Municipal Bonds: State Law Limitations on Local Government Borrowing

Summary

This practice note provides an overview of the various state law limitations on local government borrowing. Some states have adopted legislation that comprehensively seeks to regulate government borrowing to avoid excessive state and local government debt. Others have taken a narrower, more focused approach. All these mechanisms have been implemented to both protect the state and its citizens from uncontrollable debt and protect bondholders from being left with invalid bonds.