Alabama Constitution Section 225 Indebtedness of municipal corporations Limitation exception as to Sheffield and Tuscumbia
Alabama Constitution – Section 225: Indebtedness of Municipal Corporations — Limitation; Exception as to Sheffield and Tuscumbia
Text of Section 225:
"No city, town, or other municipal corporation other than as provided in this Constitution shall become indebted in an amount, including existing indebtedness, in the aggregate exceeding twenty percentum of the assessed value of the property therein, except for the erection, construction, or maintenance of schools, and the acquisition, construction, and maintenance of sanitary or storm water sewers, and for the construction, extension, and improvement of water and sewer systems, and for the acquisition, provision, and operation of gas, electric, and other public utilities, and the acquisition, construction, and maintenance of public hospitals, and for the construction of street and highway improvements, and for the construction, repair, and maintenance of public libraries, where the total indebtedness for such purposes shall not exceed twenty-five percentum of the assessed value of the property therein, and except as to the cities of Sheffield and Tuscumbia, in which cities the total indebtedness may be increased to thirty-five percentum of the assessed value of the property therein."
Summary:
Section 225 places limits on how much debt Alabama cities, towns, or municipalities can legally take on:
General Debt Limit:
A general limit of 20% of the assessed property value within the municipality applies to total indebtedness.
Higher Debt Limit (25%) Allowed For Certain Purposes:
Municipalities can go up to 25% for debt related to specific infrastructure and services, such as:
Schools
Storm and sanitary sewers
Water and sewer systems
Public utilities (gas, electric, etc.)
Public hospitals
Street and highway improvements
Public libraries
Special Exception:
Sheffield and Tuscumbia (two cities in Alabama) are allowed a higher debt ceiling of 35% of the assessed property value for the above-listed purposes.
Key Takeaways:
Most Alabama municipalities are limited to 20% of property value in total debt.
For essential services and infrastructure, that cap can go up to 25%.
Sheffield and Tuscumbia have a unique constitutional exception allowing up to 35%.
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