What limitation is imposed by the 60% Rule?

The 60% Rule refers to a guideline in municipal finance that limits the approval of new debt obligations to no more than 60% of the budgeted appropriations for the current year. This rule is designed to ensure that municipalities do not overextend their financial responsibilities by taking on new debts that exceed a sustainable portion of their budget. By keeping new debt within this limitation, municipalities can maintain fiscal prudence, avoid potential financial distress, and ensure that they have adequate resources to meet their existing obligations and commitments.

This rule helps to protect the fiscal health of the municipality by aligning debt levels with budgetary constraints, ultimately supporting responsible governance and financial management. It also promotes transparency in financial decision-making, as it requires approval processes that are mindful of the limitations imposed by overall budgeted appropriations. This is key for maintaining trust with constituents and stakeholders who are concerned about the financial stability of their local government.