Debt Limitation Clause

Definition

A provision in a state constitution that limits the amount of debt the state government can incur, often requiring public approval through a vote before new debt is issued. Creating a separate public corporation allows the state to borrow money through that entity without triggering these constitutional limits.

Examples

• •NJ Transit borrows approximately $150 million per year, and that debt does not count toward New Jersey's constitutional debt limitation because NJ Transit is structured as a separate corporation.

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