Legal Definitions - debt limitation

Definition: Debt limitation refers to a maximum amount of borrowing that an individual, business, or government can undertake. Some state constitutions prohibit states from incurring debt beyond a certain limit, while others require a vote of the people to exceed the limit.

Example: The state of California has a debt limitation of $300,000,000 for general obligation bonds. This means that the state cannot issue bonds beyond this limit without obtaining voter approval.

This example illustrates how debt limitation works in practice. The state of California cannot borrow more than $300,000,000 without seeking approval from the voters. This helps to ensure that the state does not accumulate too much debt and become financially unstable.