Municipal Debt Limits

Training for: Legal Notes

(Reprinted, as revised from the January 2015, Maine Townsman, “Legal Notes.”)

Members often ask if there are limits on how much debt a municipality in Maine can carry. The answer is yes, there certainly are.

According to 30-A M.R.S. § 5702, a municipality cannot incur total debt, not counting debt for schools, storm or sanitary sewers, energy facilities, and municipal airports exceeding 7.5% of its last full state valuation of all taxable property. 

There are also limits on most of these exclusions: school debt cannot exceed 10%; storm or sanitary sewer debt cannot exceed 7.5%; and municipal airport debt cannot exceed 3%. (The benchmark, again, is the municipality’s last full state valuation.) 

But when all debt, including the exclusions, is combined, total debt cannot exceed 15% of the municipality’s last full state valuation.

For purposes of statutory debt limits, “full state valuation” means the state valuation most recently certified by the State Tax Assessor pursuant to 36 M.R.S. § 381, adjusted to 100%.

Note that a municipality may set lower (but not higher) percentages or amounts than those established by statute.

Also noteworthy is that the statutory debt limits do not apply to borrowing in anticipation of taxes, revenue-sharing or state or federal aid, among other things (see 30-A M.R.S. § 5703). (R.P.F./S.F.P.)

(Reprinted, as revised from the January 2015, Maine Townsman, “Legal Notes.”)

Members often ask if there are limits on how much debt a municipality in Maine can carry. The answer is yes, there certainly are.

According to 30-A M.R.S. § 5702, a municipality cannot incur total debt, not counting debt for schools, storm or sanitary sewers, energy facilities, and municipal airports exceeding 7.5% of its last full state valuation of all taxable property. 

There are also limits on most of these exclusions: school debt cannot exceed 10%; storm or sanitary sewer debt cannot exceed 7.5%; and municipal airport debt cannot exceed 3%. (The benchmark, again, is the municipality’s last full state valuation.) 

But when all debt, including the exclusions, is combined, total debt cannot exceed 15% of the municipality’s last full state valuation.

For purposes of statutory debt limits, “full state valuation” means the state valuation most recently certified by the State Tax Assessor pursuant to 36 M.R.S. § 381, adjusted to 100%.

Note that a municipality may set lower (but not higher) percentages or amounts than those established by statute.

Also noteworthy is that the statutory debt limits do not apply to borrowing in anticipation of taxes, revenue-sharing or state or federal aid, among other things (see 30-A M.R.S. § 5703). (R.P.F./S.F.P.)