Assess and explain the restrictions placed on state and local government debt in Virginia. Identify three or four methods needed to avoid restriction limits.
Most restrictive debt limitation is state constitutional ceilings on municipal borrowings. It prevents both citizens and legislations from incurring debt beyond a stated maximum. A typical constitutional limit restricts the total amount of debt that may be outstanding at any time. However such constitutional restrictions just control the quantity rather than quality of indebtedness. These have been circumvented using different methods which have not only nullified the quantitative restrictions but have negated the performance measures for which these restrictions were imposed. Other debt restrictions for the state are:
- No debt shall be contracted by or in behalf of commonwealth except in following cases:
- Debts to redeem previous debts and meet emergencies
- Debts can be contracted to meet casual deficits in the revenue or anticipation of collection of revenues. The limit on such debt is 1.15 times the average annual tax revenues derived from taxes on income and retail sales as certified by Public ...
The restrictions on government debt in Virginia are examined.