Which instrument is primarily used to finance local infrastructure improvements?

General obligation bonds are primarily used to finance local infrastructure improvements because they are backed by the taxing power of the issuing government. These bonds allow municipalities to borrow money to fund projects such as roads, bridges, schools, and parks, with the promise to repay the debt through tax revenues. This connection to the overall financial strength and taxing authority of the municipality makes general obligation bonds a strong and stable source for financing essential community projects.

Municipal notes, while useful for short-term financing needs, are not typically employed for long-term infrastructure improvements. They generally cover immediate cash flow issues rather than substantial construction endeavors. Tax anticipation notes serve a similar purpose by allowing municipalities to borrow against anticipated tax revenue, but their function is limited to managing cash flow prior to the collection of taxes, rather than funding large infrastructure projects.

Special assessment bonds are also relevant, as they are used to finance specific projects that benefit particular areas or properties. However, they are more focused on improvements that are directly tied to a specific group of taxpayers rather than broadly financing comprehensive local infrastructure initiatives. This makes general obligation bonds the primary choice for financing general infrastructure improvements across the community.