> Was there a problem that the city spent 1/2 of tax income on just servicing the debt?
Actually, yes.
Let's say I went to the Casino, put all my money on black and won. Great. Was there a problem that I risked all my money in the casino? There surely was.
The thing is, financing investments via bonds means that only parts of the citizens are actually financing it with their private money (and also enjoy the benefits like interest). But the city could also just make a contract over the 35 years with recurring payments instead of paying all upfront. And then it could simply raise the tax (if necessary) to pay the additional payments. The difference is that now all citizens pay for it rather than just a small share.
Actually, yes.
Let's say I went to the Casino, put all my money on black and won. Great. Was there a problem that I risked all my money in the casino? There surely was.
The thing is, financing investments via bonds means that only parts of the citizens are actually financing it with their private money (and also enjoy the benefits like interest). But the city could also just make a contract over the 35 years with recurring payments instead of paying all upfront. And then it could simply raise the tax (if necessary) to pay the additional payments. The difference is that now all citizens pay for it rather than just a small share.