Public Indebtedness

Abstract

This chapter discusses Article XI of the Colorado Constitution, governing public debt. Section 1 prohibits pledging public credit to private interests, and Section 2 forbids public grants to private interests or public purchases of shares in private ventures. Applied to the general assembly, Section 2 overlaps the ban on appropriations to private institutions in Article V, Section 34. Both were substantially undermined when the supreme court created a broad “public purpose” exception to them. Section 3 capped the state’s debt at very low levels. Its original purpose was to keep the state substantially on a cash basis, but its importance was much reduced when the supreme court interpreted it not to apply to revenue bonds, debt repayable only from special funds or by a separate entity, or debt limited to one fiscal year even if renewable. Original Sections 6, 7, and 8 were debt limits on local governments analogous to those imposed on the state by Section 3. A 1970 amendment consolidated the three provisions into current Section 6 covering all local governments and removed local debt ceilings. Article XI’s debt rules should be read together with those imposed in 1992 by Article 10, Section 20.