Which statement about debt limitation percentages is true?

Which statement about debt limitation percentages is true?

• A. The debt limitation is 2% for municipalities and 2% for counties
• B. The debt limitation is 3.5% for municipalities and 2% for counties
• C. The debt limitation is 2% for municipalities and 3.5% for counties
• D. The debt limitation is 4% for municipalities and 2% for counties

Answer: (B)

The key idea here is the statutory debt limits set for local units, which cap how much debt a municipality or county can have relative to its tax base. In New Jersey, the Local Government Debt Limits Law defines these ceilings as a percentage of the equalized value of taxable property. The numbers are 3.5% for municipalities and 2% for counties. This framing helps ensure debt remains in line with what the community’s property base can support. So the statement that municipalities may issue general obligation debt up to 3.5% of equalized value and counties up to 2% reflects the actual limits, making it the correct choice. The other options mix up or alter those percentages, which does not align with the statutory caps.

The key idea here is the statutory debt limits set for local units, which cap how much debt a municipality or county can have relative to its tax base. In New Jersey, the Local Government Debt Limits Law defines these ceilings as a percentage of the equalized value of taxable property. The numbers are 3.5% for municipalities and 2% for counties. This framing helps ensure debt remains in line with what the community’s property base can support.

So the statement that municipalities may issue general obligation debt up to 3.5% of equalized value and counties up to 2% reflects the actual limits, making it the correct choice. The other options mix up or alter those percentages, which does not align with the statutory caps.