Municipal Debt Limits 

Most all cities have Debt Limitation policies that restrict or limit the amount of General Obligation Bond debt a city can issue. (General Obligation Bond debt = debt guaranteed only by the Government’s ability to raise taxes)

Some reasons for limiting the amount of debt a city can issue are:

  • Protect the citizens from unlimited tax increases
  • Maintain a city’s debt rating to ensure best rates for borrowing
  • Align with bond rating agency guidelines

The listed surrounding cities all have debt limitation policies that restrict the amount of General Obligation debt a city can incur. Except Lakeland!  We have no limits, no rules and no control on how much debt the Board of Commissioners can issue.  Below are listed the General Obligation Bond debt (G.O. Debt) limit policies for the surrounding municipalities.

City Debt Limit Policy
Germantown G.O. Debt Service/General Fund Expenditures ≤ 12%
Total G.O. Debt/Total Assessed Property Value ≤ 1.5%
Debt Per Capita ≤ $2,000
Per Capita Debt/Per Capita Income ≤ 4%
Arlington G.O. Debt Service ≤ 15%** Total Property Tax Revenues
Collierville General Fund Balance Requirement of 25% minimum
Average Life of Total Debt ≤ 10 years
Percentage of Principal Paid within 10 years ≥ 60%
Per Capita Debt/Per Capita Income ≤ 4%\
Per Capita Debt/Per Capita Assessed Value ≤ 4%
G.O. Debt Service/General Fund Expenditures ≤ 12%
Bartlett Total G.O. Debt/Total Assessed Property Value ≤ 5%
G.O. Debt Service/General Fund Expenditures ≤ 15%
Debt Per Capita ≤ $2,000
Lakeland No Debt Limit Rules.

** Can be increased to 20% for emergencies by 2/3 vote of Town Council

What does this mean to us?  It means that the Board of Commissioners can obligate us to ANY amount of debt they vote on, whether it will bankrupt the town or not!

Let’s look at how Lakeland stood in 2014, stands now and would be if the $60,000,000 Bond proposal had gone through.

Lakeland (2014) compared to the listed cities Debt Limitation Policies:

 

This is how much Lakeland has changed under Mayor Bunker! 

* Note: Germantown changed three of their debt policy limits.  These are reflected in this chart.

 

 Lakeland (with $60,000,000 bond) compared to the listed cities Debt Limitation Policies: