What typically determines the amount of debt a municipality can incur?

The amount of debt a municipality can incur is primarily governed by the constitution or laws of a state. Each state in the U.S. has its own legal framework that sets limits on the amount of debt local governments can take on. These laws are designed to ensure fiscal responsibility and protect taxpayers from excessive borrowing that could lead to financial instability.

Many states have constitutional provisions that restrict the amount of debt a municipality can accumulate without voter approval or require certain debt issuance processes to be followed. This oversight helps maintain a balance between funding necessary public projects and ensuring that debt levels remain manageable.

Other options, such as the mayor, contractors, and local boards, may have roles in the process of incurring debt or in managing budgets but do not possess the authority to unilaterally determine the limits of municipal debt. Instead, they must operate within the constraints established by state law, which ultimately shapes the financial policies of municipalities.