In an effort to protect the taxpayer from the extravagance of municipal officials, two types of restrictions, in the main, have been imposed: those limiting the power to contract debts, and those restricting the power to levy taxes. Frequently in an effort to recover and collect a judgment against the city, one or the other of these restrictions is met. Courts seem to hold unanimously that debt limitations apply to the city's obligations in contract and not in tort, but they are divided as to the effect of tax limitations upon collection of a tort judgment. As an example of the debt limitation provisions, the Iowa Constitution, forbidding indebtedness in excess of a fixed percentage of the assessed value of taxable property, reads "No county, or other political or municipal corporation shall be allowed to become indebted in any manner, or for any purpose, to an amount exceeding . . . . " And the California Constitution, limiting indebtedness in any one year to the income and revenue provided for that year, reads "No county, city, town, township, board of education, or school district, shall incur any indebtedness or liability in any manner or for any purpose exceeding . . . . " In spite of their apparent comprehensiveness, the fact that these restrictions speak of incurring and assuming debts has led the courts to hold unanimously that debt limitations apply to obligations voluntarily assumed and do not constitute a defense· for a city that has reached the limit and is being sued in tort.
Michigan Law Review,
MUNICIPAL CORPORATIONS - EFFECT UPON COLLECTION OF TORT JUDGMENTS OF CONSTITUTIONAL AND STATUTORY LIMITATIONS ON INDEBTEDNESS AND TAXING POWERS,
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol35/iss1/8