financial advisor?
What is a bond referendum?
This is the process by which you ask the voters in your locality to approve issuing “general obligation” bonds – a form of borrowing money – up to a maximum amount for one or more capital projects. If the voters approve and you issue general obligation bonds, then the locality will promise to levy taxes, and increase taxes, as may be necessary to pay the debt. because general obligation bonds are backed by this promise about taxes, our laws require the voters to weigh in on the question. There are many ways for a local government to borrow money without having a bond referendum, of course.
When can I have a bond referendum?
Whenever all the precincts in your community will otherwise be open. Essentially this means the even-year November election date, the even-year primary date, and then if you’re a municipality, those dates in the odd-numbered years, if any, when members of your governing board are up for election. In recent years the General Assembly has moved around the even-year primary date, sometimes at nearly the last minute, so that can be a hard date to plan for.
Is it too late to plan for a referendum in November 2026? If not, when will it be too late?
It’s not too late to plan for November (although it really is too late to start the process for March 2026). To get to November 2026, you need to have your governing board agree on a starting point for its discussions by early May. Otherwise, you’ll start to run into deadlines and the need for special meetings. In any event you need your local authorization process completed by early August to allow for ballot printing and related tasks at the County board of elections.
What kinds of projects can you use GO Bonds for?
You can authorize and use bonds for any capital project you are otherwise allowed by law to undertake. You are limited only by your ambition and imagination.
We have several different projects we’re considering for a referendum. How does that figure into the process?
To include different purposes within a single ballot question, those purposes must be related. Unrelated purposes cannot be combined, and have to appear as separate ballot questions. For example, a bond purpose of “public safety” could cover improvements to police and fire facilities. You could not, however, combine “fire facilities” and “park improvements” on a single ballot question. The ballot questions themselves must follow a format set out in the statutes.
What does a ballot question look like?
Here’s a sample of a ballot question for parks projects. This is a long question, and by law we have very little flexibility as to how to present the question. Drafting the ballot question within the legal parameters will be part of the bond counsel’s job in consultation with finance staff and your financial adviser
We recommend, strongly, that you state the purpose for the bonds in a general manner, such as “parks and recreation projects” or “school projects.” While you are allowed to state the purpose with more specificity, doing so locks you into that specificity, even as your priorities within a general purpose may change. So, if you ask the voters to approve “improvements to East High School” and it later becomes apparent that “improvements to Central Elementary School” are more important, you’ll be out of luck for the use of the voter-approved bonds. Stating the purpose in more generalized categories allows the voters to understand what will be financed while leaving the Board with flexibility within the categories to respond to changing conditions.
As noted above, unrelated purposes can’t be combined into a single ballot question. You’ll need separate ballot questions in that case, such that the voters can approve some of the questions, and not others.
What’s the first step?
Get you governing board to discuss, and then determine, what projects they want to consider for a bond referendum, and at what levels of funding. This informal process of their coming to an agreement of what to start with – even if you don’t end up putting all the questions forward, or reducing the amounts proposed, you’ll have a starting point for your financial analysis, your discussions with the LGC and your formal authorization process.
It is useful to start these discussions with all ideas on the table. As you move through the process, you can always eliminate proposed purposes or projects, or reduce the amount of bonds under consideration. Once you get started with the formal process, then you cannot add purposes or increase the bond amount for any purpose without starting the formal process over from the beginning.
You will need to have an informal discussion with the LGC staff early on, and you can have that discussion as soon as you decide to start the internal discussions – even if there’s no final decision even to have a referendum.
You’ll also need to hire a bond attorney firm to help you with the process (we recommend ourselves, but there are plenty of good options in North Carolina), and we recommend you also hire a separate financial advisor firm.
Should we even have a bond referendum for our projects?
There are pros and cons of having a bond referendum.
The pros – you get community buy-in for both your project and any related tax increases. It’s a lot easier to raise taxes for a project if the voters have said they want the project. Also, general obligation bonds usually carry slightly lower interest rates than other forms of financing, and 20-year financing is almost always available for GO bonds, if you need that long a term.
The cons – the voters might say no. Only propose GO bonds if you know what you’ll do if that happens. Will you just not do the project? Will you re-think the project, and ask the voters again? Or proceed with some different kind of financing. With a bond referendum, you’re setting a maximum borrowing amount in May or June, and then not borrowing the money at least until the following Spring – what will you do if the project amount exceeds the authorized amount? North Carolina local governments have many good financing options that don’t require a vote of the people, and those other options have simpler, shorter, authorization processes and allow you to set the borrowing amount after you have construction binds.
My elected officials are in agreement as to what they want to consider presenting to the voters. What does that formal authorization process look like?
You need three formal actions of the governing board, along with a public hearing, various public notices and an LGC application. Here’s a sample calendar for the required actions.
Once you start the formal process, you can (a) reduce, but not increase, the amount of bonds proposed for any single purpose, or (b) eliminate, but not add, any separate purpose.
How does the LGC process work for a bond referendum?
First of all, the LGC and LGC staff are not going be opposed to your having a bond referendum, so long as they believe you know what you’re getting into, have a realistic repayment plan, and are able to articulate why these are the locality’s priority projects. They are going to argue whether your community needs a park instead of sidewalks, but if you have a failing sewer plant, they will want to know how you are going to deal with that while you’re asking for voter-approved parks bonds.
Here is how you’re going to interact with the LGC staff –
Pre-application call. Early in the process, we’ll have an informal call with the LGC staff for you to describe the projects and explain the repayment plan. We will also discuss the timeline for the formal authorization process.
LGC application. You’ll next need to complete and file an application with the LGC. Read more about that here.
Collecting documents. As we complete steps in the authorization process, we will send copies of the relevant documents to the LGC for their files. This is how we show that we are proceeding as planned through the timeline.
After a successful referendum. If the referendum passes and we have all the supporting documents turned in, then the full LGC – actual elected and appointed officials that make up the Commission – will consider approving your application. This may well be the February or March after your November election, unless for some reason you need the approval earlier. The LGC only started this practice, of considering the referenda application only after it passes, in the last several years. Of course this leaves open the very, very unlikely possibility that the voters could say “yes” and the LGC say “no.” We haven’t seen that happen yet, although we have seen some applications put off for more information.
When you sell your bonds. There is a whole separate LGC process to sell bonds, but there is no more formal application process required.
What does the LGC application involve?
There are two main sets of information that the LGC application requires:
The first is information on your general fund performance over the last several years, and some forward-looking information. This may take you some time to pull together and project, but you will likely be able to do this without much trouble.
The second is information about the proposed projects. The LGC staff understands that you’re doing this application early on in the process, when priorities are still being established and when some of the proposed uses may be uncertain. But if for example you’re asking for $2 million for public buildings or $5 million for affordable housing, how did you come up with those numbers? Are those based on plans for a particular project, for example, or a study showing an overall community need in excess of those targets (and you’ve decided that’s all you can afford or ask the voters for)? This is not about second-guessing, but instead about making sure the work’s been done to support the plan.
How do we promote the bond issue?
The local government can provide information, but it can’t ask people to vote “yes.” The idea is that passing the bonds, or not, is supposed to be up to the voters, so it wouldn’t be appropriate to use public resources to influence the result.
A local government can expend resources to explain what’s being proposed, the projects proposed to be funded, the nature of estimated tax increases, and what the alternatives would be if the referendum fails. That’s considered “education,” as opposed to “promotion.”
Any efforts to get voters to vote “yes” or “no” would have to be privately funded. Local governments have dealt with this dichotomy in a variety of ways. Let us know if you want to talk more about that.
If the referendum passes, when can we issue bonds?
Once the voters have approved the bonds, you generally have a minimum of 90 to 120 days to actually issue bonds and put money in the bank. That’s just for the required legal process and logistics for bringing bonds to sale.
- The significant timing issue in proceeding with a bond issue, however, centers around the progress of the projects you are going to finance. In general, the LGC wants you to have construction bids in hand representing at least a substantial amount of the amount borrowed (the LGC staff uses 70% as a guideline), and well-developed estimates for the remainder. This is because the LGC is supposed to ensure that you don’t borrow too much money, or too little money, or borrow it earlier than you need it. We can coordinate the bond financing process with your construction processes so as not to delay your projects, but the construction process drives the schedule.
How much time do we have to issue bonds?
The County has seven years from a successful referendum date to issue voter-approved bonds. The LGC can extend this period to ten years, and over the last several years the LGC has routinely granted extensions requested by local governments.
Do we ever have to issue the bonds?
No. You have no obligation in fact to issue any or all of the bonds approved at a referendum.
What if we have a referendum, but end up needing more money for the project?
We wrote a separate blog post about that issue, which you can find here.
Why do I need a bond counsel? (and what is a “bond counsel”?)
A bond counsel is a law firm, other than your regular local government attorney, that is experienced in the legal aspects of local government borrowing that is viewed by the LGC and the bond purchasing community as in independent expert that can vouch for the proper authorization and issuance of your bonds (and on certain related federal tax matters as well). You’ll need bond counsel because this is not something that most lawyers, even talented and experienced municipal lawyers, will have experience with. The LGC has generally also required that the bond counsel be separate from your usual attorney to provide a level of independence.
In short, you’ll need bond counsel because the LGC will require it to ensure that your process meets legal requirements, and that when you get ready to issue bonds, you’ll be able to offer the approving legal opinion of a bond counsel firm that the bond purchasers will require. In addition, bond counsel will draft all the necessary legal proceedings and manage the schedule so that your process goes off smoothly.
Do I need a separate financial advisor?
It’s certainly possible to go through a referendum process without a separate financial advisor, and 20 years ago, or so, that was the routine. It is now rarely the case that a separate FA won’t be involved. Here are things the FA can help you with:
- Doing the calculations and analysis about how your possible projects affect your debt affordability, debt capacity and possible tax increases over time, taking into account your existing debt, your tax base growth trends and any other projects you have on the drawing board, and including “what if” analysis. This is the kind of complete information that elected officials often find very important when making decisions about timing and sizing of bond referenda proposals. The availability of this analysis is the single most important reason to hire an FA, in our opinion. You certainly could do this work yourself, but the FAs can probably do the analysis and presentation more easily and completely. If you’re not sure this is for you, ask an FA firm under consideration for a copy of a presentation they’ve made for a similar client in a similar circumstance, and then consider the value that would have for you.
- Helping you navigate the LGC process and helping you with the LGC application. Again, this is something you could do yourself, but you can also get assistance that will streamline the process.
Let us know if we can give you some contact information for financial advisers active in North Carolina.
Sample Timetable for November 2026 Bond Referendum
The County Board of Elections will want the authorization process (through Step 13) completed by late July to meet deadlines for ballot printing.
| Step | Date | |
| 1. | Determine tentative referendum plan | As soon as possible |
| 2. | Locality meets with LGC staff – virtual meeting | As soon as convenient after informal decision to proceed with November referendum – at least by mid-April |
| 3. | Locality gives informal notice to County Board of Elections | As soon as convenient after informal decision to proceed with November referendum |
| 4. | School Board adopts a resolution of support (required only for County bonds for public school purposes) | Prior to Locality Board meeting in Step 5 |
| 5. | Locality Board adopts preliminary resolution explaining purpose for issue and authorizing publication of notice of intent to file LGC application | By early June |
| 6. | Bond counsel makes notice filing to legislative committee | As soon as convenient after Step 5 |
| 7. | Locality publishes notice of intent to file application | As soon as possible after Step 5 |
| 8. | Locality prepares statement of debt and statement of estimated interest and other matters | In connection with preparing LGC application |
| 9. | Locality files LGC application | At least 10 days after Step 7 and then prior to Step 10 (can be the same day as Step 10) |
| 10. | Locality Board introduces “bond order” and schedules public hearing. The “bond order” is what our statutes call the proceeding the Locality Board adopts to formally authorize the bonds, subject to the voters’ approval | By early to mid-July |
| 11. | Clerk files sworn statement of debt and statement of estimated interest and other matters | Any time between Step 10 and Step 12 |
| 12. | Locality publishes notice of public hearing | After Step 11 and then at least six days prior to Step 13 |
| 13. | Locality holds public hearing; adopts Bond Order; formally sets ballot question and referendum date | By early August. The steps can be divided across two meetings if the Board prefers. |
| 14. | Locality publishes Bond Order as adopted | As soon as convenient after Step 13 |
| 15. | Locality publishes notice of referendum (twice) | By September 25; then by October 2 (recommended to publish as soon as convenient after Step 13) |
| 16. | Referendum occurs | November 3 |
Sample ballot question –
JEFFERSON COUNTY – PARKS AND RECREATION BONDS
Additional property taxes may be levied on property located in Jefferson County in an amount sufficient to pay the principal of and interest on bonds if approved by the following ballot question.
Shall the order authorizing $______________ bonds plus interest to pay capital costs of providing parks and recreational facilities and paying related costs and providing that additional taxes may be levied in an amount sufficient to pay the principal of and interest on the bonds, as adopted by the County’s Board of Commissioners on ____________, 2026, be approved, in light of the following:
(1) The estimated cumulative cost over the life of the bond, using the highest interest rate charged for similar debt over the last 20 years, would be $_____________ to repay the principal and $___________ in interest.
(2) The estimated amount of property tax liability increase for each one hundred thousand dollars ($100,000) of property tax value to service the cumulative cost over the life of the bonds provided above would be $____________ per year.
[ ] YES [ ] NO