Georgia Constitution Practice Exam

What is the debt limitation for cities and counties based on assessed property value?

1. They may take on any amount of debt needed.

2. The debt may not exceed 50% of the assessed value of taxable property.

3. They cannot exceed more than 10% of the assessed property value.

4. There are no restrictions on debt for cities and counties.

The correct answer is: They cannot exceed more than 10% of the assessed property value.

In Georgia, cities and counties are subject to certain debt limitations to ensure fiscal responsibility and protect taxpayers. The correct answer is that they cannot exceed more than 10% of the assessed property value. This limitation is established to prevent municipalities from overextending themselves financially, which can lead to economic instability and potential default on debts. By capping debt at 10%, this regulation encourages local governments to maintain a balanced approach to budgeting and borrowing. This threshold provides a safeguard for both the local government’s financial health and the interests of the constituents. The option indicating unrestricted debt is inaccurate since it could lead to excessive borrowing without appropriate oversight. Similarly, stating that debt may not exceed 50% of assessed value misrepresents the more conservative limits that are in place to preserve fiscal stability. The alternative option suggesting that municipalities may take on any amount of debt needed fails to recognize the legal frameworks designed to control government borrowing responsibly. Understanding these limitations is crucial for maintaining sound governance and promoting sustainable growth within local communities.