In recent years the types of financing vehicles available to local governments have become more numerous. Notes and accounts payable are usually short-term indebtedness and are part of the normal operations of an entity. We are all familiar with this kind of debt. Anticipation notes, whether of the bond or tax type, are also familiar and short-term. They are used to carry an entity over until a bond is issued or until taxes are collected at a later date.
Leases generally come in two types.
Operating leases are usually used to lease land, buildings, office space, and equipment. Regular lease payments are made in exchange for the use of the asset for a specific period of time. These arrangements are contractual in nature and are similar to other types of debt service payments. Capital leases are used to pay for construction or other major capital assets, and are therefore also called lease-purchases. In smaller governments this arrangement is used to purchase items such as copiers, computers, and vehicles.