Debt The restrictions placed on and local government debt in North Carolina In North Carolina, there are limitations or restrictions on the amount of outstanding debt for the local government in relation to the state’s property tax base. The second major restriction is on property tax rates that the local government can levy for debt service requirements. This restriction is important as it limits the power of the local government to borrow carelessly with an aim of imposing the resultant burden on the citizens. The third restriction is the need for the approval of the bond issues that the government has proposed and this is done through a specific referendum.
This constitution applies only to debts that the local government wants to acquire for a particular purpose. The state government is required to provide a balanced budget that does not have any carryover. This reduces the chances of having huge deficits that prompt the acquisition of loans. If a deficit occurs during a financial year, then it must be eliminated by increasing taxes or reducing spending instead of getting loans.
Methods needed to avoid restriction limitsThe local government should utilize every of its money prudently. Any borrowing by the local government should also be done responsibly, prudently and in a locally responsive manner. The national debt should be reduced and the federal income tax should be replaced with tax from national retail sales. There should be fiscal discipline mechanisms or budgetary rules that will ensure that the local and state government does not spend more that it has. These include expenditure and tax limits. This means the budget size has to fit to the existing resources to the most practical extend possible.
ReferencesBane, F. Et al. (1961). State Constitutional and Statutory Restrictions on Local Government Debt. Retrieved on 1st August, 2011. www. library. unt. edu/gpo/acir/Reports/policy/A-10.pdf