ABSTRACT
As the demand for public-sector investment in infrastructure continues to grow, the issuance of debt has become an increasingly important component of state and local government capital programs. An approach being utilized by many governments to address potential credit concerns is the development, adoption, and implementation of formal debt policies. Such policies are designed to provide guidance to all participants in the capital improvement process as project requests are evaluated and funding decisions are made. This chapter describes the some of the items that should be included in a comprehensive debt policy statement. These include sample debt measurements for policy goals or targets, suggested benchmarks for measuring affordability, and examples of current planning documents from issuers that incorporate some or all of these concepts. Good debt planning starts with a good capital improvement plan (CIP), one that reviews the status of current infrastructure, identifies replacement and renovation needs, and proposes new capital projects.
